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Q:
Nature's Products, Inc., sends its standard order form to Interbusiness Distribution Corporation (IDC) to evidence a sale of packing materials. IDC responds with its own standard purchase order form. Additional terms in the purchase order automatically become part of the contract unless
a. the terms materially alter the original contract.
b. the original offer expressly required acceptance of its terms.
c. the offeror objects to the new terms within a reasonable time.
d. any of the choices.
Q:
Mountaineer Sales, Inc., is the offeror and Camping Goods Corporation is the offeree under a unilateral sales contract in which Forest Recreation Products Company is also interested. Mountaineer is not notified of Camping's performance within a reasonable time. Mountaineer
a. may treat the offer as having lapsed.
b. must assume that Camping has started to perform.
c. must contact Camping.
d. must contract with Forest.
Q:
Perfect Potato Chip Company makes an offer that Snack Foods Corporation would like to accept. Under the "mirror image rule" relating to offer and acceptance, an acceptance
a. may include additional terms not contained in the offer so long as they do not materially alter the agreement.
b. may include additional terms not contained in the offer that will become part of the agreement if the offeror does not object within a reasonable period of time.
c. must include only those terms and conditions contained in the offer.
d. may contain additional terms as long as all parties agree to the additional terms.
Q:
Community Construction Corporation offers to buy from Solid Cement Company a certain quantity of cement for a certain price. Solid can accept the offer by
a. doing nothing.
b. promising to ship or promptly shipping the cement.
c. promising to ship the cement only.
d. promptly shipping the cement only.
Q:
Delany & Sons, Inc., owes Evermore Bank $50,000. Delany enters into a contract with Floyd under which Delany promises to manage and oversee Floyd's Seaside Marina. Under the contract, Floyd promises to pay Evermore the amount that will be due Delany until his debt to Evermore is paid. Delany performs as promised, but Floyd does not pay the bank. Can Evermore succeed in a suit against Floyd? Why or why not?
Q:
Pam borrows $5,000 from Quality Auto Sales to buy a car. When Pam does not pay the loan or return the car, Quality wants to transfers the right to the payment to Rapid Collection Agency. Rapid agrees to pay Quality for this right, but for a price that is less than the amount owed. Can Quality transfer this right to Rapid without Pam's consent? If so, and Quality committed fraud in the deal with Pam, could Pam legitimately refuse to pay Rapid? Explain.
Q:
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.
Q:
Mai is a third party beneficiary under a contract between Novia and Otis. Novia and Otis 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.
Q:
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 delegate.
b. an intended beneficiary.
c. an incidental beneficiary.
d. an assignor.
Q:
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.
Q:
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.
Q:
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.
Q:
Tristan promises to paint Katy's house in exchange for Lila's promise to plant trees on Tristan's property. This is
a. a delegation.
b. an assignment.
c. a third party beneficiary contract.
d. none of the choices.
Q:
Four-Square Construction Company enters into a contract with Ben to remodel Carol's Home Store, using products from Delta Building Supplies. Eatery Caf is next to Carol's Home Store. The remodeling is a gift from Ben to Carol.
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.
Q:
Four-Square Construction Company enters into a contract with Ben to remodel Carol's Home Store, using products from Delta Building Supplies. Eatery Caf is next to Carol's Home Store. The remodeling is a gift from Ben to Carol.
The value of Eatery's property will increase after Carol's store is remodeled. Eatery is
a. a delegatee.
b. an assignee.
c. an incidental beneficiary.
d. an intended beneficiary.
Q:
Four-Square Construction Company enters into a contract with Ben to remodel Carol's Home Store, using products from Delta Building Supplies. Eatery Caf is next to Carol's Home Store. The remodeling is a gift from Ben to Carol.
Carol is
a. a delegatee.
b. an assignee.
c. an incidental beneficiary.
d. an intended beneficiary.
Q:
Bonita and Chad enter into a contract for Chad to plant trees on Bonita's property for which she agrees to pay $500. When Chad's schedule conflicts, he contacts Dirk, to whom he "assigns all rights under the contract." Chad is
a. absolved of any liability under the contract.
b. in breach of the contract with Bonita.
c. liable to Bonita if Dirk does not perform.
d. liable to Dirk for inducing a prohibited contract.
Q:
Jack contracts to provide lawn-mowing services to Lee. Jack cannot delegate this duty
a. because it is a personal service contract.
b. without continuing to be liable.
c. without Lee's consent.
d. without providing lawn-mowing services to Kim.
Q:
Leonardo contracts to install automatic watering troughs in Kendall's dairy barn. Leonardo then becomes seriously ill and contracts with Jake to install the troughs. Jake is unreliable and never shows up to install the troughs. Kendall can sue
a. no one.
b. Jake only.
c. Leonardo only.
d. Jake or Leonardo.
Q:
Ilene and Jerry enter into a contract under which Ilene agrees to provide groundskeeping services for Jerry's Family Fun Center. Under an antidelegation 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.
