Business Law exam #2 (chapters 15,16,17,18,19,21,22 ), page # 1
1. The status of a third party is determined by:
a. the type of contract.
b. whether the third party gave consideration.
c. the reasonable expectations of the third party.
d. the intent of the contracting parties.
2. A nonparty to a contract may enforce the contract if the person is:
a. a donee beneficiary.
b. an incidental beneficiary.
c. a creditor beneficiary.
d. Both a and c.
3. 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.
4. 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.
5. Molly and Craig are the original parties to a contract. Craig is obligated to design a Website for Molly. They
subsequently make an agreement with Eric that Eric should take the place of Craig and assume all of Craig's rights
and duties under the contract. The agreement releases Craig from his obligations under the contract. This
agreement ts:
a. a novation.
b. an accord and
satisfaction.
c. an assignment.
d. a nullification.
6. A donee beneficiary:
a. is not entitled to enforce a contract against either party.
b. usually does not give consideration in return for the gift.
c. will generally become a creditor beneficiary after his or her rights vest.
d. is an incidental beneficiary.
7. Which statement most accurately describes third party beneficiary rights?
, Business Law exam #2 (chapters 15,16,17,18,19,21,22 ), page # 2
a. A beneficiary may enforce a contract if the parties intended to benefit him and if enforcing the promise
will satisfy a duty of the promisee to the beneficiary.
b. If a promisee intended to make a gift to the beneficiary, the beneficiary may not enforce the contract.
c. An intended third party beneficiary has no enforceable rights in a contract.
d. Incidental beneficiaries have enforceable rights against both contracting parties.
8. 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:
a. win, as he is an intended beneficiary.
b. win, as he is a donor beneficiary.
c. lose, as he is a creditor beneficiary.
ci.
d. lose, as he is an incidental beneficiary.
9. Tyron purchased a vacant lot and entered into a contract with BZ Inc. to construct a shopping center on the site.
Douglas heard about this contract and built a restaurant on an adjoining piece of property because of the planned
shopping center. Tyron was unable to raise the necessary capital and was unable to perform the contract with BZ,
Inc. Douglas sued Tyron for breach of contract as a third party beneficiary. Douglas will probably:
a. win as a third party creditor beneficiary.
b. win as a third party donee beneficiary.
c. lose as a third party incidental beneficiary.
d. lose as a third party creditor beneficiary.
10. 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.
ci.
d. An agreement to paint a house.
11. Statutes oflimitations:
a. defme how much money the injured party can sue for under a breach of contract claim.
b. define whether there has been substantial performance of a contract or a material
breach.
c. limit the time in which an injured party may sue.
d. only apply to the sale of goods. There is no statute of limitations on a service contract.
12. In January 2008, Professor Noe entered into a contract with State University. She agreed to teach full time during
the 2008-2009 academic year. Professor Noe died on May 31, 2008. Her estate:
a. is obligated to find another person who will agree to teach during the academic year.
b. is discharged from any further obligations under the contract.
c. will be discharged from any obligations under the contract only if it can be shown that her death was
unexpected.
d. will not be discharged. If the University has to pay more in order to hire a comparable substitute professor at
the last minute, then the estate will be responsible for the difference in pay.
1. The status of a third party is determined by:
a. the type of contract.
b. whether the third party gave consideration.
c. the reasonable expectations of the third party.
d. the intent of the contracting parties.
2. A nonparty to a contract may enforce the contract if the person is:
a. a donee beneficiary.
b. an incidental beneficiary.
c. a creditor beneficiary.
d. Both a and c.
3. 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.
4. 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.
5. Molly and Craig are the original parties to a contract. Craig is obligated to design a Website for Molly. They
subsequently make an agreement with Eric that Eric should take the place of Craig and assume all of Craig's rights
and duties under the contract. The agreement releases Craig from his obligations under the contract. This
agreement ts:
a. a novation.
b. an accord and
satisfaction.
c. an assignment.
d. a nullification.
6. A donee beneficiary:
a. is not entitled to enforce a contract against either party.
b. usually does not give consideration in return for the gift.
c. will generally become a creditor beneficiary after his or her rights vest.
d. is an incidental beneficiary.
7. Which statement most accurately describes third party beneficiary rights?
, Business Law exam #2 (chapters 15,16,17,18,19,21,22 ), page # 2
a. A beneficiary may enforce a contract if the parties intended to benefit him and if enforcing the promise
will satisfy a duty of the promisee to the beneficiary.
b. If a promisee intended to make a gift to the beneficiary, the beneficiary may not enforce the contract.
c. An intended third party beneficiary has no enforceable rights in a contract.
d. Incidental beneficiaries have enforceable rights against both contracting parties.
8. 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:
a. win, as he is an intended beneficiary.
b. win, as he is a donor beneficiary.
c. lose, as he is a creditor beneficiary.
ci.
d. lose, as he is an incidental beneficiary.
9. Tyron purchased a vacant lot and entered into a contract with BZ Inc. to construct a shopping center on the site.
Douglas heard about this contract and built a restaurant on an adjoining piece of property because of the planned
shopping center. Tyron was unable to raise the necessary capital and was unable to perform the contract with BZ,
Inc. Douglas sued Tyron for breach of contract as a third party beneficiary. Douglas will probably:
a. win as a third party creditor beneficiary.
b. win as a third party donee beneficiary.
c. lose as a third party incidental beneficiary.
d. lose as a third party creditor beneficiary.
10. 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.
ci.
d. An agreement to paint a house.
11. Statutes oflimitations:
a. defme how much money the injured party can sue for under a breach of contract claim.
b. define whether there has been substantial performance of a contract or a material
breach.
c. limit the time in which an injured party may sue.
d. only apply to the sale of goods. There is no statute of limitations on a service contract.
12. In January 2008, Professor Noe entered into a contract with State University. She agreed to teach full time during
the 2008-2009 academic year. Professor Noe died on May 31, 2008. Her estate:
a. is obligated to find another person who will agree to teach during the academic year.
b. is discharged from any further obligations under the contract.
c. will be discharged from any obligations under the contract only if it can be shown that her death was
unexpected.
d. will not be discharged. If the University has to pay more in order to hire a comparable substitute professor at
the last minute, then the estate will be responsible for the difference in pay.
