EXERCISES IN CONTRACTS INCLUDING CPA EXAMINATION QUESTIONS

TRUE OR FALSE

1. Obligations and contracts are identical. FALSE

2. The object of a contract of sale is its subject TRUE
matter.
3. If a valid contract is novated to void contract, FALSE. The novation is void, but the
both contracts are considered void. original contract subsists
4. Without contract, a person cannot be liable to False. Sources of obligations are:
another. 1) Law
2) Contracts
5. Consummation of a contract is manifested by FALSE?
the offer and acceptance.
Maybe perfection
6. The statement of a false cause in contracts shall ??? TRUE
render them void, if it should not be proved that The cause is presumed to be valid
they were founded upon another cause which is and subsisting
true and lawful.
7. Annulment is available only to persons who are GENERALLY: TRUE,
obliged principally or subsidiarily. It is not However, if third persons’ rights are
available to third persons. prejudicially affected, they can assail
the contract
8. If mistakes, fraud, inequitable conduct, or TRUE.
accident has prevented a meeting of the minds
of the parties, the proper remedy is not Reformation is proper when there
reformation of the instrument but annulment of was meeting of the minds but the
the contract. true intention of the parties is not
shown on the contract
9. The action or defense for the declaration of the TRUE
inexistence of void contract does not prescribe.
10. Voidable contracts cannot be ratified. FALSE. Only void contracts cannot be
ratified.

Ratification may be express or tacit.

