Professional Documents
Culture Documents
Law on Contracts
1. A sent B a letter wherein the former offered to sell his car to the latter for Php 1M. B
signified his intention to buy the same. In A’s letter he gave B two weeks to raise the
amount. After one week, A raised the price to Php 1.5M. Can B compel A to accept
the Php 1M first offered by A and deliver to him the car?
2. A sold a parcel of land to B by word of mouth and delivered to the latter the Transfer
Certificate of Title of the land. Can B compel A to execute the deed of sale of the
land?
a. B cannot compel A to execute the deed of sale as the sale being oral is
unenforceable.
b. B cannot compel A because the sale is void being oral.
c. B can compel A because the contract is enforceable due to delivery of the TCT to
him.
d. B can compel A because the sale is merely voidable and therefore enforceable,
binding until annulled.
a. S1 is true, S2 is true.
b. S1 is true, S2 is false.
c. Both statements are false.
d. S1 is false and S2 is true.
a. S1 is false, S2 is true.
b. Both statements are true.
c. Both statements are false.
d. S1 is true, S2 is false.
6. Statement 1: Contract of lease of a parcel of land for a term of one year must be
written, otherwise, unenforceable.
Statement 2: Contract of sale of a parcel of land must be in public instrument,
otherwise, unenforceable.
a. S1 is false, S2 is true.
b. Both statements are true.
c. S1 is true, S2 is false.
d. Both statements are false.
7. A contract wherein both contracting parties are incapable of giving consent and yet
ratified by the guardian of either of the parties is:
a. Rescissible
b. Voidable
c. Unenforceable
d. Void
a. Oral contract of partnership wherein more than P3,000 has been contributed by
the partners.
b. Agent given oral authority to sell the land of the principal.
c. Partnership contracts in private instrument wherein immovables have been
contributed.
d. Oral contract of limited partnership.
12. Statement 1: There is acceptance of the offer only after it has come to the
knowledge of the offeror.
Statement 2: Lesion or inadequacy of cause shall as a rule make a contract
defective.
13. Statement 1: If the cause is not stated in the contract, it is presumed that it does
not exist and therefore the contract is void.
Statement 2: In order that a contract may be voidable, there must be damage.
a. Novation
b. Ratification
c. Rescission
d. Estoppel
17. Contract which cannot be sued upon unless ratified, thus, it as if they have no effect
yet:
a. Voidable
b. Rescissible
c. Void
d. Unenforceable
a. Oral contract of agency giving authority to an agent to sell the land of the
principal.
b. Oral partnership agreement where immovables are contributed.
c. Oral contract of sale of an immovable entered into by an agent who was given
oral authority by the principal.
d. Oral agreement to answer all the expenses for the wedding reception if A marries
B.
19. A sold to B a genuine bottle of Fundador brandy. However, upon delivery, the former
substituted a fake. B now wants to annul the sale. Decide:
a. Unenforceable
b. Rescissible
c. Voidable
d. Void
21. S was intimidated by B to sell to the latter his parcel of land at a very low price. C,
the creditor of S was thus damaged since the former has no other means of
collecting from S. The remedy of S:
a. Rescission
b. Annulment
c. Have it declared by the court as void.
d. Reformation of the contract.
23. S made an offer to B for the sale of his car which was received by the latter on
January 2, 2001. On January 4, 2001, B sent a letter of acceptance by mail. On
January 3, 2001, S sent another letter to B withdrawing his offer. In this case;
a. There was a perfected sale because of the acceptance of the offer by B before he
had knowledge of its withdrawal by S.
b. There was perfected sale because S was estopped from withdrawing his offer
unless B had knowledge thereof before acceptance.
c. No sale took place because before acceptance was conveyed, the offer had been
withdrawn.
d. The offer was ineffective for lack of certainty as to the object.
24. Statement 1: An offer made by the principal is accepted from the time acceptance is
conveyed to him or his agent.
Statement 2: The object of a contract may be future things including future
inheritance.
a. Both statements are true.
b. Both statements are false.
c. S1 is true, S2 is false.
d. S1 is false, S2 is true.
