LU 5 Business Law Operation & Discharge of Contracts

Match the following

• novation

• a person not party to a contract, but whom parties intended to benefit

• third party beneficiary

•   the substitution of a new party for one of the original parties to a contract, such that the prior contract terminates and a new one substitutes for it

• incidental beneficiary

• someone who may benefit as an indirect consequence of a contract

• Injunction

• a situation in which one of the parties to a contract fails or otherwise refuses to perform the obligations established in that contract

• breach of contract

•   a permanent judicial order or decree forbidding the performance of a certain act.

What is required for an assignment of contract rights to be valid in most states?

• The assignment must be approved by a court.

• The assignment must be oral.

• The assignment must be in writing.

• The assignment does not need to be communicated to the other party.

The person to whom the rights are transferred is the

• guarantor

• guarantee

• assignor

• assignee

What is a Third Party Beneficiary in a contract?

• Someone who benefits from a contract as an indirect consequence and has the right to sue.

• A party that enters into the contract and benefits directly from it.

• A foreseen party that benefits from a contract and has the legal right to enforce the contract.

• A party that has no legal right to the benefits of the contract and cannot enforce it.

Who is the ASSIGNOR in the context of an assignment of rights?

• The person who receives the rights.

• The person who transfers his rights.

• The original party who drafted the contract.

• The guarantor of the original contract.

What is required for a novation to take place?

• Mutual Consent of all parties

• A change in the contractual obligations

• Replacement of the original party with a new one

• All of the above

What happens to contract rights when a contracting party dies?

• They are voided

• They are transferred to a third party

• They are assigned to the Administrator or Executor of the estate

• They are automatically terminated

What can be a reason for the termination of a contract according to the section "TERMINATION BY AGREEMENT"?

• Breach of contract by one of the parties

• The contract is found to be illegal

• A certain event occurs or after a certain period of time

• Mutual disagreement on the contract terms

According to the section "TERMINATION BY PERFORMANCE," when is a contract considered to be terminated?

• When a reasonable person would consider the contract to be Substantially Performed

• When the contract is largely completed but small details remain unfinished

• When the complete and satisfactory performance of the terms of a contract occurs

• When the payment of money is not complete

What does "SUBSTANTIAL PERFORMANCE" of a contract imply?

• The contract is completely and satisfactorily performed

• The contract is terminated by mutual agreement

• The contract is largely completed with only minor details unfinished

• The contract is void due to impossibility of performance