When tacit, the reason for the
voidability must have ceased, and
the person who has the right to
invoke ratification should execute an
act which necessarily implies an
intention to waive his right
11. A contract which is the direct result of a previous TRUE
illegal contract, is also void and inexistent.
12. An offer becomes effective even with the death TRUE.
of either party after acceptance is conveyed.
13. When one party is insane and the other is an In that they cannot give consent,
unemancipated minor, the contract is TRUE
unenforceable.
14. Accidental elements of a contract are those TRUE
agreed upon by the parties, and cannot exist
without being stipulated.
15. X advertised his lot for sale in a newspaper of FALSE. By meeting the offer with his
general circulation. The advertisement states: acceptance, there has been consent.
“For sale: 500 sq. m. located at No. 3333
Buendia Avenue, Makati, Metro Manila. Price:
P500,000.00. Term of payment: Cash only”. W
accepted the offer by sending a letter to X which
the latter received. X can still back out from his
offer because his advertisement is merely an
invitation to make an offer.
16. Unless it appears otherwise, business TRUE
advertisement of things for sale are not definite
offers, but mere invitations to make an offer.
17. The contracting parties may establish such TRUE. Freedom to contract
stipulation, clauses, terms and conditions as
they may deem convenient, provided they are
not contrary to law, morals, good customs,
public order, or public policy.
18. Contacts must bind both contracting parties; TRUE. Principle of mutuality?
their validity or compliance cannot be left to the
will of one of them.
19. Contracts take effect only between the …FALSE?
contracting parties.
…their heirs and assigns, unless the
rights are intransmissible by nature,
stipulation or law.
20. Consensual contracts are not perfected until the FALSE. This is characteristic of a
delivery of the object of the obligation. REAL Contract
21. Real contracts are perfected by mere consent. FALSE. Consensual contracts
22. An offer becomes ineffective upon the death, TRUE
civil interdiction, insanity, or insolvency of either
party before acceptance is conveyed.
23. When the offer has allowed the offeree a certain Suggested answer: TRUE
period to accept , the offer may be withdrawn at
any time before acceptance, except when the FALSE. By communicating such
option is founded upon a consideration, as withdrawal
something paid or promised.
24. Acceptance made by letter or telegram does not TRUE
bind the offerer except from the time it came to
his knowledge. The contract, in such a case, is
presumed to have been entered into in the place
where the offer was made.
25. When the offerer has allowed the offeree a TRUE
certain period to accept, the offer may be
withdrawn at any time before acceptance by
communicating such withdrawal, except when
the option is found upon a consideration as
something paid or promised.
26. Mutual promise to marry if orally entered into is FALSE. Unless to be performed for
unenforceable. more than one year
27. The action for annulment on the ground of fraud FALSE. Four years from the
shall be brought within four (4) years from the DISCOVERY of fraud or mistake.
time of the perfection of contract.
28. Misrepresentation made is good faith is not TRUE
fraudulent but may constitute error.
29. In order that fraud may make a contract TRUE
voidable, it should be serious and should not
have been employed by both contracting It must be the reason why the other
parties. Incidental fraud only obliges the party entered into the contract.
person employing it to pay damages.
1170. fraud in the performance of an
obligation warrants damages
30. If one party was mistaken and the other acted REFORMATION IS CORRECT
fraudulently or in such a way that the instrument ACTION, FALSE
does not show their true intention, the former
may ask for the annulment of the instrument.
31. The interpretation of obscure words or TRUE
stipulations in a contract shall not favor the party
who caused the obscurity.
32. Advertisement for bidders are simply invitations TRUE
to make proposals, and the advertiser is not
 bound to accept the highest or lowest bidder,
unless the contrary appears.
33. Contracts entered into during a lucid interval are TRUE. Binding meaning valid? Yes.
valid. Contracts agreed to in a state of Because they are voidable, i.e. valid
drunkenness or during a hypnotic spell are until annulled.
binding.
34. In order that mistake may invalidate consent, it TRUE
should refer to the substance of the thing which
is the object of the contract, or to those
conditions which have principally moved one or
both parties to enter into the contract.
35. A threat to enforce one’s claim through TRUE
competent authority, if the claim is just or legal,
does not vitiate consent.
36. Violence or intimidation shall not annul be FALSE. It shall annul, even though
obligation, if it was employed by a third person made by person not a party to the
who did not take part in the contract. contract
37. Failure to disclose facts, when there is a duty to TRUE
reveal them, as when the parties are bound by
confidential relations, constitutes fraud.
38. A mere expression of an opinion does not signify TRUE
fraud, unless made by an expert and the other
party has relied on the former’s special
knowledge.
39. Contracts take effect only between the parties, TRUE
their assigns and heirs, except in cases where
the rights and obligations arising from the
contract are not transmissible by their nature, or
by stipulation or by provision of law. The heir is
not liable beyond the value of the property her
received from the decedent.
40. If one or both debts are voidable, the same may TRUE. VALID UNTIL ANNULLED
be compensated provided they are not yet
avoided.
41. An agreement by its term that it be performed TRUE. Statute of Frauds only apply
within a year from the making thereof is when it is to be performed for more
enforceable even if entered into orally. than a year
42. An offer made through an agent is TRUE. As long as the acceptance
perfected from the time acceptance is of the principal is absolute
communicated to the principal.
43. If the cause is not stated in the contract, it is FALSE. It is presumed valid and
presumed that it is unlawful. existing
44. When the real agreement of the parties stated FALSE. There is nothing to reform if
in a contract is void, the parties can ask for the real agreement is void
reformation of the instruments.
45. By provision of the law on contracts, where the Apparently this refers to 1358, which
amount involved in the contract exceeds P500, only requires a public instrument, or
it must appear in writing or in public instrument. that the contract be in writing, FOR
A contracted a loan of P5,000 from B which is CONVENIENCE. This does not bar
not reduced in public instrument or writing. B the validity of the contract, which B
cannot recover the loan because the contract is may have the contract be in writing.
not valid.
FALSE
46. In the case of an illegal contract where there is FALSE. They will both be prosecuted
a criminal offense, the parties cannot be nonetheless.
prosecuted if they are both in pari-delicto.
47. Persons who are capable cannot allege the TRUE.
incapacity of those with whom they contracted.
48. The action for rescission is subsidiary; it cannot TRUE. In contrast to annulment
be instituted except when there is no other legal
 means to obtain reparation for damages
suffered.
49. Void contracts cannot be retified. Neither can TRUE
the right to set up the defense of illegality be
waived.
50. Delivery of the subject matter is necessary to the False. It is a consensual contract, but
perfection of the contract of sales. ownership only passes by delivery,
actual or constructive
51. Contracts entered into during a lucid interval are VALID. FALSE
voidable.
52. There is intimidation when in order to wrest FALSE. This is violence
consent, serious or irresistible force is employed.
53. Misrepresentation made in good faith is not TRUE
fraudulent but may constitute error.
54. Cause is the essential or more proximate TRUE?
purpose which the parties have in view of
entering into the contract.
55. Contracts shall be obligatory, in whatever form TRUE. For solemn or formal
they may have been entered into, provided all contracts
the essential requisites for their validity are
present.
56. When, there having been a meeting of the minds TRUE
of the parties to a contract, their true intention
is not expressed by reason of mistake, fraud,
inequitable conduct or accident, one of the
parties may ask for the reformation of the
instrument.
57. Qualified acceptance is considered counter- TRUE, which effects no meeting of
offer. the minds
58. Consent is the manifestation of the meeting of TRUE
the offer and the acceptance upon the thing and
the cause of the contract.
59. Acceptance made by letter or telegram does not TRUE
bind the offerer except from the time it came to
his knowledge.
60. Contracts agreed to in a state of drunkenness or TRUE. ALTHOUGH VOIDABLE, VALID
during a hypnotic spell are valid. UNTIL ANNULLED
61. Dolo causante shall make a contract voidable. TRUE
62. Dolo incidente only obliges the person TRUE
employing it to pay damages.

