lOMoARcPSD|25159190 Contracts Bachelor of Science in Accountancy (Southwestern University PHINMA) Studocu is not sponsored or endorsed by any college or university Downloaded by greenpai lui (greenpai@clevs.ml) lOMoARcPSD|25159190 REVIEWER IN LAW OF CONTRACTS V. Contracts - General Provisions 1. The span of time wherein a person is in possession, temporarily of all of his mental faculties. a. Option Period c. Lucid interval b. Prescriptive Period d. Reglementary period 2. The following objects may be considered an object of a contract, except. a. Future inheritance c. Transmissible rights b. Hereditary rights d. Future things 3. 4. I. In disimulados, the parties have an agreement which they conceal under the guise another contract II. In simulados, there is color of a contract, without any substance thereof, the parties not having any intention to be bound. Which of the following statements is incorrect? a. Both I and II c. I only b. Neither I nor II d. II only Which of the following statements concerning the cause of the contract is incorrect? a. In onerous contracts, the cause is the prestation promised by the parties. b. In remuneratory contracts, the cause is the service which is remunerated. c. In gratuitous contract, the cause is the mere generosity of the beneficiary. d. In accessory contracts, the cause is identical with cause of principal contract. 5. I. There is violence when in order to wrest consent, serious or irresistible force is employed. II. There is intimidation when one of the contracting parties is compelled by a reasonable and well-grounded fear of an imminent and grave evil upon his person or property, or upon the person or property of his spouse, descendants or ascendants, to give his consent. Which of the following statements is false? a. Both I and II b. Neither I nor II c. d. I only II only 6. A contract in which one of the parties prepares a ready-made contract, which other party may only affix his signature? a) Contract is valid b) Contract is void c) Contract is defective d) Contract is subject for reformation e) None of the above 7. The following statements concerning stipulation pour autrui are incorrect, except a) It has binding effect in itself before its acceptance by the party favored. b) Before acceptance by the third person, the contracting parties cannot modify. c) A mere incidental benefit is outside the doctrine of stipulation pour autrui d) It will exists even if the contract is considered null and void. 8. I. There is fraud when a person takes improper advantage of his power over the will of another depriving the latter of a reasonable freedom of choice. Downloaded by greenpai lui (greenpai@clevs.ml) lOMoARcPSD|25159190 REVIEWER IN LAW OF CONTRACTS II. There is a undue influence when, through insidious words or machinations of one of the contract which, wthout them, he would not have agreed to. Which of the following statements is correct. a. Both I and II c. I only b. Neither I nor II d. II only 9. I. An expert opinion is still within the context of a mere expression of opinion. II. Misrepresentation made in bad faith is not fraudulent but may constitute error. Which of the following statements is false? a. Both I and II c. I only b. Neither I nor II d. II only 10. The following statements pertain to the cause of a contract. Which statement refers to motive? a) It is the essential reason of a contract b) It is always known to the contracting parties c) It is illegality does not affect the validity of the contract d) There will be no contract without it. 11. Here, the parties had a meeting of minds as to the object, cause or consideration and other terms and conditions of the contract. a) Negotiation c) Birth b) Consummation d) Conception 12. A conditional acceptance is a counter-offer which extinguishes the a) Contract c) Acceptance b) Offer d) Consent 13. Which must appear in a writing in order to insure its efficacy but not for its validity? a) Contract of antichresis b) Donation of personal property below P500 c) Chattel mortgage d) Both a and c 14. Which of the following shall not make a contract defective? a) Mistake as to the subject’s qualifications b) Mistake to the substance of the object c) Mistake that can be corrected d) Mistake to the principal conditions 15. Which of the following characteristics of contracts pertains to autonomy of contract? a) Contracts should not be contract to law b) Contracts are generally perfected by mere consent except in case real contracts and formal or solemn contracts. c) Contracts should not contain doubt or ambiguity to avoid confusion and misunderstanding in the performance of contract. d) Contracting parties may establish such terms, and conditions as they may deem convenient. 16. As an object of a contract, services shall not be contrary to, except a) Law c) Good customs b) Morals d) Public opinion Downloaded by greenpai lui (greenpai@clevs.ml) lOMoARcPSD|25159190 REVIEWER IN LAW OF CONTRACTS 17. In an “invitation” to bid, B proposes the following: “I will buy the property for P100,000 and if the bid of any other offer or shall be considered the best in terms of amount and conditions, I am equal to the offer” a) The offer is speculative, because it cannot be considered against another offer which is certain b) The offer is considered a counter offer c) This is a continuing offer which is very certain d) The advertiser is not bound to accept the highest bidder. 