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Obligations and Contracts PDF
Obligations and Contracts PDF
is a juridical necessity to give, to do or not to do. It comes from the
Latin word “obligare” which means to bind.
GENERAL PROVISIONS
Requisites of Obligations
Juridical or legal tie – the vinculum or the link that binds the party
Illustration:
A entered into a contract with B whereby A agreed to
deliver to B a washing machine on Monday. The
juridical tie is the contract, the prestation is the
delivery of the washing machine, the active subject
is B, and the passive subject is A.
Sources of Obligations
Law – imposed by the law itself
Illustration:
By provision of law, a husband and wife are obliged
to live together, observe mutual respect and
fidelity, and render mutual help and support.
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Illustration:
Suppose A owes B the sum of P50.00, but by mistake A
pays B the amount of P100.00. In this case, B must
return to A the P50.00 because as to the excess, that
is payment of something not owing (Solutio Indebiti).
Illustration:
Supposing A kills B. If the court finds that A is
guilty, A will be sentenced either to imprisonment or
death, depending on the gravity of the offense.
Illustration:
Supposing Maria, while watering her flower pot in her
house, negligently caused the same to fall, hitting
Jose who suffered injuries. Maria is then obliged to
pay for the damage sustained by Jose.
Requisites of Quasi-delicts
An act or omission;
Accompanied by fault or negligence;
Causing damage to another;
There must be no pre-existing contractual relation between the
parties.
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Illustration:
Juan obliged himself to deliver a refrigerator to
Pedro.
Illustration:
I will give you a car if you pass the ECE
examinations.
Illustration:
I will let you use my car until you finish your
course in business administration.
Illustration:
A borrowed money from B in the amount of P50.00
promising to pay the amount “as soon as possible”. If
later on, they cannot agree on the specific date of
payment, the remedy of B is to go to court and ask
the court to fix the date when the debt is to be
paid.
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Kinds of Period
Ex die – a period with suspensive effect
In diem – a period with a resolutory effect and the validity of
obligation is up to a certain date
Other Kinds:
Legal period – period established by law
Voluntary period – period agreed to by the parties
Judicial period – period authorized by the court
Alternative Obligations – is one wherein various things are due, but the
payment of one of them is sufficient, determined by the choice which as
a general rule belongs to the obligor.
Illustration:
Marc obliged himself to deliver to Edwin either a
piano or a refrigerator. The delivery of the piano or
the refrigerator is sufficient compliance with the
obligation. Marc could not compel Edwin to accept
only a part of the piano or a part of the
refrigerator because in alternative obligations
complete performance of one of the prestations is
necessary.
Joint Obligations – is one which each of the debtors is answerable only for
a proportionate part of the debt and each one of the creditors is entitled
to a proportionate part of the credit.
Illustration:
Juan and Pedro are jointly indebted to Jose the
amount of P100.00. As such, Juan is liable to Jose
for the amount of P50.00 only, while Pedro is also
liable to Jose for the same amount of P50.00. Jose,
the creditor, is entitled to demand from Juan and
Pedro P50.00 each.
Solidary Obligations – is one which each of the debtors is liable for the
whole obligation and each of the creditors may demand compliance of
the entire obligation.
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Illustration:
Juan and Pedro are the solidary debtors of Jose for
the amount of P100.00. Hence either of them may be
compelled by Jose to pay the whole amount of P100.00.
So Jose can demand from Juan the amount of P100.00.
Jose can also demand from Pedro the amount of
P100.00. However, if Juan pays P100.00, then the
obligation is extinguished and the paying debtor
(Juan) is entitled to be reimbursed by his co-debtor
(Pedro) for his part of the debt, which is P50.00.
Kinds of Solidarity
Active Solidarity – when the solidarity exists among the creditors
only.
Passive Solidarity – when the solidarity takes place among the
debtors only.
Mixed Solidarity – when the solidarity exists both among the creditors
and the debtors at the same time.
