OBLIGATIONS

1. This is payment in kind:

a. Consignation
b. Payment by cession
c. Dation in payment
d. Application for payment

2. When the obligation is extinguished because of the passage of time, this is:
a. Fulfillment of resolutory condition
b. Arrival of resolutory period
c. Prescription
d. Rescission

3. When the debtor abandons or transfers all his properties to his creditors so that the creditors may
sell the properties and out of the net proceeds the creditors recover their claims, this is called
a. Dacion en pago
b. Tender of payment and consignation
c. Payment by cession
d. Remission

4. Unless the law or the stipulation of the parties require another standard of care, the obligation to
give a thing carries with it the obligation to take care of it with:
a. Extra-ordinary diligence
b. Degree of care agreed upon by the parties
c. Diligence f a good father of a family
d. Diligence of a good family of a father

5. It presupposes not only that the obligor is able, ready and willing but more so, in the act of
performing his obligation.
a. Promissory note
b. Tender of payment
c. Bill of exchange
d. Obligation to sell

6. The debtor shall lose every right to make use of the period except:
a. When after the obligations has been contracted he becomes insolvent, unless he gives a
guaranty or security for the debt.
b. When he does not furnish a guaranty or security for the debt.
c. When the debtor attempts to abscond.
d. When he violates any undertaking in consideration of which the creditor agreed to the period.

7. In alternative obligation, the right of choice belongs to:

a. The creditor
b. The debtor
c. Both the creditor and the debtor
d. Third person

8. In facultative obligation the right of choice belongs to:

a. The creditor
 b. The debtor
c. Both the creditor and the debtor
d. Third person
e. None of the above

9. The source of liability for damages are the following except:

a. Fraud
b. Negligence
c. Delay
d. Quasi-delict

10. When the fulfillment of the condition depends upon the sole will of the debtor, the conditional
obligation shall be:
a. Voidable
b. Unenforceable
c. Valid
d. Void

11. A owes B P20, 000 which became due and payable last June 23, 2020. On that date A offered B
P10, 000, the only money he then had but B refused to accept the payment. A therefore met C,
B’s 23 year old son, to whom he gave the P10, 000 with the request that he turn the money to B.
the money, was stolen while in C’s possession. How much may B still recover from A?
a. P20,000
b. P10,000
c. P15,000
d. P0.00

12. If a third person pays an obligation. What are the rights which are available to him if he pays the
obligation with the knowledge and consent of the debtor?

First Answer – He can recover from the debtor the entire amount, which he has paid.
Second Answer – He is subrogated to all of the rights of the creditor.
a. Both answer are correct
b. Both answer are wrong
c. Only the first answer is correct
d. Only the second answer is correct

13. A source of obligation not arising from law.

a. Negotiorum gestio
b. Solutio indebiti
c. Culpa aquiliana
d. Contract

14. This is the kind of diligence that the obligor must observe in the performance of his obligation to
give something:
a. Diligence of a good father of a family.
b. Extraordinary diligence of a good father of a family.
c. Diligence of a father of a good family.
d. Diligence of a good father of a family even if the law or the stipulation requires another standard
of care.
15. Obligations may arias from any of the following, except:
a. Contracts
b. Quasi-contracts
c. Law
d. Prestation

16. 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 provided 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

17. Statement no. 1. Contracts without cause are voidable because cause 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, while the second is true.

b. Both statements are true.
c. Both statements are false.
d. First statement is true while the second is false.
18. Statement no. 1. Contract of lease of a parcel of land for a term of one year must be written
otherwise enforceable.
Statement no. 2. Contract of sale of a parcel of land must be in public instrument otherwise
unenforceable.

a. First statement is false while the second is true.

b. Both statements are true
c. First statement is true while the second is false.
d. Both statements are false

19. Statement no. 1. There is acceptance of the offer only after it has come to the knowledge of the
offerer.
Statement no. 2. Lesion or inadequacy of cause shall as a rule make a contract defective.

a. Both statements are true

b. Second statement is true; first is false
c. Both statements are false
d. First statement is true; second is false

20. 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

b. Both statements are true
c. First statement is false; second is true
d. First statement is true; second is false
21. Statement 1: If the words of the contract are clear and leave no doubt on the intention of the
parties, interpretation of contracts may be proper
Statement 2: In case of gratuitous contracts, doubts shall be resolved 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

22. Statement 1: Mutual error as to the legal effect of an agreement when the purpose of the parties
is frustrated may result in the reformation of the instrument.
Statement 2: Mutual mistake of the parties and the instrument does not express the true
agreement will make the contract voidable.

a. Both statements are false.

b. Both are true.
c. First is true; second is false.
d. First is false; second is true.

