1. Danielle purchases life insurance on her own life with Big Life Insurance and makes her husband, Walter, the beneficiary. Which of the following statements is true?
A. Danielle is a donee beneficiary.
B. Danielle is an intended third-party beneficiary.
C. Big Life Insurance is a creditor beneficiary.
D. Walter is a donee beneficiary.
2. Jessica orally agrees that she will sell 400 pairs of flip-flops to a customer for $600. This agreement is
A. unenforceable because of the statute of frauds.
B. unenforceable because all necessary elements aren’t met.
C. enforceable because all necessary elements are met.
D. unenforceable because of the parol evidence rule.
3. James leases an apartment to Kyle for $900 per month rent. The written lease contains no prohibition against assignment, nor does it expressly permit assignment. Kyle assigns his rights to Harley without any consideration. James finds out and objects. The assignment is
A. invalid because James didn’t consent to the assignment.
B. valid because the written lease didn’t prohibit it.
C. invalid because the lease didn’t expressly permit assignment.
D. valid because there’s no consideration for the assignment.
4. Warren agrees to paint Abby’s restaurant for $1,000. Warren fails to paint. Abby may be entitled to punitive damages if
A. Warren doesn’t know how to paint, misrepresented himself as a painter, and never intended to paint.
B. Abby loses profits as a result of the breach.
C. Abby has to pay substantially more than $1,000 for someone else to perform the job.
D. the contract breached was both written and witnessed.
5. Paul enters into a contract with Harry. Paul agrees to put a new roof on Harry’s house, and Harry agrees to pay Paul $5,000. Paul is late on a payment to Sam’s Supply House and tells Sam’s Supply House that he will pay when he receives money from Harry. Sam’s Supply House has heard this from Paul before and didn’t receive money. To ensure Paul pays his payment from the money Harry pays him, Sam’s Supply House can
A. tell Harry that Paul is indebted to Sam’s Supply House, which automatically makes them a creditor beneficiary entitled to the payment.
B. have Paul assign his interests under the contract with Harry to Sam’s Supply House.
C. require an accord and satisfaction be entered into.
D. have Harry assign his interests under the contract with Paul to Sam’s Supply House.
6. Coretta and Mary find a property to purchase. They sign a written agreement that states the agreed-on price, closing date, and items that are to stay in the house. They forget to include the washer and dryer in the agreement, but the seller tells them he will leave them if they want them. Right before closing, they walk through the property and find that the washer and dryer have been removed. They purchase the property and sue the seller for not leaving the washer and dryer. Coretta and Mary most likely
A. won’t win based on the statute of limitations.
B. won’t win based on the statute of frauds.
C. will win based on the seller’s representation when they looked at the property.
D. won’t win based on the parol evidence rule.
7. Collin purchases a house, using a loan from Big Bank. As a condition of the loan, Big Bank requires that Collin purchase life insurance payable to Big Bank, to the extent of the outstanding mortgage, if Collin dies before fully paying the mortgage. Big Bank is
A. an incidental beneficiary but not a donee beneficiary.
B. both a creditor beneficiary and a donee beneficiary.
C. a creditor beneficiary but not a donee beneficiary.
D. an intended beneficiary but not a donee beneficiary.
8. Which of the following is an example of discharge by operation of law?
A. Xavier agrees to paint Rita’s house for $1,000. Before Xavier can paint, Rita’s house burns down.
B. Xavier agrees to paint Rita’s house for $1,000. Rita later tells Xavier that she won’t pay him. As a result, Xavier decides not to paint.
C. Xavier agrees to paint Rita’s house for $1,000. Rita changes her mind and asks Xavier not to paint. Xavier agrees.
D. Xavier agrees to paint Rita’s house for $1,000. Xavier paints, but before Rita pays him, she files bankruptcy. As a result, Xavier doesn’t get paid.
9. Sara purchases life insurance on her own life and makes her husband, Dean, the beneficiary. Sara dies. Dean applies to the insurance company for payment of the proceeds. The insurance company denies payment, pointing out that Dean didn’t sign the contract and therefore doesn’t have privity of contract. Dean is
A. entitled to the proceeds as an incidental beneficiary.
B. entitled to the proceeds because he was married to Sara.
C. not entitled to the proceeds because he doesn’t have privity of contract.
D. entitled to the proceeds as an intended beneficiary.
10. Robert contracts to paint Jake’s house for $500. Robert then asks Elmer to perform the painting work for him. Elmer does a bad job, and Jake wants to sue for breach of contact. Which of the following is true?
A. Robert isn’t responsible if he gave Jake notice of the delegation.
B. Robert is responsible for the breach of the contract only if there has been a novation.
C. Robert is responsible for the breach of the contract.
D. Elmer, but not Robert, is responsible for the breach.
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