25. Statement 1: A contract which is the direct result of a void contract is voidable.
Statement 2: If the object of the contract did not exist at the time of the transaction,
it is void. Therefore, this may include sale of future things.
a. S1 is true, S2 is false.
b. S1 is false, S2 is true.
c. Both are false.
d. Both are true.
26. A sold in writing to B his stereo set for P600. There is no delivery from A and no
payment of the price from B. Contract is:
a. Voidable
b. Unenforceable
c. Void
d. Enforceable
27. Statement 1: If the words of the contract are clear and leave no doubt on the
intention of the parties, interpretation of contracts may be proper.
Statement 2: In case of gratuitous contracts, doubt shall be resolved in favor of
greatest reciprocity of interest.
a. S1 is false, S2 is true.
b. S1 is true, S2 is false.
c. Both statements are true.
d. Both statements are false.
28. S sold his parcel of land only for P1M. Although the value of the same is P2M, he
thus suffered damage or lesion in the sale due to the inadequacy of the price.
Therefore, the contract is:
a. Voidable
b. Unenforceable
c. Valid, not defective
d. Rescissible
29. Statement 1: In case of doubt, a contract purporting to be sale shall be construed as
mortgage.
Statement 2: In annulment of contracts, there shall always be mutual restitution of
both parties thereof.
a. S1 is false, S2 is true.
b. Both statements are false.
c. Both statements are true.
d. S1 is true, S2 is false.
30. Statement 1: Just like the voidable and unenforceable contracts, rescissible contracts
may also be ratified.
Statement 2: In case of fraud or mistake, the action for annulment must be made
within four years from the commission of the vice of consent.
31. D, fearing that his creditor C, would go after his only parcel of land to satisfy his
claim for payment of D’s debt, sold his land to X who did not know of D’s intention.
Decide:
33. A without authority from B sold the latter’s car in the name of the latter. The contract
is therefore:
a. Rescissible
b. Voidable
c. Unenforceable
d. Void
34. Statement 1: A threatened B with an administrative charge for immorality if the
latter does not marry her because she is already pregnant with their child. Fearing
that she may do so, B married her.
Statement 2: The contract of marriage is therefore voidable because of threat. A
simple mistake of account may give rise to the annulment of the contract because of
mistake.
a. S1 is false, S2 is true.
b. Both statements are false.
c. Both statements are true.
d. S1 is true, S2 is false.
a. S1 is false, S2 is true.
b. S1 is true. S2 is false.
c. Both statements are true.
d. Both statements are false.
36. The three following contracts are cleansed of its defect by ratification. Which is not so
ratified?
a. Contract where the creditor was damaged by the act of the debtor intended to
defraud him.
b. Contract entered into by a person incapable of giving consent.
c. Sale of chattels orally entered into for a price not less than five hundred pesos.
d. Lease of real property for more than one year orally entered into.
37. A gave B P1M for the latter to kill C. Before B could accomplish his criminal intent to
kill C, A changed his mind and demanded the return of the money from B. Decide:
a. A cannot recover the payment he made to B because it was a void contract which
does not allow recovery by the guilty party.
b. A cannot recover the money because the contract is unenforceable.
c. A can recover the money although the contract is void, since the crime was not
committed.
d. No recovery and both A and B will be prosecuted for their crime.
38. Because A wants to sell his land to B but the latter does not want to buy the same; A
forced B to buy his land. The contract:
39. D borrowed a sum of money from C with G as guarantor. The loan is in writing but
the guaranty is oral. D failed to pay C. Who now is demanding payment from G? Can
G be compelled to pay?
40. A and B agreed on February 3, 2000 that B will construct the house of A in January
2002. The contract was orally entered into. B received a down payment from A with
the balance payable after completion of the house. The contract is:
41. A sold to B a fake Rolex watch on January 3, 2001. On January 13, 2001, B
discovered that the watch he bought from A was an imitation. The law provides that
he can annul the sale as a voidable contract within four years. Prescription starts
from:
42. A and B agreed on a contract of pledge. However, they entered into a contract of
mortgage in the honest belief that the mortgage and pledge are the same. The
instrument may be reformed:
43. A and B entered into a contract of mortgage. However, as written the document
states it is a contract of sale with right of repurchase, the error due to the fault of
the clerk/typist. Hence:
44. S sold to B his parcel of land worth P1M for only half a million pesos. After the sale
and realizing his damage, S is now seeking to set aside the sale. Decide:
45. Statement 1: If the cause is not stated in the contract, it is presumed that it does
not exist.
