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OBLICON SAMPLE PROBLEMS WITH SUGGESTED ANSWERS (PART 2 – CONTRACTS) S sold his cabinet to B for P5, 000. The parties gave their consent freely to the contract before its perfection. After delivery of the cabinet to B and his payment of the price to S, B was informed by N, his neighbor that B paid to...

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OBLICON SAMPLE PROBLEMS WITH SUGGESTED ANSWERS (PART 2 – CONTRACTS) 1. S sold his cabinet to B for P5,000. The parties gave their consent freely to the contract before its perfection. After delivery of the cabinet to B and his payment of the price to S, B was informed by N, his neighbor that B paid too much for the cabinet since he (N), knew of a similar item that is sold for a lower amount. B now wants to set aside the contract because he believed he got a bad bargain. Decide. 2. A and B entered into a joint venture contract whereby B agreed to put up a restaurant on the lot of A. N, A’s neighbor who owned a lot across A’s lot, learned of the transaction between A and B. Anticipating that many customers would patronize the restaurant, N decided to improve his vacant lot for parking. He incurred P20,000 for a guardhouse and other improvements which he had not yet paid to his contractor. Later, however, A and B mutually cancelled their earlier contract and entered into a new one whereby B agreed to put up the restaurant on another lot belonging to A which was located about 100 meters from the original area. N learned of the cancellation of the contract and decided that he would sue A and B for damages he allegedly sustained by reason threof. Decide. 3. D obtained a loan from C amounting to P200,000. To secure the loan, D mortgaged his lot. C registered the mortgage with the Register of Deeds. Later, D sold the lot to X who was not aware that the lot was mortgaged. On the due date of the loan, C demanded payment but D could not pay. Accordingly, C decided to foreclose the mortgage on the lot. X, however opposed the foreclosure claiming that he was not bound by the mortgage since he was not a party thereto. Decide. 4. S sold his only horse to B for P30,000. The parties agreed that S shall deliver the horse one week from the execution of their agreement. B, however, should pay the price immediately and in certified check. In the place of S and B, it was the custom that anyone selling a horse should place a horseshoe on its feet. Is the seller bound to place a horseshoe on the horse? 5. On June 1, S offered to sell a specific generator set to B for P300,000. B sent his letter of acceptance to S on June 8. On June 10, however, S became insolvent. On June 12, S received the letter of acceptance. Was the contract perfected? 6. P gave a special power of attorney to A to sell P’s house and lot for P2M. On May 7, A, pursuant to the authority granted to him by P, offered to sell the house and lot to B at the price of P2M. B accepted the offer on May 8 by sending a letter of acceptance to A on such date, which letter of acceptance was received by A on May 10. On May 11, P died before A could inform him of B’s acceptance. Was the contract perfected? 7. On May 1, S offered to sell his car for P500,000 to B who was interested in buying the same. In his letter to B, S stated that he was giving B up to May 31 to decide whether to

buy the car or not. On May 25, S personally went to B to inform him that he was no longer willing to sell the car unless the price was increased to P600,000 because another buyer was interested in buying the car for the said amount of P600,000. May S validly withdraw his offer? 8. B purchased 100 pieces of notebook from S at P41.95. When B reached home, he discovered that the invoice showed a total amount due of P4,915 instead of P4,195. Is the contract valid? 9. D has been for more than 10 years the personal physician of P, a sickly man of 70 years. D talked to P almost everyday in the course of giving medical service to P to convince P to donate his lot to D since D told him that he was the only one who could take care of him. Because of the persistence of D, P finally signed the deed of donation of the lot in D’s favor with all the formalities required by law. Is the deed of donation valid? 10. A, who knew that his ring was embellished with glass, told B that the embellishment was emerald. B, who knew that his watch was gold-plated, told A that it was made of pure gold. Believing that A’s ring was embellished with emerald and A, believing that B’s watch was made of pure gold, then entered into a contract whereby they exchanged their respective articles. A week later, B discovered that the ring was adorned only with an ordinary glass. Can B ask for annulment of the contract? 11. S and B entered into a contract where they made it appear that S was selling his lot and building to B. The truth, however was that S was donating his lot and building to B. What is the status of the contract? 12. S and B orally entered into a contract whereby S sold his one-year production of mangoes to B for P100,000. B gave a downpayment of P20,000 for which S issued a receipt. What is the status of the contract between S and B? 13. A died leaving properties estimated at P1M to his sons S and T. Subsequently, S sold through a private instrument one-half of his inheritance to B for P300,000, although his share was still to be delivered. What is the status of the contract? 14. S sold his car to B for P100,000 so that he can have money to purchase shabu. B knew nothing of the motive of S. Was the contract valid? 15. D and C entered into a contract wherein D agreed to give to C P50,000 within 30 days from the date of the execution of their agreement, which however does not state the consideration received by D from C. What is the status of the contract? 16. G, the guardian of M, a minor sold the fish harvested from the fishpond of M for P20,000. The fish, however had a value of P30,000. What is the status of the sale?

