46. The voluntary transfer of a contractual right to a third party is known as a(n):
a. implied warranty.
b. assignment.
c. delegation.
d. novation.
47. A(n)
obligee.
is a method of discharging a contract in which a third party becomes bound upon a promise to the
a. assignment
b. delegation
c. partial assignment
d. novation
48. A(n) is a third party who obtains possible benefits but no rights under a contract.
a. incidental beneficiary
b. intended beneficiary
c. assignor
d. donee beneficiary
49. A(n) is an intended beneficiary of a contract who receives the benefits of the contract as a gift.
a. incidental beneficiary
b. intended beneficiary
c. assignor
d. donee beneficiary
50. Anita owes Brad $75,000. Brad signs a written statement granting Glen a gratuitous assignment of his rights from
Anita. Brad delivers the signed statement to Glen before Brad dies. The assignment is:
a. irrevocable because of the delivery of the statement.
b. terminated upon Brad’s death.
c. irrevocable because of the signing of the statement.
d. invalid because it is revocable.
51. Which of the following duties would not be delegable?
a. John has a contractual duty to pay Isaac $50.
b. Karl has a contractual duty to deliver 50 bushels of corn to Michael by October 1.
c. Jeffrey has a duty to mow Georgia’s lawn at least once a week.
d. Arthur has a duty to teach an accounting class at a community college during the fall semester.
52. Theresa has a contract to teach eighth grade at Washington Middle School. She decided she could make more
money writing a book, so she assigns her teaching contract to her friend, Stephanie, who is also a licensed teacher.
The duties under the teaching contract:
a. are nondelegable.
b. which Theresa has attempted to delegate are personal in nature.
c. would no longer be required of Theresa if the school district agrees to accept Stephanie’s services, because a
novation would occur, which would relieve Theresa of her obligation to the school district.
d. All of these are correct.
53. Annette entered into a contract with a local truck dealer to have a new truck delivered to her daughter, Sue, as a
graduation present. In this contract, Sue is:
a. an incidental beneficiary.
b. a donee beneficiary.
c. a creditor beneficiary.
d. an assignor.
54. Professor Dought has a life insurance policy on his own life that provides that in the event of his death, his mother
will receive the proceeds. Professor Dought’s mother is a(n):
a. incidental beneficiary.
b. creditor beneficiary.
c. donee beneficiary.
d. assignee.
55. Bill wants to buy a new car. He goes to the bank to get a loan for the purchase, and signs an agreement to pay
$10.00 per month in premiums on a term life insurance policy which names the bank as the recipient of the policy
proceeds in the event of his death before the loan is repaid. The bank is a(n):
a. incidental beneficiary.
b. creditor beneficiary.
c. donee beneficiary.
d. assignee.
56. Betty owes Agatha $1,000. On March 1 Agatha, for value, assigned the debt to Clara. Thereafter, on March 30,
Agatha assigned the same right to Diane. Under the:
a. American rule, Clara will prevail over Diane.
b. American rule, the first assignee to notify Betty will prevail.
c. Restatement rule, the first assignee to notify Betty will prevail.
d. English rule, Clara will prevail over Diane.
57. Courts will enforce contracts for the benefit of all but which of the following?
a. Donee beneficiaries
b. Creditor beneficiaries
c. Incidental beneficiaries
d. Intended beneficiaries
58. Bill has a right against Heather and assigns it for $100 to Dan. Later, Bill grants Heather a release. Bill:
a. is liable to Dan for damages because he breached an implied warranty.
b. has no liability to Dan because he did not expressly warrant that he would not impair the assignment.
c. has no liability to Dan because the only implied warranty he made was that the assigned right actually existed
at the time of the assignment.
d. was acting contrary to public policy by assigning a contractual right for money.
59. Stark enters into a contract with a contractor to build a large shopping mall in River City. Donner will benefit from
this contract since his restaurant is adjacent to the planned mall. Donner in this instance is a(n):
a. implied beneficiary.
b. partial beneficiary.
c. donee beneficiary.
d. incidental beneficiary.
60. The party to whom a contractual duty of performance is owed is known as the:
a. obligee.
b. obligor.
c. assignee.
d. assignor.
61. Mr. Homayer hired Blake Painters to paint his house. Blake decides it has too many jobs and delegates the duties to
the Andrews Company. Andrews does a poor job, and drips paint on the Homayers’ flowers and windows. Mr.
Homayer:
a. can sue both Blake and Andrews.
b. can sue Blake, but he cannot sue Andrews.
c. can sue Andrews, but he cannot sue Blake.
d. cannot sue, because he has accepted the benefits of the assignment.
62. Mary goes to a stockbroker, purchases 50 shares of a certain stock, and instructs the broker to register the stock in
her husband Warren’s name. If this stock is intended as a Valentine’s Day gift, Warren becomes a(n):
a. donee beneficiary.
b. transferee.
c. delegatee.
d. assignee.
63. When contract terms prohibiting the assignment of rights exist, most courts will:
a. strictly construe them.
b. interpret a general term prohibiting assignments as rendering any assignment ineffective.
c. award the obligor no right to damages for breach of a general term prohibiting assignments.
d. All of these.
64. Which of the following is NOT true concerning the requirements for an effective assignment?
a. The assignment must be voluntary.
b. Consideration is required.
c. There must be an intention to make the assignee the owner of the right.
d. The assignment may be either written or oral.
