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. c. Second is false, first is true.

b. Both are false. 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 c. Both are true
b. The first is true, second is false 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 c. First is true, second is false.

b, Both are incorrect. 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 constituted.
a. First statement is false, second is true.
b. Second is false, first is true.
c. Both are false.
d. Both are true.
BUSSINESS LAW PART II

1. A offered 20 Tamiya cars to B for P1, 000.00 each. B answer by letter that he was willing to purchase not 20 but 30 pieces at
said price of P1, 000.00 each. Is the contract perfected?
a. No because there is qualified acceptance which constitutes an offer by the buyer.
b. Yes, there is perfected sale because the number of pieces is only incidental matter in the sale.
c. Yes, because the letter of acceptance was already sent by the offered.
d. No, because there is no offer yet of A that is certain.
2. Statements;
If one of the parties at the time of making the offer or acceptance was already insane the contract is voidable.
If before the acceptance is conveyed to the offered, either of the parties becomes insane, the contract is void, that is,
The offer is no effective.
a. Both statements are incorrect c. First is correct, second is incorrect.
B. Both is correct. d. Second is correct, first is incorrect.

3. A, a minor sold to B a parcel of land registered in his name misrepresenting to the latter that he is of legal age.
Having been misled as to the true age of A, B entered into the contract. Is the contract voidable?
a. It is voidable because the seller is a person incapable of giving consent to a contract being a minor.
b. It is voidable because of mistaken the part of B when he through that A was of legal age,
c. It is not voidable but rather void because of lack of consent of A who is only a minor without capacity to enter into
contacts.
d. It is not voidable because of the fraud committed by the minor seller and the buyer being in good faith.

4. Corporation, through an agent bought the shares of stocks of another stockholder without revealing to
The seller stockholder that negotiations were in progress to enhance the value of the shares. The sale is defective contract
being;
a. Void, because of fraud committed by A against the other stockholder.
b. Voidable because of mistake on the part of the seller-stockholder.
c. Rescissible because of the damage suffered by the seller.
d. Voidable due to the fraud concealment by A against a fellow stockholder.

5. While his father was still alive, A sold to B the property he (A) expected to receive from his father.
Is the contract defective?
a. It is completely valid contract because the seller is compulsory heir.
b. It is valid for there can be sale of future things and what A sold is future property.
c. It is voidable sale if he fails to receive the property he expected to receive from his father.
d. It is void for future inheritance cannot be sold.

6. A promise to give B a car as reward after B has killed C. Later, after the killing, the contract was changed to a lease of
a big house for a certain period.
The contract of lease is;
a. Void c. Voidable
b. Unenforceable d. Rescissible

7. S orally sold to B a parcel of land for which the latter paid P1. B now wants to register the sale so that he can have a
Transfer Certificate of Title in his name. Decide.
a. S cannot be compelled to execute the public document of sale because the sale is unenforceable.
b. S can be compelled to execute the public document of sale because the sale is enforceable.
c. The sale is void and therefore cannot be registered.
d. S cannot be compelled to execute the public document of sale because the sale is voidable.

8. S orally leases to R his parcel of land for a term of two years. The contract is;
a. Rescissible b. Voidable c. Unenforceable d. Void
9. A verbal agreement was made between A and B whereby y A and agreed to sell and agreed to buy A’s
farm for 100,000.00. The price was unpaid. Possession was not given nor did the deed deliver both being refused.
The contract is:
a. Rescissible b. Voidable c. Unenforceable d. Void

10. A orally leased to B his car for two 2 years .No delivery of the car was made and no payment of the rentals was
given .A refuses to pay the rentals in advance as agreed upon.
a. A may rightfully refuse because of the contract is unenforceable
b. A cannot refuse because of the contract is forceable
c. B cannot compel A to do something against the latter’s will
d. The contract is reciprocal and therefore A cannot be compelled to pay because there was no delivery of the car.