17. D owes the following creditors: X, P50,000; Y, P60,000; and Z, P90,000. He has assets valued at P400,000. Subsequently, D donated, among his assets, a parcel of land valued at P250,000 to C. The donation and acceptance were made in a public instrument. What is the status of the donation of the land made by D to C? 18. C filed a complaint in court against D to collect a money debt amounting to P500,000. After due hearing, the court rendered judgment in favor of C. Shortly after the rendition of the judgment and before C has collected D’s debt, D sold a parcel of land to X. Z, another creditor, learned of the sale made by D to X and now files an action to rescind the sale. Who has a better right to rescind the sale of D to X? 19. R, the representative of A, an absentee sold the corn with a value of P30,000 and the palay with a value of P50,000, harvested from A’s agricultural farm for a total price of P50,000. A, whose domicile was subsequently known, was informed of the sale made by G. May A seek rescission? 20. S, 17 ½ years old sold his bicycle to B, 24, for P12,000. The price is payable in 12 monthly installments. After reaching 18, S continued to collect the remaining six installments until the price was paid in full. Can S annul the contract? 21. M, the manager of an electric company offered to buy a one-square meter lot from S for P400. M showed S his power of attorney executed by the electric company and duly signed by the board of directors. M informed S that the lot would be the site of an electric post which the electric company would erect. S agreed to the order of M. M agreed to come back the following day to give the company check for the purchase price as well as the written contract. When M returned to the place of S, S refused to sign the contract and accept the check. S told M that at any rate, M or the electric company could not enforce the contract since it was not in writing. Is S correct? 22. On June 1, 2005, B, a businessman, met by chance C, a building contractor at the lobby of a hotel. Over a cup of coffee, B informed C that he would need the services of C for the construction of a three-storey building that B was planning to put up beginning August 1, 2006. B added that he would be paying C the amount of P4M for the construction. C agreed to B’s proposal. In the meantime, B gave C a check for P500,000 representing the downpayment on the contract price. Except for the table napkin on which B made some sketches of the building, no written contract was signed by the parties. On August 1, 2006, B called up C to inform him that the construction would begin within the next two weeks. C told B that he would no longer want to proceed with the contract and that he would be returning the downpayment. May B enforce the contract? 23. D was checking out of a hotel when he found out that he had lost his wallet. Since he had no money to pay his bills, he texted G, a businessman friend to help him. Upon

reading the text message, G texted M, the hotel manager, who knew G since G was a frequent guest at the hotel whenever he visited the area. The text message read: “Please let D leave. If he does not pay, I will be the one to pay.” No other information was contained in the text message. Thereafter, D signed a promissory note in favor of the hotel. Is the promise of G enforceable? 24. S, insane, orally sold his radio to B, 17 years old for P400. When T, the mother of S learned about the sale, she asked S to give to her the amount that he had received. S obediently gave the amount of P400 which his mother used to buy their food. What is the status of the contract? 25. Francis promised to give P10,000 by way of support to Mitch, if Mitch agrees to live with Francis as his wife without the benefit of marriage. Mitch because she truly loves Francis accepted his promise. After 6 months, because Mitch was seen with Edgar, her exboyfriend, Francis left their home and never came back. Can Mitch now still receive the support promised by Francis? 26. B, a law student informed O that he needed a bicycle which he would use in going to and from San Beda College of Law-Alabang. O told B that he may get the bicycle in O’s room. Was there a perfected contract?

