FYLSX FYLSX - Baby Bar Third Party Contract Rights 2 — Questions and Answers
Question 1: Assignment of a contract right transfers the assignor's rights to the assignee. Which of the following is generally NOT assignable?
- The right to receive payment for goods already delivered
- A right that would materially change the obligor's duty (Correct answer)
- A right to receive rent payments
- A right to receive a loan repayment
Correct answer: A right that would materially change the obligor's duty
Rights that would materially alter the obligor's duty or risk — such as personal services — are not freely assignable without the obligor's consent.
Question 2: Alice assigns her right to receive $5,000 from Bob to Carol. Bob pays Alice, not knowing of the assignment. Which statement is correct?
- Carol can still collect from Bob because the assignment is binding on him regardless of notice
- Bob is discharged because he paid before receiving notice of the assignment (Correct answer)
- Carol can sue Alice for breach but cannot sue Bob
- The assignment is void because Bob did not consent
Correct answer: Bob is discharged because he paid before receiving notice of the assignment
An obligor who pays the assignor without notice of the assignment is discharged; the assignee's remedy is against the assignor.
Question 3: Delegation transfers the delegator's contractual duties to a delegate. Which of the following duties CANNOT be delegated?
- The duty to pay money
- The duty to deliver fungible goods
- The duty to paint a portrait based on personal artistic skill (Correct answer)
- The duty to deliver a car
Correct answer: The duty to paint a portrait based on personal artistic skill
Duties requiring unique personal skill or involving personal trust and confidence — such as painting a portrait — cannot be delegated without the other party's consent.
Question 4: When a delegator delegates duties to a delegate, the delegator:
- Is completely released from liability once delegation occurs
- Remains secondarily liable unless there is a novation releasing the delegator (Correct answer)
- Is primarily liable, while the delegate is secondarily liable
- Has no further obligation once the delegate accepts
Correct answer: Remains secondarily liable unless there is a novation releasing the delegator
Delegation does not release the delegator from liability; the delegator remains secondarily liable unless the other party agrees to a novation substituting the delegate.
Question 5: An anti-assignment clause in a contract generally:
- Makes any attempted assignment void and unenforceable
- Bars assignment but the assignee may still have a claim for breach of contract damages (Correct answer)
- Has no effect because assignment rights are statutory and cannot be waived
- Automatically converts an assignment into a delegation
Correct answer: Bars assignment but the assignee may still have a claim for breach of contract damages
Under the UCC and modern common law, an anti-assignment clause may bar the assignment but does not automatically void it; the breaching party may owe damages rather than the assignment being nullified.
Question 6: On the FYLSX, which best describes a novation in the context of delegation?
- A unilateral substitution of a new party by the delegator without the obligee's consent
- A three-party agreement where the obligee releases the delegator and substitutes the delegate as the new obligor (Correct answer)
- An assignment of both rights and duties simultaneously
- A modification of the contract price with a new party
Correct answer: A three-party agreement where the obligee releases the delegator and substitutes the delegate as the new obligor
A novation requires all three parties' agreement: the original obligor (delegator) is released and the delegate becomes the new, sole obligor.
FYLSX FYLSX - Baby Bar Third Party Contract Rights 2
Assignment of a contract right transfers the assignor's rights to the assignee.
Which of the following is generally NOT assignable?