Statement 2: Lesion or inadequacy of cause, as a rule, invalidates a contract.
a. S1 is false, S2 is true.
b. S1 is true, S2 is false.
c. Both statements are true.
d. Both statements are false.
46. D borrowed a sum of money from C with a certain rate of interest. C now wants to
increase the rate of interest without the consent of D. What principle in contracts
prohibits C from doing so?
a. Autonomy of contracts
b. Relativity of contracts
c. Mutuality of contracts
d. Consensuality of contracts
e. Obligatory force and compliance in good faith
47. Three of the following contracts must be in writing to be valid. Which is the
exception?
48. A threatened to kill B if the latter would not marry the former’s daughters who was
pregnant with B’s child. Intimidated, B married A’s daughter against his will.
a. The contract is not voidable because the threat was made by a third person not
by one of the parties.
b. The contract is not voidable because the claim for marriage is just or legal and
therefore, consent is not vitiated.
c. The contract is not voidable since B has to answer for his fault that A’s daughter
became pregnant.
d. Voidable is the contract due to intimidation even if employed by a third person.
49. The following are characteristics of a void contract. Which is the exception?
a. The action or defense for the declaration of the inexistence of a contract does not
prescribe.
b. It cannot be ratified.
c. A contract which is the direct result of a void or illegal contract is voidable.
d. The defense or illegality of a void contract is not available to third person whose
interests are not directly affected.
2. A and B orally agreed to form a partnership two years from today, each one to
contribute P10,000.00. At the arrival of the said, if one refuses to go ahead with
the agreement, can the other enforce the agreement?
a. Yes, since the agreement is to be enforced after one year from the making
thereof, the same should be in writing to be enforceable.
b. Yes, because the prior agreement was voluntarily made.
c. Yes, the contract of partnership is not governed by the Statute of Frauds.
d. No, because the agreement was merely oral.
4. The following, except one, are common characteristics of the partnership and
corporation. Which is the exception?
a. The individuals composing both organizations have little voice in the conduct
of the business.
b. Both can only act through agents.
c. Both are business organizations composed of a number of individuals.
d. Both have juridical personalities separate and distinct from that of the
members composing it.
5. Which of the following is not requisite prescribed by the law in order that the
partners maybe held liable to a third party for the acts of one of the partners
a. The partners bind the partnership by the acquiescence for the obligations he
may have contracted in good faith.
b. The partner must have the authority to bind the partnership.
c. The contact must be in the name of the partnership or for its own account.
d. The partner must act on behalf of the partnership.
6. X, Y and Z are partners in Ace and Co. W represented himself as a partner in the
said partnership to A, who, on the faith of such representation, granted P1M loan
to the partnership. Assuming only X and Y consented to such representation, who
shall be liable to A?
a. Since the partnership benefited from the credit extended by A, all partners X,
Y, and Z are liable.
b. Only X, Y and W are partners by estoppel and are liable are pro rata.
c. Since the loan was extended to the partnership, all the partners and W are
liable.
d. Only W who made the representation shall be liable.
11. If the partner is insolvent, the first in the order of preference is:
a. Partnership creditors.
b. Partner’s contributions to the partnership.
c. Separate creditors of the partner.
d. Pro rata between the separate creditors and the partnership creditor.
13. A and B are partners in real estate business. The partnership owns a parcel of
land which C desires to buy. C contacted A and information his in his intention to
buy the said land. A did not B such intention of C. A bought B out of the
partnership and afterwards sold the land to C at a profit.
a. The partnership was dissolved when A became the sole owner.
b. The sale is void because it was without the knowledge of B.
c. A is not liable to B for his share of the profits.
d. A is liable to B for his share in the profits.
15. One of the following incidents is a clause for involuntary dissolution of the
partnership:
a. Termination of the definite term of partnership.
b. Insolvency of a partner.
c. Express will of a partner in a partnership at will.
d. Expulsion of a partner for cause as stated in the articles of part.