11. A borrowed money from C with as a guarantor. The contract of loan of P1M was not in writing while the guaranty
a. C is liable because the guaranty is enforceable although the loan is void it being oral
b. C is liable because of the accessory of contract the guaranty is void since the principal contract of loan is void
c. C is liable because the guaranty is enforceable
d. C is liable because the contract of loan is in amount exceeding 500.00 which must be in writing to be enforceable

12. A was having his housed repaired by B, who needed certain materials. So A told the stole owner, give B the materials
I shall be responsible. I shall stand good. This was orally entered into.
a. The contract is unenforceable because A made an oral agreement to answer the default of another that is B
b. The contract is unenforceable because A did not make a special promise to answer for the fault of another person
c. The contract shall be enforceable if there is ratification by A
d. The contract shall be enforceable if it has been executed

13. A and B mutually promised to marry each other. The promise being verbal and without witnesses to the promise,
A did not marry B. B is now suing A for damages .Decide:
a. The contract is unenforceable; hence, A is not liable
b. The contract is unenforceable because mutual promise to marry is covered by the Statue of Frauds
c. A is liable for damages even the contract is unenforceable
d. A may be liable for damages because mutual promise to marry is covered by the Statue of Frauds

14. A and B neighbors orally agreed that from day, B would not erect a garage on his property till after three years.
A week later B begun to erect a garage in violation of the agreement. A complains and B sets up the defense of
contract being unenforceable. Decide
a. The contract is unenforceable because it is not performed within one year from the making thereof, and it is oral
b. B can compelled to demolish the fence because he failed in his obligation not to do.
c. A can have a third person to undo what has been done by in violation of his obligation not to do
d. A has the right to complain and enforce the contract because it is enforceable

15. A and B orally agreed that A would sell and B would buys A’s radio for 200.00 three years from the date of the
of agreement .At the end of the three years, A refused to hand over the radio although B was willing to pay.
Is A bound to deliver the radio sold?
a. A is obliged to deliver what he sold since it was an enforceable sale
b. A is obliged to deliver B is ready to pay the price
c. A is not bound to deliver because the sale is unenforceable
d. A is not bound to deliver because the sale is void

16. A forced B to sell to him (A) his ring. B sued for annulment, but A had already lost the ring thru a fortuitous event.
Is A liable for the loss?
a. A is liable for the loss even it was due to fortuitous event because of his bad faith
b. A is liable not because the loss was without his fault
c. A is liable to pay damages if he cannot replace the ring
d. A is not liable because no one shall be responsible for the loss of thing due to fortuitous event
17. A was forced by B to sign a contract. C, a creditor of A wants to annul the contract. Is C allowed by law
to do so?
a. No because a third person cannot assail a void contract
b. Yes because the contract is voidable and C is damaged
c. No because a third person cannot assail avoidable contract.
d. Yes a third person can annul a rescissible contract

18. To defraud his creditors, A sold his real property to B. B now seeks to register the sale .X, creditor, seeks to
prevent the registration on the ground that it is rescissible contract. Despite X’s objection may the land be registered
in B’s name?
a. No because the contract rescissible and therefore without effect
b. No because the sale is voidable and after annulment is not binding
c. Yes because the contract although voidable is valid and binding
d. Yes because the contract although rescissible is valid, binding and enforceable before rescission

19. A made a donation to B. Later A contracted several debts. What A has left as assets is much less than this
present liabilities. May donation to be rescinded?
a. No because the debts were incurred after the donation has been made
b. No if A gave guaranty or security for his debts
c. Yes because the donation is rescissible being fraud of creditors
d. Yes because A has become insolvent after donation

20. To defraud his creditor, A sold his property to B (who is in good faith). Later B sold the property to C, who was in
bad faith .M ay the creditor rescind the sale?
a. Yes because the third person C, is in bad faith
b. No because the third person B is in good faith
c. No because the contract is voidable and not rescissible
d. Yes because the contract is rescissible

21. To defraud his creditor, A sold his house to C.When however the creditor wanted to collect his credit, somebody
lent A enough money. Is the sale rescissible?
a. Yes because it was entered into fraud of creditors
b. No because the creditor can collect the credit due to him
c. No because the debtor has become in good faith when he was lent money to pay his debts
d. Yes because the debtor was in bad faith when he sold his house to X.

