RFBT-3302
VILLEGAS
CONTRACTS (RA 386)
Contract
It is a meeting of minds between two persons whereby
one binds himself, with respect to the other, to give
something, or to render some service. (Art. 1305)
Stages in Making a Contract
1. Conception or Generation – the first stage where
the parties begin their initial negotiation and
bargaining for the formation of the contract
ending at the moment of agreement of the
parties;
2. Perfection or Birth – the parties had a meeting of
minds as to the object, cause or consideration and
other terms and conditions of the contract;
3. Consummation or fulfillment – the last stage
which consists in their performance or fulfillment
by the parties of their obligation under the term of
the perfected contract.
Characteristics of a Contract
1. Autonomy – it is the freedom of the parties to
contract and stipulate provided the stipulations
are not contrary to law, morals, good customs,
public order or public policy (Art. 1306)
2. Mutuality – the contract must bind both
contracting parties and its validity or compliance
cannot be left to the will of one of them (Art.
1308)
However, the termination of the contract does not
necessarily require mutuality, and it can be validly
left to one party by agreement or under a
resolutory facultative condition.
3. Obligatoriness – contracts shall be obligatory in
whatever form they may have been entered into,
provided all the essential requisites for validity are
present (Art. 1356)
4. Relativity
General Rule: Contracts take effect only between
the parties or their assigns and heirs.
Exceptions:
a. Rights and obligations that are not
transmissible by their nature, or by the
stipulation or by provisions of law (Art 1311)
b. Stipulation pour autrui (stipulation in favor of
a third person) – benefits clearly and
deliberately conferred by parties to a contract
upon third persons (Art. 1311) and which
stipulation is merely part of a contract entered
into by the parties, neither of whom acted as
agents of third person and which favor can be
demanded by the third person if duly accepted
by him before it could be revoked.
c. Third persons coming in possession of the
object of contract creating real rights subject
to the provisions of Mortgage Law and the
Land Registration Law (Art. 1312)
d. Contracts entered into in fraud of creditors
(Art. 1313)
ATTY.
ATTY. AGUILAR
e. When a third person induces a party to violate
a contract (Art. 1314)
5. Consensuality – contracts are perfected by mere
consent, and from that moment the parties are
bound not only to the fulfillment of what has been
expressly stipulated but also to all the
consequences which according to their nature,
may be in keeping with good faith, usage and law
(Art. 1315)
Essential Requisites of a Contract
I. Consent
II. Object certain or subject matter; and
III. Cause or consideration (Art. 1318)
Note: In real contracts, the delivery of the object of the
contract is required as a further requisite.
I. Consent
It is manifested by the meeting of the offer and the
acceptance upon the thing and the cause which are to
constitute the contract. The offer must be certain and the
acceptance absolute. A qualified acceptance constitutes a
counter-offer. (Art, 1319)
Requisites:
1. Legal capacity of the contracting parties;
2. Manifestation of the conformity of the contracting
parties;
3. Parties’ conformity to the object, cause, terms and
condition of the contract must be intelligent,
spontaneous and free from all vices of consent;
and
4. The conformity must be real.
Offer
It is defined as an expression of willingness to contract on
certain terms, made with the intention that it shall
become binding as soon as it is accepted by the person to
whom it is addressed. It must be definite, intentional, and
complete.
Rules on advertisements as offers
1. Business advertisements – not a definite offer, but
mere invitation to make an offer, unless it appears
otherwise. (Art 1325)
2. Advertisement for bidders – simply invitation to
make proposals and advertiser is not bound to
accept the highest or lowest bidder, unless the
contrary appears. (Art. 1326)
Requisites of Valid Acceptance
1. Must be absolute; a qualified acceptance
constitutes counter-offer (Art. 1319);
2. No specified form but when the offeror specifies a
particular form, such must be complied with.
Persons incapacitated to give consent
1. Deaf-mutes who do not know how to read and
write;
2. Insane or demented persons, unless the contract
was entered into during a lucid interval;
3. Minors (Art. 1327)
 2. Intransmissible rights;
3. Future inheritance, except in cases expressly
Vices of Consent authorized by law;
1. Mistake – refers to mistake of facts, not of law, 4. Services which are contrary to law, morals, good
thus rendering the contract voidable, unless customs, public order or public policy;
mistake of law involves mutual error as to the 5. Impossible things or services; and
legal effect of an agreement when the real 6. Objects which are not possible of determination as
purpose of the parties is frustrated. (Art. 1334) to their kind.