16. The following are disqualified to for a universal partnership except one:
a. Brother and sister.
b. Husband and wife.
c. Those guilty of adultery and concubinage.
d. Those guilty of the same offense, if the partnership is entered into in
consideration of the same.
17. A is the capitalist partner and B the industrial one. A engaged personality in the
same kind of business as that of the partnership:
a. If there are losses, the partnership will bear the losses.
b. If there are profits, they will be shares by A and the partnership.
c. If there are profits, A shall give them to the partnership.
d. A maybe excluded from the partnership with liability for damages.
18. A and B are capitalist partners while C is industrial partner. Both A and B equally
contributed P15,000.00 each to the capital. A contractual liability in favor of X
was incurred in the amount of P40,000.00. After exhausting partnership assets
there is a balance recoverable from
a. A and B only.
b. A, B and C.
c. A, B and C and C can get reimbursement from A and B.
d. A, B and C without reimbursement from A and B in C’s favor.
19. Statement I: After dissolution, the partners can still enter into new business
transactions in the name of the dissolved partnership although not for the
purpose of winding up partnership affairs.
20. A and B orally entered into a partnership with each of them contributing
P3,000.00 each and some personal properties in the amount of P1,000.00each.
the partnership contract is:
a. Unenforceable because the amount involved exceeds P500.00.
b. Void because it is not in public instrument.
c. Valid.
d. Void because it is not registered with the SEC.
Statement II: A limited partner’s surname cannot appear in the partnership name
if it is also the surname of a general partner to prevent misinterpretation to third
person.
25. Statement I: A partner’s interest in the partnership is not assignable unless the
other partners consent.
Statement II: An act of strict dominion may be performed by a partner without
the consent of his co-partner if it is advantageous to the partnership.
a. Both statements are false.
b. Both are true.
c. First is true, second is false.
d. First is false, second is true.
27. Statement I: A partnership contract begins from the moment of the execution of
the contract unless it is otherwise stipulated.
Statement II: even if a third person in good faith, the partnership is not bound in
the contract entered into by a partner after the dissolution of the partnership if
the business of the partnership has become unlawful.
a. First statement is false, second is true.
b. First statement is true, second is false.
c. Both are false.
d. Both are true.
28. Statement I: A substituted limited partner becomes as such from the time the
certificate of limited partnership is properly amended.
Statement II: Only those interest have not been assigned may dissolve the
partnership.
a. Both statements are true.
b. Both are false.
c. First is true, second is false.
d. First is false, second is true.
29. A, B and C formed a partnership with the name ABC & co. Partnership as a
limited partnership in mind. It is therefore:
a. Limited partnership.
b. General partnership.
c. If registered with the SEC, it is a limited partnership.
d. Partnership by estoppel.
30. Stamen I: In the absence of stipulation, the share of the industrial partner in the
profits shall be equal to the share of a capitalist partner with the smallest share.
Statement II: the industrial partner shall not share in the losses unless
stipulated.
a. First statement is false, second is true.
b. First statement is true, second is true.
c. Both are true.
d. Both are false.
31. A, B and C were partners. While acting within the scope of his authority in the
conduct of business. A committed a tort against X, a third person. Who shall be
liable and to what extend?
a. All partners are liable jointly or pro rata after the partnership assets have
been exhausted.
b. All partners shall be liable solidarily after the partnership assets have been
exhausted.
c. All partners and the partnership are liable solidarily.
d. All the partners and the partnership are liable solidarily.
32. Statement I: A limited partner shall not be bound by the obligations of the
partnership.
Statement II: a general partner shall be bound by the obligations of the
partnership.
a. Both statements are true.
b. Both are false.
c. First is false, second is true.
d. First is true, second is false.
36. A and B agreed on a profit sharing ratio in their partnership. A being the
industrial partner and B a capitalist partner. It was also stipulated that A shall
also share in the same ratio as to the losses. Is A liable for losses?
a. No, because the law exempts the industrial partner losses.
b. No, because the partners cannot stipulate that the industrial partner shall
be liable for losses.
c. Yes, even if the absence of stipulation.
d. Yes, because it was so stipulated.
39. XYZ partnership composed of three (3) capitalist partners and one industrial
partner suffered business losses. Its remaining asset remaining to P 100,000.