22. A orally sold to B a house at 16 Kiko St. Malate, Manila. In written deed of sale, both forgot the true number
of the house and instead wrote on contract “No.18 Kiko St. Malate, Manila. The remedy shall be:
a. Annulment of as voidable contract because of mutual mistake
b. Reformation of the instrument because of lack of meeting minds
c. Reformation of instrument mutual error
d. Declaration of nullity of the contract because of the uncertainty of the intention as to the object

23. A loan for 80,000.00 was orally contracted. May the lender to recover the sum lent?
a. No because the contract is unenforceable
b. No because the contract must be in writing to be valid
c. Yes if the debtor ratifies the loan
d. Yes because the contract is enforceable

24. When his father died but before the delivery of property to him, a son sold his share of the property inherited. Is the
sale valid?
a. No because future inheritance cannot be sold
b. Yes because future inheritance can be the object of the contract
c. Yes because what has been sold is present inheritance
d. No because the son was not the owner due to lack of delivery to him

25. Element without which there cannot be a contract is:

a. Essential element d. All of the above
b. Natural element e. None of the above
c. Accidental element
26. Contracts take effect only the parties, their assigns and heirs except where the right and obligations arising there from:
a. Is not transmissible by their nature
b. Is not transmissible by stipulation of the parties
c. transmissible by provision of law
d. All of the above
e. None of the above

27. Where damage is caused to either of the contracting parties or to a third person, the contract may be:
a. Annulled d. All of the above
b. Rescinded e. None of the above
c. Ratified

28. When the contract lacks one of the essential elements the contract is:
a. Void d. All of the above
b. Voidable e. None of the above
c. Rescissible

29. The act or means by virtue of which efficacy is given to a contract, which suffers from a vice of curable nullity
a. Ratification d. All of the above
b. Resolution e. None of the above
c. Rescission

30. Is a remedy in equity by means of which written instrument is made or constructed so as to express or conform
to the real intention of the parties when some error or mistake
a. Ratification d. All of the above
b. Reformation e. None of the above
c. Rescission

31. Although contracts bind only contracting parties, their assigns and heirs, in the following instances third persons are
a. In case of stipulation pour auturi
b. In contracts creating real rights
c. In contracts intended to defraud the creditors
d. All of the above
e. None of the above

32. A qualified acceptance constitutes

a. An absolute acceptance
b. A meeting of the minds between the parties
c. Counter offer
d. All of the above
e. None of the above

33. An offer becomes ineffective if, before acceptance is conveyed, either parties becomes
a. Civilly interdicted d. All of the above
b. Insane e. None of the above
c.Insolvent

34. A contract where consent is given through mistake, violence or intimidation is:
a. Void d. All of the above
b. Unenforceable e. None of the above
c. Rescissible

35. The span of time wherein a person is in possession, temporarily of all his mental faculties
a. Lucid interval d. Reglementary period
b. Option period e. None of the above
c. Prescriptive period

36. Contracts entered into a state of drunkenness or during hypnotic spell is:
a. Voidable d. Rescissible
b. Void e. None of the above
c. Unenforceable
37. An offer made through an agent is accepted from the time acceptance is communicated to:
a. The principal d. The household member of the principal
b. The agent e. None of the above
c. Both the principal and the agent

38. The essential or impelling reason why the parties enter into a contract
a. Motive d. All of the above
b. Cause e.None of the above
c. Profit

39. The statement of a false cause in contracts shall render the contracts
a. Voidable d. Rescissible
b. Void e. None of the above
c. Unenforceable

40. If mistake fraud or accident has prevented a meeting of the minds of the parties, the proper remedy is:
a. Annulment d. Resolution
b. Reformation e. None of the above
c. Rescission

41. The following contracts are valid

a. Rescissible d. Unenforceable
b. Annullable e. None of the above
c. Unenforceable

42. A contract entered into in the name of another by one who has no authority or legal representation is:
a. Void d.Unenforceable
b. Rescissible e. None of the above
c. Annullable

43. Business advertisements of the things for sale are:

a. Definite offer d. Acceptance of the offer
b. Invitation to make an offer e. None of the above
c. Counter offer

44. The following is an example a real contract

a. Contract of pledge
b. Contract of deposit
c. Contract of commodatum
d. All of the above
e. None of the above

