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Exam 17: Third Parties

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Question 21

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Jerry purchased a laptop computer for his personal use from Computer City on an installment loan contract.The sales contract stated that in the event the contract is assigned to a third party,the purchaser (Jerry) promises he will not assert any claim or defense against the assignee which he might have against Computer City.Computer City immediately assigns the contract rights to Finance USA.The computer stops working within two weeks of the purchase.

A) This is a valid waiver of defense clause.Jerry signed the contract, so he can't raise a defense to Finance USA.
B) Finance USA is an intended third party beneficiary and may therefore enforce the contract.
C) In general, this type of waiver is not permitted in consumer contracts, so Jerry can raise his claim against Finance USA.
D) This is a delegation of Jerry's duties and the delegator remains liable on the contract unless a novation agreement is made.

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Question 22

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Which of the following duties can probably be delegated?

A) An agreement to perform an operation
B) A contract to paint a picture
C) An agreement by an attorney to draft a contract
D) An agreement to paint a house

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Question 23

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A rock group assigns its payment under a performance contract to the Costume Shop,a business that has supplied the group with outrageous stage outfits,and to which the group owes a great sum of money.This is

Kirk purchases a sailboat on credit from Lakefront Sales,and Lakefront keeps a security interest in the boat.Lakefront then assigns the security interest to First Finance Co.Explain what having a security interest means.Under the UCC,what defenses can Kirk assert against First Finance?

Briefly discuss the enforceability of contracts by third parties.

Someone who might have benefited from a contract between two others but has no right to enforce that agreement is

A rock group assigns its payment under a performance contract to the Costume Shop,a business that has supplied the group with outrageous stage outfits,and to which the group owes a great sum of money.Under this arrangement the rock group is the

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

The status of a third party is determined by

A donee beneficiary

Assignment is prohibited when the obligor is agreeing to perform personal services.

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

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.

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

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

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 written 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.Discuss the conditions in which a right may not be assigned and assess if this was this a valid assignment.

Which statement regarding assignment is accurate?

When is an assignment valid and enforceable against an obligor?

Generally,in comparison to a donee beneficiary,a creditor beneficiary has

Robert hired James,a CPA,to prepare his tax returns.James was too busy and delegated the work to Sara,also a CPA.This delegation is