The Status Of A Third Party Is Determined By

Question: Brandon orally assigned his right to $100 to Will as a gift. This assignment is:

Answer: valid even though it was oral and there was no consideration from Will.

Question: A third party beneficiary's status occurs:

Answer: when the contract is created.

Question: The beneficiary of a life insurance policy paid for by the insured would ordinarily be:

Answer: a donee beneficiary.

Question: The status of a third party is determined by:

Answer: the intent of the contracting parties.

Question: A nonparty to a contract may enforce the contract if the person is:

Answer: a donee beneficiarya creditor beneficiary.

Question: Johann, a well-known musician, agrees to give ten guitar lessons to Elton for $2,000. Nothing in the contract itself prohibits a delegation. If Johann delegates his obligation to Eugene, a second-year musical student and enthusiastic guitar player, then the delegation will probably be:

Answer: prohibited because Johann and Eugene have very different skill levels.

Question: Linda assigns to Ben a right to receive rent payments. The law implies the following warranty on Linda's part:

Answer: Linda actually has a right to the rental payments.

Question: Molly and Craig are the original parties to a contract. Craig is obligated to design a Website for Molly. They subsequently make an agreement with Eric that Eric should take the place of Craig and assume all of Craig's rights and duties under the contract. The agreement releases Craig from his obligations under the contract. This agreement is:

Answer: a novation.

Question: A donee beneficiary:

Answer: usually does not give consideration in return for the gift.

Question: Which statement most accurately describes third party beneficiary rights?

Answer: A beneficiary may enforce a contract if the parties intended to benefit him and if enforcing the promise will satisfy a duty of the promisee to the beneficiary.

Question: Wright Company contracted with the city of St. Louis to train and employ disadvantaged youths. If Wright fails to fulfill the contract and is sued by one of the disadvantaged youths, the youth would:

Answer: lose, as he is an incidental beneficiary.

Question: Tyron purchased a vacant lot and entered into a contract with BZ Inc. to construct a shopping center on the site. Douglas heard about this contract and built a restaurant on an adjoining piece of property because of the planned shopping center. Tyron was unable to raise the necessary capital and was unable to perform the contract with BZ, Inc. Douglas sued Tyron for breach of contract as a third party beneficiary. Douglas will probably:

Answer: lose as a third party incidental beneficiary.

Question: Which of the following duties can probably be delegated?

Answer: An agreement to paint a house.

Question: An assignment:

Answer: for consideration is irrevocable.

Question: An assignment is valid and enforceable against all parties::

Answer: from the moment the obligor is notified from any source.

Question: Jerry purchased a state-of-the-art computer for his personal use from Computer City on an installment loan contract thinking he would make monthly payments directly to Computer City. The sales contract stated that in the event the contract is assigned to a third party, the purchaser (Jerry) promises he will not assert any claim or defense against the assignee which he might have against Computer City. Computer City immediately assigns the contract rights to Finance USA. The computer stops working within two weeks of the purchase.

Answer: In general, this type of waiver is not permitted in consumer contracts, so Jerry can raise his claim against Finance USA.

Question: Cheryl enters into a contract with Gabe. In this contract, Cheryl asks Gabe to pay the money he owes her from the contract to her friend Leah because Leah is having financial troubles. Leah is:

Answer: a third party donee beneficiary.

Question: Susan took out a life insurance policy on herself, paying all of the premium payments. She named her daughter, Jessica, as the beneficiary under the policy. Jessica has not given anything in consideration for the policy. Jessica is:

Answer: a donee beneficiary who has rights to enforce the policy once Susan dies.

Question: Ted and Alice own their recreational vehicle subject to a security agreement to Third U.S. Bank to secure the repayment of the purchase money loan. Ted and Alice sell their RV to Bob and Carol, who agree to take over the loan payments to the bank. There is no novation with the bank. Under these facts, if Bob and Carol do not make the loan payments, Third U.S. Bank:

Answer: can sue Bob, Carol, Ted, and Alice.

Question: A rock group assigns its payment under a performance contract to the Costume Shop, a business that has supplied the group with outrageous stage outfits, and to which the group owes a great sum of money. Under this arrangement the rock group is the:

Answer: assignor.

Answer: a valid assignment because this is a simple transfer of the right to receive money.

Question: Garth's Imports sold a car to Wally on credit for $30,000. Garth assigned to Cassandra all of his rights to receive money from Wally. Cassandra did not inform Wally of the assignment. Therefore, Wally continued to make the next three payments directly to Garth. Shortly thereafter, Garth left the country with the money. If Cassandra sues Wally for the missing three payments:

Answer: Cassandra will not be able to collect the money from Wally.

Question: M & E contracted to sell 500 music stands to Coda, Inc. M & E shipped the stands in accordance with the agreement. Coda paid for the stands as promised. The contract between M & E and Coda is discharged by:

Answer: full performance.

Question: As set forth in the Restatement Second of Contracts, which of the following duties are imposed on the parties in the performance and enforcement of a contract?

Answer: good faith; fair dealing

Question: The first step a court takes in choosing a remedy is to determine:

Answer: what interest it is trying to protect.