Bar Exam (Uniform) Quiz: Assignment And Delegation

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Assignment And DelegationQuestion 1 of 20

A chef, renowned for his unique culinary style, entered into a one-year written contract with a restaurant to serve as its head chef. The contract included a provision stating, "Neither party shall assign this contract without the prior written consent of the other party." Six months into the contract, the chef decided to take a sabbatical and, without the restaurant's consent, arranged for his equally famous protégé to take over his duties for the remaining six months. The chef agreed to pay the protégé from his own salary. The restaurant owner learned of the arrangement and refused to allow the protégé into the kitchen.

If the chef sues the restaurant for breach of contract, what is the restaurant's strongest defense? Select one.

The contract provision prohibiting assignment also prohibited the delegation of the chef's duties.

The chef's duties were non-delegable because they involved unique personal skill and judgment.

The chef's arrangement with the protégé constituted an anticipatory repudiation of the contract.

The restaurant was entitled to demand assurances of performance from the protégé before allowing him to work.

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Bar Exam (Uniform) Quiz

Bar Exam (Uniform) Quiz: Assignment And Delegation

Practice Assignment And Delegation in Bar Exam (Uniform) with focused quiz questions that help you check what you know, review explanations, and build confidence with test-style prompts.

What this quiz covers

This quiz focuses on Assignment And Delegation, giving you a quick way to practice the rules, question types, and explanations that matter most for Bar Exam (Uniform).

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Try each quiz question before looking at the correct answer. Use the explanations to review missed ideas, then come back to similar questions until the pattern feels familiar.

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Question 1

If the chef sues the restaurant for breach of contract, what is the restaurant's strongest defense? Select one.

The contract provision prohibiting assignment also prohibited the delegation of the chef's duties.
The chef's duties were non-delegable because they involved unique personal skill and judgment. (correct answer)
The chef's arrangement with the protégé constituted an anticipatory repudiation of the contract.
The restaurant was entitled to demand assurances of performance from the protégé before allowing him to work.

Explanation: The correct answer is B. Duties under a contract that involve unique personal skill, taste, or judgment are non-delegable. A contract with a renowned chef for his services is a classic example of such a personal services contract. The restaurant bargained for this specific chef's unique talents, and those duties cannot be delegated to another, even a highly skilled one, without the restaurant's consent. Choice A is plausible, but B is a stronger defense because even without the anti-assignment clause, the duty would be non-delegable due to its personal nature. The clause adds strength, but the fundamental nature of the service is the core issue. Choice C is incorrect because an improper delegation is a breach but does not necessarily rise to the level of an anticipatory repudiation unless it is a clear statement of an unwillingness to perform. Here, the chef intended for the contract to be performed, albeit improperly. Choice D is incorrect because the right to demand assurances arises when there are reasonable grounds for insecurity about performance; here, the delegation itself is the breach, and the restaurant is entitled to reject the performance outright, not merely seek assurances.

Question 2

A software company licensed its proprietary accounting software to a large corporation for a five-year term. The license agreement contained the following clause: "All rights and duties under this agreement are non-assignable and non-delegable, and any attempted assignment or delegation shall be void." Two years later, the corporation was acquired by a competitor. As part of the acquisition, all of the corporation's assets and liabilities, including its software licenses, were transferred to the competitor by operation of law.

If the software company seeks to terminate the license, what is its strongest argument? Select one.

The transfer of the license to the competitor constituted a void assignment in breach of the agreement. (correct answer)
The assignment materially increased the risk to the software company by placing its proprietary software in the hands of a competitor.
The transfer by operation of law is not considered an assignment and therefore does not violate the agreement.
The competitor is not bound by the terms of the original license agreement, including the non-assignment clause.

Explanation: The correct answer is A. When a contract contains a clear and unambiguous clause that not only prohibits assignment but also explicitly states that any attempted assignment is 'void,' courts will generally enforce the clause as written. The transfer of the license as part of a corporate acquisition is considered an assignment. Therefore, the transfer to the competitor was a direct violation of this 'voiding' clause, giving the software company the right to terminate the license. Choice B states a valid independent reason why some assignments may be prohibited (material increase in risk), but the explicit language of the contract in Choice A provides a more direct and powerful argument. Choice C is incorrect; a transfer of contract rights as part of a merger or acquisition is generally treated as an assignment for these purposes. Choice D is incorrect; a successor corporation that acquires assets and liabilities is generally bound by the terms of the contracts it assumes.