2. Intimidation – when one of the contracting III. Cause

parties is compelled by a reasonable and
well-grounded fear of an imminent and grave evil
upon his person or property of his spouse,
descendants or ascendants, to give his consent.
(Art. 1335 [2])
It is the essential or more proximate purpose which
moves the contracting parties to enter into the contract. It
is the immediate and direct cause which justifies the
creation of an obligation through the will of the
contracting parties.

3. Violence – when in order to wrest consent, Requisites:

serious or irresistible force is employed. (Art.
1335)
However, a threat to one’s claim through
competent authority, if the claim is just or legal,
does not vitiate consent. (Art. 1335 [4])
Note: Violence or intimidation shall annul the
obligation, although it may have been employed
by a third person who did not take part in the
contract. (Art. 1336)
4. 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. (Art. 1337)
5. Fraud – when through the insidious words or
machinations of one of the contracting parties, the
other is induced to enter in to a contract which,
without them, he would not have agreed to. (Art
1338)
Kinds of Fraud to Vitiate Consent
a. Causal fraud (dolo causante) – it is employed
by one party prior to or simultaneous with the
creation or perfection of the contract to secure
the consent of the other.
b. Incidental fraud (dolo incidente) – it is
committed in the performance of the
obligation, and its existence merely results in
breach of an already existing contract, which
entitles the injured party to damages. (Art.
1170)
II. Object
It is the subject matter of the contract. It can be a thing,
right or service arising from a contract.
Requisites:
1. Determinate or determinable;
2. Existing or potentially to exist subsequent to the
contract;
3. Must be licit;
4. Within the commerce of man; and
5. Transmissible.
General rule: All things or services may be the object of
contracts.
Exceptions:
1. Things outside the commerce of men; (Art. 1347)
It must:
1. Exist;
2. Be true; and
3. Be licit.
Note: Although the cause is not stated in the contract, it
is presumed that it exists and is lawful unless the debtor
proves the contrary. (Art 1345)
Kinds of Cause
1. Cause of onerous contracts – the prestation or
promise of a thing or service by the other.
2. Cause for remuneratory contracts – the service or
benefit remunerated.
3. Cause for gratuitous contracts – the mere
liberality of the donor or benefactor; it does not
involve any material thing but rather it involves
only the generosity of the benefactor.
4. Accessory – identical with cause of principal
contract, from which the accessory derived its life
and existence.
Formality
General Rule: Form is not required in consensual
contracts.
Exceptions: When the law requires a contract to be in
writing for its:
1. Validity (formal contracts);
2. Enforceability (under Statute of Frauds); or
3. For convenience of parties.
Formalities required in specific contracts
1. Donations
a. Personal property – if the value exceeds
P5,000, the donation and acceptance
must be both written (Art. 748)
b. Real property:
i. Donation must be in a public
instrument specifying therein the
property donated and value of
charges which done must satisfy;
ii. Acceptance must be written,
either in the same deed of
donation or in a separate
instrument, but shall not take
effect unless it is done during the
lifetime of the donor;
iii. If acceptance is in a separate
instrument, the donor shall be
notified thereof in an authentic
 form, and this step shall be noted
in both instruments. (Art. 749)
2. Partnership where real property is contributed
a. There must be a public instrument
regarding the partnership;
b. The inventory of the realty must be made,
signed by the parties, and attached to the
public instrument. (Art. 1773)
3. Antichresis – the amount of the principal and
interest must be in writing. (Art. 2134)
4. Sale or Agency to sell real property or an interest
therein – authority of the agent must be in
writing, otherwise, the sale shall be void. (Art.
1874)
5. Stipulation to charge interest – interest must be
stipulated in writing (Art. 1956)
6. Chattel mortgage – personal property must be
recorded in Chattel Mortgage register. (Art. 2140)
Kinds of Contracts
A. According to perfection or formation
1. Consensual – perfected by meeting of the
minds of the parties (Art. 1305)
2. Real – requires for their perfection both the
consent of the parties, and the delivery of the
object by one party to the other
3. Solemn – that which the law requires that
they be in some particular form (e.g. writing)
B. According to the degree of dependence
1. Principal – that which can exist independently
of other contracts
2. Accessory – that which cannot exist without a
valid principal contract
3. Preparatory – that which is not the end by
itself, but only a means for the execution of
another contract.
C. According to their form
1. Common or informal – those which require no
particular form
2. Special or Formal – those which require a
particular form
D. According to their nature of the vinculum which
they produce
1. Unilateral – those which give rise to an
obligation only to one of the parties
2. Bilateral – those which give rise to reciprocal
obligations for both parties.
E. According to the risks involved
1. Commutative – those where each of the
parties acquire an equivalent of his prestation
and such equivalent is pecuniarily appreciable
and already determined from the moment of
the perfection of the contract.
2. Aleatory – those which are dependent upon
the happening of an uncertain event, thus,
charging the parties with the risk of loss or
gain.
F. According to their names of norms regulating
them
1. Nominate – those which have their own name
and individuality, and are regulated by
provisions of law.
2. Innominate – those which lack name or
individuality, and are not regulated by special
provisions of law.
Reformation of Instruments