23. Statement 1: A threatened B with an administrative charge for immortality 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.
Statement 2: 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

b. Both are false
c. Both are true
d. First is true; second is false

24. A appointed B to sell his land:

Statement 1: If the authority of B is oral and the sale is in public instrument, the sale is void.

Statement 2: If the authority of B is in writing and the sale is oral, the contract is unenforceable.

a. The first statement is false; the second is true

b. The first is true; second is false
c. Both are true
d. Both are false

25. Statement 1: If the cause is not stated in the contract, it is presumed that it does not exist.
Statement 2: 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.

26. Statement 1: Nominate contracts are those without special designations or names under the law.
Statement 2: Innominate contracts shall first be governed by the custom of the place.
a. Both statements are correct.
b. First is correct, second is false.
c. Both are incorrect.
 d. First is incorrect, second is correct.

27. Statement 1: Contracts take effect not only between the parties but also their heirs and assigns
and the heir is liable beyond the value of the property he received from the decedent.
Statement 2: 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 correct, first is incorrect.

28. Statement 1: 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.
Statement 2: Unenforceable contracts unlike void contracts may be assailed by the third persons.

a. First statement is correct, second is incorrect.

b. First is incorrect, second is correct.
c. Both are incorrect.
d. Both are correct.

29. Statement 1: 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.
Statement 2: The action for annulment of contracts shall be extinguished when the thing which is
the object thereof is lost through fortuitous event or fraud or fault of the person who has a right to
institute the proceedings.

a. Both statements are incorrect.

b. Both are correct.
c. First is correct, second is incorrect.
d. Second is correct, first is incorrect.

30. Statement 1: Ratification of a voidable or unenforceable contract must be made within the
prescriptive period provided for by the law.
Statement 2: Ratification cleanses a voidable 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.

PARTNERSHIP

31. A partnership which comprises all that the partners may acquire by their work or industry during
the existence of the partnership is:
a. Particular partnership
b. General partnership
c. Universal partnership of all present property
d. Universal partnership of profits
32. This partner cannot engage in business for himself, unless the partnership expressly permits him
to do so.
a. Industrial
b. General
c. Limited
d. Capitalist

33. A stipulation which excludes one or more partners from any share in the profits or losses is-
a. Void
b. Valid
c. Unenforceable
d. Voidable

34. When the manner of partnership management has not been agreed upon, all the partners shall
be considered-
a. Managers.
b. Agents.
c. Administrators.
d. Co-owners

35. The change in the relation of the partners caused by a partner ceasing to be associated in the
carrying on of business.
a. Winding-up
b. Withdrawal
c. Dissolution
d. Termination of partnership

36. A partnership that is formed by two or more persons having as members one or more general
partners and one or more limited partners.
a. Limited
b. Universal
c. General
d. Particular

37. A contract where two or more persons bind themselves to contribute money, property or
industry to a common fund with the intention of dividing the profits among themselves.
a. Voluntary association
b. Corporation
c. Partnership
d. Sole proprietorship
38. The change in the relation of the partners caused by any ceasing to be associated in carrying on
the business is known as:
a. Termination of the partnership.
b. Winding up of partnership affairs.
c. Liquidation of the partnership business.
d. Dissolution of the partnership.

39. A person admitted to all the rights of a limited partner who has died or has assigned his interest
in the partnership is known as:
a. An ostensible partner.
b. A liquidating partner.
c. A substituted limited partner.
d. A general-limited partner.

40. Spouses A and B formed a limited partnership to engage in real estate business and A
contributed P1M only. Is the partnership between the spouses valid?
a. The partnership is not valid because spouses cannot enter into a limited partnership.
b. The partnership is valid because spouses can enter into a partnership, limited or general,
universal or particular.
c. The partnership is not valid because spouses cannot enter into any kind of partnership for
business except conjugal partnership.
d. The partnership is valid because spouses are prohibited to enter into a universal partnership
only.