Question 3

A client entered into a requirements contract with a supplier, under which the supplier would provide all the cement the client needed for his small, local concrete business for one year at a fixed price. The contract was silent on assignment. Six months later, the client sold his business to a large, national construction conglomerate. As part of the sale, the client assigned the requirements contract to the conglomerate. The conglomerate then placed an order with the supplier for ten times the amount of cement the client had historically ordered.

Is the supplier obligated to fill the conglomerate's order? Select one.

Yes, because requirements contracts are generally assignable under the UCC.
Yes, but only up to the amount that the original client would have reasonably required.
No, because any assignment of a requirements contract is a per se material alteration of the supplier's duty.
No, because the assignment is invalid as it would impose a burden on the supplier not contemplated by the original parties. (correct answer)

Explanation: The correct answer is D. While rights under a requirements contract can be assignable under the UCC, the assignment is invalid if the assignee's requirements are unreasonably disproportionate to the original party's stated estimates or normal prior requirements. An assignment is prohibited if it would materially change the duty of the other party or materially increase the burden or risk imposed on them. Here, shifting from a small, local business to a national conglomerate with a tenfold increase in demand represents a massive and unforeseeable increase in the supplier's burden. This material alteration of the duty makes the assignment invalid and unenforceable against the supplier. Choice B is incorrect because if the assignment itself is invalid due to the material change in burden, the supplier is not obligated to supply any amount to the assignee. The proper analysis is that the assignment fails. Choice A is too general and ignores the critical limitation on assignability. Choice C is too absolute; not every assignment of a requirements contract is invalid, only those that unreasonably alter the burden.

Question 4

You are representing a client who operates a custom furniture business. Your client entered into a written contract with a developer to provide 100 identical, standard-model oak desks for a new office building for a total price of $50,000. The contract was silent on assignment and delegation. Your client's workshop became overbooked, so your client entered into a contract with a second furniture maker to produce the 100 desks according to the developer's exact specifications. Your client notified the developer of this arrangement. The developer objects, stating it contracted with your client based on your client's reputation for quality.

What is the most accurate advice to give your client regarding the arrangement with the second furniture maker? Select one.

The delegation is improper because the contract is for custom furniture, making the duties non-delegable.
The delegation is proper, but your client remains liable to the developer if the desks are non-conforming. (correct answer)
The delegation is proper, and it discharges your client's liability, making the second maker solely responsible.
The delegation is improper unless the developer consents, because all contractual duties are presumed non-delegable.

Explanation: The correct answer is B. Contractual duties are generally delegable, unless the contract prohibits delegation or the duty is of a personal nature that requires the specific skill or talent of the obligor. Here, the contract is for 100 identical, standard-model desks. This is a contract for goods that can be produced to specifications and does not involve unique personal skill. Therefore, the duty is delegable. However, a delegation of duties does not discharge the liability of the delegating party (the delegator). Your client remains liable to the developer for the performance of the contract. If the second maker fails to perform or performs defectively, the developer can sue your client for breach. Choice A is incorrect because despite the business being 'custom furniture,' the specific items are standard-model desks, making the duties delegable. Choice C is incorrect because a delegation does not discharge the delegator's liability; only a novation, which requires the obligee's consent, can do that. Choice D is incorrect because the law presumes duties are delegable, not non-delegable.

Question 5

A landscaping company had a contract to provide weekly lawn maintenance for a homeowner for one year. Three months into the contract, the company's owner decided to retire. He sold the business, including all equipment and existing service contracts, to a buyer. The sales agreement included a clause where the buyer "assumes and agrees to perform all service contracts." The buyer continued to service the homeowner's lawn for two months, but then ceased performance entirely. The homeowner had to hire a more expensive service to finish the year.

Against whom does the homeowner have a right to recover damages for the breach of contract? Select one.

