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BUSINESS LAWQuiz – Law on Contracts-PART 1 A sent B a letter wherein the former offered to sell his car to the latter for P1M. B signified his intention that he may buy the same. In A’s letter, he gave B two weeks to raise the amount .After one week A raised the price to P1 Can B compel A to accept ...

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BUSINESS LAW Quiz – Law on Contracts-PART 1

1. A sent B a letter wherein the former offered to sell his car to the latter for P1M. B signified his intention that he may buy the same. In A’s letter, he gave B two weeks to raise the amount .After one week A raised the price to P1.5M Can B compel A to accept the P1M first offered by A and deliver to him the car? a. Yes since there was already offer and acceptance b. Yes because A cannot change his offer without the consent of B c. Yes because A cannot withdraw the offer within two weeks as he is under to estoppel d. No because there was no acceptance yet of the offer 2. A sold a parcel of land to B by word of mouth and delivered to the latter the Transfer of Certificate of Title of the land. Can B compel A to execute the deed of sale of the land? a. B cannot compel to A to execute the deed of sale as the sale being oral is unenforceable b. B cannot compel A because the sale is void being oral c. B can compel A because the contract is enforceable due to the delivery of the TCT to him d. B can compel A because the sale is merely voidable and therefore enforceable, binding until annulled 3. Statement No.1 As a rule contracts take effect only between the parties Statement No.2. Mere incidental benefit of the third person is enough for stipulation pour autri to exist provide he accepts the same a. First statement is true second statement is true b. First statement is true while the second is false c. Both statements are false d. First statement is false while the second is true 4. Three of the following objects of contracts except a. Those things within the commerce of man b. Services which are not contrary to law, morals, good customs c. in transmissible rights d. Heredity of rights 5. Statement No.1 Contracts without cause are voidable because is presumed to exist in a contract Statement No.2 Offer must be absolute and acceptance must be certain before can there be meeting of the minds of parties a. First statement is false second statement is true b. Both statements are true c. Both statements are false d. First statement is true while the second is false 6. Statement no.1 Contract of lease of a parcel of land for a term of one year must be written otherwise unenforceable Statement no.2 Contract of sale of a parcel of land must be in public instruments otherwise unenforceable a. First statement is false second statement is true b. Both statements are true c. First statement is true while the second is false d. Both statements are false 7. A contract wherein both contracting parties are incapable of giving consent and yet ratified by the guardian of either of the parties is:

a. Rescissible b. Voidable c. Unenforceable d. Void 8. Three of the following contract is void .Which one is not? a. Oral contract of partnership wherein more than 3,000 has been contributed by the partners b. Agent giving oral authority to sell the land of the principal c. Partnership contracts in private instrument wherein immovable have been contributed d. Oral contract of limited partnership 9. Which of the following constitutes fraud? a. Misrepresentation mad out not in bad faith b. Misrepresentation by a third person and both parties mistaken c. Usual exaggerations in trade or dealers /sales talk d. Failure to disclose facts when there is a duty to reveal them as when the parties are bounded by confidential relations 10. These are the principles in contracts. Which is not? a. Freedom or autonomy of contracts c. Perfection by mere consent b. Relativity of contracts d. Binding on third person 11. Which of the following constitutes offer? a. Business advertisements of things for sale b. Advertisements for bidders c. An offer through an agent d. Before the acceptance is conveyed, either of the parties dies, civilly interdicted, becomes insane or insolvent 12. Statement no.1. There is acceptance of the offer only after it has come to the knowledge of the offer. Statement no.2. Lesion or inadequacy of cause shall as a true make a contract defective. a. Both statements are true c. Both statements are false b. Second statement is true, first is false d. First statement is true, second is false 13. Statement no.1. If the cause is not stated in the contract it is presumed that it does not exist and therefore the contract is void. Statement no.2. In order that a contract may be voidable, there must be damage. a. Both statements are false c. First statement is false, second is true b. Both statements are true d. First statement is true, second is false 14. The action to annul avoidable contract is extinguished by: a. Novation c. Rescission b. Ratification d. Estoppel 15. Which of the following contract is unenforceable? a. One of the contracting parties is incapable of giving consent. b. Contract of lease of a car for two years orally entered into. c. Oral contract of sale or land. d. Mortgage contract in private instrument. 16. Which of the following contracts is not void ab initio? a. Those whose object is outside the comer. b. Those whose object did not exist at the time of transaction. c. Those which contemplate an impossible service. d. Those undertaken in fraud of creditors. 17. Contract which cannot be sued upon unless ratified, thus it as if hey no effect yet: a. Voidable c. Void b. Rescissible d. Unenforceable 18. Which of the following contracts is valid? a. Oral contract of agency giving authority to an agent to sell the land of the principal. b. Oral partnership agreement where immovable are contributed. c. Oral contract of sale of an entered into by an agent who given oral authority by the principal d. Oral agreement to answer all the expenses for the wedding reception if A marries B.

