Beneficiaries and Incidental Beneficiaries: Rights and Liabilities

Question 1

What is the distinction between a beneficiary and an incidental beneficiary?

Accepted Answer

A beneficiary has a legal right to enforce the contract, while an incidental beneficiary does not.

Answer

An incidental beneficiary has a legal right to enforce the contract, while a beneficiary does not.

Answer

There is no legal distinction between a beneficiary and an incidental beneficiary.

Answer

A beneficiary is a third party who is not intended to benefit from the contract, while an incidental beneficiary is a third party who is intended to benefit from the contract.

Question 2

What is the doctrine of privity of contract?

Accepted Answer

The principle that only the parties to a contract can sue or be sued for breach of contract.

Answer

The principle that a third party can enforce a contract intended for their benefit.

Answer

The principle that a contract is not valid unless it is in writing.

Answer

The principle that a contract is binding on all parties who sign it.

Question 3

Which of the following is not an exception to the doctrine of privity of contract?

Accepted Answer

Implied warranty of merchantability

Answer

Assignment

Answer

Novation

Answer

Estoppel

Question 4

What was the significance of the Restatement (Third) of Contracts in relation to beneficiaries?

Accepted Answer

It clarified the rights of beneficiaries.

Answer

It expanded the rights of beneficiaries.

Answer

It restricted the rights of beneficiaries.

Answer

It abolished the doctrine of privity of contract.

Question 5

Which element is crucial for establishing rights as a third-party beneficiary?

Accepted Answer

Intended benefit to the third party

Answer

Consideration provided by the beneficiary

Answer

Direct contractual relationship between the promisor and the beneficiary

Answer

Written agreement explicitly naming the beneficiary

Question 6

Which characteristic does NOT distinguish incidental beneficiaries?

Accepted Answer

Explicit identification in the contract

Answer

Lack of legal right to enforce the contract

Answer

Potential to benefit indirectly from the contract

Answer

Inability to sue for breach of contract if harmed

Question 7

True or False: Incidental beneficiaries have a direct legal right to enforce a contract.

Accepted Answer

False

Answer

True

Question 8

Which of the following is a defense that a promisor can assert against an incidental beneficiary?

Accepted Answer

Lack of privity of contract.

Answer

Statute of Frauds.

Answer

Mutual mistake.

Answer

Illegality.

Question 9

Which of the following accurately describes the rights of an intended beneficiary to enforce a contract?

Accepted Answer

An intended beneficiary has a legal right to enforce the contract from the moment the promisor manifests an intent to make the beneficiary a donee.

Answer

An intended beneficiary has no right to enforce the contract unless the beneficiary has provided consideration for the contract.

Answer

An intended beneficiary has a right to enforce the contract only if the beneficiary is a minor.

Answer

An intended beneficiary has no right to enforce the contract regardless of the promisor's intent.

Question 10

True or False: A third party who is not a party to a contract can never have any rights under the contract.

Accepted Answer

False.

Answer

True.

Question 11

Which of the following statements best describes the concept of "creditor beneficiary"?

Accepted Answer

A beneficiary who has a legal right to enforce the contract because the promisor owes a debt to the beneficiary.

Answer

A beneficiary who has a moral right to enforce the contract.

Answer

A beneficiary who has no right to enforce the contract.

Answer

A beneficiary who is owed a gift under the contract.

Question 12

In which of the following circumstances would an intended beneficiary have a vested right to enforce a contract?

Accepted Answer

When the promisor unequivocally manifests an intent to make the beneficiary a donee.

Answer

When the contract is fully performed.

Answer

When the beneficiary is a minor.

Answer

When the beneficiary provides consideration for the contract.

Question 13

Which of the following is NOT a right of a third-party beneficiary?

Accepted Answer

To modify the contract without the consent of the contracting parties

Answer

To sue the promisor for breach of contract

Answer

To receive performance of the contract

Answer

To assign their rights under the contract

Question 14

True or False: Incidental beneficiaries are always entitled to enforce a contract.