It is a remedy to conform to the real intention of the
parties due to mistake, fraud, inequitable conduct,
accident. (Art. 1359)
Requisites:
1. There is a meeting of the minds of the parties to a
contract;
2. The parties’ true intention is not expressed in the
instrument;
3. Such failure of the instrument to express the
parties’ intention is by reason of mistake,
accident, relative simulation, fraud, or inequitable
conduct;
4. The facts upon which relief by way of reformation
of the instrument is sought are put in issue by the
pleadings; and
5. There is strong, clear and convincing proof of
mistake, accident, relative simulation, fraud, or
inequitable conduct.
Prescriptive period in reformation of instruments: within
10 years from the date of the execution of the instrument,
since the suit is based on a written document.
Interpretation of Contracts
If the terms of a contract are clear and leave no doubt
upon the intention of the contracting parties, the literal
meaning of its stipulations shall control.
If the words appear to be contrary to the evident intention
of the parties, the latter shall prevail over the former.
(Art. 1370)
In order to judge the intention of the contracting parties,
their contemporaneous and subsequent acts shall be
principally considered. (Art. 1371)
However general the terms of a contract may be, they
shall not be understood to comprehend things that are
distinct and cases that are different from those upon
which the parties intended to agree. (Art. 1372)
If some stipulation of any contract should admit of several
meanings, it shall be understood as bearing that import
which is most adequate to render it effectual. (Art. 1373)
The various stipulations of a contract shall be interpreted
together, attributing to the doubtful ones that sense which
may result from all of them taken jointly. (Art. 1374)
Words which may have different significations shall be
understood in that which is most in keeping with the
nature and object of the contract. (Art. 1375)
The usage or custom of the place shall be borne in mind
in the interpretation of the ambiguities of a contract, and
shall fill the omission of stipulations which are ordinarily
established. (Art. 1376)
The interpretation of obscure words or stipulations in a
contract shall not favor the party who caused the
obscurity. (Art. 1377)
When it is absolutely impossible to settle doubts by the
rules established in the preceding articles, and the doubts
refer to incidental circumstances of a gratuitous contract,
the least transmission of rights and interests shall prevail.
If the contract is onerous, the doubt shall be settled in
favor of the greatest reciprocity of interests.
If the doubts are cast upon the principal object of the
contract in such a way that it cannot be known what may
have been the intention or will of the parties, the contract
shall be null and void. (Art. 1378)
DEFECTIVE CONTRACTS
I. Rescissible Contracts
These are contracts validly constituted but nevertheless
may be set aside due to a particular economic damage or
lesion caused to either of the parties or to a third person.
It may be set aside on whole or in part, up to the extent of
the damage caused. (Art. 1381)
Characteristics of Rescissible contract
1. It has all the elements of a valid contract;
2. It has a defect consisting of an injury to one of
the contracting parties or to a third person;
3. It is valid and effective until rescinded;
4. It can be attached only directly; and
5. It is susceptible of convalidation only by
prescription.
Contracts that may be rescinded:
1. Under Art. 1381, those
a. Entered into by guardians whenever the
wards whom they represent suffer lesion
by more than ¼ of value of the property
(Art. 1381 [1]);
If a guardian alienates properties of the
ward without judicial approval, the
contract is unenforceable for lack of
authority (Art. 1403 par 1);
b. Agreed upon in representation of the
absentees, if absentee suffers lesion by
more than ¼ value of the property (Art.
1382 [2]);
c. Contracts where rescission is based on
fraud committed on creditor and cannot
collect the claim due (accion pauliana)
(Art. 1381 [3]);
d. Contracts where the object involved is the
subject of litigation; contract entered into
by defendant without knowledge or
approval of litigants or judicial authority
(Art 1381 [4]);
e. Payment by an insolvent – on debts which
are not yet due; prejudices the claim of
others (Art. 1382);
f. Provided for by law (Arts. 1526, 1534,
1538, 1539, 1542, 1556, 1560, 1567 &
1659)
2. Payments made in state of insolvency (Art. 1382)
a. Plaintiff has no other means to maintain
reparation;
b. Plaintiff must be able to return whatever
he may be obliged to return due to
rescission;
c. The things must not have been passed to
third persons in good faith;
d. It must be made within 4 years (Art.
1382)
Note: Rescission of contract creates an obligation of
mutual restitution of the objects of the contract, their
fruits, and the price with interest.
II. Voidable Contracts
Are those where consent is vitiated either by the
incapacity of one of the contracting parties or by
mistake, violence, intimidation, undue influence or fraud.
These contracts are binding, unless they are annulled by
a proper action in court. It is susceptible of ratification.
(Art. 1390)
Note: Annulment may be had even if there be no
damage to the contracting parties.
Characteristics:
1. Effective until set aside;
2. Can be ratified;
3. Can be assailed only by the party whose consent was
defective or his heirs or assigns;
4. May be attacked indirectly or collaterally, by way of
defense to an action under the contract by way of a
counterclaim.
Classes of voidable contracts:
1. Those where one of the parties is incapable of
giving consent; and
2. Those where the consent is vitiated by mistake,
violence, intimidation, undue influence or fraud.
(Art. 1390)
Note: An action for annulment may be instituted by all
who are thereby obliged principally or subsidiarily. He who