OBLICON MULTIPLE CHOICE

1. These persons are bound by contracts: D

a. Contracting parties
b. Assigns or Assign
c. Heirs
d. All of them
2. Who is liable for the loss of the subject matter D
by fortuitous event?
a. Creditor
b. Debtor
c. Both creditor and debtor
d. None of them
3. Contract that is made for a valuable A
consideration is:
a. Onerous
b. Gratuitous
c. Onerous and gratuitous
d. None of the them
4. A intimidated B to marry A’s daughter. After a B
year, B would like to file action for annulment but
could not do so because A was around to
intimidate him. The marriage contract is:
a. Resicissible
b. Voidable
c. Void
d. unenforceable
5. The following, except one, are the characteristics A
of void or inexistent contract. Which is the
exception?
a. The defense of illegality of the contract is
available to third persons whose interests
are not directly 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.
6. Example 1: G, guardian of W, sold W’s house D
valued at P50,000 for P37,500 or a lesion by one-
fourth of the value Even though there is lesion in no. 2,
this is not one of the contracts listed
Example 2: S sold his house valued at P50,000 for rescissible by the code.
only P10,000 because S did not know the true value
of the house.
a. Both contracts are rescissible.
b. Only no. 1 is rescissible.
c. No. 2 is voidable because there is an
error or mistake.
d. Both contracts are valid and enforceable.
7. When there is concurrence of offer and C
acceptance, there is:
a. Payment
b. Revocation
c. Consent
d. None of the above
8. Essential requisites of a contract: D
a. Consent
b. Cause
c. Subject
d. All of them
9. A contract where both parties are incapable of C
giving consent is:
a. Void
b. Voidable
c. Unenforceable
d. rescissible
10. the stage of “conception” of a contract is: C
a. When the contract is fully executed.
b. When the parties come to an agreement.1)
Preparation: Conception or
c. When negotiations are in progress. generation
d. When there is a meeting of the parties’2)
Perfection (birth)
minds. 3)
Consummation (death or
termination)
11. In order that fraud may make a contract C
voidable,
a. It may be incidental but should have
been employed by both parties.
 b. It should be serious and the parties must
be in pari delicto.
c. It should be serious and should not have
been employed by both contracting
parties.
d. It may be incidental but both parties
should not be in pari delicto.
12. Simulation of Contract – Absolute or relative. C
Relative when:
a. Parties are not bound at all.
b. The contract is void.
c. The parties conceal their true agreement.
d. None of the above.
13. Mr. Esguerra, a former government employee, C
suffered from severe paranoia and was confined
in the mental hospital in 2001. After his release, Because his incapacity did not end?
he was placed under the guardianship of his wife
to enable him to get his retirement pay. In 2004 Or D, because by becoming a
he became a mining prospector and sold the mining prospector he had
mining claims. In 2007, he sued to annul the become sane?
sale claiming that he was mentally incapacitated
at the time of sale. The sale in question was:
a. Illegal
b. Void
c. Voidable
d. valid
14. Which of the following contracts is enforceable
even if not executed in writing? A. MUST BE OF REAL PROPERTY TO
a. Lease of personal property for 2 years. BE REQUIRED TO BE IN WRITING
b. An agreement for the sale of
immovables. E
c. Lease of immovables for a period longer
that one year. Or B, because immoveables might
d. A representation as to the credit of a third not refer to real property?
person.
e. None of the above.
15. A contract where one of the parties is incapabale B
of giving consent is:
a. Resicissible
b. Voidable
c. Void
d. Unenforceable
e. None of the above.
16. In three of the following defective contracts, C, sale itself is void.
ratification cleanses the defects. Which is the
exception?
a. Both parties are incapable of giving
consent.
b. Sale of immovable property or interest
orally entered into.
c. Sale of a piece of land thru an agent, the
authority is oral.
d. Contracts entered into by a person who
has been given no authority.
17. In a contract, as written, D promises to pay C A
P10,000 on September 15, 2012. The
consideration received by D is not stated in the
contract.
a. The contract is valid because the cause is
always presumed to exist.
 b. The contract is valid so long as it is in
writing.
c. The contract is valid because cause is not
essential to a contract.
d. The contract is void because the cause is
not stated.
18. S entered into a contract with B by threatening B because the threat is unjust and
B that if B does not agree to make the contract, not legal?
S will publish defamatory matter concerning B’s
wife.
a. The contract is valid because the
defamatory matter to be published does
not relate to B, the contracting party.
b. The contract is voidable because such
publication when carried out whether
true or not will cause a serious harm to B
and his wife.
c. The contract is unenforceable but B is
entitled to damages the moment the
publication is made.
d. Contract is void.
19. Example no. 1: D owes C P10,000 due onA. In no. 2 both debts are valid until
December 25. C owes D P6,000 due on annulled, thus legal compensation
December 25. D’s obligation is guaranteed by G. may take place

