With Regard to the Law Governing Privity of Contract and Assignment

question 14

Multiple Choice

With regard to the law governing privity of contract and assignment, which of the following is true?

• A) Where the assignor assigns the same debt to two or more persons, if the promisor (debtor) pays out, in good faith, to the first assignee to give him notice, he has no further obligation.
• B) If a promisor (debtor) accidentally pays out to the assignor after receiving notice of the assignment, he is free from any obligation to the assignee; the assignee must look to the assignor for payment.
• C) Novation refers to the voiding of the original contract and substituting another.
• D) An exception to the doctrine of privity of contract is a contract selling a car.
• E) An equitable assignment is easier to enforce than a statutory assignment.

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Definitions:

Secured

Pertaining to assets or loans that are protected by collateral to ensure repayment or mitigate risk.

Collateral

Assets or property pledged by a borrower to secure a loan or other credit, and subject to seizure on default.

Tender Offer

A proposal by an entity to purchase shares from shareholders of another company, usually at a premium to the market price.

Target's Shares

Equity stakes in the Target Corporation, a publicly traded company known for its retail operations.