has capacity may not invoke the incapacity of the party
with whom he has contracted no can those who exerted
intimidation, violence or undue influence or employed
fraud or caused mistake base their action upon these
flaws of the contract.
Causes of extinction of an action to annul
1. Prescription – the action for annulment must be
commenced within 4 years depending on the
ground stated.
a. Under Art 1381 no.1 – within 4 years from
the time of the termination of the
incapacity of the ward;
b. Under Art. 1381 no. 2 – within 4 years
from the time the domicile of the absentee
is known; or
c. Under Art. 1381 nos. 3&4 & Art. 1382 -
within 4 years from the time of the
discovery of fraud.
2. Ratification – cleanses the contract of its defects
from the moment it was constituted. (Art 1396)
 a. Express – the desire of the innocent party
to validate the contract is clearly
manifested verbally or formally in writing
b. Implied – it is the knowledge of the
reason which renders the contract
voidable and such reason having ceased,
the person who has a right to invoke it
should execute an act which necessarily
implies an intention to waive his right
(Art. 1393)
3. By loss of the thing which is the object of the
contract through fraud or fault of the person who
is entitled to annul the contract. (Art. 1401)
4. If the minor is guilty of active misrepresentation
of his age.
III. Unenforceable Contracts
Those contracts which cannot be enforced by action or
complaint, unless they have been ratified by the party or
parties who did not give consent thereto.
An unenforceable contract is valid although it produces no
legal effect.
Characteristics of Unenforceable Contracts
1. It cannot be enforced by a proper action in court;
2. It may be ratified;
3. It cannot be assailed by a third person;
4. May only be assailed as a way of defense, not by
direct action; and
5. The defect of unenforceable contract is of a
permanent nature and it will exist as long as the
contract is not duly ratified. The mere lapse of
time cannot give efficacy to the contract.
Kinds of unenforceable contracts
1. Those entered into in the name of another person
by one who has been given no authority/legal
representation or acted beyond his powers;
Note: A contract of sale over a piece of land
entered into by an agent whose authority is not in
writing, even if he acted beyond the scope of his
authority is void, not merely unenforceable. (Art.
1874)
2. Those that do not comply with the Statute if
Frauds; and
3. Those where both parties are incapable of giving
consent to a contract. (Art. 1403)
IV. Void/ Inexistent Contracts
A void or inexistent contract is one which has no force and
effect from the very beginning, as if it had never been
entered into, and which cannot be validated either by time
or ratification. A void or inexistent contract is equivalent
to nothing; it is absolutely wanting in civil effects.
Characteristics of Void Contracts
1. The contract produces no effect whatsoever either
against or in favor of anyone; hence it does not
create, modify, or extinguish the juridical relation
to which it refers;
2. No action for annulment is necessary, because
nullity exists ipso jure; a judgment of nullity
would merely be declaratory;
3. It cannot be confirmed or ratified; and
4. If it has been performed, the restoration of what
has been given is in order.
Note: The defect or inexistence of a contract is
permanent. It cannot be cured by ratification nor
prescription.
The following contracts are inexistent and void from the
beginning:
1. Those whose cause, object or purpose is contrary
to law, morals, good customs, public order or
public policy;
2. Those which are absolutely simulated or fictitious;
3. Those whose cause or object did not exist at the
time of the transaction;
4. Those whose object is outside the commerce of
men;
5. Those which contemplate an impossible service;
6. Those where the intention of the parties relative
to the principal object of the contract cannot be
ascertained;
7. Those expressly prohibited or declared void by
law.
QUESTIONS
1. The validity and efficacy of the contract cannot be left
to the will of one of the contracting parties.
a. Relativity of contract
b. Mutuality of contract
c. Obligatoriness of contract
d. Freedom of contract
2. This principle means that contracts take effect only
upon the contracting parties, their assigns or
successors-in-interest
a. Relativity of contract
b. Mutuality of contract
c. Obligatoriness of contract
d. Freedom of contract
3. Consent is manifested by the meeting of the offer and
the acceptance upon the thing and the cause which
are to constitute the contract. Which of the following
constitutes a definite offer?
a. An offer made through an agent
b. Business advertisement of things for sale
c. Advertisement for bidders
d. All of the above
4. An agreement in restraint of trade.
a. Perfectly valid
b. Voidable
c. Unenforceable
d. Void
5. Contract that is made for a valuable consideration is:
a. Onerous
b. Gratuitous
c. Onerous and Gratuitous
d. Aleatory
6. The stage of “conception” of a contract is:
a. When the contract is fully executed
b. When the parties come to an agreement
c. When negotiations are in progress
d. When there is a meeting of the parties’ minds.
7. These persons are bound by contracts:
 a. Contracting parties a. Simple donations inter vivos wherein no condition
b. Assigns or Assign imposed
c. Heirs b. Wills
d. All of them c. When the real agreement is void
d. All of the above
8. Acceptance of an offer made by letter or telegram
shall bind the offeror: 17. The following contracts should observe the Statute of
a. From the time the offeree has knowledge of the Frauds, except:
offer. a. Guaranty
b. From the time the offeree sent his acceptance. b. Lease of personal property longer than one year
c. From the time the acceptance is communicated. c. Representation as to the credit of a third person
d. From the time the offeror made the offer. d. Lease of personal property for one year