Example no. 2: D owes C P10,000 payable on D

December 25. Later, D, through intimidation, was
able to make C sign a promissory note stating that C
is indebted to D for the same amount. In here, D
cannot be required to pay C P10,000 because he (D)
can set up compensation against C.
a. Both examples are true.
b. Both are false.
c. Only no. 1 is true; No. 2 is false.
d. Only no. 2 is true; No. 2 is false.
20. Valid until annulled unless there has been a C
ratification:
a. Rescissible contract.
b. Inexistent contract.
c. Voidable contract.
d. None of the above.
21. Contracts that cannot be sued upon unless B
ratified:
a. Voidable
b. Unenforceable
c. Rescissible
d. None of the above
22. Which of the following contract is voidable? C
a. Those whose object is outside the
commerce of men.
b. Those whose are absolutely fictitious.
c. Those where one of the parties is
incapacitated.
d. Those which contemplate an impossible
service.
23. The duty not to recover what has voluntarily A
been paid, although payment was no longer
required:
a. Natural obligation
b. Moral obligation
c. Civil obligation
 d. None of the above
24. Which of the following contacts is voidable? C
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 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.
25. Which of the following contract is rescissible?
a. Those where one of the parties is C
incapable of giving consent to a contract.
b. Those where both parties are incapable
of giving consent to a contract.
c. Those which are entered into by
guardians whenever the wards whom
they represent suffer a lesion of more
than ¼ of the value of the object of the
contract.
d. Those which are absolutely simulated or
fictitious.
26. Rescission of contract can take place in this case: B
a. When the things which are the object of
the contract are legally in the possession
of third persons who acted in good faith.
b. When he who demands rescission can
return whatever he may be obliged to
restore.
c. When the party seeking resolution can
perform only as to part and rescind as to
remainder.
d. When the seller cannot return the
installments paid to him by the buyer.
27. L entered into a contract of lease with X. T, the D. the proper remedy is reformation
clerk of L, typed the document. Due to T’s of the instrument
negligence, the document made was that of
sales instead of lease.
a. The remedy is annulment.
b. Parties may go to court for interpretation.
c. Parties may enforce their right because it
is enforceable.
d. None of the above.
28. S owns an oil painting. Being in need of money, D
S sold the painting to B for P1,000. After the
sale, S 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 annul the contract on ground of
fraud.
c. S may annul the contract on ground of
error.
d. B is entitled to the benefit of the contract
because it is valid and binding.
29. G was appointed guardian of S, the latter being D. SALE BY A MINOR!
16 years old. S sold his parcel of land in writing
to B valued at P100,000 for P75,000, suffering
 lesion by ¼ of the value. What is the status of
the contract?
a. Rescissible
b. Unenforceable
c. Enforceable
d. voidable
30. A appoints B to sell his land. 1 VOID
2 VALID
Example No. 1: If the authority of B is oral and B
sells the land in writing, the sale is valid. A