65. Which of the following involves a creditor beneficiary relationship?
a. A contract where the insured names a bank with which he has a loan as the beneficiary of a life insurance
policy
b. A contract between an employer and a union representing the employees, which contract is made for the
benefit of the employees
c. A contract between the owner of a building and the contractor stating that the contractor will pay his
employees at a stated rate
d. A contract between a governmental unit and business for services to be rendered to area citizens
66. Lynne is the intended beneficiary of a third-party contract. Her rights have vested. In an action by Lynne to enforce
the promise, the promisor may assert the defense of:
a. rescission.
b. contractual modification.
c. fraud.
d. All of these.
67. Which of the following involves an invalid assignment that a court would not enforce?
a. An assignment of a savings account accompanied by the delivery of the passbook
b. An assignment lacking consideration
c. An assignment of an automobile liability insurance policy accompanied by the delivery of the policy
d. An assignment in writing signed by the assignor and delivered to the assignee
68. Which of the following is correct with regard to successive assignments of the same right?
a. It is impossible for an assignor to assign the same right more than once.
b. In England, the first assignee to notify the obligor prevails.
c. The Restatement does not recognize the validity of any successive assignments.
d. The majority rule in the United States is that the first assignee to notify the obligor prevails.
69. Noel and Lyle have a contract whereby Noel is to perform routine construction services according to the blueprints
that Lyle has provided. Noel assigns the contract to David. As a result of this assignment:
a. Lyle can bring suit based upon detrimental reliance.
b. Noel has no more rights or responsibilities with regard to the contract.
c. Noel no longer has any rights under the contract, but he remains responsible for the duties he agreed to
perform.
d. Noel has all of his rights under the contract, but he has no responsibility for the performance of the duties.
70. Brice owns a parcel of land that is encumbered by a mortgage held by the First National Bank. Brice agrees to sell
the land to Paul for $50,000. Brice and Paul together go to the First National Bank to discuss the sale and purchase
with the banker. Brice, Paul, and the banker sign an agreement stating that Paul will assume the mortgage and that
Brice will be discharged from all further liability on the mortgage. In this case:
a. the bank is a third party donee beneficiary.
b. the bank can collect from Brice if Paul defaults.
c. Brice is a third party beneficiary of the agreement between Paul and the bank.
d. the agreement among the three is a novation.
71. Notice of an assignment:
a. cuts off any defenses based on subsequent agreements between the obligor and assignor.
b. does not prevent subsequent setoffs of the obligor that arise out of separate matters.
c. does not bar subsequent counterclaims of the obligor that arise out of separate matters.
d. has no effect on defenses based on subsequent agreements between the obligor and assignor or on
subsequent setoffs and counterclaims of the obligor that arise out of separate matters.
72. Odessa owes Kevin $2,000. On July 1, Kevin assigns the right to the $2,000 to Troy. Thereafter, on July 15, Kevin
assigns the same right to Donna, who in good faith gives value for it and knows nothing about the first assignee. In
this case:
a. Troy has the right to the payment of $2,000.
b. Donna has the right to the $2,000.
c. neither Troy nor Donna can claim the $2,000.
d. the rule differs in different states. Depending on which rule a state follows, the answer will vary.
73. Barbara owes Arturo $2,000. On July 1, Arturo assigns the debt to Charles. Thereafter on July 15, Arturo assigns
the same right to Dennis, who in good faith gives value for it and knows nothing about the first assignee. Dennis
immediately notifies Barbara of the assignment. Under:
a. all of the rules, Charles has priority since he was the first assignee in time.
b. the majority rule, Dennis has priority.
c. the English Rule, Dennis has priority.
d. the English Rule, Charles has priority.
74. Under Section 2-210 of the Code, unless circumstances indicate to the contrary, a contract that prohibits an
assignment:
a. prohibits both an assignment of rights and a delegation of duties under the contract.
b. prohibits only a delegation of the delegator’s duty of performance and not the assignment of rights.
c. renders any subsequent assignment ineffective.
d. All of these.
75. Notice of an assignment:
a. must be given to the obligor.
b. cuts off any defenses based on prior agreements between the obligor and assignor.
c. precludes subsequent setoffs and counterclaims of the obligor that arise out of entirely separate matters.
d. All of these.
76. The law governing assignments is found in Articles
well as the common law.
a. 1 and 2
b. 2 and 4
c. 2 and 9
d. 3 and 4
and of the Uniform Commercial Code (UCC), as
77. A gratuitous assignment is rendered irrevocable if, prior to the attempted revocation, the assignee:
a. receives payment of the claim from the obligor.
b. obtains a judgment against the obligor.
c. Neither of these. A gratuitous assignment is always revocable.
d. Both of these.
78.
a. What is an assignment?
b. What is a delegation?
c. What does it mean to “assign a contract”?
79.
a. What is a third party beneficiary?
Distinguish between the following types of third party beneficiaries: creditor beneficiary; donee
b. beneficiary; intended beneficiary, incidental beneficiary. Can all third parties that benefit from a
contract sue to enforce rights under the contract? Explain.
a. A third party beneficiary is one who benefits from a promise made in a contract
80.
a. Distinguish between the time a third party’s rights arise under an assignment, a delegation, and a
third party beneficiary contract.
b. Identify and define the following terms: assignor and assignee; delegator and delegatee.
In an assignment and a delegation, the rights of the third party arise some time
a. after the original contract has been entered into. In a third party beneficiary
contract, the rights of the third party arise or are contemplated by the contracting
81. The UCC permits a buyer under a contract of sale to agree as part of the contract that he will not assert against an
assignee any claim or defense that the buyer may have against the seller under certain circumstances. Identify these
circumstances, and discuss the reason the UCC permits such a provision and how the FTC deals with such waiver
of defense provisions.
82. Give an example of an assignment of rights and explain the relationship of the parties.
83. Name four nonassignable contract rights found in Restatement (Second) of Contracts, Section 317(2).