9. Essential requisites of a contract: 18. Which of the following contracts is required to be in

a. Consent writing to be enforceable?
b. Cause a. An agreement that by its terms is not to be
c. Subject performed within a year from the making thereof.
d. All of them b. A special promise to answer for the debt, default
or miscarriage of another.
10. An incidental element of a contract c. An agreement made in consideration of marriage,
a. Implied warranty other than a mutual promise to marry.
b. Payment of interest in a loan d. All of the above.
c. Delivery of the object in contract of pledge
d. All of the above
19. Contracts that cannot be sued upon unless ratified:
11. A threat to enforce one’s claim through competent a. Voidable
authority, if the claim is just or legal does not vitiate b. Unenforceable
consent. c. Rescissible
Contracts entered into during a lucid interval are d. Void
valid. Contracts agreed into a state of drunkenness or
during a hypnotic spell are binding. 20. Which of the following can be considered as feature of
a. Both are true the void contract?
b. Both are false a. Subject to ratification
c. No.1 is true; No. 2 is false b. They exist
d. No.1 is false; No. 2 is true c. Action or defense for nullity is subject to
prescription
12. Which of the following contract is not valid? d. It is imprescriptible as a defense
a. Mutual promise to marry entered into orally
b. Sale of immovable property orally entered into 21. In three of the following defective contracts,
c. One of the parties in a contract is incapable of ratification cleanses the defects. Which is the
giving consent exception?
d. Sale of immovable property thru an agent a. Both parties are incapable of giving consent
b. Sale of immovable property or interest orally
13. A conferment of a direct benefit in a contract between entered into
two persons in favor of a third person who must c. Sale of piece of land thru an agent the authority is
accept such benefit before the same is withdrawn is oral
known as: d. Contracts entered into by a person who has been
a. Policitacion given no authority
b. Stipulation por autrui
c. Donation propter nuptias 22. Valid until annulled unless there has been ratification
d. Counter-offer a. Rescissible contract
b. Inexistence contract
14. The offeror need not know the acceptance by the c. Voidable contract
offeree is the theory of: d. None of the above
a. Cognition
b. Manifestation 23. Because of the intimidation employed by X, a third
c. Expedition person, S sold his car to B. This contract is:
d. B or C a. Void
b. Voidable
15. Statement No.1: Dolo incidente entitled the person c. Unenforceable
against whom it was employed the right to seek the d. Rescissible
annulment of the contract.
Statement No.2: Innominate contracts are exclusively 24. B called C by the telephone to guaranty the debt of D
regulated by the stipulations of the parties. to C. The contract between B and C is:
a. Both are true a. Unenforceable
b. Both are false b. Voidable
c. No.1 is true; No. 2 is false c. Rescissible
d. No.1 is false; No. 2 is true d. Annullable