45. A. In case of divisible contract, if the legal terms can be separated from the legal ones, that the latter can be enforced
B. The defense of illegality of contracts is available to third persons whose interest are directly affected

a. Both are true c. First is false

b. Both are false d. Second is false

46. A and B entered into an oral sale of the formers car for P1M which amount has been credited to his bank account
although the car has not yet been delivered to the latter. Can B compel A to execute the deed of sale of the car?
a. No because the sale is unenforceable
b. Yes because it is enforceable
c. Yes if A used the money paid to him
d. No because the sale is void
47. On January 20 2002 A and B agreed verbally to form a partnership on January 25 2004
a. The contract is void because future property can’t be contributed to a universal partnership of all present property
b. It is voidable if the parties marry each other before they form the partnership
c. Unenforceable because it is not in writing
d. Void because there is no public instrument of their agreement

48. A orally leased B his car for a term of 2 years .B has not taken possession of the car and A has not received any rental.
The
contract is:
a. Unenforceable c. Rescsissible
b. Valid and binding d. Voidable

49. Base on the preceding number, if the object were a house, the contact shall be;
a. Unenforceable c. Rescissible
b. Valid and binding d. Voidable

50. If the object were a parcel of land. The contract is;

a. unenforceable c. Rescissible
b. Valid and binding d. Voidable

51. A, being the eldest, sold the minor sister’s parcel of the land in the name of the latter and by virtue therefore the
later was able to finish high school. The contract is;
a. Void c. Rescissible
b. Unenforceable D. Voidable

52. Without authority from, B name the land of A to X who was in good faith. The contact is;
a. Void because B was not the owner at the time of the perfection of the sale.
b. Unenforceable, because B had no authority to sell A’s land.
c. Violable, because of the fraud committed by B against A.
d. Valid sale provided B owner upon delivery

53. Based on the preceding no. if the sale in A’s name is the contract is:
a. Void because B was not the owner at the time of the perfection of the sale.
b. Unenforceable, because B had no authority to sell A’s land.
c. Voidable, because of the fraud committed by B against A.
d. Valid sale provided B owner upon delivery

54. If the doubts are cast upon the principal object of the contract in such a way that it cannot be known
what may have been the intention or will of the parties. The contract shall be:
a. Voidable due to lack of meeting minds
b. Void
c. Interpreted for there is doubt
d. Reformed to express the true intention of the parties
BUSINESS LAW
QUIZ ON CONTRACTS –PART III

1. Which of the following can be considered as a feature of a void contract?

a. Subjects to ratification
b. It exists
c. Action or defense of nullity is subject to prescription
d. Novation cannot apply

2. L entered into a contract of mortgage with X. T, the clerk of L, typed the document .Due to T’s negligence, the
document made was that of sale instead of mortgage.
a. The remedy is annulment
b. Parties may go to court for interruption
c. Parties may enforce their right because it is enforceable
d. Reformation of the instrument is proper

3. These persons are bound by contracts, except

a. Third Persons b. Assigns c. Heirs d.Parties

4. Liable for the loss of the subject matter by fortuitous event:

a. Creditor c. Both creditor and debtor
b. Debtor d. None of them

5. S offers to sell his house to B for 100,000. B asks him if he would accept 80,000. Which of the following is
correct?
a. Because of ambiguity, both offers are terminated by operation by law
b. B’s response is a counter –offer effectively terminating the 100,000 offers and insignating an offer for
80,000
c. B’s response is a rejection of the 100,000 offer and there is no offer for 80,000 because it is too indefinite to
be an offer
d. B’s response is a mere inquiry; the 100,000 offer by S is still in force

6. Example no.1 G, guardian of W, sold W’s house valued at 50,000 for 37,500 or lesion by ¼ of the value
Example no.2 S sold his house valued at 50,000 for only 10,000 because S did not know the true value of the
house
a. Both contracts are rescissible.
b. Only no.1 is rescissible
c. Only no.2 voidable because there is an error or mistake
d. Both contracts are valid and enforceable

7. B company bought out a competitor, C Corporation, with a stipulation that C Corporation should not
thereafter engage in any business in the Philippines unless consented to and approved by B Company
a. The stipulation is defective but subject to ratification
b. The stipulation is defective the parties are free to enter into any stipulation, terms and conditions such
as this one
c. The stipulation is unenforceable as there was no showing that the sale was done in writing
d. The stipulation is void because it is contrary to public policy