Accepted Answer

False

Answer

True

Question 15

What is the primary distinction between a beneficiary and an incidental beneficiary?

Accepted Answer

A beneficiary has a vested right to enforce the contract, while an incidental beneficiary does not.

Answer

An incidental beneficiary is identified in the contract, while a beneficiary is not.

Answer

A beneficiary's rights are derived from the promisor's intent to benefit them, while an incidental beneficiary's rights are derived from the promisee's intent.

Answer

An incidental beneficiary is typically a creditor of the promisee, while a beneficiary is not.

Question 16

The doctrine of privity of contract holds that:

Accepted Answer

Only the parties to a contract can directly enforce or be sued upon the contract.

Answer

Third parties can always enforce a contract if they are intended to benefit from it.

Answer

Incidental beneficiaries can never enforce a contract.

Answer

Beneficiaries can only enforce a contract if they are specifically identified in the contract.

Question 17

Which of the following is an exception to the doctrine of privity of contract that allows third parties to enforce contracts?

Accepted Answer

Third-party beneficiaries

Answer

Assignment of contracts

Answer

Implied contracts

Answer

Quasi-contracts

Question 18

In a contract for the sale of goods, who is typically considered the intended beneficiary of the seller's promise to deliver the goods?

Accepted Answer

The buyer

Answer

The buyer's agent

Answer

The seller's agent

Answer

A third party who is not involved in the contract

Question 19

True or False: A beneficiary's rights can be terminated if the promisee modifies or rescinds the contract before the beneficiary's rights vest.

Accepted Answer

True

Answer

False

Question 20

How has the Restatement (Third) of Contracts affected the enforceability of intended beneficiary contracts?

Accepted Answer

The Restatement (Third) of Contracts has made it easier to enforce intended beneficiary contracts.

Answer

The Restatement (Third) of Contracts has made it more challenging to enforce intended beneficiary contracts.

Answer

The Restatement (Third) of Contracts has no impact on the enforceability of intended beneficiary contracts.

Answer

The Restatement (Third) of Contracts only applies to incidental beneficiary contracts.

Question 21

Which of the following accurately describes the impact of the doctrine of privity of contract on the rights of incidental beneficiaries?

Accepted Answer

Incidental beneficiaries have no enforceable rights under the contract.

Answer

Incidental beneficiaries have the same rights as intended beneficiaries.

Answer

Incidental beneficiaries can only enforce the contract if they are specifically named in it.

Question 22

In contract law, who is a third party who receives a direct benefit from the performance of a contract but is not a party to the agreement?

Accepted Answer

Incidental beneficiary

Answer

Promisor

Answer

Intended beneficiary

Answer

Promisee

Question 23

What is a potential advantage of allowing third parties to enforce contracts as intended beneficiaries?

Accepted Answer

Enhanced protection for individuals who rely on contractual agreements

Answer

Increased flexibility and adaptability of contracts

Answer

Simplified contract formation processes

Answer

Reduced likelihood of disputes between promisors and promisees

Question 24

Which statement accurately describes the privity of contract doctrine?

Accepted Answer

A strict rule that prevents third parties from enforcing contracts

Answer

A flexible principle that allows incidental beneficiaries to sue promisors directly

Answer

A doctrine that prohibits promisors from assigning their contractual obligations

Answer

A theory that allows third parties to benefit from contracts even without being named

Question 25

Which exception to the privity of contract doctrine enables a non-party to enforce a contract?

Accepted Answer

Third-party beneficiary theory

Answer

Assignment

Answer

Equitable estoppel

Answer

Res judicata

Question 26

In a sales contract, who is the intended beneficiary of the implied warranty of merchantability?

Accepted Answer

Buyer

Answer

Seller

Answer

Manufacturer

Answer

Distributor

Question 27

What is a key feature of an incidental beneficiary?

Accepted Answer

Benefits indirectly from the contract.