16. Which of the following instruments is not subject to 25. This kind of defective contract refers to that contract
reformation? which is validly agreed upon because all the essential
elements exits, but courts can nullify it when there is
 damage or prejudice to one of the parties or to a third
person. Its enforcement would cause injustice by
reason of some external facts.
a. Voidable contract
b. Void or Inexistence Contract
c. Rescissible Contract
d. Unenforceable Contract
26. P, who was in Hongkong, made an overseas call to A,
his friend, to sell P’s lot in Quezon City immediately as
P needed cash. Accordingly, A sold the lot to B. The
deed of sale is in a public document. The sale of P’s
lot is:
a. Valid
b. Rescissible
c. Unenforceable
d. Void
27. All are incorrect about contracts except one
a. Voidable contracts are also called validable
contracts
b. Stipulation pour autrui is an exception to
mutuality of contracts
c. Fraud in inducement is a ground to nullify a
contract
d. Void contracts are unenforceable but not vice
versa
28. The following, except one, are the characteristics of
void or inexistent contact. What is the exception?
a. They are not subject to ratification.
b. The right to raise defense of illegality cannot be
waived.
c. The defense of illegality of the contract is available
to third persons whose interest is not directly
affected.
d. The action or defense for declaration of the nullity
or inexistence of the contract does not prescribed.
29. Mistake in three of the following will not make a
contract voidable. Which one will not?
a. Mistake as to the substance of the thing which is
the object of the contract.
b. Mistake as to the principal conditions which
principally moved one or both parties to enter into
the contract.
c. Mistake as to the identity or qualifications of one
of the parties, which identity or qualifications have
been the principal cause of the contract.
d. Simple mistake of account.
30. Statute of Frauds is applicable to
a. Partially executed contract
b. Oral contract of loan when the amount involved is
less than P500
c. Contract not to be performed within a year from
the making thereof
d. All of the above.
31. When bilateral contracts are vitiated with vices of
consent, they are rendered
a. rescissible.
b. void.
c. unenforceable.
d. voidable
32. Lino entered into a contract to sell with Ramon,
undertaking to convey to the latter one of the five lots
he owns, without specifying which lot it was, for the
price of P1 million. Later, the parties could not agree
which of five lots he owned Lino undertook to sell to
Ramon. What is the standing of the contract?
a. Unenforceable.
b. Voidable.
c. Rescissible.
d. Void.
33. One of the following statements concerning
ratification of a voidable contract is false. Which is it?
a. Ratification extinguishes the action to annual a
voidable contract.
b. Ratification cleanses the contract from all its
defects from the moment it was constituted.
c. Ratification requires the conformity of the party
who has no right to bring the action for
annulment.
d. Ratification may be made by the guardian of the
incapacitated person, or the incapacitated person
upon attaining capacity, or the party whose
consent was vitiated.
34. The following agreements are covered by the Statute
of Fraud. Which is not?
a. An oral agreement which by its terms is not to be
performed within one year from the making
thereof.
b. An oral special promise to answer for the debt,
default or miscarriage of another.
c. An oral agreement in consideration of marriage.
d. An oral contract of partnership where the
contribution in money or personal property
amounts to P3,000 or more.
35. S owns an oil painting. Being in need of money, S sold
the painting to B for P1, 000. After the sale it was
discovered that the painting was valuable and worth
P5, 000.
a. S may rescind the contract on ground of lesion
or inadequacy of cause
b. S may rescind the contract on ground of fraud
c. S may annul the contract on the ground of error
d. B is entitled to the benefit of the contract
because it is valid and binding
36. Contract which has no effect at all and cannot be
ratified is a/an:
a. Unenforceable c. Voidable
b. Void contract d. All of them
37. S sold to B in private instrument his land. Later, B
wanted to have the sale registered, but registration
requires a public instrument. In here, B may compel S
to execute the needed public instrument.
S sold to B orally his specific land. After B paid S the
price of the sale, he wants to register the land in his
name but he needed a public instrument of sale. In
here B may compel S to execute the needed public
instrument.
a. Both examples are false c. Only 2 is true
b. Only 1 is true d. Both are true.
38. Ratification of voidable contract is necessary for its
validity.
One can ask for the annulment of a contract based on
dolo incidente.
a. Both are true c. I is true, II is false
b. Both are false d. I is false, II is true
39. S was forced by X to sign a contract with B for the
sale of specific property for P10,000. C a creditor of X
is prejudiced by the contract. What can S do?
a. S may ask for annulment of the contract
b. S may ask for rescission of the contract
 c. S may ask C to declare the contract avoided c. S1 is true, S2 is false
d. C may ask for the annulment of the contract. d. S1 is false, S2 is true