41. If a partner is insolvent, the first in the order of preference is:

a. Partnership creditors.
b. Partner’s contribution to the partnership.
c. Separate creditors of the partner.
d. Pro rata between the separate creditors and the partnership creditors.

42. A, B and C are partners in a partnership. A and B contributed P10, 000.00 each while C
contributed his service. After payment of the partnership liabilities to creditors, only P6, 000.00
remains. In the absence of stipulation to the contrary, the share of C shall be:
a. Equal to the share of A.
b. Equal to the share of B.
c. P2,000.00
d. Nothing

43. X, Y and Z are partners who contributed equally to the capital of the partnership. A owes the
partnership P9, 000.00. Z collected form A P3, 000.00 before X and Y could receive anything
form A, who later became insolvent and therefore they could not collect their shares.
a. Partner Z shall share the P3, 000.00 with his co-partners X and Y.
b. Z cannot be required to share what he already received from A.
c. X and Y should first exhaust all remedies to collect from A.
d. X and Y can automatically deduct from the capital contribution of Z in the partnership their
respective shares in the P3, 000.00.

44. A and B are partners in real estate business. The partnership owns a parcel of land which C
desires to buy. C contacted A and informed him of his intention to buy the said land. A did not
tell B such intention of C. A bought B out of the partnership and afterwards sold the land to C at
a profit.
a. The partnership was dissolved when A became the sole owner.
b. The sale is void because it was without the knowledge of B.
c. A is not liable to B for his share of the profits.
d. A is liable to B for his share of the profits.

45. A, B and C are partners in ABC Company. D represented himself as a partner in the partnership
to E who, on the belief of such representation, extended credit of P50, 000.00 to the
partnership. Assuming only B and C consented to such representation, who shall be liable to E?
a. All of A, B, C and D are liable because of partnership liability for the credit extended to the
partnership by E.
b. B, C and D are partners by estoppel and thus, are liable to E.
c. Partners A, B and C are liable to E for the benefit extended to them.
d. Only D who made the representation is liable to E.

46. May contribute money, property or industry to a common fund:

a. Limited partner
b. General partner
c. Both limited and general partner
d. Both limited and industrial partner

47. One of the following incidents is a cause of involuntary dissolution of the partnership:
a. Termination of the definite term of partnership.
b. Insolvency of a partner.
c. Express will of a partner in a partnership at will.
d. Expulsion of a partner for cause as stated in the articles of part.

48. The following are disqualified to form a universal partnership except one:
a. Brother and sister
b. Husband and wife
c. Those guilty of adultery or concubinage
d. Those guilty of the same offense, if the partnership is entered into in consideration of the same.

49. A is the capitalist partner and B the industrial one. A engaged personally in the same kind of
business as that of the partnership:
a. If there are losses, the partnership will bear the losses.
b. If there are profits, they will be shared by A and the partnership.
c. If there are profits, A shall give them to the partnership.
 d. A may be excluded from the partnership with liability for damages.

50. A is the capitalist partner and B the industrial one. Suppose B engages in business on his own
account but different from that of the partnership:
a. If there are profits, B and the partnership shall share equally.
b. If there are losses, B and the partnership shall equally share.
c. B may be excluded from the partnership but without damages.
d. B may be excluded from the partnership with damages.

Corporations

51. This is the written acknowledgement of the interest of the stockholder in the corporation.
a. Proxy
b. Share of stock
c. Voting trust agreement
d. Certificate of stock

52. These are the persons who sign the articles of incorporation and therefore must be subscribers
of shares.
a. Incorporators
b. Directors
c. Stockholders
d. Corporate officers

53. This is a public instrument giving authority to vote for stockholder

a. Proxy
b. Voting trust agreement
c. Stock certificate
d. Voting trust certificate

54. A gratuitous reissue of treasury shares will result in

a. Capital surplus
b. Stock dividend
c. Watered stock
d. Property dividend

55. The nationality of the corporation determined by the nationality of the stockholders in control
of the same is called:
a. Domicile test
b. Incorporation test
c. Management test
d. Control test
56. The interest or right of the stockholder in the corporations’ profits or in the net assets of
corporation on dissolution is-
a. Shares of stock;
b. Dividend;
c. Capital;
d. Certificate of stock.

57. The right of a corporation to exist as juridical person, during its term as stated in the articles of
incorporation despite the death of any of its stockholders is-
a. Right of existence;
b. Right of succession;
c. Pre-emptive right;
d. Right of redemption.