19. A sold to B genuine bottle of Fundador brandy. However, upon delivery the former substituted a fake, B now wants to annul the sale. Decide: a. The contract is void ab initio therefore it can be annulled. b. The contract can be annulled since it is voidable due to fraud. c. The contract cannot be annulled because it is only incidental fraud. d. There is dolo incidente therefore it can be annulled. 20. G was appointed as the guardian of M who owns a parcel of land value at Php 1M. M sold the land only for Php. 7M to B. The contract is defective because; a. Unenforceable c. Voidable b. Rescissible d. Void 21. S was intimidated by to sell to the latter his parcel of land at a very law price. C, the creditor of S was thus damaged since the former has no other means of collecting from S. The remedy of S: a. Rescission c. Have it declared by the court as void b. Annulment d. Reformation of the contract 22. Which of the following contracts must be in writing to be enforceable? a. Acts and contract for the creation transmission, modification, extinguishments of real rights. b. The cession, repudiation, renunciation of heredity rights. c. Contract of guaranty d. Contract of partnership

23. S made an offer to B for sale of his car which was received by the latter on January2, 2001. On January4, 2001 B sent a letter of acceptance by mail. On January 3, 2001 S sent another letter to B withdrawing his offer. In this case; a. There was a perfected sale because of the acceptance of the offer by B before he had knowledge of its withdrawal by S. b.There was perfected sale because S stopped from withdrawing his offer B had knowledge thereof before acceptance. c. No sale took place because before acceptance was conveyed, the offer had been withdrawn. d. The offer was ineffective for lack of certainty as to the object. 24. Statements: An offer made by the principal is accepted from the time acceptance is conveyed to him or his agent. The object of a contract may be future things including future inheritance. a. Both statements are true. b. Both are false.

c. Second is false, first is true. d. Fist is false, second is true.

25. Statements: A contract which is the direct result of a void contract is voidable. If the object of the contract did not exist at the time of the transaction it is void. Therefore this may include sale future things, a. First is true, second is false. c. Both are false. b. First is false, second is true d. Both are true 26. A sold in writing to B his sterio set for Php600.00. There is no delivery from A and no payment of the price from B. Contract is: a. Voidable c. Void b. Unenforceable d. Enforceable

