REGULATORY FRAMEWORK

AND LEGAL ISSUES IN BUSINESS

Midterm Examination
Name: Erick James M. Floresca SCORE:
Section: Date:

I. TRUE or FALSE. Write T if the statement is TRUE, write F if the statement is FALSE. (2 points
each)
F__ 1. An oral Deed of Absolute Sale is not valid contract.
T__ 2. A Contract of Sale is a real contract; hence it is perfect upon the delivery of a thing.
T__ 3. A Contract of Sale can exist by itself without being dependent upon another contract.
T__ 4. Warranties are issued to promise or undertake to ensure that certain facts are or shall be
as the seller represents them.
T__ 5. Warranties may be agreed upon by the contracting parties—that is, express warranties,
or by provision of law—that is, implied warranties, while conditions must be imposed by said
parties.
T__ 6. An express warranty must be written to be valid.
T__ 7. By the contract of agency, a person binds himself to render some service or to do
something in representation or on behalf of another, with the consent or authority of the latter.
T__ 8. A Contract of Agency must always be written.
T__ 9. When a sale of a piece of land or any interest therein is through an agent, the authority
of the latter shall be in writing; otherwise, the sale shall be void.
T__ 10. A contract of sale cannot be unilateral because there are reciprocal obligations in a
contract of sale.
T__ 11. Recto Law will govern installment sales over movable property
T__ 12. Maceda Law will govern installment sales over immovable property
F__ 13. In order to be Contract of Agency to be valid, it must be in a public instrument.
T__ 14. By the contract of sale, one of the contracting parties obligates himself to transfer the
ownership and to deliver a determinate thing, and the other to pay therefore a price certain in
money or its equivalent.
T__ 15. A real estate mortgage is a principal contract
T__ 16. The agent shall be liable for damages if there being conflict between his interest and
that of the principal, he should prefer his own.
T__ 17. Acceptance by the agent may also be express, or implied from his acts which carry out
the agency, or from his silence or inaction according to the circumstances.
T__ 18. An agency couched in general terms comprises only acts of administration, even if the
principal should state that he withholds no power or that the agent may execute such acts as
he may consider appropriate, or even though the agency should authorize a general and
unlimited management.
T__ 19. Agency may be express, or implied from the acts of the principal, from his silence or
lack of action, or his failure to repudiate the agency, knowing that another person is acting on
his behalf without authority.
T__ 20. If the agent acts with authority and on behalf of the principal, the transaction is valid.
Hence, the principal is liable to the third party while the agent is not personally liable unless he
bounds himself
II. MULTIPLE CHOICE: Select the best answer by UNDERLINING the statement of your choice:
(2pts each)
B 21. The pledgor has the following rights, except to:
a. Ask for the return of the thing pledged after he has paid his debt, interest, and expenses
in a proper case
b. Continue to be the owner of the thing pledged unless it is expropriated
c. Require the deposit of the thing with a third person if it is in danger of being impaired or
lost through the negligence or willful act of the pledgee
d. Alienate the thing pledged without the consent of the pledgee

B 22. This is a stipulation in pledge or mortgage providing that the ownership of a thing given as
security will be passed to the pledge or mortgagee upon default of the debtor.
a. Constitutum Possession
b. Pactum commisorium
c. Legal subrogation
d. Redemption

D 23. The following may be an object of pledge, except:

a. Motor Vehicle
b. Laptop
c. Parcel of land
d. All of the above

B 24. The delivery required in pledge for its perfection and validity is:

a. Execution of public instrument

b. Execution of private instrument
c. Registration
d. Actual Delivery

B 25. It refers to the procedure adopted by the mortgagee to terminate the rights of the
mortgagor on the property mortgaged and included the sale of the property.
a. Redemption
b. Repossession
c. Foreclosure
d. Repurchase
D 26. An express warranty in a contract of sale involving real property exists when:
a. it affirms a fact or relates to any promise by the seller relating to the property
b. the affirmation or promise naturally induced the buyer to purchase the property
 c. the buyer purchases the property, relying on that affirmation or promise.
d. All of the above

D 27. The following are the characteristics of a contract of sale, except:

a. Consensual
b. Principal
c. Gratuitous
d. None of the above
D 28. The following are the stages of contract of sale, except:
a. Performance
b. Perfection
c. Negotiation
d. None of the above
C 29. The contract that was entered not performed in the course of business of the seller
a. Contract of Loan
b. Contract of Sale
c. Contract to Sell
d. Contract of Piece of Work
D 30. Payment is considered as what when it is given as a separate and distinct consideration
from the purchase price?
a. Earnest Money
b. Option Money
c. Purchase Money
d. All of the above
III. MATCHING TYPE Indicate your answers by writing the letter representing the statement or
phrase that best describes, defines, or explains the numbered items. (2 points each)

a. Principal o. Mortgagor
b. Pledge p. Mortgagee
c. Real estate mortgage q. Foreclosure
d. Agent r. Pledgee
e. Sale on credit s. Installment sale
f. Vendee t. Pledgor
g. Revocation u. Immovable
h. Withdrawal v. Movable
i. Agency w. Vendor
j. Substitute x. Accessory Contract
k. Commission agent y. Principal Contract
l. General agency z. Option money
m. Special agency aa. Earnest money
n. Chattel mortgage bb. Dacion en pago

A__ 31. The person who gives authority to another to perform a certain act in the former’s
behalf.
M__ 32. This refers to the act of the principal of terminating the agency at will.
J__ 33. A person who performs a service or does something in representation or in behalf of
another with the latter’s consent and authority.
L__ 34. The authority given by the principal to his agent when the act to be performed is an act
of administration.
K__ 35. An agent who receives salary for his work done
V__ 36. The party who delivers a movable property to another to secure his debt or that of
another person.
T__ 37. The object of a real estate mortgage
C__ 38. A mortgage constituted upon an immovable to secure an obligation
X__ 39. An agreement wherein a movable shall be the security of a principal obligation without
the delivery of the movable.
P__ 40. The object of a chattel mortgage.
aa__ 41. Paying an object on a scheduled time
W__ 42. A person who obliged himself to transfer ownership upon payment of determined
price
F__ 43. A person who obliged to pay for the thing sold.
Z__ 44. Ownership of a thing is transferred to the creditor to settle a monetary obligation.
B__ 45. One of the proofs of perfection of sale.
IV. ENUMERATION. Kindly write the answer on the space provided. (2 points each)
Name three instances wherein a Special Power of Attorney is required by law:
46. If thew creditor uses the thing without authority
47. If he misuses the thing in any other way
48. if the thing is in danger of being lost or impaired because of the negligence or willful act of
the pledgee
What are the two main difference of a pledge from a chattel mortgage:
49. Delivery of the personal property to the mortagagee is not necessary
50. the sale is different
- NOTHING FOLLOWS -