Question

1. In May 2018, Miguel Rojas visited Bill Yung's fourth-floor accounting offices in the Trump Building. Before Miguel left, he hired Bill, a CPA, to prepare his 2018 tax returns due no later than April 15, 2019.

Each month, Miguel provides Bill with updated income and expense data which Bill used to determine Miguel's 2018 tax obligations.

Finding that his workload is getting too large, Bill delegates Miguel's tax work to Kathy Bray. Kathy, also an experienced CPA, operates her own tax service firm located on the second floor of the adjacent Clinton Building. Bill's delegation is:

a. enforceable, as Kathy is also a CPA.

b. not enforceable, as Miguel hired Bill to perform personal services.

c. not enforceable, as this violates public policy.

d. enforceable, as there was no expectation Bill would do the work himself.

2. Jeanne supplies cage-free, free-range, organic chicken eggs to the upscale, Gelson's Supermarkets. Gelson's owes her $15,000 and she orally assigns her right to the money to her grandson Spencer for his 16th birthday. This assignment is:

a. irrevocable once Jeanne has told Spencer about the gift.

b. valid even though it was oral and there was no consideration from Spencer.

c. not valid because Spencer gave no consideration for the assignment.

d. not valid because it was not in writing.

e. not valid because Spencer is a minor.

Answer 1

Ans 1. (d) Enforceable, as there was no expectation Bill would do the work himself.

The situation comes under the concept of sub-contracting, where Bill sub-contracted the work to Kathy. This is permissible under the US Subcontracting Law, where, a subcontractor is a person who is awarded a portion of an existing contract by a principal or general contractor. The subcontractor performs work under a contract with a general contractor, rather than the employer who hired the general contractor.

Ans 2. (b) valid even though it was oral and there was no consideration from Spencer.

This come under the scope of Assignment Law. The assignment does not necessarily have to be in writing; however, the assignment agreement must show an intent to transfer rights. The effect of a valid assignment is to extinguish privity between the assignor and the third-party obligor and create privity between the obligor and the assignee.