CVCITC

Cagayan Valley Computer & Information Technology College, Inc.

No. 28 Carreon Street, Centro East, Santiago City, Philippines | Telefax: (078) 305-0139
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CONTRACTS
STUDY GUIDE AND CASE STUDY
CHAPTER I

I. Definitions
Define or give the meaning of the following:
1. contract
2. stipulation pour autrui
3. real contract
4. perfection of contract.

II. Discussions
1. May a third person acquire rights under a contract to which he is a stranger or
be bound thereby? Explain.
2. How are contracts perfected?
3. When will a person be bound by a contract entered into by another?
4. Give the effect of the perfection of a contract.

III. Problems
Explain or state briefly the rule or reason for your answer.
1. A and B entered into a contract not specifically provided in the Civil Code. Is the
contract valid and binding.
2. S(seller) and B (buyer) entered into a contract of sale. It was agreed that the price
shall be determined by T, a third person. Can S or B refuse to be bound by T's
determination of the price if he does not agree with the amount thereof?
3. Dowes C P20,000. Both are house painters. It was agreed that D instead of paying C,
will paint the house of E to which E expressed his conformity to C whose service as
painter was previously contracted by E. Has B the right to enforce the stipulation
between C and D?
4. X made an office desk for Y. X told Y that the latter may pay whatever amount he
would like to pay for it. When the desk was finished Y offered to pay P2,000 but X
instead demanded P3,000, its fair value. Is X entitled to P3,000?

CHAPTER 2
Part I

I. Definitions
 CVCITC
Cagayan Valley Computer & Information Technology College, Inc.
No. 28 Carreon Street, Centro East, Santiago City, Philippines | Telefax: (078) 305-0139
_____________________________________________________________________________________________________________________

Define or give the meaning of the following:

1. Consent
2. Acceptance
3. Natural elements
4. Option contract
5. Mistake of law
II. Discussions
1. When is a contract voidable or annullable?
2. Is it always required that he who alleges fraud or mistake in entering into a
contract, must prove his allegation? Explain.
3. Give the requisites in order that intimidation may vitiate or annul consent of a
party to a contract.
4. May fraud be commuted by a party to a contract though there is no
misrepresentation on his part? Explain.
5. Will the acceptance of a business advertisement of a thing for sale produce the
perfection of a contract? Explain.
III. Problems
Explain or state briefly the rule or reason for your answer.
1. In a contract containing an option period, when is the offerer not allowed to
withdraw his offer even before acceptance by the offeree? When is the offerer
allowed to withdraw his offer even after acceptance?
2. S sold his house to B believing that B was C. Can S legally withdraw from the
contract on the ground of mistake?
3. S agreed to deliver to B 500 cavans of rice at P600 per cavan. S delivered only
490 cavans deliberately misrepresenting that the delivery consisted of 500
cavans. Can B ask the court to annul the contract on the ground of fraud?
4. S sold to B a commercial land for P1,000,000. S assured B that it is certain that in
two year’s time, the land would increase in market value by 50% or P1,500,000.
It turned out that the market value of the land even decreased to about
P800,000. Is S liable to B for misrepresentation?
5. 5. Suppose in the same problem, what S sold to B, hardware owner, are 500 bags
of cement. S had every reason to believe that the price of cement would go
down. After two weeks, it did go down. Has B the right to have the sale annulled?
6. S sold to B for P100,000 a parcel of land belonging to S located in his hometown
without specifying its exact location and area. Is the sale valid?
7. S has several pigs. Under a contract of sale, S binds himself to deliver a pig to a B
for P3,000 if the pig has a weight of at least 30 kilos. State the binding effect of
the sale.
 CVCITC
Cagayan Valley Computer & Information Technology College, Inc.
No. 28 Carreon Street, Centro East, Santiago City, Philippines | Telefax: (078) 305-0139
_____________________________________________________________________________________________________________________

Part II
I. Definitions
Define or give the meaning of the following:
1. Cause
2. Motive
3. inadequacy of cause

II. Discussions
1. Give the requisites of cause in a contract.
2. State the effect if the cause of a contract is found to be false.
3. What is the object and what is the cause in a contract of sale?
III. Problems
Explain or state briefly the rule or reason for your answer.

