Contracts: Third Party Beneficiaries; Assignments – Flashcards

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Seller and Buyer enter into a K for the sale of widgets. The contract states that Buyer will pay the sales price to Seller's child, Son. Seller wishes to give Son the money as a graduation gift. Carl learns of the K from a gossipy aunt. When Buyer pays the money to Seller, Son files suit against Buyer. Son's right with respect to the contract are best described as:
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Vested as of the time he brouht suit against buyer.
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A third-party beneficiary's rights vest when the beneficiary:
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manifests assent to the promise, brings suit to enforce the promise, or materially changes position in justifiable reliance on the promise.
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When a delegate assumes the duty to perform, the most important consequence is:
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The obligee can compel performance or bring suit against the delegate for nonperformance.A
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The best test for determining whether someone is an intended third-party beneficiary is to ask:
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to whome is the performance given according to the language of the contract?
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An ________ beneficiary may eventually receive a benefit from a K but has no rights under the K.
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incidental.
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If a person leaves an item of jewelry with a jeweler for repair, and the jeweler sells the item to an unsuspecting purchaser, _______________.
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The purchaser has title to the item and the true owner cannot recover it.
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Entrusting goods to a merchant who deals in goods of that kind give him the power (but not the right) to ____________________ of the rights of the entruster to a buyer in the ordinary course of business.
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to transfer.
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Which of the following will not revoke a gratuitous assignment?
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A subsequent delegation of duties by the assignor.
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Assignment of rights and delegations of duties are ________ concepts, and the delegation of duties will not affect the assignment of rights.
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separate
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Death of the assignor, the assignor taking performance directly from the obligor, and the bankruptcy of the assignor all ____________ a gratuitous assignment.
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revoke!
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Which of the following is not an implied warranty given by an assignor to an assignee for value?
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Warranty against infringement.
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Under a warranty against infringement...
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a merchant seller regularly dealing in goods of the kind sold warrants that the good delivered are free of patent, trademark, copyright, or similar claims.
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As a general rule, if a promisor fails to perform under a K, a third-party beneficiary whose rights have vested sue the promisee if the third-party beneficiary is ___________.
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a credit beneficiary. A creditor beneficiary may sue on the underlying obligation, whereas a donee beneficiary generally has no right to sue for nondelivery of a gift.
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Owner owes Arthur $1,000 for a painting he bought from him. Arthur assigns his right to payment to Annie and notifies Owen of the assignment. Owen later performs work on Arthur's home and bills Arthur $500. Arthur tells Owen to deduct it from the $1,000 he owes, which Owen does. When Annie sues Owen for the remaining $500, which of the following is not a valid defense?
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The $500 was a valid setoff from the amount owed under contract.
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When an obligor delegates his duties under a K, the delegate _____.
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cannot be compelled to perform by the obligee absent an assumption of duties.
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Delegation creates a power in another to _________ the delegator's contractual duties.
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perform
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The delegate does not 1) _________ and 2) __________.
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1) Automatically become liable on thr contract when the obligor delegates his duties. 2) replace the obligor as the real party in interest.
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If an assignor takes payment or performance directly from the obligor, _______.
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a gratuitous assignment is revoked, but an assignment for value is not.
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The general rule is that when the assignor makes two assignments of the same right, if the first assignment is ______, the _____ asignee has priority.
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irrevocable, first.
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Which of the following is not an action that results in the vesting of a third-party beneficiary's rights?
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The third-party beneficiary assigns his rights under the contract.
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The right to receive services under a contract between _____ may be assigned but the right to receive services under a K between ______ may not.
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a property owner and a contractor for construction of a home; a publisher and an author.
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The general rule is that if the assignor makes two assignments of the same right and the first assignment is irrevocable, the first assignee has priority. Which of the following fact situations is not an exception to the general rule?
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The second assignee for value and without notice of the prior assignment obtains a novation from the obligor, who may choose which assignee to pay.
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Which of the following is not a factor a court considers in determining whether a party is an intended third-party beneficiary?
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Whether the third party materially changed his position in justifiable reliance on the promise.
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If an assignee for value discovers that the assignor had previously assigned the same contract right to another party for value, the assignee may _____.
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sue the assignor for breach of warranty.
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A writing is ________.
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usually not required for an effective assignment.
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A buyer fraudulently induces a seller to sell his yacht to the buyer. The buyer then uses the yacht as collateral for a loan from a bank, which has no knowledge of buyer's fraud. What are the seller's rights with respect to the yacht?
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The seller can recover the yacht, but will be subject to the bank's security interest.
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An obligor who delegates his duties _______.
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remains secondarily liable on the contract, even if the delegate expressly assumes the obligor's duties under the K.
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B owes $100. A assigns his right to payment of the $100 to C and notifies B. B pays the $100 to A. If C sues B for the $100:
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C will prevail if she gave value to A for the assignment because assignments for value are irrevocable.
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Which of the following is a true statement concerning the assignability of contract rights?
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The right to receive personal services cannot be assigned.
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B assigns his contractual right to receive payment of $1,000 from A to C. B later assigns the same right to D, who has no knowledge of the assignment to C. Which of the following is correct?
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If A pays D, D will prevail if he is assignee for value.
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Which of the following duties can be delegated?
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A contract to manufacture and deliver limited edition plates.
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A writing is required for an assignment _______.
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of wages
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An intended beneficiary must be ______.
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identifiable at the time performance is due.
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A and B enter into a K under which A will sell 500 widgets to B for $5,000. A asisgns his right to payment for the widgets to C and notifies B. Just before A shipped the widgets, a and B agree that A will accept $4,500 if B pays within 10 days of delivery. B pays C $4,500 within 10 days of delivery of the widgets. If C sues B for the remaining $500 on the orginial contract, _____.
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C will not prevail because A has not shipped the widget when A and B agreed to the lower price.
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Which of the following assignments is effective?
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An oral assignment of rights under an insurance contract.
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The best test for determining whether someone is an intended third-party beneficiary is to ask:
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to whom is performance to be given according to the language of the K?
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Which of the following cannot be assigned?
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An actor's contract with his agent.
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An assignee's rights against an obligor are subject to _______.
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The defenses the obligor has against the assignor but not to setoffs arising after notice of assignment.
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An important difference between the rights of a donee beneficiary and a creditor beneficiary is that ___________.
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a creditor beneficiary can sue the promisee on the underlying obligation, but a donee beneficiary cannot.
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If a watch owner leaves her watch for repairs at the store where it has purchased and the store then borrows money from a bank, giving the bank the owner's watch as pledged collateral _______.
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the watch owner can recover the watch from the bank immediately.
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Which of the following is not a factor a court considers in determining whether a party is an intended third-party beneficiary?
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Whether the third party materially changed his position in justifiable reliance to the promise.
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In a sale of goods, a good faith purchaser for value ________.
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can be the holder of a security interest in the goods.
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Which of the following is not required for an effective assignment of an interest in land?
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Consideration
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A agrees to purchase widget from B for $300. The contract provides that A is to pay the $300 to C. B owes C $300.
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A is the promisor, B is the promisee, and C is the hird-party beneficiary.
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A agrees to sell widgets to B for $450. The contract provides that b is to pay the $450 to C. C is A's niece, and the $450 is a birthday gift. Which of the following statements is accurate?
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A is the promisee, B is the promisor, and C is a hitrd-party beneficiary.
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A and B enter into a contract under which A will sell 500 widgets to B for $5,000. A assigns his right to payment for the widgets to C and notifies B. Just before A shipped the widgets, A and B agreed that A will accept $4,500 if B pays within 10 days of delivery. B pays C $4,500 within 10 days of delivery of the widgets. If C sues B for the remaining $500 on the original contract, ________.
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C will not prevail because A had not shipped the widgets when A and B agreed to the lower price.
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