27. If the words of the contract are clear and leave no doubt on the intention of the parties, interpretation of contracts may be proper. In case of gratuitous contracts, doubts shall be resolve in favor of greatest reciprocity of interest. a. The first statement is false: second is true b. The first statement is true: second is false c. Both are true d. Both are false 28. S sold his parcel of land only for Php 1M although the value of the same is Php 2M. He thus suffer damage or lesion in the sale due to the inadequacy of the price. Therefore the contract is a. Voidable c. Valid, not defective b. Unenforceable d. Rescissible 29. Statements; In case of doubt, a contract purporting to be sale shall be constructed as mortgage. In annulment of contracts, there shall always be mutual restitution of both parties thereof. a. First statement is false, second is true c. Both are true b. Both are false d. First statement is true, second is false 30. Statements; Just like voidable and unenforceable contracts, rescissible contracts may be ratified. In case of fraud or mistake, the action for annulment must be made within four years from the commission of the vice of consent. a. Both statements are true c. First is true: second is false b. Both are false d. First is false, second is true 31. D, fearing that his creditor C, would go after his only parcel of land to satisfy his claim for payment of D’s debt, sold his land to X who did not know of D’s intention. Decide; a. C can ask for annulment of the sale as this is voidable contract. b. C. may ask for damage against X since he was damage by the sale. c. C can file an action for rescission of the sale. d. C cannot ask for the rescission of the sale. 32. Mutual error as to the legal affect of an agree when the purpose of the parties is frustrated may result in the reformation of the instrument. Mutual mistake of the parties and the instrument does not express the true agreement will make the contract voidable. a. Both statements are false c. First is true, second is false. b. Both are true. d. First is false, second is true. 33. A without authority from B sold the latter’s car in the name of the latter. The contract is therefore: a. Rescissible c. Unenforceable b. Voidable d. Void 34. A threatened B with an administrative change for immorality if the latter does not marry her because she is already pregnant with their child. Fearing that she may do so, B married her. The contract of marriage is therefore voidable because of threat. A simple mistake of account may give rise to the annulment of the contract because of mistake. a. First statement is false, second is true c. Both are true b. Both are false d. First is true, second is false 35. A appointed B to sell his land; If authority of B is oral and the sale is in public instrument, the sale is void. If the authority of B is in writing and the sale is oral, the contract is unenforceable.

a. T he first statement is false, the second is true b. The first is true, second is false

c. Both are true d. Both are false

36. In three of the following the contract is cleanse of its defect by ratification. Which is not so ratified? a. Contract where the creditor was damage by the act of the debtor intended to defraud him. b. Contract entered into by a person incapable of giving consent. c. Sale of chattels orally entered into for a piece not less than five hundred pesos. d. Lease of real property for more than one year orally entered into 37. A gave B One Million Pesos for the latter to kill C. Before B could accomplish his criminal intent to kill C. A change His mind and demanded the return of the money from B. Decide; a. A cannot recover the payment he made to B because it was a void contract which does not allow recovery by the guilty party. b. A cannot recover the money because the contract is unenforceable. c. A can recover the money although the contract is void since the crime was not committed. d. No recovery and both A and B will prosecuted for their crime. 38. Because A wants to sell his land to B but the latter does not want to buy the same, A forced B to buy his land. The land The contract; a. Not binding upon B since his consent was vitiated. b. It is unenforceable as against B but not against A. c. May be ratified expressly or tacitly by A d. It is valid, binding and enforceable. 39. D borrowed a sum of money from C with G as guarantor. The loan is in writing but the guaranty is oral. D failed to pay C. Who now is demanding payment from G? Can G be compelled to pay? a. Yes, because he is the guarantor obliged to pay in case the debtor defaults. b. No, because the guaranty is void having been orally made. c. No, because the guaranty is unenforceable against G, it being oral. d. Yes, because the guaranty is enforceable, writing not needed. .

40. A and B agreed on February 3, 2000 that B will construct the house of A in January 2002. The contract was orally entered into. B received a down payment from A with the balance payable after completion of the house. The contract is; a. Voidable because it not in public instrument. b. Enforceable even if not in writing, having been ratified. c. Unenforceable because it is not in writing and yet performance there is after one year from perfection. d. Void because it is not in writing as required by law. 41. A sold to B a fake Rolex watch on January 3, 2001, discovered that the watch he bought A was an imitation. The law provides that he can annul the sale as a voidable contract within four years. Prescription starts from; a. January 3, 2001 when the sale was perfected b. The time of delivery of the watch to B. c. The time they first talked about the sale of the watch. d. January13, 2001 when the fraud was discovered by B. 42. A and B agreed on a contract of pledge. However, they entered into a contract of mortgage in the honest belief that the mortgage and pledge are the same. The instrument may be reformed; a. No, the document cannot be reformed since contract is void. b. No, cannot be change. They are bound by the document which speaks for itself.

c. Yes, it can be reformed because it does not express the true agreement of the parties. d. Not, it cannot be reformed because there was no meeting of minds between the parties and the remedy is annulment of contract.