58. Their names are mentioned in the articles of incorporation as originally forming the corporation
and are signatories thereof.
a. Corporators.
b. Stockholders.
c. Incorporators.
d. Members.

59. Under this theory, the nationality of a corporation is that of the country under whose laws it was
formed.
a. Control test.
b. Incorporation test.
c. Domiciliary test.
d. Grandfather rule.

60. A corporation created in strict compliance with all the legal requirements and whose right to
exist as a corporation cannot be successfully attacked in a direct proceeding for that purpose by
the State is a:
a. De jure corporation.
b. De facto corporation.
c. Corporation by estoppel.
d. Corporation by prescription.

61. The right of a stockholder to demand payment of the fair value of his shares when he dissents
from certain corporate acts is known as:
a. Pre-emptive right.
b. Appraisal right.
c. Redemption right.
d. Appreciation right.

62. A stock that is issued without consideration or below par value or the issued price is known as:
a. Watered stock.
b. Delinquent stock.
c. Redeemable stock.
d. Preferred stock.

63. A subscribed to 1,000 shares of stock of X Corporation. She paid 25% of the said subscription.
During the stockholders meeting, can A vote all her subscribed shares?
a. No, because the subscription has not yet been fully paid.
b. No, because A’s shares have become delinquent which cannot be voted.
c. No as to the unpaid percentage of subscription.
d. Yes, because unpaid shares not delinquent can be voted.

64. X Corporation posted a P1M profit in its realty business and its real estate has appreciated in
value to the tune of P4M. The board then declared dividends to its stockholders computed on
the basis of representing profits and appreciation in value of its real estate. Is the dividend
declaration valid?
a. Not valid because there was no approval of 2/3 of the outstanding capital stock.
b. Valid because it was based on profit and increment in the value of the corporate assets.
c. Not valid because dividends must only come from the unrestricted retained earnings.
d. Valid if no creditors shall be prejudiced and approved by the required votes of the directors and
stockholders.

65. A subscribed to 100 shares of X Corporation, paying 25% of the amount thereof. The corporation
refuses to issue to the former a stock certificate for his subscription despite the demand of A for
a stock certificate corresponding to 25 shares which he claims have been paid. Meanwhile, the
corporation has become insolvent and A now refuses to pay for his unpaid balance on his
subscription. Is the refusal of the corporation to issue the certificate valid?
a. Not valid because there can be issued a stock certificate for the number of shares already paid.
b. Valid because the stock certificate can only be issued after the full payment of the subscription.
c. Valid with respect to the unpaid portion of the subscription.
d. Not valid because only delinquent share may be denied stock certificate.

66. A subscribed to 100 shares of X Corporation, paying 25% of the amount thereof. The corporation
refuses to issue to the former a stock certificate for his subscription despite the demand of A for
a stock certificate corresponding to 25 shares which he claims have been paid. Meanwhile, the
corporation has become insolvent and A now refuses to pay for his unpaid balance on his
subscription. Is A correct in refusing to pay for the remaining shares, the company being already
insolvent?
a. No, under the trust fund doctrine upon the insolvency of the corporation to which he is still
liable for his unpaid subscription.
b. No, because of the doctrine of piercing the veil of corporate fiction.
c. Yes, his obligation extinguished due the insolvency of the corporation and his discharge from
liability by reason thereof.
d. Yes, because he is denied of his right to receive stock certificate.
67. Which of the following is not a requisite for a close corporation?
a. The number of stockholders shall not exceed twenty.
b. That no close corporation is a stockholder thereof owning at 2/3 of the voting stocks.
c. There is a restriction in the transfer of shares.
d. There is no public offering of shares.

68. Majority of the following must be residents of the Philippines, except:

a. Members of the board of directors.
b. Members of the board of trustees.
c. Incorporators.
d. Officers

69. Private corporations have the following attributes, except:

a. It is created by law as juridical person.
b. It has the right of succession.
c. It may be formed, organized and existing under a special law or charter.
d. It has the powers, attributes and properties expressly authorized by the law or incident to its
existence.