18. It refers to the essential reason which impels the contracting parties to enter into it and which explains and justifies the creation of the obligation through such contract. a) Cause of contract c) Object of contract b) Form of contract d) Consent of contract 19. The requisites of a valid acceptance generally includes, except a) It must be absolute b) It must be in writing c) It must be not conditional d) It does not need to be in public instrument 20. I. Principle of tolerated fraud states that dealer’s talk, the kind of exaggerations in advertisement the public is familiar with, are not in itself fraudulent. II. Caveat emptor means seller beware. a) Both I and II c) I only b) Neither I nor II d) II only 21. Which must appear in a public document in order to insure its efficacy but not for its validity? a) Contract of agency to sell real property b) Renunciation of hereditary rights c) Stipulation limiting common carrier’s duty d) None of the above 22. The essential elements of contracts generally include, except a) Delivery c) Object b) Consent d) Consideration 23. X, bachelor Certified Public Accountant, inflicted physical injuries to Bibi Gandang Reyna. Upon learning this, Juan Reyna, the father of Bibi Gandang Reyna, was able to force X to marry her under pain of being sued in the Professional Regulatory Commission for revocation of his license. Which statement is correct? a) There was no defect, the marriage was perfectly valid. b) The marriage may be annulled on the ground of force or violence c) The marriage may be annulled on the ground of threat and intimidation d) The defective marriage may, however, be ratified. 24. The additional requisite of real contracts as compared to consensual contracts is. a) Execution c) Consideration b) Object d) Delivery 25. An object of a contract must, except a) Not be impossible b) Be determinate as to its kind Downloaded by greenpai lui (greenpai@clevs.ml) lOMoARcPSD|25159190 REVIEWER IN LAW OF CONTRACTS c) d) Be outside the commerce of men Not be contrary to law, morals, good customs, public order or public policy 26. R makes an offer to Andrew on January 10, 2021. Andrew makes known his acceptance in a letter sent January 12, 2021 and received by R on January 20, 2021. Meantime, on January 15, 2021, R became insolvent. a) There is already a meeting of minds, the contract is perfected b) The contract is voidable because one party is insolvent c) The contract is void the offer being ineffective d) The contract is voidable because one party is incapacitated. 27. I. Motive is equivalent to consent II. Consent should be known in contrast to motive. Which of the following statements . a) Both I and II b) Neither I nor II c) I only d) II only 28. These are which exist only when the contracting parties expressly stipulate for them a) Essential elements b) Accidental elements c) Natural elements d) All of the above 29. Which of the following is not a characteristics of a contract? a) Autonomy b) Mutuality c) Relativity d) Mandatory 30. I. Contracts with unlawful cause produce no effect whatever and are considered null and void Ii. Contracts with unlawful motive produce no effect whatever and are considered null and void Which of the following statements is incorrect? a) Both I and II c) I only b) Neither I nor II d) II only 31. It is the consideration given to the offeror for the privilege to buy or not to buy a) Contract c) Option money b) Option contract d) Earnest money 32. Principle of Relativity provides that contract may take effect between a) Stranger of the contract b) Subject’s assignee c) Heirs of the grandfather d) Third person 33. The following are the innominate contracts, except a) Do ut des c) Facio ut des b) Do ut facias d) Facio ut facias Downloaded by greenpai lui (greenpai@clevs.ml) lOMoARcPSD|25159190 REVIEWER IN LAW OF CONTRACTS 34. It is the thing, right or service which is the subject matter of the obligation, arising from the contract. It also refers to the conduct to be performed, and may consist of giving, doing or not doing a thing. a) Object certain b) Consent of the parties c) Execution required by law d) Cause which is established 35. The following are the requisites of an valid offer, except a) It must be indefinite b) It must be certain c) It must be complete d) It must be intentional 36. It refers to a meeting of minds between two persons whereby one binds himself, with respect to other, to give something or to render some service. It is one of the five sources of civil obligation. a) Obligation c) Right b) Contract d) Civil action 37. What is the effect when there is pari delicto? a) Annulment is a remedy for the defective contract b) Reformation is a remedy for the defective contract c) Damages is a remedy for the valid contract d) Fraud is mutually compensated for the valid contract 38. The person who can give consent to a contract, except a) Minor over 7-years old on a contract of deposit b) Deaf-mute signing a sales contract c) Wife donating a