Illustration:
In the preceding example, if Juan and Pedro agreed
that all the six sacks of rice should be deliver on
May 1st, then notwithstanding that the object of the
obligation is physically divisible. Nevertheless, it
is indivisible because the parties intended complete
performance at one given time. Juan, therefore, must
deliver all the six sacks of rice on May 1st. he
cannot deliver two or three or even five, because
that case the delivery still constitutes partial
performance.
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Illustration:
A stipulation in the contract for the sale of a
residential lot, that the vendee would complete
within two years from the date of the sale 50% of his
residence on the lot, and, in the event of failure to
do so, the vendee would pay the vendor the sum of
P10,000.00.
Illustration:
A binds himself to deliver to B a Honda Civic car
at the end of the current year. They agree in
writing that should A fail to deliver the car on a
specified date, A shall pay B as penalty
P10,000.00. A fails to make the delivery. B could
demand the payment of P10,000.00 against A. B,
however could not compel A to deliver the car and
pay the penalty at the same time. The payment of
the penalty takes the place of the principal
obligation.
Joint – when both the principal contract and the penal clause can be
enforced
Illustration:
A borrowed from B the amount of P100.00 payable on
October 10, 2007. They agreed further that should
A fail to pay the amount on the said date, A shall
pay B the amount of P10.00 as penalty. On October
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By the loss of the thing due – when it perishes or goes out of commerce or
disappears in such a way that its existence is unknown or it cannot be
recovered.
By compensation – takes place when two persons, in their own right, are
creditors and debtors of each other.
Kinds of Compensation
Legal compensation – takes place when compensation extinguishes
the two debts in their concurrent amounts even without the express
agreement of the parties.
Voluntary compensation – takes place when there is compensation by
agreement of the parties as in the case of mutual set off of accounts.
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Illustration:
A is indebted to B in the amount of P100.00. On
the other hand, B is also indebted to A in the
amount of P100.00. Both debts are due.
Compensation will take place because both are, in
their own right, creditors and debtors of each
other.
Kinds of Novation
Real novation – the change in the object or principal conditions of the
obligation.
Illustration:
A obliged himself to deliver to B a car.
Subsequently, they entered into another contract
whereby instead of A delivering a car, A would
deliver a truck. The object of the obligation was
changed, so the novation was a real novation.
Illustration:
A is indebted to B in the amount of P100.00. A now
requests B to accept C as debtor in his (A’s)
place. If B accepts C as his new debtor, who
assumes the obligation of A, then there is a
novation by the substitution of the person of the
debtor. If it is B who requests that he be changed
by C and A agrees, then there is also novation –
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this time by the subrogation of a third person in
the place of the creditor.
Mixed novation – the change in the person of the parties and the
objects or modification of principal condition.
Illustration:
A obliged himself to deliver to B a carabao.
Subsequently A proposed that C would take his
place but instead of delivering a carabao he would
deliver a horse. If B and C agreed, then there was
a mixed novation because the object of the
obligation and the person of the obligor were
changed.
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is the meeting of the minds between two persons whereby one binds
himself with respect to the other to give something or to render service. It
comes from the Latin word “contractus” which signifies an agreement.
GENERAL PROVISIONS
Elements of Contracts
Essential Elements
Stages of a Contract:
Preparation or Conception – includes all the initial stages up to the time
the parties agree upon the terms of the contract.
Illustration:
Juan offers to sell his horse to Pedro for P2,000.00.
Pedro asks Juan to bring his horse to his place to
enable him to see whether the horse is fit for
carretela purposes. Juan brings the horse to Pedro’s
place and the latter is allowed by Juan to use his
horse in pulling Pedro’s carretela to enable the
latter to see whether the horse has sufficient speed,
is physically fit, etc. After trying the horse, Pedro
bargains with Juan as to the price. Up to this stage,
the parties are doing things leading to the meeting
of the minds.
Perfection or Birth – the time when the minds of the parties meet in
agreement upon the object or subject matter as well as to the price or
consideration.
Illustration:
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Juan agrees to receive P2,000.00 for his horse and
Pedro agrees to take the horse for that amount. The
contract here is perfected because there is already a
meeting of the minds.
Consummation or Termination
Illustration:
Juan delivers the horse to Pedro and the same is
accepted. Pedro gives the amount P2,000.00 as
purchase price and the latter receives it. In here,
the contract is consummated and terminated.
Classification of Contracts
Express and Implied Contracts – is one written in the intent of the parties is
shown by words, oral or written.
Illustration:
A, for and in consideration of P1,000.00, entered
into a contract with B whereby the latter agreed to
murder C.
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Illustration:
A entered into a contract with B whereby for and in
consideration of P1,000.00 the latter agrees to live
with A without the benefit of marriage.
Illustration:
Pedro and Maria decided to get married on October 10,
2007. Invitations were printed and distributed to
relatives and friends and apparel were purchased
including matrimonial bed. Pedro, however walked out
of it and was never heard of again.
Contrary to public order – Signifies the public weal which are permanent
and essential in institutions.
Illustration:
An agreement that the creditor can use force or
violence to compel the debtor to pay is contrary to
public order.
Contrary to public policy – Refers not only to “public safety” but also to
considerations which are moved by the common good.
Illustration:
A entered into a contract with B wherby A will not
enter into any enterprise whatever in the
Philippines. This is against public policy as it is a
contract in restraint of trade.
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Rights – may be transmissible or not transmissible. Examples of
these rights are the right to vote, rights flowing from a contract of
marriage, parental authority, etc.
Illustration:
Juan offers to sell to Jose his only white horse for
P500.00. Jose accepts the offer. Here, the consent of
the parties is manifested by the concurrence of their
wills as to the white horse and as to the price. The
object is the white horse and the cause is P500.00.
Illustration:
Juan sells his car to Pedro for P10,000.00.This
contract of sale creates a reciprocal obligation in
both parties. Juan is obliged to deliver the car to
Pedro and the latter is obliged to pay Juan the
purchase price of P10,000.00.
Remunetory Contract – the cause is the service or benefit for which the
remuneration is given.
Illustration:
Juan is accused for a crime in court. He retains the
services of Atty. Dela Cruz as his defense counsel
for P5,000.00. The P5,000.00 to be given by Juan to
Atty. Dela Cruz is for the professional services of
Atty. Dela Cruz.
Illustration:
Pedro donated a parcel of land to the municipality of
Naic, Cavite, to be used as the municipal cemetery
without receiving any valuable consideration for the
same. Here, the cause of the contract of donation is
the mere liberality of Pedro, the benefactor.
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REFORMATION OF INSTRUMENTS
Requisites of Reformation
There is a valid contract;
The contract is in writing;
The written contract fails to express the true intention of the parties
The failure of the written contract to express the true intention is due to
mutual mistake, fraud, inequitable conduct, or accident.
DEFECTIVE CONTRACTS
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Lesion – damage or injury suffered by the party seeking rescission
by reason of the fact that the price is unjust or inadequate
Contracts that is voidable even though there may have been no damage to
the contracting parties
Those where one of the parties is incapable of giving consent to a
contract;
Those where the consent is vitiated by mistake, violence,
intimidation, undue influence or fraud.
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is the sum of money which the law awards or imposes as percuniary
compensation, recompense, or satisfaction for an injury done or a wrong
sustained as a consequence either of a breach of a contractual obligation or
a tortious act.
Types of Damages
Actual or Compensatory Damages – damages that cover actual injury or
economic loss. It is intended to put the injured party in the position he
was in prior to the injury. It typically includes medical expenses, lost
wages and the repair or replacement of property.
Nominal Damages – these are small and trivial sums awarded for a
technical injury due to a violation of some legal right, and as a
consequence of which some damages must be awarded to determine
the right.
Liquidated Damages – the amount of which has been agreed upon by the
parties or fixed by the judgement of a competent court.
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Registration of Merchants
Bureau of Commerce – for those merchants having their place of
business in Manila
Register of Deeds – for those in the provinces
Securities and Exchange Commission – for corporations and all
partnerships with a capital of three thousand pesos (P3,000.00) or more
Bureau of Customs – in the case of vessels, those more than 3 tons
gross
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GENERAL ENGINEERING & APPLIED SCIENCES
A. Contracts
B. Obligation
C. Quasi-delicts
D. Condition
2. Obligation comes from the latin word ________ which means to bind.
A. Obligum
B. Obligate
C. Obligare
D. Obligus
A. Contracts
B. Obligation
C. Quasi-delicts
D. Condition
A. Civil Obligations
B. Natural Obligation
C. Pure Obligation
D. Condition
A. Civil Obligations
B. Natural Obligation
C. Pure Obligation
D. Condition
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6. Requisites of obligations which is the vinculum or the link that binds the
party
A. Juridical or legal tie
B. Prestation
C. Active subject
D. Passive subject
A. Law
B. Contracts
C. Quasi-delicts
D. Work
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A. An act or omission
B. Accompanied by fault or negligence
C. There must be no pre-existing contractual relation between the
parties.
D. Acts or omissions punished by law
A. Pure obligation
B. Conditional obligation
C. Reciprocal obligation
D. Alternative obligation
A. Pure obligation
B. Condition
C. Reciprocal obligation
D. Alternative obligation
A. Pure obligation
B. Conditional obligation
C. Reciprocal obligation
D. Alternative obligation
A. Suspensive Condition
B. Alternative obligation
C. Reciprocal obligation
D. Resolutory Condition
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18. “A” borrowed money from “B” in the amount of P50.00 promising to pay
the amount “as soon as possible”. If later on, they cannot agree on the
specific date of payment, the remedy of “B” is to go to court and ask the
court to fix the date when the debt is to be paid. This illustrates:
A. Pure obligation
B. Obligations with a period
C. Reciprocal obligation
D. Alternative obligation
A. Ex die
B. In diem
C. Legal period
D. Voluntary period
20. A kind of period with a resolutory effect and the validity of obligation is
up to a certain date
A. Ex die
B. In diem
C. Legal period
D. Voluntary period
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A. Ex die
B. In diem
C. Legal period
D. Voluntary period
A. Judicial period
B. In diem
C. Legal period
D. Voluntary period
A. Judicial period
B. In diem
C. Legal period
D. Voluntary period
A. Pure obligation
B. Condition
C. Reciprocal obligation
D. Alternative obligation
A. Pure obligation
B. Condition
C. Reciprocal obligation
D. Alternative obligation
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26. An obligation wherein various things are due, but the payment of one of
them is sufficient, determined by the choice which as a general rule
belongs to the obligor.
A. Pure obligation
B. Condition
C. Reciprocal obligation
D. Alternative obligation
27. One in which each of the debtors is answerable only for a proportionate
part of the debt, and each one of the creditors is entitled to a
proportionate part of the credit
A. Joint obligation
B. Solidary obligation
C. Divisible obligation
D. Indivisible obligation
28. One in which each of the debtors is liable for the whole obligation and
each of the creditors may demand compliance of the entire obligation.
A. Joint obligation
B. Solidary obligation
C. Divisible obligation
D. Indivisible obligation
A. Active Solidarity
B. Passive Solidarity
C. Mixed Solidarity
D. Solo Solidarity
30. When the solidarity takes place among the debtors only, it is called
A. Active Solidarity
B. Passive Solidarity
C. Mixed Solidarity
D. Solo Solidarity
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31. When the solidarity exists both among the creditors and the debtors at
the same time, this is called
A. Active Solidarity
B. Passive Solidarity
C. Mixed Solidarity
D. Solo Solidarity
A. Joint obligation
B. Solidary obligation
C. Divisible obligation
D. Indivisible obligation
33. Juan obliged himself to deliver to Pedro six sacks of rice as follows:
Three sacks of rice to be delivered by Juan on May 1st, and Pedro to
pay Juan the amount of P150.00. Another three sacks of rice to be
delivered by Juan on June 1st, and Pedro to pay Juan the same amount
of P150.00. This illustrates:
A. Joint obligation
B. Solidary obligation
C. Divisible obligation
D. Indivisible obligation
A. Qualitative
B. Quantitative
C. Ideal
D. Moral
A. Qualitative
B. Quantitative
C. Ideal
D. Mental
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A. Law
B. Penal clause
C. Stipulation
D. Preceding
38. “A” binds himself to deliver to “B” a Honda Civic car at the end of the
current year. They agree in writing that should “A” fail to deliver the car
on a specified date, “A” shall pay “B” as penalty P10,000.00. “A” fails to
make the delivery. “B” could demand the payment of P10,000.00 against
“A”. “B”, however could not compel “A” to deliver the car and pay the
penalty at the same time. This is ______ type of penal clause:
A. Joint
B. Subsidiary
C. Solo
D. Partial
39. A classification of penal clause when both the principal contract and the
penal clause can be enforced.
A. Joint
B. Subsidiary
C. Solo
D. Partial
A. By Payment or Performance
B. By the condition or remission of the debt
C. By altering the signature
D. By the loss of the thing due
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A. Joint obligation
B. Solidary obligation
C. Divisible obligation
D. Indivisible obligation
A. Partial
B. Complete
C. Express
D. Implied
43. A remission when the waiver or renunciation refers only to a part of the
obligation.
A. Partial
B. Complete
C. Express
D. Implied
A. Partial
B. Complete
C. Express
D. Implied
45. A remission when it is inferred from the acts or conduct of the obligee.
A. Partial
B. Complete
C. Express
D. Implied
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A. Legal compensation
B. Voluntary compensation
C. Judicial compensation
D. Partial compensation
A. Legal compensation
B. Voluntary compensation
C. Judicial compensation
D. Partial compensation
48. A type of compensation that takes place when the court permits the
counterclaim of the defendant as against the claim of the plaintiff.
A. Legal compensation
B. Total compensation
C. Judicial compensation
D. Partial compensation
49. A type of compensation that takes place when the two obligations are of
different amounts and a balance remains unextinguished after the
compensation.
A. Legal compensation
B. Total compensation
C. Judicial compensation
D. Partial compensation
50. A type of compensation that takes place when the obligations are of the
same amount and compensation extinguishes the obligations entirely.
A. Legal compensation
B. Total compensation
C. Judicial compensation
D. Partial compensation
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A. True novation
B. Real novation
C. Personal novation
D. Substitute novation
52. “A” obliged himself to deliver to “B” a car. Subsequently, they entered
into another contract whereby instead of “A” delivering a car, “A” would
deliver a truck. This illustrates:
A. True novation
B. Real novation
C. Personal novation
D. Substitute novation
A. True novation
B. Real novation
C. Personal novation
D. Substitute novation
54. A novation where there is a change in the person of the parties and the
objects or modification of principal condition.
A. Mixed novation
B. Real novation
C. Personal novation
D. Substitute novation
55. It is the meeting of minds between two persons whereby one binds
himself with respect to the other to give something or to render some
service.
A. Contracts
B. Obligation
C. Quasi-delicts
D. Condition
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56. A contract comes from the Latin word ______ which signifies an
agreement.
A. Kontrus
B. contractus
C. Tractum
D. contractumus
A. Essential element
B. Natural elements
C. Accidental elements
D. Unnatural elements
60. A stage of a contract that includes all the initial stages up to the time the
parties agree upon the terms of the contract.
A. Preparation or Conception
B. Perfection or Birth
C. Consummation or Termination
D. Deliberation
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61. A stage of a contract that refers to the time when the minds of the parties
meet in agreement upon the object or subject matter as well as to the
price or consideration.
A. Preparation or Conception
B. Perfection or Birth
C. Consummation or Termination
D. Deliberation
62. Juan agrees to receive P2,000.00 for his horse and Pedro agrees to take
the horse for that amount. This refers to what stage of the contract
A. Preparation or Conception
B. Perfection or Birth
C. Consummation or Termination
D. Deliberation
63. Juan delivers the horse to Pedro and the same is accepted. Pedro gives
the amount P2,000.00 as purchase price and the latter receives it.
This is an example of what stage of the contract
A. Preparation or Conception
B. Perfection or Birth
C. Consummation or Termination
D. Deliberation
64. A contract wherein the intent of the parties is shown by words, oral or
written.
A. Express contract
B. Implied contracts
C. Executed contracts
D. Executory contracts
A. Express contract
B. Implied contracts
C. Executed contracts
D. Executory contracts
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A. Express contract
B. Implied contracts
C. Executed contracts
D. Executory contracts
A. Consensual contract
B. Bilateral contract
C. Real contract
D. Unilateral contract
69. A contract that is perfected by delivery of the thing which is the object of
the contract.
A. Consensual contract
B. Bilateral contract
C. Real contract
D. Unilateral contract
70. A contract where only one of the parties has an obligation such as in
commodatum or gratuitous deposit.
A. Consensual contract
B. Bilateral contract
C. Real contract
D. Unilateral contract
A. Consensual contract
B. Bilateral contract
C. Real contract
D. Unilateral contract
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72. “A”, for and in consideration of P1,000.00, entered into a contract with
“B” whereby the latter agreed to murder “C”. This limitation upon the right
to contract that refers to
A. Contrary to law
B. Against moral
C. Contrary to good customs
D. Contrary to public order
73. “A” entered into a contract with “B” whereby for and in consideration of
P100,000.00 the latter agrees to live with “A” without the benefit of
marriage. This limitation upon the right to contract that refers to
A. Contrary to law
B. Against moral
C. Contrary to good customs
D. Contrary to public order
74. Pedro and Maria decided to get married on October 10, 2007. Invitations
were printed and distributed to relatives and friends and apparel were
purchased including matrimonial bed. Pedro, however walked out of it
and was never heard of again. This limitation upon the right to contract
that refers to
A. Contrary to law
B. Against moral
C. Contrary to good customs
D. Contrary to public order
75. “A” entered into a contract with “B” wherby “A” will not enter into any
enterprise whatever in the Philippines. This limitation upon the right to
contract that refers to
A. Contrary to law
B. Against moral
C. Contrary to good customs
D. Contrary to public order
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77. A classification of contracts as to its “cause” where the cause is the pure
liberality of the giver.
A. Gratuitous Contract
B. Remunetory Contract
C. Onerous Contract
D. Liberation Contract
A. Gratuitous Contract
B. Remunetory Contract
C. Onerous Contract
D. Liberation Contract
A. Reformation
B. Novation
C. Defect
D. Erroneous
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82. A defective contract where it has all the essential requisites of a contract
and the contract itself is valid, but by reason of injury or damage to third
persons, such as creditors, the contract may be rescinded.
A. Rescissible Contract
B. Voidable Contracts
C. Unenforceable Contracts
D. Void or Inexistent Contracts
A. damage
B. effect
C. lesion
D. payment
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88. It is the sum of money which the law awards or imposes as percuniary
compensation, recompense, or satisfaction for an injury done or a wrong
sustained as a consequence either of a breach of a contractual
obligation or a tortious act.
A. Payment
B. Injury
C. Damages
D. Compensation
89. Damages that cover actual injury or economic loss. It typically includes
medical expenses, lost wages and the repair or replacement of property.
A. Actual or Compensatory Damages
B. Nominal Damages
C. Moral Damages
D. Temperate or Moderate Damages
90. Damages that includes physical suffering, mental anguish, fright, serious
anxiety, besmirched reputation, wounded feelings, moral shock, social
humiliation, and similar injury.
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91. Damages which are small and trivial sums awarded for a technical injury
due to a violation of some legal right, and as a consequence of which
some damages must be awarded to determine the right.
93. “Damages” where the amount of which has been agreed upon by the
parties or fixed by the judgement of a competent court.
A. Liquidated Damages
B. Exemplary Damages
C. Corrective Damages
D. Compensatory Damages
95. Branch of the unwritten law which was originally founded on the customs
of merchants, mariners and business men generally in their dealings with
one another throughout the civilized countries of the world.
A. Law Merchant
B. Law of businessmen
C. Law of mariners
D. Law of people
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