Chapter 17 Quiz

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Question #1

A debt collector who is delegated the right to payments on a student loan owes no obligation to the debtor arising under the original terms of the loan.

A FALSE

B TRUE

Question #2

In most states, the assignment of ownership rights in real estate cannot be prohibited because that would be contrary to public policy.

A FALSE

B TRUE

Question #3

Expressly designating a third party as a beneficiary in a contract indicates that the beneficiary is intended.

A TRUE

B FALSE

Question #4

Laminate LLC agrees to buy factory equipment from Metalwork Company on the seller’s misrepresentation that it meets certain specifications. Metalwork assigns the right to payment on the deal to Nations Credit Corporation. When the buyer discovers the fraud, the firm returns the equipment and cancels their contract. Laminate

A must pay a prorated amount of the contract price to Nations Credit.

B must pay the entire contract price to Nations Credit.

C must reimburse Nations Credit for costs with respect to the assignment.

D need not pay any of the contract price to Nations Credit.

Question #5

Harry assigns his rights under a contract with Irma to his college roommate, Jake. Neither Harry nor Jake notifies Irma of the assignment. The assignment

A will become effective after thirty days even if no notice is given to Irma.

B will not be effective until notice is given to Irma.

C is effective immediately.

D is invalid.

Question #6

On an assignment to a loan broker by an auto dealer of the payments due on an auto loan, the broker obtains only those rights that the dealer originally had.

A FALSE

B TRUE

Question #7

Any beneficiary to a contract who is not deemed an intended beneficiary is an incidental beneficiary.

A FALSE

B TRUE

Question #8

As a general rule, any duty can be delegated.

A TRUE

B FALSE

Question #9

Once the obligor receives proper notice, only performance to the assignee can discharge the obligor’s obligation.

A TRUE

B FALSE

Question #10

Beck and Call enter into a contract under which Beck agrees to cater Call’s wedding. The contract expressly prohibits any transfer of rights without the assignee’s consent. Call may transfer the right to receive Beck’s services to Dion

A if Beck consents.

B under no circumstances.

C if Call decides to use a different caterer.

D if Dion is also getting married.

Question #11

The rights under an insurance policy can normally be assigned

A under no circumstances.

B if the assignment significantly alters the duties of the insurer.

C if the assignment significantly changes the risk to the insurer.

D if the assignment involves only a payment of benefits.

Question #12

An incidental third party beneficiary cannot sue to enforce the contract because the benefit is unintentional.

A FALSE

B TRUE

Question #13

An insurance policy cannot be assigned if the assignment will significantly alter the risks to, or the duties of, the insurer.

A TRUE

B FALSE

Question #14

Jim and Kiel agree that Jim will fix the refrigeration unit in Kiel’s Food Truck in exchange for payment of a debt that Jim owes to Lenders Bank. Under this contract, the intended beneficiary is

A Lenders Bank.

B Jim.

C Kiel’s Food Truck.

D any customer, client, or employee of Kiel’s Food Truck or Lenders Bank.

Question #15

An obligee can legally refuse performance from a delegatee only if the duty delegated is one that cannot be delegated.

A FALSE

B TRUE

Question #16

If performance under a contract will vary materially on a delegation of its duties to a third party from that expected by the obligee, the delegation is

A permitted if special trust has been place in the obligor.

B permitted if the performance does not require the obligor’s personal skill.

C permitted on sufficient notice by the obligor.

D prohibited.

Question #17

Desu, an accountant, and Engineers PA enter into a contract under which Desu agrees to perform audits for Engineers. Desu can delegate the duty to perform the audits to

A no other party.

B any accountant working at Desu’s firm.

C any accountant performing other financial services for Engineers.

D any reputable accountant.

Question #18

Beta contracts to design and deliver marketing materials to Cesar. Beta cannot delegate this duty to Devon

A if the delegatee’s performance will match the obligee’s expectations.

B if special trust has not been placed in the obligor.

C under any circumstances.

D if performance depends on Beta’s personal skill.

Question #19

When the original parties to a contract agree that its performance should directly benefit a third party, that party can sue the promisor directly for breach.

A FALSE

B TRUE

Question #20

Commercial Rebuild LLC enters into a contract to remodel Dockside Marina, agreeing to use only products from Eagle Supplies. Halfway through the project, Commercial refuses to finish the job. The contract can be enforced against Commercial by

A Eagle only.

B Dockside or Eagle.

C Dockside only.

D any interested third party, including a contracting party’s employee.

Question #21

A surgeon can delegate his or her contractual duty to operate on a certain patient because the rendering of medical services is not personal performance.

A TRUE

B FALSE

Question #22

Beau borrows $15,000 from Credit Center to buy a car. The lender assigns the right to receive the loan payments to Debt Collections Inc. If Beau does not pay the debt, the assignee can

A none of the choices.

B enforce the payment in court.

C extinguish the contract rights of the assignor.

D demand performance of the deal from any of the original parties.

Question #23

Lew and Mavis enter into a contract for the clearing and plowing of Mavis’s 350-acre tract for which she agrees to pay $1,000. Lew transfers his duty under this contract to Nye. With respect to the duties under the original contract, this transfer

A requires a special form to constitute a valid transfer.

B does not relieve Lew of the potential obligation to perform.

C extinguishes Lew’s obligation to perform.

D is an invalid transfer of a non-transferable obligation.

Question #24

Generally, the duties under a contract can be delegated

A unless the rights under the contract have previously been assigned.

B under no circumstances.

C unless the delegation involves only a payment of money on the deal.

D unless the contract expressly prohibits delegation.

Question #25

A transfer of contract rights to a third party is an incidental benefit.

A TRUE

B FALSE

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