70. In three of the following instances, shares with or without voiding rights can be voted, except:
a. Increase or decrease of capital stock
b. Dissolution of the corporation
c. Election of directors or trustees
d. Merger or consolidation with other corporation

71. Statement 1: In the sale of goods, if the seller delivers more than the quantity agreed upon, the
buyer may rescind the contract of sale.
Statement 2: The seller have the right of legal redemption only if this right has been agreed
upon between the seller and the buyer.

a. Both statements are false.

b. Both are true.
c. First is false, second is true.
d. First is true, second is false.

72. Statement 1: If several persons, jointly and in the same contract, should sell an undivided
immovable with a right of repurchase, none of them may exercise this right for more than his
respective share.
Statement 2: Each one of the co-owners of an individual immovable who may have sold his
share separately, may independently exercise the right of repurchase as regards his own share,
and the vendee cannot compel him to redeem the whole property.
a. Both statements are true.
b. Both are false.
c. First is false, second is true.
d. First is true, second is false.
 73. Statement 1: The creditors of the vendor cannot make use of the right of redemption against
the vendee, until after they have exhausted the property of the vendor.
Statement 2: The vendor is responsible to the vendee for any hidden faults or defects in the
thing sold if so stipulated by the parties.
a. First statement is false, second is true.
b. Second statement is false, first is true.
c. Both statements are false.
d. Both statements are true.

74. Statement 1: In the sale of immovable property, if it has been stipulated that upon failure to pay
the price at the time agreed upon, the rescission of the contract shall of right take place, the
vendee may still pay despite the demand for rescission.
Statement 2: In the sale of movable property, the rescission of the sale shall of right take place if
the vendee, upon the expiration of the period fixed for the delivery of the thing, should not have
appeared to receive it, or having appeared he should not have tendered the price.
a. Both statements are correct.
b. Both are incorrect.
c. First is incorrect, second is correct.
d. First is correct, second is incorrect.

75. B in good faith purchased a diamond ring from C, a friend of his. C gave B a bill of sale. Later on,
O identified the ring as the one she had lost about a year before. There is no question as to the
truth of O’s allegation. In case:
a. O cannot recover the ring from B because the latter was in good faith when he bought the ring
from C.
b. O cannot recover the ring from B because it was lost by him (O) and found by, C therefore C, as
finder will be keeper and owner who could transfer ownership to B, an innocent purchaser for
value.
c. C is the one liable to O for damages while B becomes owner who could not be disposed being an
innocent purchaser for value.
d. O can recover the ring from B even if he is an innocent purchaser for value because C did not
have title to convey to B.

76. The following items pertain to either a contract of sale or a contract to sell.
I. Ownership of the thing sold is transferred upon delivery.
II. Ownership of the thing is transferred to the buyer at some future time.
III. The risk of loss is on the buyer.
IV. The risk of loss is on the seller.

Based on the above data, which of the following is correct?

a. Items I and III pertain to a contract to sell

b. Items I
c. I and III pertain to a contract to sell
 d. Items II and IV pertain to a contract of sale
e. Items I and III pertain to a contract of sale

77. The following items pertain to either emptio rei sperati or emptio spei.
I. The sale of a future thing.
II. The sale of hope or expectancy.
III. The sale of present thing.
IV. The thing sold must come into existence.

Based on the above information, which of the following is correct?

a. Items I and II pertain to emptio rei sperati.

b. Items II and III pertain to emptio spei.
c. Items II and III pertain to emptio rei sperati.
d. Items III and IV pertain to emptio spei.

78. A and B are co-owners of a rural lot not exceeding 1 hectare. The lot is surrounded on its four
sides as follows: on the North, by the road; on the East, by the lot of X consisting of 2 hectares;
on the South, by the lot of Y consisting of 2 ½ hectares; and on the West, by Z’s lot consisting of
2 ¾ hectares. A sells his undivided interest in the agricultural lot to T, who owns several hectares
of rural land in the area. Who has the right of legal redemption over the undivided interest in
the lot sold by A to T?
a. B
b. X
c. Y
d. Z

79. S, the owner of a rent-a-car business, leased one of his cars to B for one month. On the day of
the expiration of the lease and while B was still in possession of the car, B offered to buy the car
from S for P200, 000.00. Believing the price to be a good one, S readily accepted B’s offer and
then and there executed a deed of absolute sale in favor of B who immediately paid the price in
cash. Thereafter, B drove away form place of S.
a. The delivery of the car by S to B is by constitutum manu.
b. The delivery of the car by S to B is by traditio longa manu.
c. The delivery of the car by S to B is by traditio brevi manu.
d. There was no delivery because B should have turned over the possession of the car to S upon
the expiration of the lease so that S could make the proper delivery to him upon the expiration
of the lease so that S could make the proper delivery to him upon the execution of the contract
of sale.

