CPA REVIEW SCHOOL OF THE PHILIPPINES

For PSBA INTEGRATED REVIEW

REGULATORY FRAMEWORK FOR BUSINESS TRANSACTIONS

COVERAGE: Contracts
Direction: Read and select the best answer for the following questions.

1. It refers to a meeting of minds between two persons whereby one binds himself, with respect to the
other, to give something or to render some service. It is one of the five sources of civil obligation. a.
Obligation
b. Contract
c. Right
d. Civil action

2. Which of the following characteristics of contracts pertains to relativity of contract?

a. It means that the contractual provisions constitute the law between the parties. Obligations
arising from contracts have the force of law between the contracting parties and should be
complied with in good faith,
b. It means that the validity and performance of contract cannot be left to the will of only one of
the parties but must be mutually decided by all contracting parties.
c. It means that-the contract is binding only upon the contracting parties and their successors
such as heirs or assignees and third persons are not generally allowed to assail a contract.
d. It means that the parties may establish such stipulations, clauses, terms, and conditions as
they may deem convenient provided they are not contrary to law, morals, good customs,
public order or public policy.

3. Which of the following characteristics of contracts pertains to autonomy of contract?

a. It means that the parties may establish such stipulations, clauses, terms, and conditions as
they may deem convenient provided they are not contrary to law, morals, good customs,
public order or public policy.
b. It means that contracts are generally perfected by mere consent except in case real contracts
that require delivery of subject matter and formal or solemn contracts which require
execution of formality required by law.
c. It means that contracts should not be contrary to law.
d. It means that contracts should not contain doubt or ambiguity to avoid confusion and
misunderstanding in the performance of contract.

4. Which of the following types of elements of contract pertain to essential elements of contracts?
a. They refer to those which are required in order for a contract to exist such as consent of the
contracting parties, object certain which is the subject matter of the contract and cause of the
obligation which must be established. These elements may not be waived by the parties.
b. They refer to those that exist in certain contract unless set aside or suppressed by the parties
such as warranty against eviction and warranty against hidden defects in a contract of sale.
These elements may be waived by parties as long as the waiver is made in good faith.
c. They refer to those that do not normally exist in a contract unless stipulated by the parties
such as tenns of payment, interest rate or place of payment.

5. Which of the following statements best describes a real contract?

a. It is a contract perfected by mere consent such as contract of lease and contract of sale.
b. It is a contract perfected by the delivery of the object of the contract such as contracts of
deposit, of pledge, of loan and of commodatum.
c. c, It is a contract which must be in the form provided by law for their perfection such as
contract of donation involving immovable property, together with the acceptance by the
donee, must be in a public instrument to be valid.