371712365 RFBT Contracts Soriano PDF

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EXERCISES IN CONTRACTS INCLUDING CPA EXAMINATION QUESTIONSTRUE OR FALSE Obligations and contracts are identical. FALSE The object of a contract of sale is its subject matter. TRUE If a valid contract is novated to void contract, both contracts are considered void. FALSE. The novation is void, but th...

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EXERCISES IN CONTRACTS INCLUDING CPA EXAMINATION QUESTIONS TRUE OR FALSE 1. Obligations and contracts are identical. 2. The object of a contract of sale is its subject matter. 3. If a valid contract is novated to void contract, both contracts are considered void. 4. Without contract, a person cannot be liable to another.

FALSE TRUE

FALSE. The novation is void, but the original contract subsists False. Sources of obligations are: 1) Law 2) Contracts 5. Consummation of a contract is manifested by FALSE? the offer and acceptance. Maybe perfection 6. The statement of a false cause in contracts shall ??? TRUE render them void, if it should not be proved that The cause is presumed to be valid they were founded upon another cause which is and subsisting true and lawful. 7. Annulment is available only to persons who are GENERALLY: TRUE, obliged principally or subsidiarily. It is not However, if third persons’ rights are available to third persons. prejudicially affected, they can assail the contract 8. If mistakes, fraud, inequitable conduct, or TRUE. accident has prevented a meeting of the minds of the parties, the proper remedy is not Reformation is proper when there reformation of the instrument but annulment of was meeting of the minds but the the contract. true intention of the parties is not shown on the contract 9. The action or defense for the declaration of the TRUE inexistence of void contract does not prescribe. 10. Voidable contracts cannot be ratified. FALSE. Only void contracts cannot be ratified. Ratification may be express or tacit. When tacit, the reason for the voidability must have ceased, and the person who has the right to invoke ratification should execute an act which necessarily implies an intention to waive his right 11. A contract which is the direct result of a previous TRUE illegal contract, is also void and inexistent. 12. An offer becomes effective even with the death TRUE. of either party after acceptance is conveyed. 13. When one party is insane and the other is an In that they cannot give consent, unemancipated minor, the contract is TRUE unenforceable. 14. Accidental elements of a contract are those TRUE agreed upon by the parties, and cannot exist without being stipulated. 15. X advertised his lot for sale in a newspaper of FALSE. By meeting the offer with his general circulation. The advertisement states: acceptance, there has been consent. “For sale: 500 sq. m. located at No. 3333 Buendia Avenue, Makati, Metro Manila. Price: P500,000.00. Term of payment: Cash only”. W accepted the offer by sending a letter to X which the latter received. X can still back out from his offer because his advertisement is merely an invitation to make an offer.

16. Unless it appears otherwise, business advertisement of things for sale are not definite offers, but mere invitations to make an offer. 17. The contracting parties may establish such stipulation, clauses, terms and conditions as they may deem convenient, provided they are not contrary to law, morals, good customs, public order, or public policy. 18. Contacts must bind both contracting parties; their validity or compliance cannot be left to the will of one of them. 19. Contracts take effect only between the contracting parties.

TRUE

TRUE. Freedom to contract

TRUE. Principle of mutuality?

…FALSE?

…their heirs and assigns, unless the rights are intransmissible by nature, stipulation or law. 20. Consensual contracts are not perfected until the FALSE. This is characteristic of a delivery of the object of the obligation. REAL Contract 21. Real contracts are perfected by mere consent. FALSE. Consensual contracts 22. An offer becomes ineffective upon the death, TRUE civil interdiction, insanity, or insolvency of either party before acceptance is conveyed. 23. When the offer has allowed the offeree a certain Suggested answer: TRUE period to accept , the offer may be withdrawn at any time before acceptance, except when the FALSE. By communicating such option is founded upon a consideration, as withdrawal something paid or promised. 24. Acceptance made by letter or telegram does not TRUE bind the offerer except from the time it came to his knowledge. The contract, in such a case, is presumed to have been entered into in the place where the offer was made. 25. When the offerer has allowed the offeree a TRUE certain period to accept, the offer may be withdrawn at any time before acceptance by communicating such withdrawal, except when the option is found upon a consideration as something paid or promised. 26. Mutual promise to marry if orally entered into is FALSE. Unless to be performed for unenforceable. more than one year 27. The action for annulment on the ground of fraud FALSE. Four years from the shall be brought within four (4) years from the DISCOVERY of fraud or mistake. time of the perfection of contract. 28. Misrepresentation made is good faith is not TRUE fraudulent but may constitute error. 29. In order that fraud may make a contract TRUE voidable, it should be serious and should not have been employed by both contracting It must be the reason why the other parties. Incidental fraud only obliges the party entered into the contract. person employing it to pay damages. 1170. fraud in the performance of an obligation warrants damages 30. If one party was mistaken and the other acted REFORMATION IS CORRECT fraudulently or in such a way that the instrument ACTION, FALSE does not show their true intention, the former may ask for the annulment of the instrument. 31. The interpretation of obscure words or TRUE stipulations in a contract shall not favor the party who caused the obscurity. 32. Advertisement for bidders are simply invitations TRUE to make proposals, and the advertiser is not