80. B called on S at the shoe factory of S for the latter to make a pair of shoes which B would be
needing in the play “Romeo and Juliet.” B provided S with the description of the pair of shoes
that he wanted since S did not manufacture the kind of shoes that B needed. S quoted a price of
P1,000.00 which B agreed to pay upon delivery to him of the pair of shoes. Since S and B had
been neighbors for a long time, their agreement was sealed with a handshake.
 a. The contract between S and B becomes enforceable if S had already completed making the pair
of shoes.
b. The contract between S and B becomes enforceable if B had already paid the amount agreed
upon for the work.
c. The contract between S and B is enforceable even if it is still executory.
d. The contract cannot be enforced by either party because it was not in writing.

Negotiable Instruments

81. Statement 1: A person secondarily liable on the instrument is the one who is absolutely required
to pay the instrument.
Statement 2: A check as a bill of exchange is not an assignment of funds with the bank to the
credit of the drawer.
a. Both are false
b. Both are true
c. Second is true
d. First is true

82. Statement 1: An incomplete and already delivered instrument, if completed, and is negotiated
to a holder in due course, is valid and effectual for all purposes in his hands.
Statement 2: Such holder may enforce it as if it had been filled up strictly in accordance with the
authority given and within a reasonable time.
a. Both statements are true
b. First statement is false; second statement is true
c. Both statements are false
d. First statement is true; second statement is false

83. Statement 1: A check is a bill of exchange drawn on a bank payable on demand or at a fixed
determinable future time.
Statement 2: A check must be presented for payment within six (6) months after its issue
otherwise it becomes stale and the drawer will be discharged from liability.
a. Both statements are true
b. First statement is false; second statement is true
c. Both statements are false
d. First statement is true; second statement is false

84. Statement 1: A person whose signature does not appear on the instrument may be liable
therefor.
Statement 2: When the instrument is not dated, it will be considered to be dated as of the time
it was drawn, made of endorsed.
a. Both statements are true
b. First statement is false; second statement is true
c. Both statements are false
d. First statement is true; second statement is false
85. Statement 1: There is valid payment when a negotiable instrument is delivered and accepted by
the creditor.
Statement 2: Creditors are bound to accept checks in payment of obligation
a. Both statements are true
b. First statement is false; second statement is true
c. Both statements are false
d. First statement is true; second statement is false

86. Statement 1: An instrument payable upon a contingency is negotiable and the happening of the
event cures the defect
Statement 2: An instrument where no time for payment is expressed is payable on demand
a. Both statements are true
b. First statement is false; second statement is true
c. Both statements are false
d. First statement is true; second statement is false

87. Statement 1: An order or promise to pay out of a particular fund is negotiable.

Statement 2: An instrument which is payable to bearer is negotiated by indorsement plus the
delivery of the instrument.

a. Both statements are true

b. First statement is false; second statement is true
c. Both statements are false
d. First statement is true; second statement is false

88. Statement 1; When a signature is so placed upon the instrument that it is not clear in what
capacity the person making the same intended to sign, he is deemed to be an indorsee.
Statement 2: Where the instrument is payable to bearer, the payee may not be named or
otherwise not indicated with reasonable certainty.
a. Both statements are true
b. First statement is false; second statement is true
c. Both statements are false
d. First statement is true; second statement is false

89. Statement 1: A holder in due course is one who possesses both legal and beneficial interest to
the instrument and is subject to personal defenses only.
Statement 2: A holder for value is an endorsee who has both the legal title and the beneficial
interest to the instrument and is subject to both real and personal defenses available against
him.
a. Both statements are true
b. First statement is false; second statement is true
c. Both statements are false
d. First statement is true; second statement is false
90. Statement 1: The indorsement of the instrument by a minor passes the title thereto
notwithstanding that from want of capacity, the minor may incur no liability.
Statement 2: A person whose signature does not appear on the instrument may be held liable
thereon.
a. Both statements are true
b. First statement is false; second statement is true
c. Both statements are false
d. First statement is true; second statement is false