Q:
Devon and Edmond enter into a contract for the closing of a sale of Devon's recording studio. When Edmond's schedule conflicts, he asks Ferdie to perform his duties at the closing. This transfer of duties is
a. a delegation.
b. an assignment.
c. prohibited.
d. a negotiation.
Q:
Animal Feed Corporation and Beneficial Trucking, Inc., enter into a contract for Beneficial to transport a truckload of hay for which Animal Feed agrees to pay. Due to schedule conflicts, Beneficial contacts Crop Transport Company, to which Beneficial "assigns all rights under the contract." This transfer is
a. an assignment and a delegation.
b. an alienation and a negotiation.
c. an obligation and a cancelation.
d. prohibited.
Q:
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.
Q:
Pat, a world famous musician and composer, agrees to give ten piano lessons to Quinn in exchange for $1,000. Pat's attempt to delegate his contract to Ruth, an inexperienced pianist, will probably be
a. permitted because contracts may be freely delegated.
b. permitted because the contract is concerned with music lessons.
c. prohibited because contracts may not be freely delegated.
d. prohibited because Pat and Ruth have very different skill levels.
Q:
Opportunity Market Company (OMC) and Pierce enter into a contract for Pierce to cut and trim the landscaping around OMC's building before a meeting of the company's sales staff. When Pierce's schedule conflicts, he asks Rachel to do the cutting and trimming. This transfer of duties is
a. a delegation.
b. an assignment.
c. a third party beneficiary contract.
d. prohibited.
Q:
Phillip assigns his rights under a contract with Maria to his college roommate, John. Neither Phillip nor John 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.
Q:
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. Jack
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.
Q:
A contract between Laser Maintenance, Inc., and Medical Vision Operation Corporation 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.
Q:
Grady and Hannah contract with Isaac to transfer the ownership of Grady and Hannah's Mesa Ranch to Isaac. This is
a. a delegation.
b. an assignment.
c. a third party beneficiary contract.
d. an alienation.
Q:
Michel, the owner of Nature's Refuge Caf, and Olin enter into a contract under which Olin agrees to design an outdoor addition to the caf for which Michel agrees to pay $3,000. This contract may not be assigned if
a. the assignment will significantly change the risk of nonperformance.
b. the assignment is expressly prohibited by the terms of the contract.
c. the contract is uniquely personal in nature.
d. any of the choices.
Q:
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.
Q:
A contract between Slim and Goldie may not be assigned if it
a. does not expressly permit assignment.
b. involves a sale of goods.
c. involves personal services.
d. is oral.
Q:
Richly Merchandise, Inc., contracts with Stand-Rite Contractors to build a store. Stand-Rite assigns the contract to Town Builders, which has a poor record of completing projects. Richly could most successfully argue that the contract cannot be assigned because
a. Richly did not consent to the assignment.
b. Richly did not receive adequate consideration for the assignment.
c. the assignment will materially increase the risk of nonperformance.
d. Town Builders was not an original party to the deal.
Q:
Merry Music Inc. and Nayda enter into a contract for Nayda to write six songs for which Merry Music agrees to pay her. Nayda transfers her right to payment under the contract to Omni Artists Agency. In the transfer of rights, Nayda is
a. a delegator.
b. an assignor.
c. an obligor.
d. an alien.
Q:
Forrest makes and sells furniture. Forrest and Glenda enter into a contract for the delivery of Forrest 's products to Glenda's Gear retail locations for which she agrees to pay the invoiced price. Forrest transfers the right to payment under the contract to Haulers Trucks & Trailers. This transfer is
a. a delegation.
b. an assignment.
c. a third party beneficiary contract.
d. prohibited.
Q:
Will owes Jenny $1,000. Brad owes Will $1,000. Will unconditionally assigns his rights to Jenny. Will's right to the $1,000 is then
a. unchanged.
b. extinguished.
c. incidental.
d. assigned to a court.
Q:
Revenue & Sales Corporation and Software Solutions, Inc., enter into a contract for the design of custom software for which Revenue & Sales agrees to pay $4,500. Software Solutions transfers the right to payment under the contract to Creditline Company. Creditline is
a. an assignor.
b. an assignee.
c. an obligee.
d. a delegate.
Q:
Stephanie's sale of rights she has under a contract with Runway Retail, Inc., to buy the retailer's clothing overstock is
a. a delegation.
b. an assignment.
c. a third party beneficiary contract.
d. none of the choices.
Q:
Jayson and MaryElise enter into a contract. Jayson agrees to mow MaryElise's yard every week for the summer. MaryElise is the
a. obligor.
b. obligee.
c. assignee.
d. assignor.
Q:
Robert enters into a contract with Claire. Claire agrees to paint Robert's living room for $500. Claire is the
a. obligor.
b. obligee.
c. assignee.
d. assignor.