bound to accept the highest or lowest bidder, unless the contrary appears. 33. Contracts entered into during a lucid interval are valid. Contracts agreed to in a state of drunkenness or during a hypnotic spell are binding. 34. In order that mistake may invalidate consent, it should refer to the substance of the thing which is the object of the contract, or to those conditions which have principally moved one or both parties to enter into the contract. 35. A threat to enforce one’s claim through competent authority, if the claim is just or legal, does not vitiate consent. 36. Violence or intimidation shall not annul be obligation, if it was employed by a third person who did not take part in the contract. 37. Failure to disclose facts, when there is a duty to reveal them, as when the parties are bound by confidential relations, constitutes fraud. 38. A mere expression of an opinion does not signify fraud, unless made by an expert and the other party has relied on the former’s special knowledge. 39. Contracts take effect only between the parties, their assigns and heirs, except in cases where the rights and obligations arising from the contract are not transmissible by their nature, or by stipulation or by provision of law. The heir is not liable beyond the value of the property her received from the decedent. 40. If one or both debts are voidable, the same may be compensated provided they are not yet avoided. 41. An agreement by its term that it be performed within a year from the making thereof is enforceable even if entered into orally. 42. An offer made through an agent is perfected from the time acceptance is communicated to the principal. 43. If the cause is not stated in the contract, it is presumed that it is unlawful. 44. When the real agreement of the parties stated in a contract is void, the parties can ask for reformation of the instruments. 45. By provision of the law on contracts, where the amount involved in the contract exceeds P500, it must appear in writing or in public instrument. A contracted a loan of P5,000 from B which is not reduced in public instrument or writing. B cannot recover the loan because the contract is not valid. 46. In the case of an illegal contract where there is a criminal offense, the parties cannot be prosecuted if they are both in pari-delicto. 47. Persons who are capable cannot allege the incapacity of those with whom they contracted. 48. The action for rescission is subsidiary; it cannot be instituted except when there is no other legal

TRUE. Binding meaning valid? Yes. Because they are voidable, i.e. valid until annulled. TRUE

TRUE

FALSE. It shall annul, even though made by person not a party to the contract TRUE

TRUE

TRUE

TRUE. VALID UNTIL ANNULLED

TRUE. Statute of Frauds only apply when it is to be performed for more than a year TRUE. As long as the acceptance of the principal is absolute FALSE. It is presumed valid and existing FALSE. There is nothing to reform if the real agreement is void Apparently this refers to 1358, which only requires a public instrument, or that the contract be in writing, FOR CONVENIENCE. This does not bar the validity of the contract, which B may have the contract be in writing. FALSE FALSE. They will both be prosecuted nonetheless. TRUE. TRUE. In contrast to annulment