Example No. 2: If the authority of B is in writing and

B sells the land orally, the sale is valid. Which of the
following is correct?
a. First example is false but second example
is true.
b. Both examples are true.
c. Both examples are false.
d. First example is true but second example
is false.
31. Three of the following contracts are void. Which C
is the exception?
a. Sale of animal suffering from contagious
disease.
b. Contract where the cause is immoral.
c. Relatively simulated contract.
d. Will pay you P10,000 “if I like”.
32. D forced C to lend him P10,000. The promissory D
note is in writing.
a. The contract is rescissible because the d
contract is fraudulent.
b. The contract is void.
c. C cannot demand payment from D
because the contract is unenforceable.
d. Contract remains to be valid.
33. The stipulation in a contract to the effect that the C
debtor should remain as a servant in the house
and in the service of her creditor so long as she
had not paid her debt is void because it is:
a. Contrary to good custom.
b. Contrary to public policy.
c. Contrary to law and morality.
d. None of the above.
34. X, after the death of his father, sold his C
inheritance though its amount has not yet been
determined to B, for a consideration of P50,000.
a. The contract is valid only if the
inheritance values at least equal or more
than P50,000.
b. The contract is rescissible.
c. The contract is valid even though nothing
remains of her inheritance to be turned
over to B.
d. Contract is void, future inheritance
cannot be the object of sale.
35. One of the stipulations contained in the contract D
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 employer’s 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.
36. Which of the following is not a requisite for the D. except in real contracts
validity of a contract?
a. Consent.
b. Object.
c. Cause or consideration.
d. Delivery of the thing.
e. None of the above.
37. Before acceptance is conveyed, an offer E
becomes ineffective upon:
a. Death.
b. Civil interdiction.
c. Insanity.
d. Insolvency of either party.
e. All of the above.
38. Example 1: S sold to B in a private instrument D. both contracts are valid, (2) the
his land. Later, B wanted to have the sale sale is valid, no unenforceable
registered, but registration requires a public because it is already consummated,
instrument. In here, B may compel S to execute no longer executory
the needed public instrument.

