Test Bank for Essentials of Contract Law, 2nd Edition

Test Bank for Essentials of Contract Law, 2nd

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 CHAPTER 7

Third-Party Interests

True/False
Indicate whether the statement is true or false.
An answer must be all True to be True.
1. T F A third-party beneficiary contract is a contract for the benefit of a third party
who is not one of the contracting parties.
2. T F In a third-party beneficiary contract, one promisor has a duty to both the other
contracting party and to the third-party beneficiary.
3. T F A third-party creditor beneficiary has a right to receive something from one of
the contracting parties prior to the creation of the third-party beneficiary
contracts.
4. T F A third-party incidental beneficiary does not have a right to receive something
from one of the parties prior to the creation of the contract.
5. T F The two contracting parties in a third-party beneficiary contract can always
release each other from their respective duties.
6. T F A contracting party may assign a contractual right but may not delegate a
contractual duty.
7. T F Once a contractual right is assigned, the assignor no longer has the contractual
right and therefore the original obligor now owes the duty to the assignee.
8. T F Once a contractual duty is assigned, the assignor no longer has the contractual
duty.
9. T F Rights are transferred; duties are duplicated.
10. T F Not all assignments are enforceable.
11. T F Not all delegations are enforceable.
12. T F An assignee takes the assigned right free from any defense that the obligor could
have raised against the assignor-obligee at the time of the assignment.
13. T F Duties may be delegated without the consent of the promisee (the party who has
the right and is entitled to the performance).
14. T F Some assignments transfer a right, other assignments transfer a right and
delegate a duty.
15. T F If the delegatee does not perform his or her duty, the original obligee may sue
either the delegatee or the delegator (the original promisor).

Multiple-Choice
Identify the best correct answer.
1. Who has rights and duties under a bilateral third-party beneficiary contract?
(a) The two contracting parties have duties and rights and the third-party beneficiary has neither.
(b) The two contracting parties have duties and rights and the third-party beneficiary has only a duty.
(c) The two contracting parties have duties and rights and the third-party beneficiary has only a right.
(d) Only one contracting party has duties and the other contracting party and the third-party
beneficiary have only rights.

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2. Third-party beneficiary who has a right may be:
(a) a creditor beneficiary
(b) a donee beneficiary
(c) a creditor, a donee, or an incidental beneficiary
(d) a creditor or a donee beneficiary

3. The Restatement [Second] of Contracts uses the term(s):

(a) intended beneficiary
(b) donee beneficiary
(c) creditor beneficiary
(d) incidentals beneficiary

4. Christine promised her granddaughter, Zoe, that if Zoe would quit smoking for one year, Christine
would buy Zoe a new Buick (yes, “Not your Grandma’s Buick”). Zoe quit smoking for a year.
(a) General Motors is a third-party creditor beneficiary.
(b) General Motors is a third-party donee beneficiary.
(c) General Motors is a third-party incidental beneficiary.
(d) General Motors is a third-party intended beneficiary.

5. Regina contracted to sell Greenacre to Joshua for Joshua’s promise to pay $1,000,000 according to the
following plan; $100,000 to Regina’s cousin, Erin, as a present for joining the Tulsa Ballet; $100,000
to Ace Credit Card Company as full payment of Regina’s pending balance; and $800,000 to Benton, a
broker, to invest for the benefit of Regina’s mother, Alice.
(a) Regina has a right and Joshua has several duties.
(b) Regina has a right and a duty and Joshua has a right and several duties.
(c) Regina has a duty and Joshua has a right and several duties.
(d) Regina has a right and a duty and Joshua has several duties.

6. Same facts as Question 5.

(a) Erin is a donee beneficiary; Ace is a creditor beneficiary; Benton is an incidental beneficiary; and
Alice is a donee beneficiary.
(b) Erin is a donee beneficiary; Ace is a donee beneficiary; Benton is an incidental beneficiary; and
Alice is a creditor beneficiary.
(c) Erin is an incidental beneficiary; Ace is a donee beneficiary; Benton is an incidental beneficiary;
and Alice is a donee beneficiary.
(d) Erin is a creditor beneficiary; Ace is a creditor beneficiary; Benton is an incidental beneficiary;
and Alice is a creditor beneficiary.

7. Sophie contracts to lease Blackacre to Juliette for 5 years at $20,000 a year. Juliette assigned her right
to receive Blackacre and her duty to pay Sophie to Alfanso.
(a) Juliette no longer has the right to receive Blackacre nor a duty to pay Sophie.
(b) Juliette no longer has the right to receive Blackacre but still has a duty to pay Sophie.
(c) Juliette has the right to receive Blackacre but no longer has the duty to pay Sophie.
(d) Juliette has the right to receive Blackacre and has a duty to pay Sophie.

8. Showtime hired the Blue Notes to perform at its supper club.

(a) The Blue Notes could delegate their duty to perform without Showtime’s consent.
(b) The Blue Notes could not delegate their duty to perform without Showtime’s consent.
(c) The Blue Notes could delegate their duty to perform and their right to payment without
Showtime’s consent.
(d) The Blue Notes could not delegate their duty to perform without Showtime’s consent but could
assign their right to payment without Showtime’s consent.

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Test Bank for Essentials of Contract Law, 2nd Edition

9. Tony had a contract with the Morning Gazette to deliver newspapers. Because Tony’s delivery route
was both extensive and lucrative, he was able to delegate half of the route to Emile.
(a) Tony has the duty to deliver newspapers to half of the route, and Emile has the duty to deliver
newspapers to the other half of the route.
(b) Tony has the duty to deliver newspapers to the entire route.
(c) Tony has the duty to deliver newspapers to the entire route and Emile has the duty to deliver
newspapers to half of the route.
(d) Tony cannot delegate his duty without the consent of the Gazette.

10. Nina and Roberto have a bilateral contract with Nina to work and Roberto to pay. Nina assigns her
right to payment to Jose. Nina works but Roberto does not pay.
(a) Nina may sue Roberto.
(b) Jose may sue Roberto.
(c) Both Nina and Jose may sue Roberto.
(d) Jose may sue Nina.

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