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Exam 19: Third-Party Rights to Contracts

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Question 31

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The ______ in a third-party beneficiary contract is the party to the contract who owes something to the promisor in exchange for the promise made to the third-party beneficiary.

A) Promisee
B) Promisor
C) Obligor
D) Obligee
E) Assignee

F) D) and E)
G) C) and D)

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Question 32

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"Third-Party Woes." Trudy owed Sam $40 for a book she purchased from him. Trudy mowed Betty's yard for $40 and agreed with Betty that Betty would pay Sam for the book. Sam is not aware of the assignment. Betty pays no one. Trudy also mowed Bob's yard for $40. She agreed with Bob that Bob would give the payment to Sally representing Trudy's birthday present to Sally. Bob later refuses to do so saying that promises to give gifts are not enforceable. He then moves out of town. Trudy tells both Sam and Sally that she is broke and that they will have to get any amounts due from Betty and Bob respectively. Sally is very unhappy because she wanted to buy a new pair of sandals with the money. -Which of the following would be the likely result if Sam sues Trudy for the $40 she owes him for the book?

A) Sam will win because Trudy cannot avoid her obligations through a delegation.
B) Sam will win but only because he was not aware of the assignment.
C) Sam will win but only because the contract was for an amount under $1,000.
D) Sam will win only if Betty cannot be found for service of process.
E) Trudy will win because she delegated the duty of payment to Betty.

F) A) and E)
G) B) and D)

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Question 33

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Assuming the parties live in a jurisdiction that allows donee beneficiaries to enforce rights under a contract, against whom may a donee beneficiary enforce rights and why?

Maurice is excited because a developer plans a subdivision full of high priced homes that will adjoin his property. Maurice is so pleased that he puts in a new swimming pool to celebrate. Maurice believes that the subdivision will significantly increase the value of his property. The developer, however, changes his mind and decides not to develop the subdivision. Maurice is angry and asks if he can sue the developer, particularly since he can establish reliance. What would you tell Maurice and why? Discuss whether you agree with the law on this issue and why or why not.

Which of the following is a consideration of courts in determining whether a person is an incidental or intended beneficiary?

Which of the following is a type of intended beneficiary?

An intended beneficiary is a third party to a contract who is intended to be directly benefited from the contract made by the contracting parties.

"Painted House." Billy had a contract to paint Jan's house for $800 including the duty to clean up any debris. The contract between Billy and Jan did not address assignment in any way. Billy, who was very busy, assigned the contract, specifying that it included the right to receive the money and the duty to paint the house, to Richard who was interested in making some extra money and had experience painting. Billy did not tell Jan about the assignment because he did not want any trouble nor did Richard mention the assignment to her. In fact, Richard never met Jan because he painted while she was at work. After Richard did a good job painting the house, Jan sent a check to Billy for $800. Billy needed the money to pay some bills, so he spent it. He thought he would have money coming in with which to pay Richard, but that did not happen. Richard asked Jan for $800 when it was not forthcoming from Billy. Jan refused. Richard said that he was going to sue her. Jan called Billy and told him that he had no right to assign the contract. Another problem involved disposal of debris. Although Richard was a good, competent painter, he forgot and left some old paint cans at Jan's house. Jan demanded that Billy come and properly dispose of the paint cans because they could not simply be put in the trash. Billy refused and told her that she would have to get Richard to dispose of the paint cans because that was his responsibility. Jan called Richard who told her that he was busy and that clearing out the paint cans was Billy's responsibility. -What would be the likely result of a lawsuit brought by Richard against Jan to recover the $800?

Assignment of personal duties is generally permitted.

What was the ruling of the court in the Case Opener involving a lawsuit by fans seeking a refund based upon the Tyson and Holyfield fight being stopped in the third round because Tyson bit off a piece of Holyfield's ear?

What is the term for the party to a contract who transfers his or her rights to a contract to a third party?

Which of the following is true regarding oral assignments?

Which of the following, if any, is needed in order for an assignment to be valid?

Creditor beneficiaries can enforce their rights under a contract whenever the contract is valid.

Parties not in ______ usually do not have rights to a contract.

A[n] ______ occurs when a party to a contract transfers his or her duty to perform to a third party who is not part of the original contract.

When parties include a[n] ______ clause in their contract, the parties are attempting to limit their ability to assign their rights under the contract.

Creditor beneficiaries can enforce their rights under a contract whenever the contract is _____.

Alice owned a condominium directly above Sam. Alice failed to take proper care of some plumbing problems, and on several occasions Alice's plumbing problems caused leaking into Sam's apartment resulting in property damage. Both Alice and Sam had signed a condominium association agreement providing that each tenant would pay for any damage caused; that the agreement could be enforced by the management of the association or, in a proper case, by an aggrieved owner; and that adherence to the agreement was required "for the benefit of the Association and any person acquiring or owning an interest in the property." The association itself refused to sue Alice in order to recover damages with which to reimburse Sam. Therefore, Sam sued Alice himself. She claimed that he had no standing to sue. Which of the following is the most likely result of the dispute if the court follows Allan v. Nersesova, the case in the text involving a similar issue?

Which of the following references the maturing of rights such that a party can legally act on the rights?