BLAW CH 17 MC part 2

As a general rule, members of the public are held to be _______ of contracts entered into by their municipalities or other governmental units in the regular course of carrying on governmental functions

Incidental beneficiaries

Courts have held that a beneficiary's rights cannot be lost by modification or discharge. This is known as:

Vesting

Selena delegates her rights under contract. The clause delegating her rights are termed: "All my rights under contract are herby effectively delegated to...". This language shows that the contract is of:

assignment and delegation

Denise contracts with Long Life Insurance Co., agreeing to pay premiums in return for which the company agrees to pay $500,000 to Denise's husband Barn when Denise dies. Barn is a(n)

donee beneficiary.

A contract may be enforced by a third-party beneficiary if that beneficiary:

is the intended beneficiary

Which of the following is true of delegation

it is often confused with assignment

In an assignment/delegation, which party remains secondarily liable on the obligation that has been delegated?

Assignor/delegator

Martha purchases a book from Just Books on credit and later sells the book to her friend Christina. Christina in turn sells the book to David, who agrees to pay the balance to Just Books. Who is the creditor beneficiary in this exchange?

Just Books

Ted Nix purchased two acres of land from Sally Pine. Nix paid 15% at the closing and gave his note for the balance secured by a 30-year mortgage. Fiver years later, Nix found it increasingly difficult to make payments on the note and finally defaulted. Pine threatened to accelerate the loan and foreclose if Nix continued in default. Pine told Nix either to get the money or obtain an acceptable third party to assume the obligation. Nix offered the land to Quick Co. for $4,000 less than the equity Nix had in the property. This was acceptable to Pine and at the closing, Quick paid the arrearage, executed a new mortgage and note, and had title transferred to its name. Pine surrendered Nix's note and mortgage to him. The transaction in question is a(n):

Novation

Which of the following is a type of substituted contract in which the obligee agrees to discharge the original obligor and to substitute a new obligor in his/her place?

Novation

Stella buys a car from Marble Sales for $10,000 on credit. Joel's daughter likes the car and so Joel buys the car from Stella. Joel also agrees to pay the balance due to Marble Sales, on behalf of Stella. Joel defaults Marble Sales can bring a suit for breach of contract against:

Stella and Joel

Fiona owed Lutz $5,000. As a result of an unrelated transaction, Lutz owed Bing that same amount. The three parties signed an agreement that Fiona would pay Bing instead of Lutz and Lutz would be discharged of all liability. The agreement among the parties is:

a novation

Mike has a three-year lease on the apartment he occupies. He has lived there one year. He now wants to leave and go to Aspen, Colorado to be a ski instructor. However, Mike's landlord will not release him from the lease, and threatens to sue him if he breaks his lease. Mike finds Paul to take over the last two years of the lease but Mike is worried that Paul might cause damage or in other ways inflict loss that he, Mike, might be held financially responsible. In order to assure Mike that he will be completely discharged from all obligations under his lease, Mike should attempt to bring about:

a novation

On August 1, Neptune Fisheries contracted in writing with West Markets to deliver to West 3,000 pounds of lobsters at $4 a pound. Delivery of the lobsters was due October 1 with payments due November 1. On August 4, Neptune entered into a contract with Deep Sea Lobster Farms which provided as follows: "Neptune Fisheries assigns all the rights under the contract with West Markets dated August 1 to Deep Sea Lobster Farms." The best interpretation of the August 4 contract would be that it was:

an assignment of rights and a delegation of duties by Neptune

Rice contracted with Locke to build an oil refinery for Locke. The contract provided that Rice was to use United Pope Fittings. Rice did not do so. United learned of the contract and, anticipating the order, manufactured additional fittings. United sued Locke and Rice. United is:

not entitled to recover because it is an incidental beneficiary

Union Bank lent $200,000 to Wagner. Union required Wagner to obtain a life insurance policy naming Union as beneficiary. While the loan was outstanding, Wagner stopped paying the premiums on the policy. Union paid the premiums adding the amounts paid to Wagner's loan. Wagner died and the insurance company refused to pay the policy process to Union. Union may:

recover the policy proceeds because it is a creditor beneficiary

Jada owned an insurance policy in her life, on which she paid all the premiums. Shaun was named the beneficiary. Jada died and the insurance company refused to pay the insurance proceeds to Shaun. An action by Shaun against the insurance company for the insurance proceeds will be:

successful because Shaun is a third party beneficiary

For a third person to have the right to enforce a contract, he/she must necessarily prove that:

the contract was made to benefit him

In a novation

the original obligor is completely discharged from his or her obligations under the contract

A third party is categorized as a donee beneficiary when:

the promisee's primary purpose in contracting is to make a gift of the agreed on performance to the third party