Only the original company, because it was the party who signed the contract with the homeowner.
Only the buyer, because the buyer's assumption of the contract created a novation that released the original company.
Both the original company and the buyer. (correct answer)
The buyer, but only if the homeowner can prove that the buyer was a solvent and competent company.

Explanation: The correct answer is C. This fact pattern involves a delegation of duties (servicing the lawn) and an assumption of those duties by the delegatee (the buyer). When a delegatee expressly assumes the duties of the contract, the delegatee becomes directly liable to the obligee for performance. The obligee (homeowner) is an intended third-party beneficiary of the assumption agreement between the delegator and the delegatee. At the same time, the original obligor (the landscaping company/delegator) is not released from its liability simply by delegating its duties. It remains in privity of contract with the homeowner. Therefore, the homeowner can sue both the original company (on the original contract) and the buyer (on the third-party beneficiary assumption agreement). Choice A is incorrect because the assumption creates liability for the buyer. Choice B is incorrect because an assumption does not create a novation without the obligee's express consent to release the original obligor. Choice D is incorrect because the buyer's liability stems from its promise to perform, not from its competence or solvency.

Question 6

A painter contracted with a homeowner to paint the exterior of the homeowner's three-story house for $10,000, with payment due upon satisfactory completion. The painter needed funds immediately to purchase supplies for another job. The painter went to a finance company and signed a document stating, "I hereby transfer my right to payment of $10,000 from the homeowner to the finance company." The finance company paid the painter $8,000. The finance company immediately sent a certified letter to the homeowner notifying her of the assignment. Before the painter began work, he was seriously injured and informed the homeowner he could not perform the job. The homeowner hired another painter for $12,000.

The finance company has sued the homeowner for $10,000. What is the likely outcome of the suit? Select one.

The finance company will recover $10,000, because it is a holder in due course of the right to payment.
The finance company will recover $8,000, because that is the amount of value it gave for the assignment.
The finance company will recover nothing, because the painter's nonperformance is a defense the homeowner can assert against the assignee. (correct answer)
The finance company will recover nothing, because the right to payment was not assignable until the painter had performed the work.

Explanation: The correct answer is C. An assignee takes the assigned right subject to any defenses the obligor could have raised against the assignor. This is often summarized as the assignee 'stands in the shoes' of the assignor. Here, the painter (assignor) failed to perform the contract by not painting the house. This material breach is a complete defense to the homeowner's (obligor's) duty to pay. Because the homeowner could assert this defense against the painter, she can also assert it against the finance company (assignee). Therefore, the finance company will recover nothing from the homeowner. Its remedy is against the painter for breach of warranty of the assignment. Choice A is incorrect because holder-in-due-course status applies to negotiable instruments, not general contract rights. Choice B is incorrect because the amount of consideration paid for the assignment is irrelevant to the amount the assignee can collect from the obligor, which is determined by the underlying contract and any defenses. Choice D is incorrect because rights under an existing contract, even those conditional on future performance, are generally assignable.

Question 7

The finance company has sued the homeowner for $10,000. What is the likely outcome of the suit? Select one.

The finance company will recover $10,000, because it is a holder in due course of the right to payment.
The finance company will recover $8,000, because that is the amount of value it gave for the assignment.
The finance company will recover nothing, because the painter's nonperformance is a defense the homeowner can assert against the assignee. (correct answer)
The finance company will recover nothing, because the right to payment was not assignable until the painter had performed the work.

Question 8

A construction company entered into a contract with a landowner to build a warehouse for $500,000. The contract contained a clause that read: "This contract is not assignable." Needing to finance the project, the construction company obtained a loan from a bank and, as collateral, executed a written instrument assigning its right to future payments under the contract to the bank. The bank promptly notified the landowner of the assignment. The construction company completed the warehouse according to the contract specifications, but the landowner, citing the contract clause, paid the $500,000 directly to the construction company.

In a suit by the bank against the landowner for the $500,000, which party is likely to prevail? Select one.

The landowner, because the contract explicitly prohibited assignment, rendering the assignment to the bank void.
The landowner, because payment to the construction company discharged the landowner's duty.
The bank, because the contract clause is interpreted as only prohibiting the delegation of duties, not the assignment of rights.
The bank, because the landowner's payment to the construction company after receiving notice of the assignment was improper. (correct answer)

Explanation: The correct answer is D. Courts generally construe clauses that prohibit the 'assignment of the contract' narrowly. Such a clause is typically interpreted to bar only the delegation of the assignor's duties, not the assignment of the right to receive payment. To effectively prohibit the assignment of rights, the language must be very specific (e.g., 'any assignment of rights under this contract is void'). Therefore, the assignment of the right to payment to the bank was valid (Choice C correctly states the legal principle, but D provides the ultimate outcome). Once an obligor receives notice of a valid assignment, their duty to pay is owed to the assignee. Payment to the original obligee (the assignor) does not discharge the duty. Here, the landowner had notice of the valid assignment to the bank but paid the construction company anyway. This payment was improper, and the landowner remains liable to the bank. Choice A is incorrect because the clause is not sufficient to void the assignment of rights. Choice B is incorrect because payment to the assignor does not discharge the duty after notice of assignment.

Question 9

A manufacturer entered into a contract to sell 1,000 widgets to a retailer. The contract stated: "This agreement may be assigned by either party." The retailer, seeking to streamline its operations, assigned "the contract" to a second retailer. The second retailer sent a purchase order for the 1,000 widgets to the manufacturer. The manufacturer, concerned about the second retailer's creditworthiness, refused to ship the widgets.

Under UCC Article 2, which of the following is the most accurate statement of the manufacturer's rights? Select one.

The manufacturer must deliver the widgets because the contract expressly permitted assignment.
The manufacturer may treat the assignment as creating reasonable grounds for insecurity and may demand assurances of performance. (correct answer)
The manufacturer may refuse to deliver because the assignment of 'the contract' was an improper delegation of the duty to pay.
The manufacturer must deliver the widgets because the first retailer remains liable for the contract price.

Explanation: The correct answer is B. Under UCC § 2-210, an assignment of 'the contract' is construed as both an assignment of rights and a delegation of duties. While the delegation is generally permissible, the original obligee (the manufacturer) has a substantial interest in having their original contracting party perform. The UCC provides that the obligee may treat any assignment which delegates performance as creating reasonable grounds for insecurity. This gives the obligee the right to demand assurances of due performance from the assignee (the second retailer) without prejudice to their rights against the assignor. The manufacturer is not required to ship until such assurance is received. Choice A is incorrect because the right to demand assurances qualifies the duty to perform. Choice C is incorrect because the delegation of the duty to pay is generally permissible. Choice D is incorrect because while the first retailer does remain liable, this does not negate the manufacturer's right to demand assurances from the party who is now expected to perform.

Question 10

A consulting firm contracted to provide marketing services to a corporation for one year at a rate of $20,000 per month. The consulting firm immediately assigned its right to payment for the last month of the contract (the twelfth month) to a lender to satisfy a pre-existing debt. The lender did not notify the corporation. The consulting firm provided services for ten months. In the eleventh month, the consulting firm and the corporation mutually agreed to terminate the contract, with the corporation paying a final settlement of $10,000. The lender learned of this and sued the corporation for $20,000.

Is the lender likely to succeed in its suit against the corporation? Select one.

Yes, because the assignment was for value and thus irrevocable by the consulting firm.
Yes, because the corporation's agreement to terminate the contract could not defeat the lender's vested rights.
No, because the parties to the original contract can modify it until the obligor receives notice of the assignment. (correct answer)
No, because the assigned right to payment for the twelfth month never vested since the contract was terminated.

Explanation: The correct answer is C. The assignor and the obligor are free to modify the contract, and such a modification is effective against the assignee, so long as the obligor has not yet received notice of the assignment. Here, the lender (assignee) never notified the corporation (obligor) of the assignment. Therefore, the consulting firm (assignor) and the corporation were free to modify their contract, which they did by terminating it early. This modification is effective against the lender. The right to the twelfth payment, which was the subject of the assignment, was extinguished by this valid modification. Choice A is incorrect because the irrevocability of the assignment as between the assignor and assignee does not prevent the assignor and obligor from modifying the contract before notice. Choice B is incorrect because the assignee's rights have not 'vested' against the obligor until the obligor receives notice. Choice D is close, but C states the more precise legal rule: the ability to modify exists until notice is given.

