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P a g e |1
BUSINESS LAW
ATTY. MACMOD
CONTRACTS
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41. S offers to sell his house to B for P100, 000. B asks him if he would accept P80, 000. Which of the
following is correct?
a. Because of ambiguity, both offers are terminated by operation of law.
b. Bs response is a counter-offer effectively terminating the P10, 000 offer and instigating an offer
for P80, 000.
c. Bs response is a rejection of the P100, 000 offer, and there is no offer for P80, 000 because it is
too indefinite
d. Bs response is a mere inquiry, the P100, 000 offer by S is still in force.
42. By this principle, the validity and efficacy of the contract cannot be left to the will of one of the
contracting parties.
a. Relativity of contract
c. Mutuality of contract
b. Obligatoriness of contract
d. Freedom of contract
43. This principle means that contracts take effect only upon the contracting parties, their assigns or
successors-in-interest
a. Relativity of contract
c. Mutuality of contract
b. Obligatoriness of contract
d. Freedom of contract
44. B fraudulently induces S to sell him (B) a masterpiece painting for P10, 000. Subsequently, B sold
it to X for P12, 000, a good faith purchaser. S is entitled to
a. Rescind the contract with B plus damages
b. Recover the painting from X but no damages
c. Recover damages from B
d. Annul the contract plus damages
45. Which of the following is correct?
a. An action to enforce judicially a natural obligation prescribes in 4 years
b. An action for annulment of contract is imprescriptible
c. An action to declare contract void is not subject to prescription
d. An action for rescission of contract prescribes in five (5) years counted from the execution of the
contract
46. The following contracts should observe the Statute of Frauds, except:
a. Guaranty
b. Lease of personal property longer than one year
c. Representation as to the credit of a third person
d. Lease of real property longer than one year
101. The guardian of an insane person sells a house and a lot belonging to the latter valued at P100, 000
to B, buyer for P74, 000 with the approval of the court. The contract is:
a. Valid
d. Unenforceable
b. Rescissible
e. Void
c. Voidable
102. The following, except one, are the characteristics of void or inexistent contract. Which is the
exception
a. The defense of illegality of the contract is available to third person whose interests are not
directlty affected
b. They are not subject to ratification
c. The right to raise defense of illegality cannot be waived
d. The action or defense for declaration of their nullity or inexistence of the contract does not
prescribe
103.A intimidated B to marry his daughter. After a year, B would like to file an action for annulment but
could not do so because A was around to intimidate him. The marriage contract is
a. Rescissible
c. Void
b. Voidable
d. Unenforceable
104. Which of the following contract is enforceable even if not reduced in writing.
a. Lease of car for 2 years
b. Representation as to the credit of a third person
c. Lease of immovable for a period longer than one year.
d. Agreement for the sale of immovable property.
105. Simulation of Contract - Absolute or relative. Relative when:
a. Parties not bound at all
b. The contract is void
c. The parties conceal their true agreement
d. None of the above
106. Which of the following instruments is not subject to reformation?
a. Simple donations inter vivos wherein no condition imposed
b. Wills
c. When the real agreement is void
d. All of the above
107. Essential requisites of a contract:
a. Consent
c. Subject
b. Cause
d. All of them
108. The offeror need not know the acceptance by the offeree is the theory of:
a. Cognition
c. Expedition
b. Manifestation
d. B or C
109. Statement No.1: If one party was mistaken and the other acted fraudulently or inequitably in such a
way that the instrument does not show their true intention, the former may ask for the annulment
of the instrument.
Statement No.2: The statement of a false cause in contracts shall render them void, if it should not be
proven that they were founded upon another caused which is true and lawful.
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
110. One of the stipulations contained in the contract between M Company and its employees is that the
company shall pay a bonus to employees of the company who shall continue its employment for at
least 2 consecutive years, unless he quits or is discharged before the expiration of the period of 2
years. X, an employee of the company was discharged without just cause one week before the
completion of the two-year period:
a. X is not entitled to the bonus because his discharge was in accordance with the contract.
b. X is not entitled to the bonus, because the employers right to terminate is superior than the
right of the employee to be employed.
c. X is entitled to the bonus whether the discharge is with or without cause.
d. X is entitled to the bonus because the debtor company has voluntarily prevented the
happening of the condition.
111. Example No.1- W 16 years old, sold his house valued at P1 M for P50, 000 or a lesion by more than
one-fourth of the value of the said house.
Example No.2- A sold his building orally to B. The contracts are:
a. Both contracts are unenforceable
b. No. 1 is rescissible; while No.2 is unenforceable
st
nd
c. 1 is voidable; while 2 is unenforceable
d. Both contracts are binding
112. Statement No.1: Dolo incidente entitled the person against whom it was employed the right to seek
the annulment of the contract.
Statement No.2: Innominate contracts are exclusively regulated by the stipulations of the parties.
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
113. Statement No.1: Validable contracts can be voided within the period allowed by law.
Statement No.2: There is undue influence if insidious words or machinations were employed by a
party on the other just to obtain the latters consent, without which the latter would not have entered
into the contract.