BUS 115 Chapter 16 Quiz – Flashcards

Someone who might have benefited from a contract between two others but has no right to enforce that agreement is _____. a donee beneficiary an incidental beneficiary a creditor beneficiary a contractual beneficiary

Which statement regarding assignments is accurate? Gratuitous assignments are generally revocable regardless of whether they are oral or written. An assignment for consideration is irrevocable. An assignment becomes valid when the obligor receives notice of the assignment. An assignment must be written and follow all legal formalities.

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. This is a valid waiver of defense clause. Jerry signed the contract, so he can't raise a defense to Finance USA. Finance USA is an intended third party beneficiary and may therefore enforce the contract. In general, this type of waiver is not permitted in consumer contracts, so Jerry can raise his claim against Finance USA. This is a delegation of Jerry's duties and the delegator remains liable on the contract unless a novation agreement is made.

When is an assignment valid and enforceable against an obligor? From the moment it is made. From the moment the obligor signs the contract. From the moment the assignee gives consideration. From the moment the obligor is notified of the assignment.