The partnership is indebted to its supplier in the amount of P 160,000. How can
recover the P 60,000.
a. Can recover from the partnership P 100,000 and the balance of P 60,000
from the other capitalist.
b. Can recover from the partnership P100,000 and the balance of P 60,000
from any of the partners.
c. Can recover from the partnership P100,000 and the balance of P 60,000
from the (4) partners jointly including the industrial partner.
d. Can recover from the partnership P 100,000 only and suffer as his list in
the balance of P 60,000.
40. Which of the following persons are not disqualified from a universal partnership?
a. Those guilty of adultery and concubinage.
b. Husband and wife.
c. Brother and sister.
d. Those guilty of the same of the criminal offense. If the partnership is
entered into a consideration of the same.
42. Which of the following incidents maybe a cause for involuntary dissolution of a
partnership?
a. Expulsion of any partner.
b. Insolvency of any partner.
c. Express will of any partner.
d. Termination of term of the partnership.
43. Which of the following liabilities of the partnership shall rank first in the order of
payment?
a. Those owing to creditors others than partners.
b. Those owing to partners in respect to profits.
c. Those owing to partners in respect to capital.
d. Those owing to partners other than for capital and profit.
44. X, Y and Z are partners and contributed. To the partners and partnership P
40,000, P 30,000 and services, respectively. The partnership was later liquidated
and after payment of the partnership indebtedness, only P20, 000 worth of asset
remained. How much is the share of Z?
a. Zero
b. Equal to the share of X
c. Equal to the share of Y
d. P6, 000
45. The following are instances, except one, when a partnership is unlawful. Which is
the exception
a. a partnership formed to furnished apartment houses to be used as venue
for illegal gambling
b. a partnership formed to create cartel for monopoles
c. a partnership formed for smuggling of contrabands
d. a partnership formed for the purpose of buying public lands
46. A person in a partnership who is not really a partner, not being a party to the
partnership agreement but is made liable as a partner for the protection of
innocent third persons is known as:
a. Dormant partner
b. Secret partner
c. Partnership by estoppels
d. Partner by estoppels
47. A, B and C are partners engaged in retail business. Their contribution is P20, 000
each. D is admitted partner with a contribution of P12. At the time of his
admission, the partnership has an outstanding obligation to E in the amount of
P80, 000. In this case:
a. D is liable to E for this obligation so that the assets of the partnership
amounting to P68, 000 will be exhausted leaving a balance of P12, 000.
Only A, B and C shall be liable jointly or pro rata, out of their separate
property.
b. D is not liable to E for this obligation
c. D is liable to E for this obligation so that the assets of the partnership will
be exhausted; leaving a balance of P12, 000 all the partners shall be liable
jointly or pro rata, out of their separate property.
d. Answer not given
48. A, B and C are equal partners in X Partnership. On April 29, 2008, partner died.
Not knowing that C died, on May 01, 2006, A contracted a liability to D who also
does not know the death of C, the liability is P90, 000. After D exhausted the net
assets of X Partnership in the amount of P60, 000, he can collect
a. P10, 000 from estate of C, P10, 000 from B
b. P15, 000 from A and P15, 000 from B
c. P20, 000 from A and 10, 000 from B
d. P30, 000 from A
49. A and B are partners of X Partnership. A is the managing partner. E owes A P10,
000 and X Partnership P30, 000. The obligations of E are both due. A collected
from E the debt of E to A in the amount of P10, 000 and issue a receipt in the
name of A.
a. The whole of the P10,000 will be applied to debt of E to A
b. P 10, 000 will be applied to debt of E to the partnership
c. P2, 500 to debt to E to A and P7, 500 to debt of E to the partnership
d. P5, 000 each to debt of E to A and to the partnership
50. A, B and C are general partners ion ABC partnership. G is debtor to the
partnership in the amount of P15, 000. A receive from the debtor G the sum of
P5, 000 and issued a receipt indentifying the amount collected as P5, 000.
a. A can be compelled to share B and C their P5, 000
b. B and C should automatically sue G to collect the P10, 000
c. B and C can change the capital of A with their share of the P5, 000
d. A cannot be compelled to share the P5, 000 with B and C