Answer

Has a direct right to enforce the contract.

Answer

Can sue the promisor for breach of contract.

Answer

Must be named in the contract.

Question 28

Which of the following is NOT a requirement for a third party to enforce a contract as an intended beneficiary?

Accepted Answer

Presence of consideration provided by the third party

Answer

The third party must have knowledge of the contract and its terms.

Answer

The intent to benefit the third party must be direct and not merely incidental.

Answer

The contract must clearly identify the third party as an intended beneficiary.

Question 29

In which of the following circumstances would a third party be considered an incidental beneficiary?

Accepted Answer

The third party receives a benefit that is indirect and not the primary purpose of the contract.

Answer

The third party provides consideration for the contract.

Answer

The third party is specifically named in the contract as an intended beneficiary.

Question 30

Which of the following remedies is available to an intended beneficiary who has been deprived of their contractual rights?

Accepted Answer

Specific performance, damages, or injunction

Answer

Damages only

Answer

Injunction only

Answer

Rescission

Question 31

What is the difference between a third-party beneficiary and an incidental beneficiary?

Accepted Answer

A third-party beneficiary has a legal right to enforce the contract, while an incidental beneficiary does not.

Answer

A third-party beneficiary is always aware of the contract, while an incidental beneficiary is not.

Question 32

Which of the following is an example of an incidental beneficiary?

Accepted Answer

A neighbor who benefits from a construction project next door.

Answer

A person who is specifically named in a contract as a beneficiary.

Answer

A creditor who is owed money by the promisor.

Question 33

What is the doctrine of privity of contract?

Accepted Answer

A legal principle that only the parties to a contract can sue or be sued on the contract.

Answer

A legal principle that prevents incidental beneficiaries from benefiting from a contract.

Answer

A legal principle that allows third-party beneficiaries to enforce a contract.

Question 34

Which of the following exceptions to the doctrine of privity of contract allows third-party beneficiaries to enforce a contract?

Accepted Answer

The intended beneficiary rule

Answer

The foreseeability rule

Answer

The incidental benefit rule

Answer

The reliance rule

Question 35

What is the significance of the promisor's intent when determining whether a third-party beneficiary has a right to enforce a contract?

Accepted Answer

The promisor's intent is a key factor in determining whether the beneficiary is an intended beneficiary or an incidental beneficiary.

Answer

The promisor's intent is irrelevant to whether the beneficiary has a right to enforce the contract.

Question 36

What is the difference between a donee beneficiary and a creditor beneficiary?

Accepted Answer

A donee beneficiary receives a gift under the contract, while a creditor beneficiary receives payment of a debt.

Answer

A donee beneficiary must be specifically named in the contract, while a creditor beneficiary need not be.

Question 37

Which of the following cases illustrate the concept of an incidental beneficiary?

Accepted Answer

A father who benefits from a contract between his son and a tutor.

Answer

A creditor who is owed money by the promisor.

Answer

A child who is the intended beneficiary of a contract between their parents.

Question 38

A construction company contracts with a homeowner to build a swimming pool. The contract specifies that the pool will be built to meet all local building codes. A local swimming pool inspector, whose job is to enforce these codes, inspects the pool and finds it does not comply. In this scenario, the inspector is:

Accepted Answer

An incidental beneficiary

Answer

A creditor beneficiary

Answer

A donee beneficiary

Question 39

A homeowner contracts with a landscaping company to maintain their yard. The contract specifically states that the landscaping company will ensure the yard is free of weeds.  A neighbor enjoys the view of the homeowner's well-maintained yard. The neighbor is:

Accepted Answer

An incidental beneficiary

Answer

A primary beneficiary

Answer

A creditor beneficiary

Answer

A donee beneficiary

Question 40

A company contracts with a software developer to create a new website. The contract includes a provision that the developer will ensure the website complies with all accessibility guidelines. A person with a disability who uses the website is:

Accepted Answer

An incidental beneficiary

Answer

A creditor beneficiary

Answer

A donee beneficiary

Question 41

Which of the following is NOT a requirement for a third party to be considered a beneficiary with enforceable rights under a contract?