43. A and B entered into a contract of mortgage. However, as written the document states it is a contract of sale with right of repurchase, the error due to the fault of the clerk/typist. Hence: a. The contract of sale must be annulled since it is voidable. b. The instrument has to be enforced as is for it is the proof of the agreement between the parties. c. because of the negligence of the parties in signing without first reading the instrument, they are bound by the contents of the same. d. The instrument may be reformed because it does not express the true agreement of the parties. 44. S sold to B his parcel of land worth one million pesos for only half a million pesos. After the sale and realizing his damage, S is now seeking to set aside the sale. Decide; a. The contract is voidable because of mistake of the seller. b. It is rescissible because of the lesion or damage suffers by S. c. S has the right an increase in the price to prevent unjust enrichment on the part of B. d. The sale is valid, binding and enforceable because as a rule lesion or inadequacy o cause or price in sale does not invalidate a contract. 45. If the cause is not state in the contract, it is presumed that it does not exist. Lesion or inadequacy of cause as a rule invalidates a contract. a. First statement is false, second is true b. First is true, second is false c. Both are true d. Both are false 46. D borrowed a sum of money from C with a certain rate of interest. C now wants to increase the rate of interest without the consent of D. What principal in contracts prohibits C from doing so? a. Autonomy of contracts d. Consensuality of contracts b. Relativity of contracts e. Obligatory force and compliance in good faith c. Mutuality of contracts 47. Three of the following contracts must be in writing to be valid. Which is the exception? a. Contract of partnership where immovable are contributed. b. Contract of agency to sell the land of the principal. c. contract where the amount involved exceeds five hundred pesos. d. Negotiable instrument. 48. A threatened to kill B if the latter would not marry the formers daughter who was pregnant with B’s child. Intimidated, B married A’s daughter against his will. a. The contract is not voidable because the threat was made by a third person not by one of the parties. b. The contract is not voidable because the claim for marriage is just or legal and therefore consent is not vitiated. c. The contract is not voidable since B answer for his fault that A’s daughter become pregnant. d. Voidable is the contract due to intimidation even if employed by a third person. 49. The following are characteristics of a contract. Which is the exception? a. The action or defense for three declaration of the inexistence of a contract does not prescribe.

b. It cannot be ratified. c. A contract which is the direct result of a void or illegal contract is voidable. d. The defenses or illegality of a void contract is not available to the third person whose interests are not directly affected. 50. The following are attributes of a voidable contract. Which is not? a. It is binding, valid and enforceable before annulment. b. Damage is material to be voidable contract. c. It can be ratified and ratification has retroactive effect. d. The capacitated cannot allege the incapacity of the other party 51. The following are attributes of a rescissible contract. Except; a. It is valid until rescinded b. Damage or lesion is absolutely material. c. Third person whose interest is affect may ask for rescission. d. It is principal remedy of the creditor to collect his credit. 52. Nominate contracts are those without special designations or names under the law. In nominate contracts shall first be governed by the custom of the place. a. Both statements are correct. c. Both are incorrect. b. First is correct, second is false. d. First is incorrect, second is correct.

53. Statements; Contracts take effect not only between the parties but also their heirs and assigns and the heirs is liable beyond the value of the property he received from the decedent In stipulation pour autri, the third person must communicate his acceptance of the stipulation before its revocation.

a. Both statements are correct b, Both are incorrect.

c. First is true, second is false. d Second true, first is incorrect

54. Statements; If the contract is unenforceable and a public document is necessary for the contract’s registration, the parties may Compel each other to make the needed public document. Unenforceable contracts unlike void contracts may be assailed by the third persons. a. First statement is correct, second is incorrect. c. Both are incorrect. b. First is incorrect, second is correct. d. Both are correct. 55. Statements; When the defect of the contract consists in the incapacity of one of the contracting parties, the incapacitated is Obliged to make restitutions unless he did not benefit by the thing or price received by him. The action for annulment of contracts shall be extinguished when the thing which is the object therefore is lost Through fortuitous event or fraud or fault of the person who has right to institute the proceedings. a. Both statements are incorrect c. First is correct, second is incorrect. b. Both are correct. d. Second is correct, first is incorrect. 56. Ratification of a voidable or unenforceable contract must be made within the prescriptive period provided for by the law. Ratification cleanses avoidable or unenforceable contract from all its defects from the moment it was constit...