Professional Documents
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CONTRACTS
CONTRACTS
CONTRACTS
BUSINESS LAW
TRUE OR FALSE
MULTIPLE CHOICE
41. S offers to sell his CAR to B for P100,000. B asks him if he would accept P80, 000. Which of the
following is correct?
a. Because of ambiguity, both offers are terminated by operation of law.
b. B’s response is a counter-offer effectively terminating the P100, 000 offer and instigating an offer
for P80, 000.
c. B’s response is a rejection of the P100, 000 offer, and there is no offer for P80, 000 because it is
too indefinite
d. B’s response is a mere inquiry, the P100, 000 offer by S is still in force.
42. By this principle, the validity and efficacy of the contract cannot be left to the will of one of the
contracting parties.
a. Relativity of contract c. Mutuality of contract
b. Obligatoriness of contract d. Freedom of contract
43. This principle means that contracts take effect only upon the contracting parties, their assigns or
successors-in-interest
a. Relativity of contract c. Mutuality of contract
b. Obligatoriness of contract d. Freedom of contract
44. B forced S to sell him (B) a masterpiece painting for P1M.Subsequently, B sold it to X for P 2M, a
good faith purchaser. S is entitled to
a. Rescind the contract with B plus damages
b. Recover the painting from X but no damages
c. Recover damages from B
d. Annul the contract plus damages
45. Which of the following is correct?
a. An action to enforce judicially a natural obligation prescribes in 4 years
b. An action for annulment of contract is imprescriptible
c. An action to declare contract void is not subject to prescription
d. An action for rescission of contract prescribes in five (5) years counted from the execution of the
contract
46. The following contracts should observe the Statute of Frauds, except:
a. Guaranty
b. Lease of personal property longer than one year
c. Representation as to the credit of a third person
d. Lease of real property longer than one year
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50. Consent is manifested by the meeting of the offer and the acceptance upon the thing and the cause
which are to constitute the contract. Which of the following constitutes a definite offer?
a. An offer made through an agent
b. Business advertisement of things for sale
c. Advertisement for bidders
d. All of the above
51. Example No. 1: The husband, by intimidation, was able to obtain the consent of his wife, with regards
to the sale of a piece of land to him belonging to the wife for P1 million. The contract is voidable
because there was intimidation.
Example No. 2: In the above example, the right of the wife is to go to court and file a motion for
annulment within four (4) years from the time intimidation ceased.
a. Both are true c. No. 1 is true; No. 2 is false
b. Both are false d. No. 1 is false; No. 2 is true
52. An agreement in restraint of trade.
a. Perfectly valid c. Unenforceable
b. Voidable d. Void
53. Rescission of contract can take place in this case:
a. When the things, which are the object of the contract, are legally in the possession of third
persons who acted in good faith.
b. When he demands rescission can return whatever he may be obliged to restore.
c. When the party seeking resolution can perform only as to part and rescind as to remainder.
d. When the seller cannot return the installment paid to him by the buyer.
54. Which of the following contracts is required to be in writing to be enforceable?
a. An agreement that by its terms is not to be performed within a year from the making thereof.
b. A special promise to answer for the debt, default or miscarriage of another.
c. An agreement made in consideration of marriage, other than a mutual promise to marry.
d. All of the above.
55. S makes an offer to B on January 1, 2014. B makes known his acceptance in a letter sent on January
2, and received by S on January 10. Meantime, on January 5, S becomes insane.
a. The contract is voidable because one party is insane
b. There is already a meeting of minds, the contract is perfected
c. The contract is not binding because there is no meeting of minds
d. Contract is unenforceable.
56. In the preceding number S is perfectly sane but only an unemancipated minor of the time the
acceptance is communicated to him.
a. There is no meeting of minds between the parties, unless ratified by the guardian of S.
b. The contract is not binding because the party is incapacitated
c. The contract is binding between the parties (but voidable)
d. Contract is valid.