means to obtain reparation for damages suffered. 49. Void contracts cannot be retified. Neither can TRUE the right to set up the defense of illegality be waived. 50. Delivery of the subject matter is necessary to the False. It is a consensual contract, but perfection of the contract of sales. ownership only passes by delivery, actual or constructive 51. Contracts entered into during a lucid interval are VALID. FALSE voidable. 52. There is intimidation when in order to wrest FALSE. This is violence consent, serious or irresistible force is employed. 53. Misrepresentation made in good faith is not TRUE fraudulent but may constitute error. 54. Cause is the essential or more proximate TRUE? purpose which the parties have in view of entering into the contract. 55. Contracts shall be obligatory, in whatever form TRUE. For solemn or formal they may have been entered into, provided all contracts the essential requisites for their validity are present. 56. When, there having been a meeting of the minds TRUE of the parties to a contract, their true intention is not expressed by reason of mistake, fraud, inequitable conduct or accident, one of the parties may ask for the reformation of the instrument. 57. Qualified acceptance is considered counter- TRUE, which effects no meeting of offer. the minds 58. Consent is the manifestation of the meeting of TRUE the offer and the acceptance upon the thing and the cause of the contract. 59. Acceptance made by letter or telegram does not TRUE bind the offerer except from the time it came to his knowledge. 60. Contracts agreed to in a state of drunkenness or TRUE. ALTHOUGH VOIDABLE, VALID during a hypnotic spell are valid. UNTIL ANNULLED 61. Dolo causante shall make a contract voidable. TRUE 62. Dolo incidente only obliges the person TRUE employing it to pay damages. OBLICON MULTIPLE CHOICE 1. These persons are bound by contracts: a. Contracting parties b. Assigns or Assign c. Heirs d. All of them 2. Who is liable for the loss of the subject matter by fortuitous event? a. Creditor b. Debtor c. Both creditor and debtor d. None of them 3. Contract that is made for a valuable consideration is: a. Onerous b. Gratuitous c. Onerous and gratuitous d. None of the them

D

D

A

4. A intimidated B to marry A’s daughter. After a year, B would like to file action for annulment but could not do so because A was around to intimidate him. The marriage contract is: a. Resicissible b. Voidable c. Void d. unenforceable 5. The following, except one, are the characteristics of void or inexistent contract. Which is the exception? a. The defense of illegality of the contract is available to third persons whose interests are not directly affected. b. They are not subject to ratification. c. The right to raise defense of illegality cannot be waived. d. The action or defense for declaration of their nullity or inexistence of the contract does not prescribe. 6. Example 1: G, guardian of W, sold W’s house valued at P50,000 for P37,500 or a lesion by onefourth of the value Example 2: S sold his house valued at P50,000 for only P10,000 because S did not know the true value of the house. a. Both contracts are rescissible. b. Only no. 1 is rescissible. c. No. 2 is voidable because there is an error or mistake. d. Both contracts are valid and enforceable. 7. When there is concurrence of offer and acceptance, there is: a. Payment b. Revocation c. Consent d. None of the above 8. Essential requisites of a contract: a. Consent b. Cause c. Subject d. All of them 9. A contract where both parties are incapable of giving consent is: a. Void b. Voidable c. Unenforceable d. rescissible 10. the stage of “conception” of a contract is: a. When the contract is fully executed. b. When the parties come to an agreement. ) c. When negotiations are in progress. d. When there is a meeting of the parties’ ) ) minds.

B

A

D Even though there is lesion in no. 2, this is not one of the contracts listed rescissible by the code.

C

D

C

C

Preparation: Conception generation Perfection (birth) Consummation (death termination) 11. In order that fraud may make a contract C voidable, a. It may be incidental but should have been employed by both parties.

or

or

b. It should be serious and the parties must be in pari delicto. c. It should be serious and should not have been employed by both contracting parties. d. It may be incidental but both parties should not be in pari delicto. 12. Simulation of Contract – Absolute or relative. Relative when: a. Parties are not bound at all. b. The contract is void. c. The parties conceal their true agreement. d. None of the above. 13. Mr. Esguerra, a former government employee, suffered from severe paranoia and was confined in the mental hospital in 2001. After his release, he was placed under the guardianship of his wife to enable him to get his retirement pay. In 2004 he became a mining prospector and sold the mining claims. In 2007, he sued to annul the sale claiming that he was mentally incapacitated at the time of sale. The sale in question was: a. Illegal b. Void c. Voidable d. valid 14. Which of the following contracts is enforceable even if not executed in writing? a. Lease of personal property for 2 years. b. An agreement for the sale of immovables. c. Lease of immovables for a period longer that one year. d. A representation as to the credit of a third person. e. None of the above. 15. A contract where one of the parties is incapabale of giving consent is: a. Resicissible b. Voidable c. Void d. Unenforceable e. None of the above. 16. In three of the following defective contracts, ratification cleanses the defects. Which is the exception? a. Both parties are incapable of giving consent. b. Sale of immovable property or interest orally entered into. c. Sale of a piece of land thru an agent, the authority is oral. d. Contracts entered into by a person who has been given no authority. 17. In a contract, as written, D promises to pay C P10,000 on September 15, 2012. The consideration received by D is not stated in the contract. a. The contract is valid because the cause is always presumed to exist.

