CH. 16

After an effective assignment of rights, both the assignor and the assignee have a right to the obligor's performance.

False

Although no special words or particular form are necessary to create an assignment, an assignment must be supported by consideration to be effective.

False

A third party is an intended beneficiary if the promisee's purpose in bargaining for and obtaining the promisor's promise was to make a gift to the beneficiary.

True

After an effective delegation of duties, both the delegator and the delegatee are liable to the obligee for performance of the contractual duty.

True

An assignment of rights is the voluntary transfer to a third party of the rights arising from the contract..

True

In a novation, the delegator will be discharged and the third party will become directly bound on her promise to the obligee.

True

Arthur and Bob enter into a contract. Bob later delegates his duty of performance to Clark. Which of the following is true? a. If Clark fails to perform, Bob has a duty to perform. b. Arthur will always have to accept Clark's performance. c. The delegation is valid only if all three parties agree. d. Bob must compensate Clark for accepting the delegation.

a. If Clark fails to perform, Bob has a duty to perform.

A contract in which the promisor agrees to render a certain performance to a third person is called: a. a third-party beneficiary contract. b. an assignment of rights. c. a delegation of duties. d. a novation.

a. a third-party beneficiary contract.

The delegator remains bound to perform her contractual duties even after a delegation unless the delegation is: a. a gratuitous delegation. b. a delegation for value. c. a novation. d. none of the above.

c. a novation.

An implied warranty is an explicitly made contractual promise regarding contract rights transferred.

False

Harold sells his used car to Tina and assigns his rights in his auto liability insurance policy to her. This is a valid assignment.

False

If successive assignments have taken place, the majority rule is that the first assignee to notify the obligor will prevail in a dispute among the successive assignees.

False

The rights of an intended beneficiary vest at the time of the making of the contract or at the time he learns of its making, whichever is later.

False

In an action by the intended beneficiary of a third-party beneficiary contract, the promisor may assert any defense that would have been available to him had the action been brought by the promisee.

True

Most contract rights, including rights under an option contract, are assignable.

True

Sarah orders a microwave oven from Myriad's Department Store and requests that it be delivered to her sister Theresa. Theresa is a third-party intended beneficiary.

True

Under the Restatement and the Code, unless the language or circumstances indicate otherwise, an assignment of "all my rights under the contract" is both an assignment of rights and a delegation of the assignor's duties under the contract.

True

Where the assignee gives consideration in exchange for an assignment, a contract exists between the assignor and the assignee and the assignor may not revoke the assignment.

True

CPA: Krieg was the owner of an office building encumbered by a mortgage securing Krieg's promissory note to Muni Bank. Park purchased the building that was subject to Muni's mortgage. As a result of the sale to Park: a. Muni is not a third party creditor beneficiary. b. Krieg is a third party creditor beneficiary. c. Park is liable for any deficiency resulting from a default note. d. Krieg was automatically released from any liability on the note.

a. Muni is not a third party creditor beneficiary.

An assignee of a contract right: a. acquires all of the rights of the assignor. b. acquires new, additional rights by virtue of the assignment. c. takes the assigned rights free of all of the defenses to which the rights would be subject in an action by the assignor against the obligor. d. all of the above

a. acquires all of the rights of the assignor.

Which of the following would not be assignable? a. A owes B $50. B assigns to C the right to collect the money. b. Pedro assigns a contract right to land to Chung. c. Teacher assigns to her best friend her contract right to teach. d. All of the above

c. Teacher assigns to her best friend her contract right to teach.

A delegation of contractual duties will not be permitted if: a. the duties are of a personal nature. b. the contract is silent with respect to the assignment. c. the delegation is for payment of money. d. None of the above will be permitted.

a. the duties are of a personal nature.

A gratuitous assignment is: a. valid even though not supported by consideration. b. not revocable by the assignor. c. not terminated by the assignor's death. d. all of the above.

a. valid even though not supported by consideration.

Clara sells her house to Donald. The house has a mortgage which is held by First Bank. As part of the transaction, First Bank agrees to discharge Clara from the mortgage and to allow Donald to assume the obligation. This is a(n): a. assignment of rights. b. novation. c. delegation of duties. d. third-party creditor beneficiary contract.

b. novation.

In the absence of an expressed intention to the contrary, an assignor who receives value makes all of the following implied warranties to the assignee with respect to the assigned right EXCEPT: a. that he will do nothing to defeat or impair the assignment. b. that the obligor will pay the assigned debt. c. that the assigned right actually exists. d. that he has no knowledge of any fact that would impair the value of the assignment.

b. that the obligor will pay the assigned debt.

An intended creditor beneficiary of a third-party beneficiary contract has rights against: a. the promisee/debtor only. b. the promisor only. c. both the promisee and the promisor. d. neither the promisee nor the promisor.

c. both the promisee and the promisor.

CPA: Graham contracted with the city of Harris to train and employ high school dropouts residing in Harris. Graham breached the contract. Long, a resident of Harris and a high school dropout, sued Graham for damages. Under the circumstances, Long will: a. win, because Long is a third-party beneficiary entitled to enforce the contract. b. win, because the intent of the contract was to confer a benefit on all high school dropouts re-siding in Harris. c. lose, because Long is merely an incidental beneficiary of the contract. d. lose, because Harris did not assign its contract rights to Long.

c. lose, because Long is merely an incidental beneficiary of the contract.

A life insurance policy naming a spouse as a beneficiary is a common example of a(n): a. assignment. b. delegation of duties. c. third-party donee beneficiary contract. d. third-party incidental beneficiary contract.

c. third-party donee beneficiary contract.

Which of the following assignments of contract rights are not assignable? a. Assignments that would materially increase the risk or burden on the obligor b. Assignments which would transfer a personal contract right c. Assignments which are prohibited by law d. All of the above

d. All of the above

In the case of a gratuitous assignment, which of the following would not be revocable? a. The donee-assignee receives payment of the claim from the obligor. b. The donee-assignee obtains a judgment against the obligor. c. The donee-assignee obtains a new contract with the obligor. d. None of the above would be revocable.

d. None of the above would be revocable.