Question 11

A homeowner entered into a written contract with a roofing company to replace her roof for $15,000. The contract specified that a particular brand of high-end shingles be used. The roofing company, being short on crews, delegated the work to a subcontractor. The subcontractor was an experienced roofer but was not an employee of the roofing company. The subcontractor completed the job but used a different, less expensive brand of shingles, resulting in a roof of inferior quality. The homeowner refused to pay.

The roofing company has sued the homeowner for the $15,000 contract price. Which of the following is the homeowner's best defense? Select one.

The roofing company's duties were non-delegable because the contract was for a specialized service.
The delegation was improper because the homeowner did not consent to the use of a subcontractor.
The subcontractor's failure to use the specified shingles constituted a material breach of the contract. (correct answer)
The use of a subcontractor automatically terminated the original contract with the roofing company.

Explanation: The correct answer is C. Even if a duty is properly delegated, the delegator remains liable for performance of the contract. The obligee's contractual rights are against the delegator. Here, the contract required a specific brand of high-end shingles. The subcontractor's use of an inferior brand constituted a failure of performance and, given the likely difference in quality and value, would be considered a material breach. This material breach by the subcontractor is treated as a material breach by the original roofing company, giving the homeowner a defense to her duty to pay the contract price. Choices A and B are incorrect because roofing work, while skilled, is generally considered delegable, and consent is not typically required unless the contract so provides or it's a unique personal service. The duty was delegable, but the performance was defective. Choice D is incorrect; a delegation does not terminate the original contract.

Question 12

If the software company seeks to terminate the license, what is its strongest argument? Select one.

The transfer of the license to the competitor constituted a void assignment in breach of the agreement. (correct answer)
The assignment materially increased the risk to the software company by placing its proprietary software in the hands of a competitor.
The transfer by operation of law is not considered an assignment and therefore does not violate the agreement.
The competitor is not bound by the terms of the original license agreement, including the non-assignment clause.

Question 13

Under UCC Article 2, which of the following is the most accurate statement of the manufacturer's rights? Select one.

The manufacturer must deliver the widgets because the contract expressly permitted assignment.
The manufacturer may treat the assignment as creating reasonable grounds for insecurity and may demand assurances of performance. (correct answer)
The manufacturer may refuse to deliver because the assignment of 'the contract' was an improper delegation of the duty to pay.
The manufacturer must deliver the widgets because the first retailer remains liable for the contract price.

Question 14

You are representing a hospital. The hospital provided $50,000 in medical services to a patient who was injured in a car accident. Upon admission, the patient signed a document stating, "I hereby assign to the hospital so much of my recovery from any legal action related to this accident as is necessary to pay my bill." The patient later hired an attorney and won a $100,000 judgment against the driver who caused the accident. The driver's insurance company, which had received notice of the assignment, paid the full $100,000 directly to the patient.

What is the hospital's best course of action to recover the $50,000? Select one.

Sue the patient, because the insurance company properly discharged its duty by paying the judgment creditor.
Sue the insurance company, because it failed to honor the assignment after receiving notice. (correct answer)
File a medical lien against the patient's property, as the assignment is likely unenforceable against third parties.
Sue the patient's attorney for failing to protect the hospital's interest in the recovery.

Explanation: The correct answer is B. The patient made a valid assignment of a future right (proceeds from a lawsuit) to the hospital. Once the right came into existence (upon judgment), the assignment attached. The insurance company (the obligor) had notice of this assignment. When an obligor has notice of a valid assignment, it must pay the assignee to discharge its duty. By paying the patient (the assignor) instead of the hospital (the assignee), the insurance company did not discharge its obligation to the hospital. Therefore, the hospital can sue the insurance company directly for the assigned amount. While the hospital also has a claim against the patient for conversion of the funds (Choice A), the stronger and more direct claim is against the obligor who ignored the notice. Choice C is incorrect because the assignment is a valid contractual device. Choice D is incorrect because the attorney's primary duty is to the client, not the client's creditors, although some jurisdictions do have rules regarding protecting known lienholders.

Question 15

A farmer entered into a written agreement to sell his entire upcoming season's wheat crop to a grain company for a fixed price. The contract provided that the grain company would pay the farmer upon delivery. The farmer then assigned his right to payment under the contract to a bank as security for a loan. Later, a severe drought destroyed half of the farmer's crop. The farmer delivered the remaining half of the crop to the grain company, which paid the farmer directly for the quantity delivered. The bank, having received no payment, sued the grain company.

Assuming the bank gave proper notice of the assignment to the grain company, what is the bank's most likely recovery from the grain company? Select one.

The full original contract price, because the grain company should have paid the bank.
The value of the wheat that was delivered, because the grain company improperly paid the farmer after notice. (correct answer)
Nothing, because the farmer's duty to deliver the full crop was discharged by impracticability.
Nothing, because the grain company's payment to the farmer discharged its obligation.

Explanation: The correct answer is B. The bank, as the assignee, stands in the shoes of the farmer (assignor). The grain company's (obligor's) duty to pay is conditioned on the farmer's delivery of the wheat. Due to the drought, the farmer's duty to deliver the full crop was likely partially discharged under the doctrine of impracticability. However, a duty to pay arose for the wheat that was actually delivered. Because the bank had given notice of the assignment, the grain company's duty to pay for the delivered wheat was owed to the bank, not the farmer. By paying the farmer directly, the grain company did not discharge its obligation to the bank. Therefore, the bank can recover from the grain company the amount that was due for the delivered wheat. Choice A is incorrect because the full contract price was never due, as the condition of delivering the full crop was not met. Choice C is incorrect because a duty to pay arose for the portion of the crop that was delivered. Choice D is incorrect because payment to the assignor after notice does not discharge the obligor's duty to the assignee.

Question 16

If the chef sues the restaurant for breach of contract, what is the restaurant's strongest defense? Select one.

The contract provision prohibiting assignment also prohibited the delegation of the chef's duties.
The chef's duties were non-delegable because they involved unique personal skill and judgment. (correct answer)
The chef's arrangement with the protégé constituted an anticipatory repudiation of the contract.
The restaurant was entitled to demand assurances of performance from the protégé before allowing him to work.

Question 17

An art collector hired a famous artist to paint a portrait of the collector's spouse for $50,000. Before the painting was started, the collector sold his business and assigned his right to the portrait to the purchaser of the business, a corporation that wanted the portrait for its boardroom. The artist refused to paint the portrait for the corporation.

If the corporation sues the artist for specific performance, is the corporation likely to prevail? Select one.

Yes, because the right to receive goods or services is freely assignable.
Yes, because the corporation is a valid assignee of the collector's contract rights.
No, because a contract for a portrait is a personal services contract.
No, because the assignment would materially alter the artist's duty. (correct answer)

Explanation: The correct answer is D. While the duty to perform a personal service (painting the portrait) is not delegable, the right to receive the performance may be assignable unless the assignment would materially change the obligor's duty. Here, the artist's duty was to paint a portrait of a specific person (the collector's spouse). The assignment to the corporation presumably changes the subject of the portrait to a corporate officer or a different theme for the boardroom. This is a material alteration of the artist's duty. The artist contracted to apply her unique skill to a specific subject, and she cannot be compelled to paint a different one. Therefore, the right was not assignable under these circumstances. Choice C is incorrect because it confuses the non-delegability of the artist's duty with the non-assignability of the collector's right. The personal services nature of the contract is the reason the duty is altered, but the direct legal reason for the assignment's failure is the material change in the obligor's (artist's) duty. Choices A and B are incorrect because they fail to account for the material change in duty limitation on assignability.

Question 18

A client hired an attorney to represent him in a personal injury lawsuit for a 30% contingency fee. The representation agreement stated, "The attorney shall not delegate her duties under this agreement. No rights under this agreement may be assigned by either party, and any such attempted assignment is void." After months of work, the attorney's law firm merged with a larger firm. As part of the merger, the attorney assigned the client's case and the right to the contingency fee to the new firm. The client was informed of the change and did not object.

Has a valid assignment of the right to the fee occurred? Select one.

Yes, because the client's failure to object constituted a waiver of the anti-assignment clause.
Yes, because assignments of law firm assets during a merger are an exception to general contract principles.
No, because the contract language made the attempted assignment of the right to the fee ineffective. (correct answer)
No, because a contingency fee agreement is a personal services contract and the rights are not assignable.

