Bus Law Ch. 16

Professor Doright 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 Doright's mother is a(n): a. incidental beneficiary. b. creditor beneficiary. c. donee beneficiary. d. assignee.

donee beneficiary.

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 the contractor's employees at a specified rate. d. A contract between a governmental unit and business for services to be rendered to area citizens.

A contract where the insured names a bank with which he has a loan as the beneficiary of a life insurance policy.

In which of the following situations is there a third party incidental beneficiary who would be unable to enforce the agreement? a. Wholesalers, when the buyer of a business promises the seller that he will pay outstanding debts to wholesalers who have supplied inventory for the business. b. Workers, where a contractor agrees to post a performance bond to assure payment of workers and material men. c. A debtor, where a new partner enters an accounting firm and agrees to pay a share of debts incurred prior to his admission to the firm. d. A doctor, when an automobile accident policy states that the insurance company will reimburse the insured for medical expenses incurred as a result of an automobile accident.

A doctor, when an automobile accident policy states that the insurance company will reimburse the insured for medical expenses incurred as a result of an automobile accident.

When contract terms prohibiting the assignment of rights exist, most courts will: a. strictly construe them. b. interpret a general term prohibiting assignments as a mere promise not to assign. c. award the obligor a right to damages for the breach of the terms forbidding the assignment. d. All of the above.

All of the above

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.

An assignment of an automobile liability insurance policy accompanied by the delivery of the policy.

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.

Arthur has a duty to teach an accounting class at a community college during the fall semester.

Carlos, a contractor, and Lyle, a landowner, have a contract whereby Carlos is to perform routine construction services according to the blueprints that Lyle has provided. Carlos assigns the contract to David, a developer. As a result of this assignment: a. Lyle can bring suit based upon detrimental reliance. b. Carlos has no more rights or responsibilities with regard to the contract. c. Carlos no longer has any rights under the contract, but he remains responsible for the duties he agreed to perform. d. Carlos has all of his rights under the contract, but he has no responsibility for the performance of the duties.

Carlos no longer has any rights under the contract, but he remains responsible for the duties he agreed to perform.

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.

Consideration is required

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.

Incidental beneficiaries.

Which of the following is NOT true about a delegation of duties? a. When the delegatee assumes the delegated duty, both the delegator and the delegatee are liable for performance of the contractual duty to the obligee. b. Contractual duties are generally delegable. c. The courts will examine an assignment more closely than a delegation. d. A delegation will not be permitted if the nature of the duties are personal in that the obligee has a substantial interest in having the delegator perform the contract.

The courts will examine an assignment more closely than a delegation.

Which of the following is true about the vesting of an intended beneficiary's rights? a. The promisor and promisee may provide that the benefits will never vest. b. States are consistent in their rules as to when vesting occurs. c. Vesting cannot require the third party to change position in reliance on the promise made for his benefit. d. Regardless of whether an intended beneficiary's rights have vested, the promisor and promisee may, by later agreement, vary those rights.

The promisor and promisee may provide that the benefits will never vest.

Mary goes to her stockbroker, purchases 50 shares of stock, and instructs the broker to register the shares in her husband Warren's name. If this stock is intended as a Valentine's gift, Warren becomes: a. a donee beneficiary. b. a transferee. c. a delegatee. d. an assignee.

a donee beneficiary

Under the Restatement, if there are successive assignments of the same right: a. the first assignee to notify the obligor prevails. b. the latest assignee is usually entitled to the assigned right. c. a prior assignee is entitled to the assigned right to the exclusion of a subsequent assignee in most circumstances. d. a subsequent assignee is entitled to the assigned right unless a prior assignee gave value and obtains either a judgment against the obligor or a new contract with the obligor.

a prior assignee is entitled to the assigned right to the exclusion of a subsequent assignee in most circumstances

Stark enters into a contract with a contractor to build a large shopping mall in River City. Donner will greatly benefit from this contract since his convenience store is adjacent to the mall. Donner in this instance is: a. an implied beneficiary. b. a partial beneficiary. c. a donee beneficiary. d. an incidental beneficiary.

an incidental beneficiary.

The Speelman v. Pascal case held that: a. a gratuitous assignment is terminated by the assignor's death, even if the assignor made an effective delivery of the assignment prior to his death. b. assignments of rights to sums that are expected to become due to the assignor are enforceable. c. assignments cannot be made of sums that are not presently due but are expected to become due in the future. d. personal contracts are not assignable.

assignments of rights to sums that are expected to become due to the assignor are enforceable.

Harold hired Blake Painters to paint his house. Blake decides he has too many jobs and delegates the duties to the Andrews Company. Andrews does a poor job, and drips paint on Harold's flowers and windows. Harold: 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.

can sue both Blake and Andrews.

Will 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.

creditor beneficiary.

A transfer to a third party of a contractual obligation is known as a(n): a. assignment of rights. b. delegation of duties. c. revocability of assignment. d. partial assignment.

delegation of duties.

The transfer of a contract duty to a third party is known as a(n): a. implied warranty. b. assignment. c. delegation. d. novation.

delegation.

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

donee beneficiary

Wendell owes Liz $75,000. Liz signs a written statement granting Troy a gratuitous assignment of her rights from Wendell. If Liz dies prior to delivering the statement to Troy: a. Liz's death has no effect on the assignment. b. the assignment is terminated upon Liz's death. c. the signing of the statement makes the assignment irrevocable. d. the assignment is invalid, because it is gratuitous.

he assignment is terminated upon Liz's death.

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

incidental beneficiary

A(n) __________ is a method of discharging a contract in which a third party becomes bound upon a promise to the obligee. a. assignment b. delegation c. partial assignment d. novation

novation

The party to whom a contractual duty of performance is owed is known as the: a. obligee. b. obligor. c. assignee. d. assignor.

obligee.

Darrell owns a parcel of land that is encumbered by a mortgage held by the First National Bank. Darrell agrees to sell the land to Paul for $50,000. Darrell and Paul together go to the First National Bank to discuss the sale and purchase with the banker. Darrell, Paul, and the banker sign an agreement stating that Paul will assume the mortgage and that Darrell 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 Darrell if Paul defaults. c. Darrell is a third party beneficiary of the agreement between Paul and the bank. d. the agreement among the three is a novation.

the agreement among the three is a novation.

Anita owes Brad $75,000. Brad signs a written statement granting Carl a gratuitous assignment of his rights from Anita. If Brad delivers the signed statement to Carl before he dies: a. the delivery of the statement makes the assignment irrevocable. b. the assignment is terminated upon Brad's death. c. the signing of the statement makes the assignment irrevocable. d. the assignment is invalid, because it is revocable.

the delivery of the statement makes the assignment irrevocable.

Barbara owes Arthur $2,000. On July 1, Arthur assigns the right to the $2,000 to Maud. Thereafter, on July 15, Arthur assigns the same right to Derek, who in good faith gives value for it and knows nothing about the first assignee. In this case: a. Maud has the right to the payment of $2,000. b. Derek has the right to the $2,000. c. neither Maud nor Derek can claim the $2,000. d. the rule differs in different states. Depending on which rule a state follows, the answer will vary.

the rule differs in different states. Depending on which rule a state follows, the answer will vary.