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THE LAW ON OBLIGATIONS AND CONTRACTS

Name: _______________________________________________ Date: __________ Score: _______

General Instruction: Read carefully the instruction for each part of this examination. Write all your
answers on your test booklet. (Maximum points= 40 points)

Part I. Identification. Write the term or statement that best describes, define or explain the phrase
given. (1 point each)

1. A stipulation that clearly and deliberately confers a favor upon a third person
2. The offeree is given a certain period within which to buy or not the thing being offered
3. It exists when serious or irresistible force is employed to obtain consent
4. Inadequacy of cause in a contract
5. The remedy in equity by means of which a written instrument is made to conform to the real
intention of the parties when some error has been committed
6. A meeting of minds between two persons whereby one binds himself with respect to the other to
give something or to render some service
7. It is defective by reason of the incapacity or vitiated consent of one of the parties to a contract
8. The manifestation of the meeting of the offer and the acceptance upon the thing and the cause
which are to constitute the contract
9. The period of temporary sanity of an insane person
10. It has all the essential requisites of a contract but which may be set aside by reason of injury or
damage to third persons

Part II. YAHOO! or DOOMED!!. Write the word YAHOO! if the statement is true and DOOMED!! if
the statement is false. (2 point each)
1. The determination of the performance of a contract may be left to a third person, whose decision
shall not be binding until it has made known to both contracting parties.
2. A contract entered into in the name of another without authority is unenforceable against the
latter.
3. Acceptance of a contract by letter or telegram does not bind the offerer except from the time it
came to his knowledge.
4. When the acceptance of a contract is by letter or telegram, the contract is presumed to have
been entered into in the place where the offer was made.
5. The person making the offer may fix the time, the place and the manner of acceptance, all of
which must be complied with.
6. A party may recover, if public interest will be subserved, money or property delivered by him for
an illegal purpose, provided that he repudiates the contract before the purpose has been
accomplished.
7. When the agreement is not illegal per se but is merely prohibited, and the prohibition by law is
designed for the protection of the plaintiff, he may, if public policy is enhanced, recover what he
has paid or delivered.
8. In case of divisible contract, if the illegal terms can be separated from the legal ones, the latter
may be enforced.
9. The defense of illegality of contracts is not available to third persons whose interests are not
directly affected.
10. A contract which is the direct result of previous illegal contract is also void and inexistent.
11. Cause is the essential reason of the contract; while motive is the private or secret reason or
intention of the contracting parties.
12. All services which are not contrary to law, morals, good customs, public order or public policy
may be the object of contracts.
13. Contract is generally void when object is future inheritance.
14. A simulated contract is a contract that does not intend to have any legal effect on or change in
the juridical situation of the parties.
15. There is undue influence when a person takes improper advantage of his power over the will of
another, depriving the latter of a reasonable freedom of choice.

“Wealth gotten by vanity shall diminish; but he that gathers by labor shall increase.”
– Proverbs 13: 11