ACCT 2700 STUDY ACTUAL EXAM GUIDE QUESTIONS AND
ANSWERS SURE A+
✔✔What is another condition for the rights of an intended beneficiary to vest? -
✔✔When the third party materially alters their position in detrimental reliance on the
contract.
✔✔What happens at the vesting of rights for an intended beneficiary? - ✔✔Contracting
parties can no longer modify or cancel the contract to take away the third party benefit.
✔✔What does 'Privity of Contract' mean? - ✔✔Only the original parties to a contract
have rights and liabilities under the contract.
✔✔What are the exceptions to Privity of Contract? - ✔✔Assignment, Delegation, and
Third Party Beneficiary Contracts.
✔✔What is an assignment in the context of contracts? - ✔✔Transfer of contractual
rights.
✔✔What is a delegation in the context of contracts? - ✔✔Transfer of contractual duties.
✔✔In an assignment, who is the Assignor? - ✔✔The party assigning rights to a third
party.
✔✔In an assignment, who is the Assignee? - ✔✔The party receiving rights.
✔✔In an assignment, who is the Obligor? - ✔✔The party obligated to perform.
✔✔In an assignment, who is the Obligee? - ✔✔The party entitled to performance by the
Obligor.
✔✔What happens to the Assignor's rights after an assignment? - ✔✔The Assignor's
rights are extinguished.
✔✔What rights does the Assignee have after an assignment? - ✔✔The Assignee has
the right to demand performance from the Obligor and has the same defenses the
Assignor had.
✔✔What is the advisable form of an assignment? - ✔✔While an assignment can be
oral, it is advisable to be in writing.
✔✔What is the general rule regarding assignment of rights? - ✔✔All rights can be
assigned.
, ✔✔What are some exceptions to the general rule of assignment? - ✔✔Statute expressly
prohibits assignment, the contract is personal, assignment significantly changes the
risks or duties of the Obligor, or the contract prohibits assignment.
✔✔Why should an Assignee notify the Obligor of an assignment? - ✔✔To avoid priority
issues and ensure proper performance.
✔✔What is the US Rule regarding assignments? - ✔✔First assignment in time wins.
✔✔What is the English Rule regarding assignments? - ✔✔First assignee to give notice
wins.
✔✔What could happen if the Obligor is not notified of an assignment? - ✔✔The Obligor
might perform for the wrong party.
✔✔What is the most common remedy for breach of contract? - ✔✔Damages
✔✔What is the goal of damages in breach of contract cases? - ✔✔To make the party
whole or give them the benefit of their bargain.
✔✔What are the four types of damages? - ✔✔Compensatory, Consequential, Nominal,
Punitive.
✔✔What do compensatory damages cover? - ✔✔Direct losses and costs.
✔✔What are consequential damages? - ✔✔Indirect but foreseeable losses resulting
from the breach.
✔✔When are nominal damages awarded? - ✔✔When there is a technical injury without
monetary loss.
✔✔What is the purpose of punitive damages? - ✔✔To punish and deter wrongdoing.
✔✔What is the standard measure for compensatory damages? - ✔✔The difference
between the value of the promised performance and the actual performance, reduced
by any loss avoided.
✔✔What is the duty of the innocent injured party in a breach of contract? - ✔✔To
mitigate damages.
✔✔What is rescission in the context of equitable remedies? - ✔✔It terminates the
contract and returns parties to their positions prior to the transaction.
ANSWERS SURE A+
✔✔What is another condition for the rights of an intended beneficiary to vest? -
✔✔When the third party materially alters their position in detrimental reliance on the
contract.
✔✔What happens at the vesting of rights for an intended beneficiary? - ✔✔Contracting
parties can no longer modify or cancel the contract to take away the third party benefit.
✔✔What does 'Privity of Contract' mean? - ✔✔Only the original parties to a contract
have rights and liabilities under the contract.
✔✔What are the exceptions to Privity of Contract? - ✔✔Assignment, Delegation, and
Third Party Beneficiary Contracts.
✔✔What is an assignment in the context of contracts? - ✔✔Transfer of contractual
rights.
✔✔What is a delegation in the context of contracts? - ✔✔Transfer of contractual duties.
✔✔In an assignment, who is the Assignor? - ✔✔The party assigning rights to a third
party.
✔✔In an assignment, who is the Assignee? - ✔✔The party receiving rights.
✔✔In an assignment, who is the Obligor? - ✔✔The party obligated to perform.
✔✔In an assignment, who is the Obligee? - ✔✔The party entitled to performance by the
Obligor.
✔✔What happens to the Assignor's rights after an assignment? - ✔✔The Assignor's
rights are extinguished.
✔✔What rights does the Assignee have after an assignment? - ✔✔The Assignee has
the right to demand performance from the Obligor and has the same defenses the
Assignor had.
✔✔What is the advisable form of an assignment? - ✔✔While an assignment can be
oral, it is advisable to be in writing.
✔✔What is the general rule regarding assignment of rights? - ✔✔All rights can be
assigned.
, ✔✔What are some exceptions to the general rule of assignment? - ✔✔Statute expressly
prohibits assignment, the contract is personal, assignment significantly changes the
risks or duties of the Obligor, or the contract prohibits assignment.
✔✔Why should an Assignee notify the Obligor of an assignment? - ✔✔To avoid priority
issues and ensure proper performance.
✔✔What is the US Rule regarding assignments? - ✔✔First assignment in time wins.
✔✔What is the English Rule regarding assignments? - ✔✔First assignee to give notice
wins.
✔✔What could happen if the Obligor is not notified of an assignment? - ✔✔The Obligor
might perform for the wrong party.
✔✔What is the most common remedy for breach of contract? - ✔✔Damages
✔✔What is the goal of damages in breach of contract cases? - ✔✔To make the party
whole or give them the benefit of their bargain.
✔✔What are the four types of damages? - ✔✔Compensatory, Consequential, Nominal,
Punitive.
✔✔What do compensatory damages cover? - ✔✔Direct losses and costs.
✔✔What are consequential damages? - ✔✔Indirect but foreseeable losses resulting
from the breach.
✔✔When are nominal damages awarded? - ✔✔When there is a technical injury without
monetary loss.
✔✔What is the purpose of punitive damages? - ✔✔To punish and deter wrongdoing.
✔✔What is the standard measure for compensatory damages? - ✔✔The difference
between the value of the promised performance and the actual performance, reduced
by any loss avoided.
✔✔What is the duty of the innocent injured party in a breach of contract? - ✔✔To
mitigate damages.
✔✔What is rescission in the context of equitable remedies? - ✔✔It terminates the
contract and returns parties to their positions prior to the transaction.