Accepted Answer

The third party must be specifically named in the contract.

Answer

The third party's rights must be clearly defined in the contract.

Answer

The contract must be intended to benefit the third party.

Question 42

A father contracts with a tutor to provide tutoring services to his child. The child is considered a:

Accepted Answer

Donee beneficiary

Answer

Creditor beneficiary

Answer

Incidental beneficiary

Answer

Primary beneficiary

Question 43

Which of the following is a legal principle that prevents a third party from suing on a contract where they are not a party?

Accepted Answer

Privity of contract

Answer

Statute of Frauds

Answer

Offer and acceptance

Answer

Consideration

Question 44

A homeowner contracts with a contractor to install a new roof. The contract includes a provision that the contractor will use only certified roofing materials. A manufacturer of certified roofing materials is:

Accepted Answer

An incidental beneficiary

Answer

A primary beneficiary

Answer

A creditor beneficiary

Answer

A donee beneficiary

Question 45

Under the Restatement (Second) of Contracts, a third party is generally NOT considered a beneficiary of a contract unless:

Accepted Answer

The promisor's performance will directly benefit the third party.

Answer

The third party is identified in the contract by name.

Answer

The third party knows about the contract and accepts its terms.

Question 46

Which of the following is NOT a potential remedy for a third-party beneficiary who is denied their contractual rights?

Accepted Answer

Rescission of the contract

Answer

Injunction

Answer

Specific performance

Answer

Damages against the promisor

Question 47

In the absence of a specific intent to confer a benefit on a third party, courts may find that the third party is an incidental beneficiary when:

Accepted Answer

The third party's benefit is merely incidental to the main purpose of the contract.

Answer

The third party is a close relative of one of the contracting parties.

Answer

The contract expressly states that the third party is a beneficiary.

Question 48

Which of the following factors is NOT considered when determining whether a third party is an intended beneficiary of a contract?

Accepted Answer

The third party's knowledge of the contract

Answer

The intent of the parties to the contract

Answer

The nature of the benefit conferred on the third party

Answer

The relationship between the third party and the contracting parties

Question 49

Under the doctrine of privity of contract, a third party generally cannot:

Accepted Answer

Enforce a contract to which they are not a party.

Answer

Be sued for breach of contract.

Answer

Receive benefits under a contract.

Answer

Assign their rights under a contract.

Question 50

Which of the following exceptions to the doctrine of privity of contract allows a third party to enforce a contract?

Accepted Answer

Assignment of rights

Answer

Novation

Answer

Fraud

Answer

Estoppel

Question 51

In a contract that expressly provides for a third-party beneficiary, the third party:

Accepted Answer

Acquires direct rights against the promisor.

Answer

Is not considered a party to the contract.

Answer

Must be specifically identified in the contract.

Answer

Can only enforce the contract if the promisee assigns their rights.

Question 52

Which of the following is NOT a potential advantage of using a trust to create a third-party beneficiary relationship?

Accepted Answer

Protection of the beneficiary's rights from the claims of the promisor's creditors.

Answer

Tax benefits

Answer

Flexibility in managing the beneficiary's assets

Question 53

Under the doctrine of illusory promises, a promise that is subject to the promisor's sole discretion:

Accepted Answer

Is not enforceable by a third-party beneficiary.

Answer

Is always enforceable by a third-party beneficiary.

Answer

Is only enforceable if the promisor acts in good faith.

Answer

Is enforceable by a third-party beneficiary if the promisor has received consideration.

Question 54

Which of the following is a potential disadvantage of using a third-party beneficiary relationship?

Accepted Answer

The beneficiary may have no control over the performance of the contract.

Answer

The promisor may be able to modify or terminate the contract without the beneficiary's consent.

Answer

The beneficiary may be liable for the promisor's breach of contract.