ANSWERS: 1. B may not set aside the contract based on the principle of Mutuality of Contract. 2. A is not entitled to sue A and B for the damages he sustained. This is not a case of a stipulation pour autrui, where the parties in a contract deliberately conferred upon a third person a favor or benefit. The benefit that would have been received by N from the contract between A and B was only incidental and did not give him the right to recover damages. 3. X was bound by the mortgage. Subsequent purchaser is bound by the mortgage registered in the Register of Deeds even if he is not aware of it. The contract herein is one which creates real rights therefore third persons who come into possession of the object of contract is bound thereby. (1312) 4. S is obliged to place a horseshoe on the horse because the observance of custom or usage is a consequence of entering into a contract. (1315) 5. The contract was not perfected because the insolvency of S occurred before he came to learn of the acceptance of his offer. It is well settled rule that an offer becomes ineffective upon the insolvency of either party before acceptance is conveyed. (1323) 6. The contract was perfected on May 10 when A received the letter of acceptance. An offer made through an agent is accepted from the time acceptance is communicated to him. (1322) 7. S may validly withdraw his offer to B and all that S needs to do is to inform B of such withdrawal. Such withdrawal must be made before the lapse of the period of acceptance, unless there is an option founded upon a consideration, as something paid or promised. (1324) 8. The contract is valid. The mistake is a simple mistake of account and does not render the consent of the parties vitiated. This shall only give rise to correction. Mistake to vitiate consent must refer to the substance of the thing which is the object of the contract or to a principal condition which moved the parties to enter into a contract (1331). The excess P720.00 should be returned by B. 9. The deed of donation is voidable on the ground of undue influence. (1337) 10. Neither party can ask for annulment since both are guilty of fraud. The contract therefore is valid. In order that a contract may be considered voidable and be annulled fraud must not be committed by both parties. (1344)

11. The contract is a relative simulated contract. Therefore the parties are bound by the contract of donation, their true intention, since no third person is prejudiced and their purpose is not contrary to law, moral, good customs, public order or public policy. (1346) 12. The contract is valid. Future things may be the object of contracts. (1347 par 1) 13. The contract is valid since the inheritance is an existing inheritance. (1347 par 2) 14. The contract is valid because the illegal motive of S does not affect its validity. Motive is different from the cause of the contract. (1351) 15. The contract is valid because the cause is presumed to exist and is lawful unless the contrary is proved by the debtor. (1354) 16. The sale is rescissible because M suffered the minimum amount of lesion required by law to make the contract rescissible. (1/4 x 30,000= 7,500, the lesion is 10,000). (1381 par 1) 17. The donation is rescissible. It is presumed to have been made in fraud of creditors. The remaining value of the assets after donation would be insufficient to cover the debts contracted by D before the donation. (1387 par 1) 18. Both C and Z have a right to rescind the sale since the sale is presumed in fraud of creditors having been made by the party against whom judgment has been rendered. (1387 par 2) 19. A may seek rescission of the total sale to recover the damages he suffered. (1381 par 2) 20. S may no longer annul the contract. There was implied ratification when S upon reaching the age of majority continued to collect the remaining instalments. (1393) 21. The contract must be in writing for it to be enforceable against S. This is a sale of real property. 22. B may enforce the contract against C although there was no formal agreement signed by the parties because C was deemed to have ratified the contract by his acceptance of the downpayment. 23. If D cannot pay, M cannot enforce the promise of G since G’s promise is not the writing required by law. (1403 2b) 24. The contract is voidable because the mother of S is deemed to have ratified the contract. (1407) 25. The contract between Francis and Mitch is illegal and constitutes an offense, therefore it is void. 26. Yes. The contract is one of commodatum, where one party loaned something to another. In this case, the bicycle was loaned by O to B....