57. In a contract, as written, D promises to pay C P10, 000 on September 15, 2014. The consideration
received by D is not stated in the contract. Decide.
a. The contract is valid because the cause is always presumed to exist.
b. The contract is valid so long as it in writing
c. The contract is valid because cause is not essential to a contract
d. The contract is void because the cause is not stated.
58. The stage of “conception” of a contract is:
a. When the contract is fully executed
b. When the parties come to an agreement
c. When negotiations are in progress
d. When there is a meeting of the parties’ minds.
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88. S, a minor, owns a specific property valued P50, 000. B, Capacitated, by means of fraud induced S to
sell his property to him (B) for P10, 000 which S did so. The contract is in writing.
a. The contract is binding from the start
b. The contract remains unenforceable because it falls under the Statue of Frauds.
c. The contract is rescissible because the ward suffered lesion by more then one-fourth of the
value.
d. The contract is void.
89. A contract entered into in violation of right of first refusal is:
a. Rescissible d. Void
b. Voidable e. None of the above
c. Unenforceable
90. A, a bachelor lawyer, raped W twice. Upon learning this, “F” the father of W, was able to force A to
marry W under pain of being sued in court and debarred from the practice of his law profession.
Which statement is correct?
a. The marriage may be annulled on the ground of force or violence
b. The marriage may be annulled on the ground of threat or intimidation
c. The defective marriage, may, however, be ratified
d. There was no defect, the marriage was perfectly valid
91. S owns an oil painting. Being in need of money, S sold the painting to B for P1, 000. After the sale it
was discovered that the painting was valuable and worth P5, 000.
a. S may rescind the contract on ground of lesion or inadequacy of cause
b. S may rescind the contract on ground of fraud
c. S may annul the contract on the ground of error
d. B is entitled to the benefit of the contract because it is valid and binding
92. Statement No. 1: An agreement which, by its terms and conditions, is to be performed within a year
from the making thereof is unenforceable even if entered into orally.
Statement No. 2: A contract involving fraud (dolo incidente) is voidable.
a. Both are true c. No.1 is true; No. 2 is false
b. Both are false d. No.1 is false; No. 2 is true
93. Type of defective contract that creates no rights and impose no obligation, but are susceptible of
ratification.
a. Voidable contracts c. Rescissible Contracts
b. Unenforceable Contracts d. Void Contracts
94. D forced C to lend him P10, 000. The promissory note is in writing.
a. The contract is rescissible because the contract is fraudulent
b. The contract is void
c. C cannot demand payment from D because the contract is unenforceable
d. Contract remains to be valid
95. Which of the following contract is not valid?
a. Mutual promise to marry entered into orally
b. Sale of immovable property orally entered into
c. One of the parties in a contract is incapable of giving consent
d. Donations between husband and wife
96. Three of the following are void contracts. Which is the exception?
a. Contracts where the cause is immoral
b. Contracts to prevent a known supporter of a political rival from voting for his candidate
for a valuable consideration
c. Contracts with a valid consideration but with unlawful motives
d. Absolutely simulated contracts
97. Contract with a false cause is
a. Voidable c. Unenforceable
b. Void d. All of the above
98. Statement No.1: The action for annulment on the ground of fraud shall be brought within 4 years from
the time of the perfection of contract.
Statement No.2: If a valid contract is novated to a void contract, both contracts are considered void.
a. Both are true c. No.1 is true; No. 2 is false
b. Both are false d. No.1 is false; No. 2 is true
99. Statement No.1: Advertisements for bidders are simply invitations to make proposals, and the
advertiser is not bound to accept the highest or lowest bidder, unless the contrary appears.