Example 2: S sold to B orally his specific land. After

B paid S the price of the sale, he wanted 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.
b. Only No.1 is true.
c. Only No.2 is true.
d. Both examples are true.
39. X alleged that Y promised to give X one hectare C the statute of frauds requires sale
of land. This is in consideration of X’s meritorious of real property, or interest therein,
service to Y. Y pleads in defense that since the be in writing…
promise was not writing, it is unenforceable
under the Statue of Frauds. Decide.
a. The promise is unenforceable because it
is not in writing.
b. The Statue of Frauds is applied because
X has rendered services already.
c. The Statue of Frauds is inapplicable here,
because the promise to give the land is
not a sale of real property.
d. The Statue of Frauds can apply to
partially executed contract.
40. An incidental element of a contract: B
 a. Implied warranty in sale.
b. Payment of interest in a loan.
c. Delivery of the object in contract of
pledge.
d. All of the above.
41. Statue of Frauds is applicable to: C
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 making thereof.
d. All of the above.
42. By provision of law, which of the following E. a, b, c requires a public
contracts is not required to appear in a public instrument only for CONVENIENCE,
document? d under the statute of frauds
a. Acts and contracts which have for their requires an agreement to sell
object the creation, transmission, immoveable property, for all we
modification or extinguishment of real know, the sale may have already
rights over immovable property. been executed
b. The cession, repudiation or renunciation
of hereditary rights. D
c. The power to administer property.
d. Sale of immovable property.
e. None of the above.
43. Which of the following instruments is not subject D
to reformation?
a. Simple donations inter vivos wherein no
condition is imposed.
b. Wills.
c. When the real agreement is void.
d. All of the above.
44. Which is the most defective contract? D
a. Rescissible contract.
b. Voidable contract.
c. Unenforceable contract.
d. Void contract.
45. Which of the following may not be made the D
object of a contract?
a. All things which are not outside the
commerce of men.
b. All rights which are transmissible.
c. All services which are not contrary to law.
d. Impossible things or services.
e. None of the above.
46. An obligation which cannot be enforced by court B
action, but which is binding on the party who
makes it in conscience and according to natural
justice is called:
a. Civil obligation.
b. Natural obligation.
c. Pure obligation.
d. Simple obligation.
47. D is indebted to C in the sum of P10,000. For the C. badges of fraud
purposes of avoiding the claims of C, D donated B rescissible if C has no other
all his properties worth the same amount to X. means?
a. The contract is absolutely simulated.
b. The contract is rescissible.
c. The contract is merely voidable.
d. The contract is void.
48. In three of the following, the transaction is void. A
Which is the exception?
a. Oral contract of partnership the capital is
P3,000 or more.
b. Contracts in writing contemplating
impossible services.
c. Authority of the agent orally made in sale
of immovable property.
d. Oral contract of partnership whenever
immovable property is contributed.
49. This kind of defective contract refers to that C
contract which is validly agreed upon because all
the essential elements exist, 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 Inexistent Contract.
c. Rescissible Contract.
d. Unenforceable Contract.
50. S and B orally agreed that S would sell and B B
would 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.
51. A sold his land to B. Although the sale was made A
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 return the price
because the contract is not enforceable.
c. B may only sue A to return the price
because no one may enrich himself at the
expense of another.
d. B may occupy and use A’s land as a buyer
in good faith.
52. Contract which has no effect at all and cannot be B
ratified is a/an:
a. Unenforceable contract.
b. Void contract.
c. Voidable.
d. All of them.
53. If mistake, fraud, inequitable conduct, or C
accident has prevented a meeting of the minds
of the parties to contract, the proper remedy is:
a. Sue for specific performance of the
contract.
b. Ratify the contract.
c. Annulment of the contract.
d. Reformation of the contract.
54. S, a minor, owns a specific property valued at A
P50,000. B, capacitated, by means of fraud
induced S to sell his property to him (B) for
P100,000 which S did so. The contract is in
writing.
a. The contract is binding from the start.
b. The contract remains unenforceable
because if falls under the Statue of
Frauds.
c. The contract is rescissible because the
ward suffered lesion by more than one-
fourth of the value.
d. The contract is void.
55. In order that a stipulation in favor of a third D
person in a contract would be valid and binding
upon parties thereto, three of the requisites are
mentioned in the following enumeration. Which
among them is not requisite?
a. There must be a stipulation in favor of a
third person.
b. The contracting parties must have clearly
and deliberately conferred a favor upon
that third person.
c. The third person communicated his
acceptance to the obligor before its
revocation.
d. That there must be an existing agency
between either of the contracting parties
and the third person.
56. D is indebted to C for P10,000. For the A
purpose of defrauding C, D sold his only
parcel of land to X valued at P10,000. X
had no knowledge of the intention of D.
a. The contract between D and X is binding.
b. The contract is voidable because D is in
bad faith.
c. The right of C is to rescind the contract
because the transaction is fraudulent.
d. The contract between D and X is
rescissible.
57. D owes C P500. However, C’s right has already D
prescribed. Notwithstanding the knowledge of
this fact, D paid the amount. Realizing this
mistake, D wants to recover the amount he paid.
a. D can be made to recover on ground of
mistake.
b. D can be made to recover on the ground
that his obligation is not legally
enforceable.
c. D can be made to recover because this
will enrich C at the expense of D.
d. D cannot recover.
58. A obtained a loan from B for P1,500 with interest C
at 14% per annum, the payment of which was
secured by guarantor C. After maturity of the
loan, D without the knowledge of A paid B,
P1,400 and thereupon B signed a receipt and
gave it to D, of this tenor. “Received from D
P1,400 in full payment of A’s obligation in may
favor”. (Sgd.) B.
 a. D can recover from A P1,500 because the
whole obligation of A to B has been
extinguished.
b. D can recover from A P1,500 because the
balance of P100 is considered
extinguished by partial remission.
c. D can recover from A P1,400 because
that was presumably the extent to which
A was benefited.
d. D cannot recover from A because he paid
without the knowledge of A.
59. The duty not to recover what has voluntarily A
been paid although payment was no longer
required.
a. Natural obligation
b. Moral obligation
c. Civil obligation
d. None of the above.
60. Contract with a false cause is B
a. Voidable.
b. Void.
c. Unenforceable.
d. All of the above.
61. Which of the following contracts is unenforceable D
unless ratified?
a. Those entered into in the name of
another person by one who has been
given no authority or legal
representation, or who has acted beyond
his powers.
b. Contracts infringing the Statute of
Frauds.
c. Those where both parties are incapable
of giving consent to a contract.
d. All of the above
62. Which of the following contracts is required to be E
in writing to be enforceable?
a. An agreement that by its terms is not to
be performed within a year from the
making thereof.
b. A special promise to answer for the debt,
default or miscarriage of another.
c. An agreement made is consideration of
marriage, other than a mutual promise to
marry.
d. Sales of goods, chattels or things in
action at a price not less than P500.
e. All of the above.
63. Example no. 1: D obliged himself to give C B
P10,000. However, the day before the obligation
falls due, D’s apartment was completely gutted
by accidental fire. There is no question that the
money was also razed by fire. The obligation of
D is totally extinguished because of fortuitous
event.