8. Which of the following is not valid?

a. Mutual promise to marry entered into orally
b. Sale of immovable property orally entered into
c. One of the parties in contracts is incapable of giving consent
d. Mortgagor of an immovable cannot alienate it without the mortgagee’s consent

9. D forced C to execute a promissory note

a. Contract is rescissible because the contract is fraudulent
b. The contract is void
c. C cannot demand payment from D because the contract is unenforceable
d. Contract remains to be valid
10.Example 1 S sold to B in a private instrument his land .Later B wanted to have the sale registered, but
registration requires a public instrument: In here, B compel S to execute the needed public instrument.

Example 2 S sold to B orally his land. After B paid S the price he wants to register the land in his name but
he needed a public instrument of sale. In here B may compel S to execute the needed public instrument.
a. Both examples are false c. Only the second is true
b. Only first is true is true d. Both examples are true

11. In contract of sale executed by S and B, it appears S sold his motor vehicle to B for 50,000.00.It turned
out however, S has three motor vehicles .Galliant valued 80,000.00: Hi-Ace van valued 70,000; and a Jeep
valued 60,000.Which of the following is correct?
a. The contract shall be reformed because there was a mistake
b. The parties can ask for interpretation because the word motor vehicle is ambiguous
c. The parties can ask for annulment of the contract
d. There is no contract

12. An agreement is restraint of trade or establishing monopoly is:

a. Perfectly valid b. Voidable c. Unenforceable d. Void

13. Three of the following are rescissible, which is not?

a. Sale of property under litigation made by defendant without the consent of plaintiff or authority of the
court
b. Those made to defraud creditors when the latter have no other means to recover their claims.
c. Those agreed upon representation of absentees, if the absentee suffers lesion by more than ¼ of the
value of the property subject of the contract
d. Contract of sale and the price is unusually inadequate resulting to lesion

14. S and M agreed in print that S, debtor for 3,000, will work as a servant of M without pay until she could
find money with which pay to her debt. S failed to comply with her obligation .Under this premise, which
of the statement is correct?
a. The agreement to work as a servant is void because it is immoral
b. To act as a servant without pay is unconstitutional because this is equivalent to involuntary servitude
c. The agreement to work without pay since written is enforceable
d. The contract to work without pay as a servant until the debt is paid is void

15. Which of the following contracts is not required to appear in a public document?
a. Acts and contracts which have for their object the creation, transmission modification or
extinguishment of real right over immovable property
b. The session, repudiation or renunciation of hereditary rights
c. The power to administer property
d. Sale of immovable property

16. In order that stipulation in favor of a third person would be valid and binding upon the parties thereto
to the following are requisites except
a. There must be a stipulation in favor a third person
b. The contracting parties must have clearly and deliberately conferred a favor upon that third person
c. The third person communicated hi acceptance to the obligor before its revocation
d. That there must be an existing agency between either of the contracting parties and the third person

17. Statement no.1 Dolo indecent entitles the person against whom it was employed the right to seek the annulment
of the contract
Statement no.2 A stipulations pour autri is an exception to the rule on relativity of contracts.
a. Both are true c. No.1 is true; no.2 is false
b. Both are false d. No.1 is false; no.2 is true

18. Example no.1 W, 16 years old sold his house valued at P1M for 500,000 or lesion by more than one-fourth
of the value of the said house
Example no.2 S sold his house valued at P1M for only 5000,000 because of his poor judgment on the value thereof
a. Both are voidable c. No.2 is unenforceable
b. No.1 is rescissible; while No.2 is voidable d. Both contracts are binding
 19. S owns an oil painting. Being in need of money, S sold the painting to B for 1,000.After the sale it was
discovered that the painting was valuable and worth 5,000.
a. S may rescind the contract due to lesion or inadequacy of cause
b. S may annul the contract because of fraud
c. S may annul the contract on the ground of error
d. B is entitled to the benefit of the contract because it is valid and binding