Statement No.2: Accidental elements of a contract are those agreed upon by the parties, and cannot
exist without being stipulated.
a. Both are true c. No.1 is true; No. 2 is false
b. Both are false d. No.1 is false; No. 2 is true
100. A conferment of a direct benefit in a contract between two persons in favor of a third person who
must accept such benefit before the same is withdrawn is known as:
a. Policitacion c. donation propter nuptias
b. Stipulation por autrui d. Counter-offer
101. The guardian of an insane person sells a house and a lot belonging to the latter valued at P100, 000
to B, buyer for P74, 000 with the approval of the court. The contract is:
a. Valid d. Unenforceable
b. Rescissible e. Void
c. Voidable
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102. The following, except one, are the characteristics of void or inexistent contract. Which is the
exception
a. The defense of illegality of the contract is available to third person whose interests are not
directlty affected
b. They are not subject to ratification
c. The right to raise defense of illegality cannot be waived
d. The action or defense for declaration of their nullity or inexistence of the contract does not
prescribe
103.A intimidated B to marry his daughter. After a year, B would like to file an action for annulment but
could not do so because A was around to intimidate him. The marriage contract is
a. Rescissible c. Void
b. Voidable d. Unenforceable
104. Which of the following contract is enforceable even if not reduced in writing.
a. Lease of car for 2 years
b. Representation as to the credit of a third person
c. Lease of immovable for a period longer than one year.
d. Agreement for the sale of immovable property.
105. Simulation of Contract - Absolute or relative. Relative when:
a. Parties not bound at all
b. The contract is void
c. The parties conceal their true agreement
d. None of the above
106. Which of the following instruments is not subject to reformation?
a. Simple donations inter vivos wherein no condition imposed
b. Wills
c. When the real agreement is void
d. All of the above
107. Essential requisites of a contract:
a. Consent c. Subject
b. Cause d. All of them
108. The offeror need not know the acceptance by the offeree is the theory of:
a. Cognition c. Expedition
b. Manifestation d. B or C
109. One of the stipulations contained in the contract between M Company and its employees is that the
company shall pay a bonus to employees of the company who shall continue its employment for at
least 2 consecutive years, unless he quits or is discharged before the expiration of the period of 2
years. X, an employee of the company was discharged without just cause one week before the
completion of the two-year period:
a. X is not entitled to the bonus because his discharge was in accordance with the contract.
b. X is not entitled to the bonus, because the employer’s right to terminate is superior than the
right of the employee to be employed.
c. X is entitled to the bonus whether the discharge is with or without cause.
d. X is entitled to the bonus because the debtor company has voluntarily prevented the
happening of the condition.
110. Example No.1- W 16 years old, sold his house valued at P1 M for P50, 000 or a lesion by more than
one-fourth of the value of the said house.
Example No.2- A sold his land orally to B. The contracts are:
a. Both contracts are unenforceable
b. No. 1 is rescissible; while No.2 is unenforceable
c. 1st is voidable; while 2nd is unenforceable
d. Both contracts are binding
111. Statement No.1:Pledge is an example of a formal contract
Statement No.2: Innominate contracts are exclusively regulated by the stipulations of the parties.
a. Both are true c. No.1 is true; No. 2 is false
b. Both are false d. No.1 is false; No. 2 is true
112. Statement No.1: Validable contracts can be voided within the period allowed by law.
Statement No.2: There is undue influence if insidious words or machinations were employed by a
party on the other just to obtain the latter’s consent, without which the latter would not have entered
into the contract.
a. Both are true c. No.1 is true; No. 2 is false
b. Both are false d. No.1 is false; No. 2 is true
113. B1 Company bought out a competitor, B2 Corporation, with a stipulation that B2 Corporation should
not thereafter engage in any business in the Philippines unless consented to and approved by B1
Company.
a. The stipulation is defective but subject to ratification.
b. The stipulation is valid because the parties are free to enter into any stipulation,
terms and conditions such as this one.
c. The stipulation is unenforceable as there was no showing that the sale as done in
writing
d. The stipulation is void because it is contrary to public policy.
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114. 1st S. Place and modes of payment are example of natural elements
2nd S. Agency, partnership and sale are example of preparatory & consensual contracts
a. Both are true c. No.1 is true; No. 2 is false
b. Both are false d. No.1 is false; No. 2 is true
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“In the province of the mind, the mind cannot distinguish what is reality from what is vividly imagined.’”