1. S sold his fishing boat to B who intends to use the boat for smuggling. Is the
contract of sale illegal?
2. S sold to B a specific parcel of land for P500,000. B failed to pay. Has C the right
to have the sale declared void by the court on the ground of absence of cause for
non-payment of the price?
3. X gave P10,000 to Y who signed a receipt stating: “This is to acknowledge
payment by X in the amount of P12,000.” X later complains that he received
nothing from Y for the P10,000. Is Y bound to return the P10,000?
4. S sold to B his car worth P250,000 for only P200,000. There is no question that
the purchase price is grossly inadequate. Has S the right to have the sale
annulled?

Chapter 3
I. Definitions
Define or give the meaning of the following:
1. form of contract
2. informal contract
II. Discussions
1. What may be the form of a contract?
2. If the law requires a contract to be in writing, will the contract be invalid if it is
not in writing?
 CVCITC
Cagayan Valley Computer & Information Technology College, Inc.
No. 28 Carreon Street, Centro East, Santiago City, Philippines | Telefax: (078) 305-0139
_____________________________________________________________________________________________________________________

III. Problems
Explain or state briefly the rule or reason for your answer.
1. S(seller) and B (buyer) entered into a contract of sale of a parcel of land. The
sale is embodied only in a private document and not in a public instrument
because it was not acknowledged before a notary public as required by law. Is
the sale valid?
2. In the same example, what rights, if any, are acquired by the contracting parties?

Chapter 4

I. Definitions
Define or give the meaning of the following:
1. reformation
2. mutual mistake
II. Discussions
1. What is the reason why the law in certain cases permits a written instrument to
be reformed or corrected?
2. In what way is reformation of written instrument distinguished from the
annulment of a contract?
III. Problems
Explain or state briefly the rule or reason for your answer.

1. S sold his horse “X” to B under a written contract of sale. What B thought S was
selling him is horse “Y.” Can S ask for the reformation of the contract against the
objection of B who is agreeable to the sale of horse “X?"
2. Suppose in the same example, S was intending to sell his horse “Y.” Give the three
(3) cases when he can ask for the reformation of the contract.

CHAPTER 5

I. Definitions
Define or give the meaning of the following:
1. interpretation of contract
2. contract of adhesion

II. Discussions
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Cagayan Valley Computer & Information Technology College, Inc.
No. 28 Carreon Street, Centro East, Santiago City, Philippines | Telefax: (078) 305-0139
_____________________________________________________________________________________________________________________

1. What should be followed in the interpretation of a contract, its terms or the

intention of the parties? Explain.
2. Suppose a stipulation or word in a written contract is susceptible of various
interpretations, what interpretation or meaning should be given to it?
3. State the rule of interpretation where there are various stipulations of a contract.

III. Problems
Explain or state briefly the rule or reason for your answer.
1. S sold to B his condominium unit “including all its contents.” In the unit, there is an
antique chair belonging to X which X agreed to sell to S. Is the chair to be included in
the sale of the unit?
2. X, architect, designed and supervised the construction of the house of Y. The parties
failed to agree beforehand the professional fee of X. How much is Y bound to pay X?
3. Suppose in the same problem, the professional fee was agreed upon, but it is not
clear from the written contract prepared by X upon the request of Y whether it
should be the fixed amount of P200,000 or 6% of the cost of construction. How
much is Y liable to pay?

CHAPTER 6

I. Definitions
Define or give the meaning of the following:
1. rescissible contract
2. rescission

II. Discussions
1. State the rule on the liability of the acquires in bad faith of property alienated in
fraud of creditors.
2. In what cases is rescission not allowed although the contract is found to be
rescissible under the law?