40. In the preceding number, what can C do?
a. C may ask for rescission of the contract
b. C may ask for the reformation
c. C may ask S to declare the contract voided
d. C may ask for the annulment of the contract.
41. Which of the following contracts is voidable?
a. Those where both parties are incapable of giving
consent to a contract.
b. Those undertaken in fraud of creditors when the
latter cannot in any other manner collect the
claims due to them.
c. Those where the consent is vitiated by mistake,
violence, intimidation, undue influence or fraud
d. Those whose object is outside the commerce of
men
47. S1 – Motive is an essential element of a contract.
S2 – Illegal motive makes the contract voidable.
a. Both are true
b. Both are false
c. S1 is true, S2 is false
d. S1 is false, S2 is true
48. Must be in writing to be enforceable:
a. Lease of land for 12 c. Both of a and b
months
b. Lease of car for 18 months d. None of a and b
“Keep your dreams alive. Understand to achieve anything requires faith
and belief in yourself, vision, hard work, determination, and dedication.
Remember, all things are possible for those who believe.”

42. A stipulation in a contract of lease, which provides

that the tenant shall have the right to continue in
possession of the leased premises so long as he pays
monthly rentals thereon, is a valid stipulation.

The seller sold to a minor some necessaries in the

amount of P600. The goods were delivered to the
minor who, in turn paid the purchase price therefore.
The contract is unenforceable.
a. Both are true c. No.1 is true; No. 2 is false
b. Both are false d. No.1 is false; No. 2 is true

43. S and B orally agree that S would sell and B wound

buy S’s radio for P400, two years from the date of the
agreement. At the end of the two-year period, S
refused to deliver the radio although B was willing to
pay.
a. B can compel S to deliver because B is willing to
pay the price.
b. The contract falls under the Statue of Frauds,
therefore unenforceable.
c. No Statue of Frauds because the price is less
than P500.
d. The object is movable, oral contract is
enforceable.

44. This kind of defective contract refers to that contract

which is validly agreed upon because all the essential
elements exits, but courts can nullify it when there is
damage or prejudice to one of the parties or to a third
person. Its enforcement would cause injustice by
reason of some external facts.
a. Voidable contract c. Rescissible Contract
b. Void Contract d. Unenforceable Contract

45. S1 – Reformation of the instrument interprets the

contract in order to express the true intention of the
parties.
S2 – An onerous contract is interpreted in favor of
greatest reciprocity of interest.
a. Both are true
b. Both are false
c. S1 is true, S2 is false
d. S1 is false, S2 is true

46. S1 – In case of conflict between a general provision

and a special provision, the customs of the place shall
prevail.
S2 – A natural obligation is based on positive and
equity law.
a. Both are true
b. Both are false