Example no. 2: D obliged himself to pay C P10,000

with 6% interest. On the due date, D tendered
P10,000 with a promise to pay the P600 interest the
day after. If C refused to accept, he can be
compelled to do so because the obligation is
divisible.
a. Both are true.
b. Both are false.
c. No. 1 is true; No. 2 is false.
d. No. 1 is false; No. 2 is true.
64. Example no. 1: D for P10,000 mortgaged B
his land to C. C, instead of a deed of
mortgage, executed a deed of sale and let
D sign his name. D’s right to go to court
and ask for annulment.

Example no. 2: D obliged himself to give

object no. 1 or object no. 2 to C. In here, both
objects are due.
a. Both are true.
b. Both are false.
c. No. 1 is true; No. 2 is false.
d. No. 1 is false; No. 2 is true.
65. Consent is manifested by the meeting of D
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.
66. On July 15, 2012, X entered into a contract with B
Y. On February 10, 2013, X discovered that
fraud was committed at the time he entered into
the contract, a fraud that vitiated his consent.
The action for annulment shall be brought:
a. Within three years from the time of the
fraud.
b. Within four years from February 10,
2013.
c. Within four years from he time A entered
into the contract.
d. On February 10, 2013.
67. S was forced by X to sign a contract with B for A
the sale of a specific property for P10,000. C, a C may ask for the annulment of the
creditor of S, is prejudiced by the contract. What contract, because his rights are
can S do? prejudiced, even though he is not
a. S may ask for annulment of the contract. principally or subsidiarily bound by
b. S may ask for rescission of the contract. the contract
c. S may ask C to declare the contract
avoided.
d. S may ask for reformation of the
contract.
68. Example no. 1: The husband, by intimidation, B, the sale between the husband
was able to obtain the consent of his wife, with and the wife is VOID
regard to the sale of a piece of land belonging to
the wife for P1 million. The contract is voidable
because there was intimidation.