C

C Because his incapacity did not end? Or D, because by becoming a mining prospector he had become sane?

A. MUST BE OF REAL PROPERTY TO BE REQUIRED TO BE IN WRITING E Or B, because immoveables might not refer to real property?

B

C, sale itself is void.

A

b. The contract is valid so long as it is in writing. c. The contract is valid because cause is not essential to a contract. d. The contract is void because the cause is not stated. 18. S entered into a contract with B by threatening B because the threat is unjust and B that if B does not agree to make the contract, not legal? S will publish defamatory matter concerning B’s wife. a. The contract is valid because the defamatory matter to be published does not relate to B, the contracting party. b. The contract is voidable because such publication when carried out whether true or not will cause a serious harm to B and his wife. c. The contract is unenforceable but B is entitled to damages the moment the publication is made. d. Contract is void. 19. Example no. 1: D owes C P10,000 due on In no. 2 both debts are valid until December 25. C owes D P6,000 due on annulled, thus legal compensation December 25. D’s obligation is guaranteed by G. may take place Example no. 2: D owes C P10,000 payable on D December 25. Later, D, through intimidation, was able to make C sign a promissory note stating that C is indebted to D for the same amount. In here, D cannot be required to pay C P10,000 because he (D) can set up compensation against C. a. Both examples are true. b. Both are false. c. Only no. 1 is true; No. 2 is false. d. Only no. 2 is true; No. 2 is false. 20. Valid until annulled unless there has been a C ratification: a. Rescissible contract. b. Inexistent contract. c. Voidable contract. d. None of the above. 21. Contracts that cannot be sued upon unless B ratified: a. Voidable b. Unenforceable c. Rescissible d. None of the above 22. Which of the following contract is voidable? C a. Those whose object is outside the commerce of men. b. Those whose are absolutely fictitious. c. Those where one of the parties is incapacitated. d. Those which contemplate an impossible service. 23. The duty not to recover what has voluntarily A been paid, although payment was no longer required: a. Natural obligation b. Moral obligation c. Civil obligation

d. None of the above 24. Which of the following contacts is voidable? a. Those where both parties are incapable of giving consent to a contract. b. Those undertaken in fraud of creditors when the latter cannot in any other manner collect the claims due them. c. Those where the consent is vitiated by mistake, violence, intimidation, undue influence or fraud. d. Those whose object is outside the commerce of men. 25. Which of the following contract is rescissible? a. Those where one of the parties is incapable of giving consent to a contract. b. Those where both parties are incapable of giving consent to a contract. c. Those which are entered into by guardians whenever the wards whom they represent suffer a lesion of more than ¼ of the value of the object of the contract. d. Those which are absolutely simulated or fictitious. 26. Rescission of contract can take place in this case: a. When the things which are the object of the contract are legally in the possession of third persons who acted in good faith. b. When he who demands rescission can return whatever he may be obliged to restore. c. When the party seeking resolution can perform only as to part and rescind as to remainder. d. When the seller cannot return the installments paid to him by the buyer. 27. L entered into a contract of lease with X. T, the clerk of L, typed the document. Due to T’s negligence, the document made was that of sales instead of lease. a. The remedy is annulment. b. Parties may go to court for interpretation. c. Parties may enforce their right because it is enforceable. d. None of the above. 28. S owns an oil painting. Being in need of money, S sold the painting to B for P1,000. After the sale, S discovered that the painting was valuable and worth P5,000. a. S may rescind the contract on ground of lesion or inadequacy of cause. b. S may annul the contract on ground of fraud. c. S may annul the contract on ground of error. d. B is entitled to the benefit of the contract because it is valid and binding. 29. G was appointed guardian of S, the latter being 16 years old. S sold his parcel of land in writing to B valued at P100,000 for P75,000, suffering

C

C

B

D. the proper remedy is reformation of the instrument

D

D. SALE BY A MINOR!

lesion by ¼ of the value. What is the status of the contract? a. Rescissible b. Unenforceable c. Enforceable d. voidable 3...