1/30/2021 ENABLING ASSESSMENT: Void or Inexistent Contracts - B-BLAW211; Law on Obligations and Contracts; BSA21;1S; AY20-21 - DLSU-…

B-BLAW211; Law on Obligations and Contracts; BSA21;1S; AY20-21

ENABLING ASSESSMENT: Void or Inexistent Contracts

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Question 1
I. Where one of the parties to an illegal contract is incapable of giving consent, the courts may, if the interest of
justice so demands, allow recovery of money or property delivered by the incapacitated person.
II. When the price of any article or commodity is determined by statute, or by authority of law, any person paying
any amount in excess of the maximum price allowed may not recover such excess.

Response: First statement is true, second statement is false.

Question 2
Three of the following contracts are void. Which is the exception?

Response: Those where both parties are incapable of giving consent to a contract.

Question 3
There is a colorable contract but without any substance, because the parties have no intention to be bound by it.

Response: Absolute simulation

Question 4
I. A void contract at inception cannot be validated by ratification or prescription.
II. The rule is that a usurious loan transaction is not a complete nullity but defective only with respect to the agreed
interest.

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Response: Both statements are true.

Question 5
The following contracts are inexistent from the beginning, except

Response: Those which are relatively simulated.

Question 6
I. By its very nature, annulment contemplates a contract which is void, that is valid until annulled.
II. A contract which is the direct result of the previous illegal contract, is also void and inexistent.

Response: First statement is false, second statement is true.

Question 7
I. A contract that violates the Constitution and the law, is null and void and vests no rights and creates no
obligation.
II. Equity as a rule will follow the law and will not permit that to be done indirectly which, because of public
policy, cannot be done directly.

Response: Both statements are true.

Question 8
The following are the exceptions that permit the return of that which may have been given under a void contract to,
except:

Response: the guilty party.

Question 9
In equal fault means _______________.

Response: in pari delicto

Question 10
I. In case of a divisible contract, if the illegal terms can be separated from the legal ones, the latter may be
enforced.
II. The rule is that an excessive loan transaction is a complete nullity and defective also with respect to the agreed
interest.

Response: First statement is true, second statement is false.

Question 11
I. One of the characteristics of a voidable contract is that it produces no effect.
II. A void contract is as if it has never been entered into and cannot be validated either by the passage of time or by
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ratification.

Response: First statement is false, second statement is true.

Question 12
I. Stipulations authorizing the imposition of iniquitous or unconscionable interest are contrary to morals, if not
against the law.
II. Simulation of a contract may either be absolute or relative.

Response: Both statements are true.

Question 13
I. A contract which is null and void is no contract at all and hence could not be the subject of rescission.
II. The action or defense for the declaration of the inexistence of a contract does not prescribe.

Response: Both statements are true.

Question 14
I. If the parties state a false cause in the contract to conceal their real agreement, such a contract is relatively
simulated.
II. A contract without consideration is one such voidable contract.

Response: First statement is true, second statement is false.

Question 15
____________________ is one which has no force and effect from the very beginning.

Response: Void contract

Question 16
I. Parties to a void agreement cannot expect the aid of law; the courts leave them as they are, because they are
deemed "in pari delicto" or in equal fault.
II. No damages may be recovered on the basis of a void contract; being non-existent, the agreement produces no
juridical tie between the parties involved.

Response: Both statements are true.

Question 17
As a rule, which contracts of sale is void?

Response: Between husband and wife.

Question 18
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Parties to a void agreement cannot expect the aid of the law; the courts leave them as they are.

Response: In pari delicto

Question 19
The parties state a false cause in the contract to conceal their real agreement.

Response: Relative simulation

Question 20
The stipulation in a 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______________________.

Response: contrary to law and morality

Question 21
I. That a contract void at inception can be validated by ratification or prescription and certainly can be binding or
enforceable.
II. Once the disputed deed is found to be inexistent and void, the statute of limitations can apply.

Response: Both statements are false.

Question 22
I. The action or defense for the declaration of the inexistence of a contract does not prescribe.
II. The action for annulment must be brought within 6 years from the time the intimidation, violence or undue
influence ceases, or 6 years from the time of the discovery of the mistake or fraud.

Response: First statement is true, second statement is false.

Question 23
I. A void or inexistent contract is one which has no force and effect from the very beginning.
II. When the law sets, or authorizes the setting of a minimum wage for laborers, and a contract is agreed upon
which a laborer accepts a lower wage, he shall not be entitled to recover the deficiency.

Response: First statement is true, second statement is false.

Question 24
I. An excessive stipulated interest rate may be void for being contrary to public policy, an action to annul said
interest rate does not prescribe.
II. In case of a void sale, the seller has no right whatsoever to keep the money paid by virtue thereof and should
refund it, with interest rate at the legal rate, computed from the date of filing of the complaint until fully paid.

Response: Both statements are true.

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Question 25
I. Contracts are not defined by the parties thereto but by principles of law.
II. In determining the nature of a contract, the courts are bound by the name or title given to it by the contracting
parties.

Response: First statement is true, second statement is false.

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