Question 1

A(n)  __________ is a third party who obtains possible benefits but no rights under a contract.

Accepted Answer

A)   intended beneficiary
B)   assignor
C)   incidental beneficiary
D)   donee beneficiary

Question 2

If Randall and Gale agree to an assignment of Randall's contract with Doug:

Accepted Answer

A)   under both the Code and the Restatement, unless circumstances or language indicate the contrary, an assignment of "the contract" means the assignment of rights and a delegation of duties.
B)   there is no ambiguity; this is an assignment of rights only.
C)   the language is ambiguous and, therefore, the assignment is unenforceable.
D)   there is no ambiguity; this is a delegation of duties only.

Question 3

Donee beneficiaries and incidental beneficiaries are called intended beneficiaries.

Accepted Answer

A) True 
 B)False

Question 4

When the assignee gives consideration in exchange for an assignment, there is a contract between the assignor and the assignee that prevents the assignor from revoking the assignment without the assent of the assignee.

Accepted Answer

A) True 
 B)False

Question 5

Under the Restatement, if there are successive assignments of the same right:

Accepted Answer

A)   the first assignee to notify the obligor prevails.
B)   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.
C)   a prior assignee is entitled to the assigned right to the exclusion of a subsequent assignee in most circumstances.
D)   the latest assignee is usually entitled to the assigned right.

Question 6

Hiram, when he assigns to Tim his right to receive the next four rent payments on an apartment he owns, warrants that the tenant will make the assigned payments to Tim.

Accepted Answer

A) True 
 B)False

Question 7

In the case of Speelman v.Pascal , the court held that:

Accepted Answer

A)   assignments cannot be made of sums that are not presently due but are expected to become due in the future.
B)   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.
C)   assignments of rights to sums that are expected to become due to the assignor are enforceable.
D)   personal contracts are not assignable.

Question 8

In general, an assignment includes an implied warranty that the assignor who receives value will do nothing to defeat or impair the assignment once it is delivered.

Accepted Answer

A) True 
 B)False

Question 9

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 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) :

Accepted Answer

A)   incidental beneficiary.
B)   creditor beneficiary.
C)   donee beneficiary.
D)   assignee.

Question 10

Barbara owes Arthur $2,000.On July 1, Arthur assigns the debt to Caleb.Thereafter on July 15, Arthur assigns the same right to David, who in good faith gives value for it and knows nothing about the first assignee.David immediately notifies Barbara of the assignment.In this case:

Accepted Answer

A)   under the English Rule, a second assignment of the same claim can never be effective.
B)   under all of the rules, Caleb has priority since he was the first assignee in time.
C)   under the English Rule, David has priority.
D)   under the majority rule, David has priority.

Question 11

The court in Public Service Commission of Maryland v.Panda-Brandywine, L.P.:

Accepted Answer

A)   held that there is no legal distinction between the transfer of contractual rights and duties.
B)   found that the provisions in the Asset Purchase and Sale Agreement did not constitute an assignment or transfer within the meaning of the parties' agreement.
C)   held that there was an assignment of rights and delegation of duties in contravention of the parties' agreement and the transfer was therefore invalid and unenforceable.
D)   found the issue was whether an assignment or delegation could be made in this case.

Question 12

Third party rights in contracts can arise by assignment of rights, delegation of duties, or in third party beneficiary contracts.

Accepted Answer

A) True 
 B)False

Question 13

An assignee's assent is required for any assignment to be valid.

Accepted Answer

A) True 
 B)False

Question 14

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:

Accepted Answer

A)   the assignment is terminated upon Brad's death.
B)   the delivery of the statement makes the assignment irrevocable.
C)   the assignment is invalid, because it is revocable.
D)   the signing of the statement makes the assignment irrevocable.

Question 15

UCC Article 9 requires certain assignments to be in writing.

Accepted Answer

A) True 
 B)False

Question 16

Consideration must be received for an assignment to be effective.

Accepted Answer

A) True 
 B)False

Question 17

In an assignment or delegation, the third parties' rights or duties arise after the contract is made.

Accepted Answer

A) True 
 B)False

Question 18

In England and in a minority of states, the first of two or more assignees to give notice to the obligor is entitled to the assigned performance.

Accepted Answer

A) True 
 B)False

Question 19

Under Article 2 of the UCC, a right to damages for breach of the whole contract can be assigned despite a contractual provision to the contrary.

Accepted Answer

A) True 
 B)False

Question 20

A party delegating his duty to a third party is known as a delegator.

Accepted Answer

A) True 
 B)False

Exam 16: Third Parties to Contracts

When the assignee gives consideration in exchange for an assignment, there is a contract between the assignor and the assignee that prevents the assignor from revoking the assignment without the assent of the assignee.

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Third party rights in contracts can arise by assignment of rights, delegation of duties, or in third party beneficiary contracts.

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A party delegating his duty to a third party is known as a delegator.

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In the case of Speelman v.Pascal , the court held that:

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A(n) __________ is a third party who obtains possible benefits but no rights under a contract.

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In general, an assignment includes an implied warranty that the assignor who receives value will do nothing to defeat or impair the assignment once it is delivered.

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Consideration must be received for an assignment to be effective.

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An assignee's assent is required for any assignment to be valid.

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Hiram, when he assigns to Tim his right to receive the next four rent payments on an apartment he owns, warrants that the tenant will make the assigned payments to Tim.

Correct AnswerverifiedShow Answer

Barbara owes Arthur $2,000.On July 1, Arthur assigns the debt to Caleb.Thereafter on July 15, Arthur assigns the same right to David, who in good faith gives value for it and knows nothing about the first assignee.David immediately notifies Barbara of the assignment.In this case:

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Donee beneficiaries and incidental beneficiaries are called intended beneficiaries.

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Under the Restatement, if there are successive assignments of the same right:

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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 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) :

Correct AnswerverifiedShow Answer

Under Article 2 of the UCC, a right to damages for breach of the whole contract can be assigned despite a contractual provision to the contrary.

Correct AnswerverifiedShow Answer

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:

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In an assignment or delegation, the third parties' rights or duties arise after the contract is made.

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The court in Public Service Commission of Maryland v.Panda-Brandywine, L.P.:

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If Randall and Gale agree to an assignment of Randall's contract with Doug:

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UCC Article 9 requires certain assignments to be in writing.

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In England and in a minority of states, the first of two or more assignees to give notice to the obligor is entitled to the assigned performance.

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