Business Law: Text & Cases, Chapter 17

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1

Faye makes and sells furniture. Faye and Glen enter into a contract for the delivery of Faye’s products to Glen’s Gear retail locations for which he agrees to pay the invoiced price. Faye transfers her right to payment under the contract to Haulers Trucking Company. This transfer is

a. ​a delegation.

b. ​an assignment.

c. ​a third party beneficiary contract.

d. ​alienation.

b. ​an assignment.

2

Steel, Inc., and Transport Company enter into a contract. UniOil Corporation, which will indirectly benefit from the deal, is prevented from having rights under the contract by the principle of

a. ​assignment.

b. ​delegation.

c. ​privity.

d. ​alienation.

c. ​privity.

3

John enters into a contract with Katie’s Coin-op Laundry to move a suite of dryers from one of Katie’s locations to another. John subsequently transfers this duty to Loren. Loren is

a. a delegatee.

b. an obligee.

c. an obligor.

d. an assignee.

a. a delegatee.

4

Lestor and MaryElise enter into a contract. Lestor agrees to mow MaryElise’s yard every week for the summer. MaryElise is

a. ​the obligor.

b. ​the obligee.

c. ​the assignee.

d. ​the assignor.

b. ​the obligee.

5

Rachel and Stuart enter into a contract for the sale of Rachel’s textbook at the end of the fall semester for which Stuart agrees to pay $75. Rachel wants to transfer her right to payment for the book to Terry. This transfer is

a. ​a delegation.

b. ​an assignment.

c. ​an alienation.

d. ​a third-party beneficiary contract.

b. ​an assignment.

6

Revenue & Sales Corporation and Software, Inc., enter into a contract for the design of custom software for which Revenue & Sales agrees to pay $64,500. Software transfers the right to payment under the contract to CreditLine LLC. CreditLine is

a. ​an assignor.

b. ​an assignee.

c. ​a third-party beneficiary.

d. ​a delegatee.

b. ​an assignee.

7

Merry Music Inc. and Nina enter into a contract for Nina to write six songs for which Merry Music agrees to pay her. Nina transfers her right to payment under the contract to Omni Artists Agency. In the transfer of rights, Nina is

a. ​a delegator.

b. ​an assignor.

c. ​an obligor.

d. ​a third party beneficiary.

b. ​an assignor.

8

Illya owes Jenny $1,000. In a separate deal, Kasey owes Illya $1,000. Illya unconditionally assigns his rights in the deal with Kasey to Jenny. Illya’s right to the $1,000 is then

a. ​unchanged.

b. ​extinguished.

c. ​incidental.

d. ​assigned to a court.

b. ​extinguished.

9

Retail Outlets, Inc., contracts with Smooth Paving Inc. to grade and pave a parking lot. Smooth assigns the contract to Tough Road Company, which has a poor record of completing projects. Retail could most successfully argue that the contract cannot be assigned because

a. ​Retail did not consent to the assignment.

b. ​Retail did not receive adequate consideration for the assignment.

c. ​the assignment will materially increase the risk of nonperformance.

d. ​Tough Road was not an original party to the deal.

c. ​the assignment will materially increase the risk of nonperformance.

10

Gavin takes out an insurance policy on her car. Gavin can assign his policy to a third party

a. ​under any circumstances.

b. ​under no circumstances.

c. ​as long as he does so in writing.

d. ​if a court approves the assignment.

b. ​under no circumstances.

11

Ben and Ivy enter into a contract under which Ben agrees to cater Ivy’s wedding in exchange for a cash down payment. The contract expressly prohibits any transfer of rights. A contract right may be transferred, however, if the transfer involves

a. ​a right to receive payment.

b. ​a right to Ben’s services.

c. ​rights under Ivy’s insurance policy against Ben’s failing to perform.

d. ​a right whose transfer is otherwise expressly prohibited by statute.

a. ​a right to receive payment.

12

Marco and Fred enter into a contract for the sale of Marco’s apartment for which Fred agrees to pay him $100,000. Marco cannot prohibit Fred from transferring his right to the ownership of the apartment because such a prohibition is

a. ​against public policy.

b. ​immoral.

c. ​unconscionable.

d. ​a crime.

a. ​against public policy.