III. Problems
Explain or state briefly the rule or reason for your answer.
1. D owes C P100,000. Since D fails to pay, C expressed its willingness to accept the car
of D, with the same value, more or less, in payment of his debt. D, in bad faith, sold
the car to X. Has C the right to ask for the rescission of the sale?
 CVCITC
Cagayan Valley Computer & Information Technology College, Inc.
No. 28 Carreon Street, Centro East, Santiago City, Philippines | Telefax: (078) 305-0139
_____________________________________________________________________________________________________________________

2. F, guardian of M (minor), sold to B a property of M with a market value of P50,000

for only P37,000, or a difference of more than 1/4 (P12,500) of the value. If
rescission of the sale is demanded, what possible defense under the law can B
present to avoid rescission?

CHAPTER 7

I. Definitions
Define or give the meaning of the following:
1. voidable contract
2. annulment
3. ratification

II. Discussions
1. Give the requisites for the ratification of a voidable contract.
2. State the rule on the right of strangers to a contract to bring an action for its
annulment.
3. Under the law, what contracts are voidable or annullable?

III. Problem
Explain or state briefly the rule or reason for your answer.
1. S, a minor, sold a property to B. Later, the sale is annulled on the ground of the
minority of S. Is S bound to return the price received by him?
2. In the same problem, suppose S, upon reaching the age of majority, decided to ratify
or respect the contract. Has B the right to refuse the ratification and demand mutual
restitution of the property and the price?
3. Again, in the same problem, suppose the sale was annulled by the court, what are
the rights of the parties if the property was lost or destroyed?
a. without the fault of B?
b. through the fault of B?

CHAPTER 8

I. Definitions
Define or give the meaning of the following:
1. unenforceable contract
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Cagayan Valley Computer & Information Technology College, Inc.
No. 28 Carreon Street, Centro East, Santiago City, Philippines | Telefax: (078) 305-0139
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2. Statute of Frauds
3. unauthorized contract

II. Discussions
1. What are the kinds of unenforceable contract?
2. How may contracts violating the Statute of Frauds be ratified?
3. State the purpose of the Statute of Frauds.

III. Problems
Explain or state briefly the rule or reason for your answer.
1. I, an insane person, entered into a contract with M, a minor. What is the effect of
ratification
a. by either; and
b. by both, after becoming incapacitated?
2. D (debtor) owes C(creditor) P10,000. T (third person) orally promised to assume
the obligation of D. Can the promise of T be proved by the testimony of a witness
who was present when T made the same?
3. S orally agreed to sell his piano for P7,000 to B who made a partial payment of
P1,000. Later, S denied there was such a sale. Can B enforce the sale considering that
the contract was oral and the price was more than P500?

CHAPTER 9

I. Definitions
Define or give the meaning of the following:
1. natural obligation
2. civil obligation

II. Discussions
1. What is the effect of the voluntary performance of a natural obligation?
2. Give two (2) examples of natural obligations under the law.

III. Problems
Explain or state briefly the rule or reason for your answer.
 CVCITC
Cagayan Valley Computer & Information Technology College, Inc.
No. 28 Carreon Street, Centro East, Santiago City, Philippines | Telefax: (078) 305-0139
_____________________________________________________________________________________________________________________

1. C(creditor) sued D (debtor) for nonpayment of the latter's obligation. D won the
case on a technicality (i.e., not on the merits). Nevertheless, when C asked payment
again, D paid him. Now, D demands the return of what he has paid claiming, he
should not have paid C since he had no more obligation to C under the law. Decide.
2. M, a minor, bought a bicycle for P2,000 from N, who is not a minor. Under the law,
the contract is voidable because M is incapacitated to give consent because of his
minority. Give the situation by reason of which M cannot recover the P2,000 from N.