20. “A” bachelor lawyer, raped W. Upon learning this “F” the father of W, was able to force A to marry W
under pain of being sued and disbarred from the practice of his law profession. Which statement is
correct?
a. The marriage may be annulled on the ground of force or violence
b. The marriage may be annulled on the ground of threat and intimidation
c. The defective marriage may, however, be ratified
d. There was no defect, the marriage was perfectly valid

21. In an invitation to bid B proposes the following:

“I will buy the property for 100,000 and if the bid of any other offeror or bidder shall be considered the best
in terms of amount and conditions, I am equal to that offer”
a. The offer is speculative, because it cannot be considered against another offer which is certain
b. The offer is considered a counter offer
c. This is a continuing offer which is very certain
d.The advertiser is not bound to accept the highest bidder

22. Statement no. 1 If the cause is not stated in the contract it is presumed that it is unlawful
Statement no.2 The action for rescission is subsidiary it cannot be instituted except when there is no other
legal means to obtain reparation for damages suffered
a. Both statements are true c. Only first is false
b. Both are false d. Only the first is true

23. G was appointed guardian of S, the latter of being 16 years old. S sold his parcel of land in writing to B
valued at 100,000 for 75,000, suffering lesion by ¼ of the value. What is the status of the contract?
a. Rescissible b.Unenforceable c. Void d. Voidable

24. One of the stipulations contained in the contract between M company and its employees is that the
company shall pay a bonus to employees of the company who shall continue its employment for at least
2 consecutive years, unless he quits or is discharged before the expiration of the period of 2years.
X, an employee of the company was discharged without just cause, one week before the completion of the
two-period
a. X is not entitled to the bonus because his discharge was in accordance with the contract
b. X is not entitled to the bonus because the employer’s right to terminate is superior than the right of
the employee to be employed
c. X is not entitled to the bonus whether the discharge is with or without cause
d. X is not entitled to the bonus because the debtor company has voluntarily prevented happening of the
condition

25. Statement no.1 If one party was mistaken and the other hand acted fraudulently or inequitably in such a
way the instrument does not state their true intention, the former may ask for the annulment of the
instrument
Statement no.2 The statement of false cause in contracts shall render them void, if it should not be proven
that they were founded upon another case cause which is true and lawful
a. Both are true b. Both are false c. No.1 is true; No.2 is false d.No.1 is false; No.2 is true

26. Must be in writing to be enforceable

a. Lease of land for 12 months c. Both a and b
b. Lease of car for 18 months d. None of a and b

27. Which of the following is not a requisite for the validity of a contract?
a. Consent b.Object c. Cause d. Delivery

28. D owes C 500. However, C’s right has already prescribed .Notwithstanding the knowledge of this fact, D paid
the amount .Realizing this mistake D wants to recover the amount paid.
a. D ca recovers on the ground of mistake
b. D can recover because his obligation is not enforceable
c. D can recover otherwise C will be enriched at the expense of D
d. D cannot recover
29. Three of the following contracts are void .Which is the exception?
a. Those who cause, object or purpose is contrary to law, morals, good custom, public order of public policy
b. Those which are absolutely simulated or fictitious
c. Those who cause or object did not exist at the time of the transaction
d. Those where both parties are incapable of giving consent to a contract

30. X a former government employee, suffered severe paranoia and was confined in the mental hospital in 2000.
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 some mining claims. In 2006 he wants to annul the sale claiming that he was
not mentally capacitated at the time of sale. The sale question was
a. Rescissible b. Void c. Voidable d. Valid

31. Which of the following is nit presumed to be legal subrogation?

a. When a creditor, pays another creditor who is preferred
b. When a third person, not interested in obligation pays with the approval of the debtor
C.When the third person interested in the obligation pays even without the approval of the debtor
d. None of them

32. Essential requisites of a contract:

a. Consent b.Cause c.Object d.All of them

33. Which of the following instruments is not subject to reformation?

a. Simple donations inter vivos wherein no condition imposed
b. Wills
c. When the agreement is void
d. All of the above

34. Valid, binding and enforceable until annulled

a. Rescissible contract b. Void and ab initio contract c. Voidable contract d. Validable contract

35. 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 therein orally entered into
c. Sale of piece of land thru an agent and the authority is oral
d. Contracts entered into by a person who has been given no authority