13

A contract between Laser Equipment, Inc., and Medical Center contains a clause stating that any assignment is “void.” This ordinarily prohibits

a. ​any assignment.

b. ​no assignment.

c. ​only an assignment of contract rights to personal services.

d. ​only an assignment that would change the obligor’s risk.

a. ​any assignment.

14

Eli owes Martin $10,000. Martin assigns the claim to Jack. Jack does not notify Eli of the assignment. A week later, Martin assigns the same claim to Allen. Allen immediately notifies Eli of the assignment. Allen

a. ​has priority to payment in all states.

b. ​has priority to payment in states that follow the English rule.

c. ​does not have priority to payment in any state.

d. ​has priority to payment in most states.

b. ​has priority to payment in states that follow the English rule.

15

Ian owes Jo $5,000. Jo assigns the right to this payment to Kyle. Notice by Jo to Ian of the assignment

a. ​must be given immediately.

b. ​must be given within thirty days.

c. ​must be given within a reasonable time.

d. ​is not required.

d. ​is not required.

16

​Phillip assigns his rights under a contract with Maria to his college roommate, Owen. Neither Phillip nor Owen notifies Maria of the assignment. The assignment

a. ​will not be effective until notice is given to Maria.

b. ​will become effective after thirty days even if no notice is given to Maria.

c. ​is immediately effective.

d. ​can be circumvented.

c. ​is immediately effective.

17

Joy and Kris enter into a contract for Kris to lay sod in Joy’s yard for which she agrees to pay Kris. When Kris’s schedule conflicts, she contacts Leza, to whom Kris “assigns all rights under the contract.” Kris is

a. ​absolved of any liability under the contract.

b. ​liable to Joy for breach of contract.

c. ​liable to Joy if Leza does not perform.

d. ​liable to Leza for inducing a prohibited contract.

c. ​liable to Joy if Leza does not perform.

18

Market Company and Nick enter into a contract for Nick to cut and trim the landscaping around Market’s building before a meeting of the company’s sales staff. When Nick’s schedule conflicts, he asks Otis to do the cutting and trimming. This transfer of duties is

a. ​a delegation.

b. ​an assignment.

c. ​a third party beneficiary contract.

d. ​alienation.

a. ​a delegation.

19

Bill and Charlene enter into a contract for the clearing, plowing, and preparing of Charlene’s 100-acre tract for which she agrees to pay $1,000. Bill transfers his duty under this contract to Dewey. Dewey is

a. ​a delegatee.

b. ​an assignee.

c. ​an obligee.

d. ​a delegator.

a. ​a delegatee.

20

Uri and Victor enter into a contract by which Uri promises to deliver business cards, advertising banners, and other marketing materials to Victor. Uri later transfers his duty under the contract to Wren. Uri is

a. ​a delegator.

b. ​a delegatee.

c. ​an assignor.

d. ​an assignee.

a. ​a delegator.

21

Laramie contracts to provide cattle-herding services to Miles for $1,400 per month. Laramie cannot transfer this duty

a. ​under any circumstances.

b. ​without continuing to be potentially liable.

c. ​without Miles’s consent.

d. ​without paying Miles at least one monthly fee.

b. ​without continuing to be potentially liable.

22

Pico, a famous chef, agrees to give ten culinary lessons to Rhoda in exchange for $1,200. Pico’s attempt to transfer his contract duties to Sven, an unknown sous-chef, will probably be

a. ​permitted because contracts may be freely delegated.

b. ​permitted because the contract is concerned with cookery.

c. ​prohibited because contracts may not be freely delegated.

d. ​prohibited if Pico and Sven have different skill levels.

d. ​prohibited if Pico and Sven have different skill levels.

23

Ilene and Jerry enter into a contract under which Ilene agrees to provide grounds keeping services for Jerry’s Family Fun Center. Under an anti-delegation clause, the contract can prohibit and prevent the transfer of

a. ​only duties that are personal in nature.

b. ​only duties that are impersonal in nature.

c. ​no duties under the contract.

d. ​all duties under the contract.

d. ​all duties under the contract.

24

Leon contracts to install automatic watering troughs in Kendall’s dairy barn. Leon then becomes seriously ill and contracts with Jake to install the troughs. Jake is unreliable and never shows up to install the troughs. In most states, Kendall can sue

a. no one.

b. Jake only.

c. Leon only.

d. Jake or Leon.

d. Jake or Leon.

