ACCT 2700 Quiz #17

Beau borrows $15,000 from Credit Center to buy a car. The lender assigns the right to receive the loan payments to Debt Collections Inc. If Beau does not pay the debt, the assignee can A. enforce the payment in court. B. demand performance of the deal from any of the original parties. C. extinguish the contract rights of the assignor. D. none of the choices.

A. enforce the payment in court.

Kip enters into a contract with Life Insurance Company for a policy that designates Mia as the beneficiary. Kip reserves the right to change the designated beneficiary. Mia's rights under the policy are A. subject to any change that Kip makes. B. subject to the first-in-time rule. C. not affected by the reservation. D. terminated by the reservation.

A. subject to any change that Kip makes.

Marlo and Nita enter into a contract for the sale of Marlo's apartment for which Nita agrees to pay $250,000. Nita assigns her right to buy the apartment to Owen. Owen is A. the assignee. B. the obligor. C. a third party beneficiary. D. the assignor.

A. the assignee.

Generally, the duties under a contract can be delegated A. unless the contract expressly prohibits delegation. B. under no circumstances. C. unless the rights under the contract have previously been assigned. D. unless the delegation involves only a payment of money on the deal.

A. unless the contract expressly prohibits delegation.

Lew and Mavis enter into a contract for the clearing and plowing of Mavis's 350-acre tract for which she agrees to pay $1,000. Lew transfers his duty under this contract to Nye. With respect to the duties under the original contract, this transfer A. requires a special form to constitute a valid transfer. B. does not relieve Lew of the potential obligation to perform. C. is an invalid transfer of a non-transferable obligation. D. extinguishes Lew's obligation to perform.

B. does not relieve Lew of the potential obligation to perform.

A contract between Max and Nye provides for an "assignment of all rights." Max "assigns the contract" to Olin. Because a court will normally construe this wording as implying both an assignment of rights and a delegation of duties, if Olin fails to perform A. the contract is void. B. Nye is liable. C. Max is liable. D. the contract is discharged.

C. Max is liable.

Beta contracts to design and deliver marketing materials to Cesar. Beta cannot delegate this duty to Devon A. under any circumstances. B. if the delegatee's performance will match the obligee's expectations. C. if performance depends on Beta's personal skill. D. if special trust has not been placed in the obligor.

C. if performance depends on Beta's personal skill.

Mesa County contracts with New Construct Inc. to build a courthouse. New Construct hires Odell to excavate the site. Odell's work damages adjacent properties. Mesa files a suit against the excavator, who argues that the county is not named in his contract with New Construct. Most likely, the court will hold that Odell is A. not liable because Mesa is not named in Odell's contract. B. liable on the ground that Mesa is an incidental third-party beneficiary. C. liable on the ground that Mesa is an intended third-party beneficiary. D. not liable because Odell's contract was with New Construct, not Mesa.

C. liable on the ground that Mesa is an intended third-party beneficiary.

Desu, an accountant, and Engineers PA enter into a contract under which Desu agrees to perform audits for Engineers. Desu can delegate the duty to perform the audits to A. any accountant performing other financial services for Engineers. B. any accountant working at Desu's firm. C. no other party. D. any reputable accountant.

C. no other party.

Music Masters Inc. enters into a contract to pay Nag for a dozen original songs. Nag transfers the right to payment under the contract to Omni Artists. After the transfer, Nag's contract right to the payment is A. secondary. B. unaffected. C. conditional. D. extinguished.

D. extinguished.

Following a transfer by a lender of a right to receive payments on a mortgage, the homebuyer must continue to make those payments to the original lender. (T/F)

False.

In a contract for a sale of goods, the right to receive payment on an account may be assigned unless the sales contract prohibits such an assignment. (T/F)

False.

On a delegation of contract duties, the delegator is absolved from any liability for performance under the contract. (T/F)

False.

Privity of contract establishes the basic principle that contracting parties have a right to privacy in the information expressed in their contracts. (T/F)

False.

A contracting party's transfer of the contract rights or duties to another person is an exception to the rule of privity of contract. (T/F)

True.

After a transfer to a creditor by an investor of a right to receive payments on a business loan, the creditor can demand those payments from the borrower. (T/F)

True.

An insurance policy cannot be assigned if the assignment will significantly alter the risks to, or the duties of, the insurer. (T/F)

True.

If a statute expressly prohibits assignment, the particular right in question cannot be assigned. (T/F)

True.

On an assignment to a loan broker by an auto dealer of the payments due on an auto loan, the broker obtains only those rights that the dealer originally had. (T/F)

True.

When the performance of a contract depends on the personal skill of the obligor, a delegation of the duty is prohibited. (T/F)

True.