Cengage Advantage Books Introduction To Business Law 4th Edition By Beatty – Test Bank

CHAPTER 11-CONCLUSION TO CONTRACTS

TRUE/FALSE

1. An assignment is effective against the obligor from the moment it is made, regardless of whether the assignor notifies the obligor.

ANS: F PTS: 1 MSC: AACSB Analytic

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

ANS: F PTS: 1 MSC: AACSB Analytic

3. If Casey assigns her rights to receive income from rental property to Errol, then Errol will legally acquire any rights held by Casey to the income.

ANS: T PTS: 1 MSC: AACSB Analytic

4. 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.

ANS: F PTS: 1 MSC: AACSB Analytic

5. 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 permission to Norm to make the assignment legally effective.

ANS: F PTS: 1 MSC: AACSB Analytic

6. Generally, the assignment of the obligation to perform personal services is invalid.

ANS: T PTS: 1 MSC: AACSB Analytic

7. If Velma, as a birthday present, assigns to Jim her contractual right to collect $50 from Wood Co., this would be a gratuitous assignment.

ANS: T PTS: 1 MSC: AACSB Analytic

8. First Bank has agreed to loan Teresa $100,000 for use in her cosmetics business. If Teresa sells the business to Melissa before the loan is consummated, Teresa can assign her right to the loan to Melissa.

ANS: F PTS: 1 MSC: AACSB Reflective Thinking

9. 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. Big Finance Co. sues Amanda for nonpayment. 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. Generally, any defense that Amanda may have against Andy is good against Big Finance Co.

ANS: T PTS: 1 MSC: AACSB Reflective Thinking

10. Assume that Jessie and Whole Foods have formed a contract whereby Jessie agrees to deliver 10,000 dozen “Grade A Large Eggs” to be shipped in recycled paper cartons that conform with Whole Foods’ green policy.. A shortage of paper makes paper cartons much more expensive, so Jessie uses styrofoam cartons and ships the eggs. Whole Foods is entitled to cancel the contract based on this deviation of terms in the contract.

ANS: T PTS: 1 MSC: AACSB Reflective Thinking

11. Most contracts are discharged by mutual agreement.

ANS: F PTS: 1 MSC: AACSB Analytic