Under the terms of a written contract, Karp agreed to construct for Manor a garage for $10,000. Nothing was said in the parties' negotiations or in the contract about progress payments during the course of the work. For this question only, assume the following facts. After completing 25% of the garage strictly according to Manor's specifications, Karp assigned his rights under the contract to Banquo as security for an $8,000 loan. Banquo immediately notified Manor of the assignment. Karp thereafter, without legal excuse, abandoned the job before it was half-complete. Karp subsequently defaulted on the loan from Banquo. Karp has no assets. It will cost Manor at least $8,000 to get the garage finished by another builder. If Banquo sues Manor for $8,000, which of the following will the court decide? 
Banquo wins, because the Karp-Manor contract was in existence and Karp was contract was in existence and Karp was not in breach when Banquo gave Manor notice of the assignment.  Banquo wins, because Banquo as a secured creditor over Karp is entitled to priority over Manor's unsecured claim against Karp.  Manor wins, because his right to recoupment on account of Karp's breach is available against Banquo as Karp's assignee.  Manor wins, because his claim against Karp arose prior to Karp's default on his loan from Banquo. 
Question: Under the terms of a written contract, Karp agreed to construct for Manor a garage for $10,000. Nothing was said in the parties' negotiations or in the contract about progress payments during the course of the work. For this question only, assume the following facts. After completing 25% of the garage strictly according to Manor's specifications, Karp assigned his rights under the contract to Banquo as security for an $8,000 loan. Banquo immediately notified Manor of the assignment. Karp thereafter, without legal excuse, abandoned the job before it was half-complete. Karp subsequently defaulted on the loan from Banquo. Karp has no assets. It will cost Manor at least $8,000 to get the garage finished by another builder. If Banquo sues Manor for $8,000, which of the following will the court decide? 
A. Banquo wins, because the Karp-Manor contract was in existence and Karp was contract was in existence and Karp was not in breach when Banquo gave Manor notice of the assignment. 
B. Banquo wins, because Banquo as a secured creditor over Karp is entitled to priority over Manor's unsecured claim against Karp. 
C. Manor wins, because his right to recoupment on account of Karp's breach is available against Banquo as Karp's assignee. 
D. Manor wins, because his claim against Karp arose prior to Karp's default on his loan from Banquo. 
Answer: