Fin 280 EXAM 2 - Ch 16-19

Morgan entered into a contract to purchase certain real estate from Shine. Which of the following statements is FALSE? 
A) If shine fails to perform the contract, Morgan can obtain specific performance. 
B) The contract is nonassignable as a matter of law. 
C) The statute of frauds applies to the contract. 
D) Any amendment to the contract must be agreed to by both Morgan and Shine.

Sisk is a tenant of Met Company and has 2 years remaining on a 6-yr lease executed by Sisk and Met. The lease prohibits subletting but is silent as to Sisk's right to assign the lease. Sisk assigned the lease to Kern Corp, which assumed all of Sisk's obligations under the lease. Met objects to the assignment. Which one of the statements is true?

A) The assignment to Kern is voidable at Met's option
B) With respect to the rent provided for in the lease, Kern is liable to Sisk but not to Met
C) Sisk would have been relieved from liability on the lease with Met if Sisk obtained Met's consent to the assignment
D) Sisk will remain liable to Met for the rent provided for in the lease

One of the criteria for a valid assignment of a sales contract to a third party is that the assignment must:

A) not be revocable by the assignor
B) be supported by adequate consideration from the assignee
C) be in writing and signed by the assignor
D) not materially increase the other party's risk or duty

Ferco, Inc. claims to be a creditor beneficiary of a contract between Bell Co. and Allied Industries. Allied is indebted to Ferco. The contract between Bell and Allied provides that Bell is to purchase certain goods from Allied and pay the purchase price directly to Ferco until Allied's obligation is satisfied. Without justification, Bell failed to pay Ferco and Ferco sued Bell. Ferco will:

A) not prevail, because Ferco did not give any consideration to Bell.
B) prevail, provided Ferco was aware of the contract between Bell and Allied at the time the contract was entered into.
C) not prevail, because Ferco lacked privity of contract with either Bell or Allied.
D) prevail, because Ferco was an intended beneficiary of the contract

Union Bank lent $200,000 to Wagner. Union required Wagner to obtain a life insurance policy naming Union as beneficiary. While the loan was outstanding, Wagner stopped paying the premiums on the policy. Union paid the premiums, adding the amounts paid to Wagner's loan. Wagner died, and the insurance company refused to pay the policy proceeds to Union. Union may:

A) recover the policy proceeds because it is a donee beneficiary
B) not recover the policy proceeds because it is only an incidental beneficiary
C) recover the policy proceeds because it is a creditor beneficiary
D) not recover the policy proceeds because it is not in privity of contract with the insurance company

Rice contracted with Locke to build an oil refinery for Locke. The contract provided that Rice was to use United pipe fittings. Rice did not do so. United learned of the contract and, anticipating the order, manufactured additional fittings. United sue Locke and Rice. United is:

A) not recover the policy proceeds because it is only an incidental beneficiary
B) recover the policy proceeds because it is a creditor beneficiary
C) not entitled to recover because it is an incidental beneficiary
D) recover the policy proceeds because it is a donee beneficiary

The party to a contract who assigns his rights to a third party is called the: 
a) assignor
b) assignee

If a statute prohibits the assignment of a worker's compensation claim, an assignment that attempts to transfer an interest in that claim will be unenforceable: T/F
True False

An assignment is not valid unless notice is to the assignee: T/F
True False

Normally, a delegation of duties does not relieve the delegator of his obligation to perform in the event the delegatee fails to do so. T/F
True False