Example No. 2: In the above example, the right of

the wife is to go to court and file a motion for
annulment within four(4) years from the time
intimidation ceased.
 a. Both are true.
b. Both are false.
c. No. 1 is true; No. 2 is false.
d. No. 1 is false; No.2 is true.
69. A contract where both parties are incapable of C
giving consent is:
a. Rescissible.
b. Voidable.
c. Unenforceable.
d. Void.
e. None of the above.
70. Three of the following contracts are void. Which D
is the exception?
a. Those whose cause, object or purpose is
contrary to law, morals, good customs,
public order or public policy.
b. Those which are absolutely simulated or
fictitious.
c. Those which cause or object did not exist
at the time of the transaction.
d. Those where both parties are incapable
of giving consent to a contract.
71. Which of the following contracts is void? E
a. Those which object is outside the
commerce of men.
b. Those which contemplate an impossible
service.
c. Those where the intention of the parties
relative to the principal object of the
contract cannot be ascertained.
d. Those expressly prohibited or declared
void by law.
e. All of the above.
72. S makes an offer to B on January 1, 2012. B C
makes known his acceptance through a letter
sent on January 2, and received by S on January
10. Meantime, on January 5, S becomes insane.
a. The contract is voidable because one
party is insane.
b. There is already a meeting of minds, the
contract is perfected.
c. The contract is not binding because there
is no meeting of minds.
d. None of the above.
73. In the preceding number, if S is perfectly sane C
but only an unemancipated minor at the time the
acceptance is communicated to him then,
a. There is no meeting of minds between
the parties, unless ratified by the
guardian of S.
b. The contract is not binding because one
party is incapacitated.
c. The contract is binding between the
parties.
d. None of the above.
74. D owes C P10,000. But the debt soon C, X cannot recover from D, but he
prescribed. Later X, against the consent of D, can recover from C. Undue
pays C P10,000. payment. If D pays C, however, D
a. X can recover from D P10,000 because has no right to recover
the latter was enriched at the expense of
X.
 b. X has no right.
c. X cannot recover from D what he pays C.
d. Both D and C are liable to X.
75. In a contract of sale executed by S and B, it D. There is no meeting of the minds
appears S sold his motor vehicle to B and B here
bought it for P10,000. It turned out however, S
has three motor vehicles. Galant valued at
P80,000: Hi-Ace van valued at P70,000; and a
Jeep valued at P60,000. Which of the following
is correct?
a. The contract shall be reformed because
there was mistake.
b. The parties can ask for interpretation
because the word motor vehicle is
ambiguous.
c. The parties can ask for annulment of the
contract.
d. There is no contract.
76. Which is the least defective contract? A
a. Rescissible contract.
b. Voidable contract.
c. Unenforceable contract.
d. Void contract.
77. Which of the following contract is not rescissible? C
a. Those which are entered into by
guardians whenever the wards whom
they represent suffer a lesion of more
than ¼ of the value of the object of the
contract.
b. Those executed in representation of an
absentee, if the latter suffer a lesion of
more than ¼ of the value of the object
of the contract.
c. Those where one of the parties is
incapable of giving consent to a contract.
d. Those undertaken in fraud of creditors
when the latter cannot in any other
manner collect the claims due them.
e. Those which refer to things under
litigation if they have been entered into
by the defendant without the knowledge
and approval of the litigants or of
competent judicial authority.
78. X Company bought out a competitor, Y, with a B
stipulation that Y should thereafter not engage
in any business in the Philippines without the
consent of X Company.
a. The stipulation is not valid because the
parties, as a rule, have no absolute
freedom to stipulate terms and
conditions in a contract.
b. The stipulation is not valid because this is
against public policy.
c. The stipulation is valid, only it will create
a monopoly in trade.
d. The stipulation if ratified is valid.
79. Reluctantly and against her good sense and D
judgment, Rosemarie entered into a contract for
the delivery of 5 tables to Corazon for a price of
P15,000. Contact is:
a. void
 b. Voidable
c. Unenforceable
d. Valid
80. Which of the following contact is enforceable A
even if not reduced in writing?
a. Contract executed by one of the parties
in a contract.
b. Representation as to the credit of a third
person.
c. Lease of immovable for a period longer
that one year
d. Agreement for the sale of immovable
property.
81. Which of the following contract is not valid? D
a. Mutual promise to marry entered into
orally.
b. Sale of immovable property orally
entered into.
c. One of the parties in a contract is
incapable of giving consent.
d. None of the above.