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Exam 15: Third parties

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Question 21

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Johann,a well-known musician,agrees to give ten guitar lessons to Elton for $2,000.Nothing in the contract itself prohibits a delegation.If Johann delegates his obligation to Eugene,a second-year musical student and enthusiastic guitar player,then the delegation will probably be:

A) permitted because contracts may be freely delegated.
B) permitted because the contract is just for music lessons.
C) prohibited because the contract is for service from a specific person.
D) prohibited by the UCC because this is a sale of services.

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Question 22

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Linda assigns to Ben a right to receive rent payments.The law implies the following warranty on Linda's part:

A) the tenant is solvent.
B) Linda actually has a right to the rental payments.
C) the tenant will actually pay.
D) No warranties are implied by law in an assignment.

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Question 23

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Andrew Durham was injured in a job-related accident that resulted in a workers' compensation settlement agreement with the employer's insurance carrier,Traveler's Indemnity Company.The settlement agreement required Traveler's to pay Durham $2500 per month for the rest of his life.To finance its obligation,Traveler's purchased an annuity in its name.The settlement agreement required Traveler's approval or consent prior to an assignment of the annuity payments.Durham later decided to open a business and went to a credit union for a $214,000 loan.The credit union loaned the money,taking a security interest in Durham's monthly annuity payments.Traveler's consent was never secured.Was this a valid assignment?

Ted and Alice own their recreational vehicle subject to a security agreement to Third U.S.Bank to secure the repayment of the purchase money loan.Ted and Alice sell their RV to Bob and Carol,who agree to take over the loan payments to the bank.There is no novation with the bank.Under these facts,if Bob and Carol do not make the loan payments,Third U.S.Bank:

If Ray agrees to rake leaves for Michelle in exchange for Michelle's promise to pay off the debt Ray owes to Dean,then Dean is a donee beneficiary of the agreement between Ray and Michelle.

A spouse who is named the beneficiary of a life insurance policy would ordinarily be:

Norm and Frank have a legal contract that is silent with regard to an assignment of the contract.In order for Norm to assign all or part of his rights under a contract,Frank must grant such permission to Norm.

Discuss the potential liability differences between a delegation and a novation.

A third party beneficiary's status occurs:

First Bank has agreed to loan Teresa $10,000 for use in her cosmetics business.If Teresa sells the business to Melissa before the loan is disbursed,Teresa can assign her right to the loan to Melissa.

Garth's Imports sold a car to Wally on credit for $30,000.Garth assigned to Cassandra all of his rights to receive money from Wally.Cassandra did not inform Wally of the assignment.Therefore,Wally continued to make the next three payments directly to Garth.Shortly thereafter,Garth left the country with the money.If Cassandra sues Wally for the missing three payments:

A donee beneficiary:

Shirley is an actress under contract with Twentieth Century.Shirley agreed to perform the lead role in a musical to be filmed in Hollywood by Twentieth Century.At the last minute,Twentieth Century decided to scrap the musical and assigned its rights in Shirley to MGM.MGM was planning to film a western in Australia requiring Shirley to spend six months filming in Australia.Can Shirley successfully prevent this assignment?

In the Schauer v.Mandarin Gems of California,Inc.case,the court held:

A nonparty to a contract may enforce the contract if the person is:

Amanda buys a vacuum cleaner to use in her home from retailer Andy.Amanda promises to pay for it in six monthly installment of $50 each.Andy assigns the contract to Big Finance Co.who paid value and took without notice of any defense.Amanda has stopped making payments because the vacuum stopped working and Andy refuses to honor the express warranty he made to her at the time of the sale.Big Finance Co.sues Amanda for nonpayment.Generally,any defense that Amanda may have against Andy is good against Big Finance Co.

Contract prohibitions against assignments are invalid as a matter of public policy.

A party may make either an assignment or a delegation,but cannot make both an assignment and a delegation simultaneously.

Char-Glo Industries contracted with Evergreen Lawn Service to mow and trim the company's lawn.In the contract,Char-Glo included a clause prohibiting Evergreen from delegating its duties.Courts will ordinarily not enforce such a clause.

Wright Company contracted with the city of St.Louis to train and employ disadvantaged youths.If Wright fails to fulfill the contract and is sued by one of the disadvantaged youths,the youth would: