BUS LAW 4 LAW ON SALES AND CREDIT TRANSACTION

Final Examination

I. Multiple Choice:

1. Delivery of the subject matter in sale may be affected:

a. Physically b. Constructively c. Operations of the law d. All of them
2. Implied warranty in a contract of sale refers to:
a. Warranty of saleability c. Warranty against eviction
b. Particular fitness d. None of them
3. Unless there is a stipulation to the contrary, the expenses of the execution and registration of the
sale shall be borne by:
a. the vendee c. the possessor
b. the vendor d. the agent or broker
4. A sold his land to B. Although the sale was made orally, B still paid A the agreed price. Later B
wanted to have the sale registered but he needed a public instrument. What can B do?
a. B may compel A to execute the public instrument because the contract is valid
b. B cannot compel A to transfer his land, because the contract is not enforceable
c. B may only sue A to return the price because on one may enrich himself at the expense of
another.
d. B may occupy and use A’s land as a buyer in good faith.
5. Contract of sale is perfected:
a. At the moment there is a meeting of minds upon the thing and the price
b. upon payment of the price agreed
c. from the moment ownership is transferred to the buyer
d. None of the above
6. This take place when the vendor reserves the right to repurchase the thing sold, with the obligation
to reimburse to the vendee the price of sale:
a. legal redemption
b. conventional redemption
c. right to received by an unpaid seller
d. None of the above
7. Three of the following are the essential elements of sale. Which is the exception?
a. delivery c. subject matter
b. consent d. consideration
8. In double sale, the buyer preferred is:
a. one with the oldest title
b. one who first took possession in good faith
c. one who registers first in the Registry of Property despite of knowledge of prior sale
d. none of these
9. Legal redemption may exist between:
a. co-owner c. adjacent owners of urban land
b. adjacent owner of rural land d. None of these

10. Subject to the provisions of the Statute of Fraud and of any other applicable statute, a contract of
sale may be:
a. made in writing c. inferred from the contract of the parties
b. by the word of mouth d. All of them
11. This is an agreement whereby one party relinquishes his right to immediate possession of
specifically described property while retaining ultimate ownership for a period of time and for a
consideration.
a. mortgage b. usufruct c. conditional sale d. rent
12. A gratuitous deposit extinguished upon:
a. loss or destruction of the property c. rescission
 b. demise of the depository d. all of these
13. A legal writ authorizing a sheriff to take into custody property in litigation belonging to a
defendant until he complies with others of the court.
a. forclosure c. sequestration
b. dacion en pago d. garnishment
14. A person, under this arrangement, binds himself to the creditor to fulfill the obligation of the
principal debtor arising out of the future debts, the amount of which is not yet known, in the event
the latter should fail to do so.
a. warranty c. indemnity
b. surety d. garnishment
15. Alex bought on credit from Ben an item worth P2,000. To raise the balance of P1,000, Alex
arranged an unregistered chattel mortgage over a radio in favor of Carlos to secure a loan to cover
the balance. Later, Alex also borrowed the sum of P750 from Danny to whom Alex pledged the
same radio that same day in good faith. Carlos complained. Who is the preferred on the security?
a. Ben c. Danny e. Ben and Carlos
b. Carlos d. Carlos and Danny jointly
16. A creditor, though a contractual arrangement verbally made within Mr. Benitez, is to receive the
rentals of the Benitez Apartment Buildings in Quezon City with the obligation to apply them to the
payment of the interest and thereafter to the principal of his credit. This contract is valid.
a. pledge c. guaranty e. none of these
b. mortgage d. antichresis
17. A bought a refrigerator on installment from B. To secure his indebtedness, A executed a chattel
mortgage on the refrigerator in favor of B. Upon default of A, the chattel mortgage was
foreclosed and the refrigerator was sold at public auction for P800 which was less than the
balance of P1,000 due from A. How much B can collect form A?
a. P200 c. P1,000
b. P800 d. nothing
18. The subject matter of lease is:
a. consumable goods c. real rights
b. non-consumable goods d. none of the above
19. Artichresis refers only to
a. Fungible things c. movable property
b. immovable property d. none of the above
20. Possession of the thing pledged must be placed in the hands of:
a. pledges c. surety
b. guarantor d. none of the above

II. TRUE OR FALSE:

______________ 1. A guarantor cannot avail himself of the benefit of the excussion if the execution on
the property of the principal debtor would not result in the satisfaction of the obligation.
______________ 2. Guaranty is a contract whereby a person binds himself to the creditor in case the
latter should fail to do so.
______________ 3. A lender can recover the principal of a loan in a usurious contract even if the
contract is void as to interest,

______________ 4. Interest are recoverable if obligation consist in payment of money upon demand.
______________ 5. Mortgage and pledge are principal contracts.
______________ 6. Deposit is essentially gratuitous contract.
______________ 7. A warranty may either be expressed or implied.
______________ 8. A mortgage has the right to take possession of the chattel mortgaged.
______________ 9. The thing deposited must be returned to the depositor upon demand even though a
specific period for such return may have been fixed, provided the depositor prove his ownership of the
thing deposited.
______________ 10. The depository, without the express permission of the depositor cannot use the
thing deposited, otherwise, he shall be liable for damage
______________ 11. If a part of the obligation has been performed by one of the parties, a contract of
sale of chattels is nevertheless enforceable even though not in writing.
______________ 12. For reasons of public policy, husband and wife may not sell property to each other
during the marriage.
______________ 13. Sales is consensual, reciprocal and onerous.
______________ 14. The object of a contract of sale is its subject matter.
______________ 15. As a general rule, the vendor is responsible to the vendee for any hidden defects or
faults in the thing sold even though he is not aware of said defects or faults.
______________ 16. Sale is real contract.
______________ 17. Delivery of the subject matter is necessary to the perfection of the contract of
sales.
______________ 18. The expenses for the execution and registration of sale shall be borne by the
vendor.
______________ 19. Earnest money is part payment of the price and proof that the contract has been
perfected.
______________ 20. Coveat emptor is the rule in the sale of animals.

III. CASES

Case # 1. Loss of a thing due:

S offered to sell a set of furniture to B for P10,000. B immediately accepted the offer. However,
S’s residence was gutted by fire one hour before the sale. The loss is total, including the
furniture. Is B required to pay the purchase price on the ground that the contract is already
perfected? Why? Explain?

Case # 2. Leasing
“O”, owner of the copying machine, leased it to “L” at a rental of P4,000.00 a month for a period
of one year with option on the part of “L” to buy the copying machine at the end of the year for
P80,000.00 to be paid by applying the rentals, so that “L” needs only to pay P32,000.00.
“L” failed to pay rentals for 4th, 5th and 6yh months so that “O” terminated the lease and
repossessed the copying machine then sued “L” for the unpaid rental of three months, or
P12,000.00.
Is O’s suit legally teneable? Why? Explain?