Q:
Regional Steel, Inc., and Overland Transport Company enter into a contract. Smooth Oil 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. vesting.
Q:
If a contract does not require that performance be rendered directly to a third party, the third party is an intended beneficiary.
Q:
Any beneficiary who is not deemed an intended beneficiary is considered incidental.
Q:
An incidental beneficiary can sue directly to enforce a promisor's promise.
Q:
A life insurance contract involves an intended beneficiary.
Q:
Vested is the condition in which rights have taken effect and cannot be taken away.
Q:
The rights of a third party beneficiary under a contract vest if the third party materially changes his or her position in justifiable reliance on the promise.
Q:
Intended beneficiaries can sue to enforce a contract.
Q:
If a contract requires that performance be rendered directly to a third party, the third party is an intended beneficiary.
Q:
Both intended and incidental beneficiaries acquire legal rights in a contract.
Q:
An "assignment of all rights" creates an assignment of rights but not a delegation of duties.
Q:
There are no exceptions to the rule that any duty can be delegated.
Q:
All that a delegator needs to do to make a delegation effective is to express an intention to make the delegation.
Q:
A delegator is a party who transfers his or her obligation under a contract to another party.
Q:
A transfer of contract duties to a third party is an assignment.
Q:
No contract can prohibit delegation of the duties of the contract.
Q:
A valid delegation of duties relieves the delegator of the obligation to perform under the contract.
Q:
It is legally necessary to notify the obligor of any assignment of rights to a third party.
Q:
The assignment of the same contract right to two different parties automatically cancels both assignments.
Q:
Rights to receive funds can be assigned.
Q:
A right can be assigned even if the assignment will significantly alter the risks or duties of the obligor.
Q:
In most cases, a contract that prohibits its assignment cannot be assigned.
Q:
An assignment of rights in real estate often cannot be prohibited.
Q:
An insurance policy is an example of a right that can be assigned.
Q:
As long as a contract is personal in nature, all rights under the contract can be assigned.
Q:
In an assignment, the assignee obtains only those rights that the assignor had.
Q:
An assignee's rights are subject to the defenses that the obligor has against the assignor.
Q:
An assignee has a right to demand performance from the obligor.
Q:
A transfer of contract rights to a third person is generally prohibited.
Q:
When rights under a contract are assigned unconditionally, the rights of the assignor are extinguished.
Q:
A transfer of contractual rights to a third party is an assignment.
Q:
Banks may not assign their loan contracts to other firms.
Q:
In an assignment, the party receiving the rights is known as the assignor.
Q:
Privity of contract establishes the basic concept that third parties have no rights in contracts to which they are not parties.
Q:
General Equity Corporation enters into a contract with Honi, who agrees to create artwork for General's main office building. Honi delays and eventually refuses to perform. Meanwhile, General contracts to sell the building to Ideal Investments, Inc., but before the transaction is complete, Jewel Funds Company offers to pay a higher price. General refuses to transfer the building to Ideal. In separate suits by General against Honi and by Ideal against General, each plaintiff seeks specific performance. How might the court rule in each case, and why?
Q:
National Drilling Company ships its only pump to American Hydraulics Corporation, the manufacturer, for repair. National hires Overland Transport, Inc., to take the pump to American Hydraulics and to return it to National as soon as the repair is complete. National is forced to suspend operations without a pump, but Overland does not know this. National expects to be without the pump for five days and to lose profits of $5,000. When the pump is not returned by the end of the fifth day, National rents a pump at a cost of $100 per day. Overland delays five more days before returning the pump. National files a suit against Overland, asking for compensatory, consequential, and punitive damages. Will National recover?
Q:
A contract between E-Debits, Inc., and First Credit Corporation includes a provision excluding liability as a result of fraud. This provision is
a. enforceable because the parties are protected from liability.
b. enforceable because the parties consented to it.
c. enforceable if the parties have equal bargaining power.
d. not enforceable.
Q:
Clear Creek Corporation enters into a contract with Brightside Management Associates to manage and maintain Clear Creek's apartment complex. Their contract provides that neither party can recover damages for a non-fraudulent or unintentional breach. This is
a. a limitation-of-liability clause.
b. an exculpatory clause.
c. a liquidated damages clause.
d. a quasi contract.
Q:
Mitchell orally agrees to pay Lorena to plant and harvest a quarter of Mitchell's farm acreage for four soybean seasons. After Lorena prepares the land and plants the first crop, Mitchell says that their deal is off. Lorena can most likely recover
a. in quasi contract.
b. nothing.
c. in restitution.
d. on the parties' existing contract.
Q:
Karson orally agrees to pay Jaime to plant and harvest a quarter of Karson's farm acreage for four corn-planting seasons. After Jaime prepares the land and plants the first crop, Karson says that their deal is off. Jaime can most likely recover
a. in quasi contract.
b. in reformation.
c. in restitution.
d. on the parties' existing contract.