25

D’Alemberte contracts with Elias to render personal nursing services for the benefit of Federica. This is

a. ​a delegation.

b. ​an assignment.

c. ​a third party beneficiary contract.

d. ​an alienation.

c. ​a third party beneficiary contract.

26

​Lyle and Miranda agree that Lyle will fix the refrigeration unit in Miranda’s Buns n’ Burgers in exchange for her payment of a debt that Lyle owes to New Credit Corporation. New Credit is

a. ​a delegatee.

b. ​an intended beneficiary.

c. ​an incidental beneficiary.

d. ​an assignor.

b. ​an intended beneficiary.

27

Bea takes out a life insurance policy with Vida Insurance Corporation that names her spouse Wendell as the beneficiary. This is

a. a delegation.

b. ​an assignment.

c. ​a third party incidental beneficiary contract.

d. ​a third party intended beneficiary contract.

d. ​a third party intended beneficiary contract.

28

Business Loans, LLC, is a creditor beneficiary in a deal that involves Carla’s Hair Salon and Dani’s Nails. Like most creditor beneficiaries, Business Loans is

a. ​a donee beneficiary.

b. ​an incidental beneficiary.

c. ​an intended beneficiary.

d. ​an original contracting party.

c. ​an intended beneficiary.

29

Four-Square Construction Company enters into a contract with Ben to remodel Carol’s Home Store, using products from Delta Building Supplies.

Refer to Fact Pattern 17-1. Halfway through the project, Four-Square refuses to finish the job. The contract can be enforced against Four-Square by

a. ​Ben only.

b. ​Carol’s only.

c. ​Ben or Carol’s.

d. ​none of the choices.

c. ​Ben or Carol’s.

30

Four-Square Construction Company enters into a contract with Ben to remodel Carol’s Home Store, using products from Delta Building Supplies.

Refer to Fact Pattern 17-1. Delta will realize a profit from the sale of products to Four-Square to remodel Carol’s store. Delta is

a. ​a delegatee.

b. ​an assignee.

c. ​an incidental beneficiary.

d. ​an intended beneficiary.

c. ​an incidental beneficiary.

31

Paolho and Roth agree that Paolho will fix Roth’s boat dock in exchange for $5,000. Paolho spends half of the amount due under the contract to acquire the materials for the job from Sav-U Economy Lumber. Sav-U is

a. ​a delegatee.

b. ​an intended beneficiary.

c. ​an incidental beneficiary.

d. ​an assignor.

c. ​an incidental beneficiary.

32

Ozzie contracts for the sale of 500 shares of stock in Premium Quality, Inc., to Ray, with payment to go to Scholar University to pay Thalia’s tuition. The contract reserves to Ozzie and Ray the right to modify its terms. Scholar’s right to payment is

a. ​not affected by the reservation.

b. ​subject to any change that Ozzie and Ray make.

c. ​limited only if Thalia agrees to any changes.

d. ​terminated by the reservation.

b. ​subject to any change that Ozzie and Ray make.

33

App Developers, Inc. (ADI), enters into a contract with Carmen, the chief executive officer of SalesCorp, to create an app for the firm. To fulfill the contract, ADI hires Max and ten other student interns. With respect to the contract, Max is

a. ​an intended beneficiary.

b. ​an incidental beneficiary.

c. ​a delegatee.

d. ​an assignee.

b. ​an incidental beneficiary.

34

Hilda signs a contract with Indemnity Insurance Company that intentionally confers a benefit on Hilda’s daughter Jackie as the designated beneficiary. Jackie’s rights under the contract will vest

a. automatically.

b. if she demonstrates her consent to the promise at Hilda’s request.

c. if Indemnity attempts to modify the terms of the contract.

d. on the occurrence of the event for which the insurance was procured.

d. on the occurrence of the event for which the insurance was procured.

35

Mai is a third party beneficiary under a contract between Novia and Opie. Novia and Opie can modify or rescind their contract without Mai’s consent

a. ​at any time.

b. ​at no time.

c. ​after Mai’s rights have vested.

d. ​before Mai’s rights have vested.

d. ​ before Mai’s rights have vested.