36.S makes an offer to B on January 1 2007 .B makes known his acceptance in a letter sent on January 2 and received
by S on January 5.Meantime , on January 3, S became insane
a. The contract is voidable because one party is insane
b. There is already a meeting minds, the contract is perfected
c. The contract is not binding because there is no meeting of minds
d. The contract is void the offer being effective

37. Based on the same facts except S is sane but only a minor at the time the acceptance is communicated to him?
a. There is no meeting of minds between parties, therefore void.
b. The contract is not binding because the party is anticipated
c. The contract is binding between parties
d. The contract is unenforceable

38. Which of the following contract is voidable?

a. Those whose object is outside the commerce of men
b. Those which are absolute fictitious
c. Those where one of the parties is incapacitated
d. Those which contemplate an impossible service

39. The stipulation of contract to the effect that the debtor should remain as a servant in the house and in the service of her
creditor so long as she had not paid her debt is void because it is:
a. Contrary to good custom c. Contrary to law and morality
b. Contrary to public policy d. Contrary to public order
40. After the death of his father, sold his inheritance through its amount has not yet been determined to B, for an
consideration of 50,000
a, The contract is valid only if the inheritance valued at least equal or more than 50,000
b. The contract is rescissible
c. The contract is void if nothing remains of the inheritance to be turned over to B
d. Contract is void future inheritance cannot be the object of sale

41. X alleged that Y promised to give him one hectare of land. This is in consideration of X’s meritorious services
Y .Y pleads in defense that since the promise was not in writing , it is unenforceable under the Statute of Frauds. Decide
a. The promise is unenforceable because it is not in writing
b. The Statute of Fraud is applied because of A has rendered services
c. The Statute of Fraud is incapable here, because the promise to give the land is not a sale of real property
d. The Statute of Fraud is can apply to partially executed contract

42. Statement no.1 In voidable contracts, there is no need to ratify the same before they can be considered valid. In
unenforceable contracts however ratification is mandatory before they can be considered enforceable
Statement no.2 “There is undue influence if insidious words or machinations were employed by party on the
other just to obtain the latter’s consent without which the latter would not have entered into the contract
a. Both are true c. No.1 is true while No.2 is false
b. Both are false d. No.1 is false while No.2 is true

43. Three of the following are void contracts. Which is the exception?
a. Contracts where the cause is immoral
b. Contracts to prevent a known supporter of a political rival from voting for his candidate for a valuable
consideration
c. Contracts with valid consideration but with unlawful motives
d. Absolutely simulated contracts

44. Statute of Frauds is applicable to

a. executed contract
b. oral contract of loan
c. contract not to be performed within a year from the making thereof
d. mutual promise to marry

45. Which of the following is correct?

a. An action to enforce judicially a natural obligation prescribes in 4 years
b. An action for annulment of contract is imprescriptible
c. An action to declare a contract void is not subject to prescription
d. An action for rescission of contract prescribes in five (5) years counted from the execution of the contract

46. B fraudulently includes S to sell to him (B) a masterpiece painting for 100,000.Subsequently , B sold it to X
for 120,000 a good faith purchaser S is entitled to
a. Annul the contract with B plus damages
b. Recover the painting from X but no damages
c. Recover damages from B
d. Annul the contract between B and X

47. Which of the following contracts is not rescissible?

a. Those which are entered into by guardians whenever the wards, whom they represent, suffer a lesion of more
than ¼ of the value of object of the contract
b. Those executed in representation of an absentee, if the latter suffer a lesion more than ¼ of the value of the contract
c.Those where one of the parties is incapable of giving consent to a contract
d. Those undertaken in fraud of creditors when the latter cannot in any other manner collect the claims due them

48. When there is concurrence of offer and acceptance, there is:

a. Consummation b. Conception c. Consent d. Consideration

49. Which of the following contracts is voidable?

a. Those were 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
c. Those were the consent is vitiated by mistake, violence, intimidation, undue influence or fraud
d. Those whose object is outside the commerce of men
50. Which of the following contracts is not rescissible?
a. Those where one of the parties is incapable of giving consent to a contract
b. Those where both parties is 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 object of the contract
d. Those which are absolutely simulated or fictitious