Explanation: The correct answer is C. When an anti-assignment clause explicitly states that an attempted assignment is 'void,' courts strictly construe and enforce that language. Such a provision extinguishes the power to assign, meaning any attempt to do so is a legal nullity. The assignment to the new firm was therefore ineffective from the outset. Choice A is incorrect because one cannot 'waive' an act that is legally void. The client's silence cannot breathe life into a void assignment, although the client could potentially form a new contract with the new firm. Choice B is incorrect as there is no general exception for law firm mergers that overrides explicit contract terms. Choice D is incorrect because while the duty to represent the client is personal and non-delegable, the right to a fee is a right to payment, which is generally assignable, absent a valid anti-assignment clause. The clause itself, not the nature of the right, is what prevents the assignment here.

Question 19

An inventor granted a company an exclusive license to manufacture and sell her patented invention for a ten-year period in exchange for a 5% royalty on all sales. The license agreement was silent as to assignment. Two years later, the inventor, wishing to fund a new project, obtained a loan from a bank. As security, she signed a document stating: "I hereby assign to Bank my rights to all future royalties under my license agreement with Company." The bank did not notify the company. A year later, the inventor defaulted on her loan.

Which of the following describes the bank's rights with respect to the royalties? Select one.

The bank has no rights, because the assignment of rights under a patent license is invalid without the licensee's consent.
The bank has no rights, because an assignment of future rights is not a valid present assignment.
The bank has an enforceable right against the inventor to have the royalties paid to it, but no right against the company until the company is notified. (correct answer)
The bank has an enforceable right against the company to collect the royalties directly, regardless of notice.

Explanation: The correct answer is C. The assignment of the right to receive future royalty payments under an existing contract is a valid present assignment of a contract right. It is not an invalid assignment of 'future rights' because the right stems from an existing contract. The assignment is effective between the inventor (assignor) and the bank (assignee) immediately. However, to make the assignment effective against the company (the obligor), the bank must give notice. Until the company receives notice, it is entitled to continue paying the inventor, and such payments will discharge its duty for that period. Therefore, the bank has rights against the inventor but cannot enforce them against the company until notice is given. Choice A is incorrect; while the delegation of duties under a patent license might be restricted, the right to receive payment (royalties) is generally assignable. Choice B is incorrect because the rights arise from an existing contract. Choice D is incorrect because notice to the obligor is required to bind it to pay the assignee.

Question 20

A playwright granted a theater company the exclusive rights to perform her new play for one year. The agreement required the theater company to pay the playwright a royalty of 15% of the gross ticket sales. The theater company, struggling financially, delegated its duty to perform the play and assigned its rights to a second, more prestigious theater company. The playwright objected to the arrangement, arguing that she chose the original company because its smaller, more intimate venue was perfect for her play, and the second company's large, commercial stage would ruin the play's artistic integrity.

If the playwright seeks to enjoin the second theater company from performing the play, what is her strongest argument? Select one.

The contract was a personal services contract, and the theater company's duties were non-delegable. (correct answer)
The delegation materially altered the playwright's expected return, as the new venue might not be successful.
The contract created an exclusive dealing arrangement that is non-delegable without consent.
The delegation is invalid because it violates the playwright's artistic and creative interests in the performance.

Explanation: The correct answer is A. A duty is non-delegable if the obligee has a substantial interest in having the original obligor perform. This is often the case in personal services contracts. While a theater company is a business entity, a contract granting it exclusive rights to perform a new play can be considered personal in nature. The playwright relied on the specific reputation, artistic direction, venue, and production style of the original company. Delegating the performance to a different company with a different venue and style represents a material change that defeats the playwright's legitimate expectations. Therefore, the duty to perform the play was personal to the original company and non-delegable. Choice D is the consequence of the rule in A, but A states the more precise legal doctrine. Choice B is speculative; the new venue might be more successful. The harm is the loss of the bargained-for artistic performance, not necessarily financial. Choice C is incorrect; while it was an exclusive arrangement, that alone does not make the duties non-delegable; the personal nature of the performance is the key.