PRE-FINAL EXAMS 

BACLAW
Instruction:  Answer in Microsoft Word format only and submit on or before the
end of your class to my email account.

1. Upon signing the Deed of Absolute Sale, Samantha Panlilio paid P 200,000
in cash to the spouses and issued a postdated check in the amount of P
2,800,000.00, representing the remaining balance of the purchase price of
the subject property.  Thereafter, a new Transfer Certificate of Title (TCT)
was issued in the name of Samantha Panlilio.

When presented for payment, the check was dishonored for the reason
“Drawn against Insufficient Funds”.  Left with no recourse, the Spouses filed
a Complaint.  Is there meeting of minds? (5 points)

ANSWER: Yes, as stated “A contract is a meeting of the minds between two

persons, whereby one is bound to give something or to render some service to
the other. A valid contract requires the concurrence of the following essential
elements: (1) consent or meeting of the minds, that is, consent to transfer
ownership in exchange for the price; (2) determinate subject matter; and (3) price
certain in money or its equivalent.” In addition, Under Article 1338 of the Civil
Code, there is fraud when, through insidious words or machinations of one of the
contracting parties, the other is induced to enter into a contract which, without
them, he would not have agreed to. In order that fraud may vitiate consent, it
must be the causal (dolo causante), not merely the incidental (dolo incidente),
inducement to the making of the contract.

2. On several occasions between June and July of 1997, TRI-FOODS

Corporation purchased from Asian Grains, various flour products worth, P
2,650,916 covered by a total of 12 invoices.  On November 21, 1997, TRI-
FOODS made a partial payment of P 2,159,211 and on March 2, 1998
another partial payment of P 250,000, leaving a balance of P 217,704. 
Asian Grains, sent two demand letters dated May 12, 1998, and August 10,
 1998, respectively, but no payment was made by TRI-FOODS Corporation. 
On November 24, 1998, Asian Grains filed a complaint for a sum of money.
In its answer, TRI-FOODS Corporation, denied that it authorized the
purchases/purchase orders from Asian Grains; it alleged no demand for
payment was made or received by TRI-FOODS Corporation, it has not
knowledge as to the truth of the invoices, statement of accounts and letters
as they were never received by TRI-FOODS Corporation.  It had to receive
the flour products, the amount billed by Asian Grains was bloated and no
deduction was made for the corresponding payments made by TRI-FOODS
Corporation and that it had not agreed to pay interest and attorney’s fees.
Are Sales Invoices in the nature of contracts of adhesion?

ANSWER: Yes, as stated in “An adhesion contract (also called a "standard form
contract" or a "boilerplate contract") is a contract drafted by one party (usually a
business with stronger bargaining power) and signed by another party (usually
one with weaker bargaining power, usually a consumer in need of goods or
services). The second party typically does not have the power to negotiate or
modify the terms of the contract. Adhesion contracts are commonly used for
matters involving insurance, leases, deeds, mortgages, automobile purchases, and
other forms of consumer credit.” Therefore, Sales Invoices is an example of
Adhesion Contract.

(3.) True or False: (5 points)

(a.) Where acts stipulated in a contract require the exercise of special
knowledge, genius, skill, taste, ability, experience, judgment, discretion,
integrity, or other personal qualification of one or both parties, the
agreement is of a personal nature, and terminates on the death of the party
who is required to render such service. 
ANSWER: TRUE
(b.) When a compromise agreement is given judicial approval, it becomes
more than a contract binding upon the parties. 
ANSWER: TRUE
 (c.) A contract which requires, in addition to the above, the delivery of the
object of the agreement, as in a pledge or commodatum, is commonly
referred to as a formal contract. 
ANSWER: FALSE
(d.) Escalation clauses are not void per se.  
ANSWER: TRUE
(e.) The determination of the performance may be left to a third person,
whose decision shall not be binding until it has been made known to one of
the contracting parties. 
ANSWER: FALSE
(4.) True or False: (5 points)
(a.) Once the minds of the contracts of adhesion meet, a valid contract exists,
whether it is reduced to writing or not.  
ANSWER: TRUE
(b.) It is correct to conclude that contracts of adhesion are invalid per se. 
ANSWER: FALSE
(c.) A contract of adhesion becomes void only when the dominant party takes
advantage of the weakness of the other party. 
ANSWER: TRUE
(d.) The freedom of contract is not absolute. 
ANSWER: TRUE
(e.) Contracts are law between the parties, and they are bound by its
stipulations. 
ANSWER: TRUE

(5.) True or False: (5 points)

a. It is a rule that a contract freely entered between the parties should be

respected, though a contract is not the law between the parties. 
ANSWER: TRUE
b. It is a general rule that provisions of applicable law, especially provisions
relating to matters affected with public policy, are not deemed written into
the contract.  
ANSWER: TRUE
 c. It is a fundamental rule that contracts, once perfected, bind both
contracting parties. 
ANSWER: TRUE
d. If a contract should contain some stipulation in favor of a third person, he
may demand its fulfillment provided he communicated his acceptance to
the obligor after its revocation. 
ANSWER: TRUE
e. Among contracts which are transmissible are those which are purely
personal, either by provision of law, such as in cases of partnerships and
agency, or by the very nature of the obligations arising therefrom, such as
those requiring special personal qualifications of the obligor. (F
ANSWER: TRUE
(6.) Multiple Choice question (5 points)
Answer: C
Those which are perfected by the mere agreement of the parties:
a. Formal
b. Real
c. Consensual
d. Principal

(7.) Multiple Choice question (5 points)

Answer: B
Those which require not only the consent of the parties for their perfection, but
also the delivery of the object by any one party to the other.
a. Formal 
b. Real
c. Consensual
d. Principal

(8.) Multiple Choice question (5 points)

Answer: D
The contract must bind both contracting parties; its validity or compliance cannot
be left to the will of one of them.
a. Autonomy of contracts
b. Relativity of contracts
c. Formality of contracts
d. Mutuality of contracts

(9.) Multiple Choice question (5 points)

Answer: B
Contracts take effect only between the parties, their assigns and heirs, except in
case where the rights and obligations arising from the contract are not
transmissible by their nature, or by stipulation or by provision of law.
a. Autonomy of contracts
b. Relativity of contracts
c. Formality of contracts
d. Mutuality of contracts

(10.) Multiple Choice question (5 points)

Answer: B
A contract is in the stage of conception when? 
a. There is meeting of the minds
b. Negotiations are in progress
c. The parties come to an agreement
d. The contract is perfect