property to her husband d) Insane person during his lucid intervals 39. Formal or solemn contracts are perfect by a) Delivery of the object of a contract b) Mere consent by contracting parties c) Provisions of the law d) Execution of formalities required by law 40. The following are requisites of consent, except a) It must be free from vices b) Parties have full civil capacity c) It must be real d) It must be manifested in writing 41. Which must be registered in order to insure its efficacy but not for its validity? a) Contract of loan with interest b) Contract of partnership where real property contributed c) Sale or transfer of large cattle d) All of the above 42. An offer becomes ineffective when before the acceptance is conveyed either offeror a) Died c) Became deaf-mute b) Became insolvent d) Became insane Downloaded by greenpai lui (greenpai@clevs.ml) lOMoARcPSD|25159190 REVIEWER IN LAW OF CONTRACTS 43. Real accounts, such as contracts of deposit, of pledge, of loan or mutuum or commodatum are perfected by a) Mere consent by contracting parties b) Provisions of the law c) Delivery of the object of a contract d) Execution of formalities required by law 44. Which must appear in a public document in order to insure its efficacy but not for its validity? a) Donation of personal property below P5,000 b) Donation of personal property exceeding P5,000 c) Donation of real property d) Both b and c 45. In the Philippine jurisdiction, the theory to determine the moment of perfection of contract is a) Mailbox theory b) Cognitive theory c) Expedition theory d) Reception theory 46. Which of the following contracts best describes auto-contract? a) It is a contract which has been performed b) It is a contract that has not yet been performed c) It is a contract wherein one party has already prepared form of a contract, containing the stipulations he desires, and he simply asks the other party to agree to them if he wants to enter into the contract d) It is a contract wherein one person contracts with himself. 47. For a contract to be considered obligatory, it is not necessary that a) It is negotiated b) It is valid c) It is enforceable d) It is perfected 48. The additional requisites of solemn contracts as compared to consensual contracts is a) Object b) Delivery c) Execution d) Consideration 49. If there was an acceptance already, the offeror cannot just withdraw his offer unilaterally. If he unilaterally withdraws, a) Offeror will be liable for damages b) Offeree can ask for the reformation, c) Offeror may annul the contract d) Both b and c 50. The following instances will render an offer ineffective before acceptance in conveyed. Which one will not? When on of the parties a) Is civilly interdicated b) Becomes insolvent c) Becomes insane d) Is placed under a hypnotic spell Downloaded by greenpai lui (greenpai@clevs.ml) lOMoARcPSD|25159190 REVIEWER IN LAW OF CONTRACTS VI. QUIZ 6 1. Real contract, such as contracts of deposit, of pledge, of load or mutuum or commodatum are perfected by a) Mere consent by contracting parties b) Provisions of the law c) Delivery of the object of a contract d) Execution of formalities required by law 2. I. Those where one of the parties is capable of giving consent to a contract. II. Those where the consent is vitiated by mistake, violence, intimidation, undue influence fraud. Which will not render the contract annullable? a) All of the statements b) None of the statements c) Statements I only d) Statements II only 3. I. Loss of the object of the contract through fraud of the person who is entitled to annul the contract. II. If the minor is guilty of active mirepresentation of his age III. Ratification of the guardian of the ward who entered into the contract of sale IV. Lapse of the prescriptive period to annul Which are causes of the extinction of the action to annul? a) All of the statements b) None of the statements c) Statements I and II only d) Statements III and IV only 4. I. Ratification must be clear, unequivocal, and expressed. II. Knowledge of the voidable contract is a prerequisite to ratification III. The defect in consent must have ceased before the ratification is effected. Which of the statements are false? a) Statement I only b) Statement II only c) Statement III only d) None of the above 5. Formal or solemn contracts are perfect by a. Delivery of the object of a contract b. Mere consent by contracting parties c. Provisions of the law d. Execution of formalities required by law 6. The following are not true in interpreting a contract, except a) Interpretation of obscure words in a contract shall favor the party who caused the obscurity. b) Whenever the contract provides for payment of penalty in case of breach, it shall be interpreted liberally in favor of the awarding of penalty. c) Words which may have different significations shall be understood in that which is most in keeping with the nature and object of the contract. d) The usage or custom of the place cannot be included in the interpretation of the ambiguities of a contract, and shall fill the omissions of stipulations which are ordinarily established. Downloaded by greenpai lui (greenpai@clevs.ml) lOMoARcPSD|25159190 REVIEWER IN LAW OF CONTRACTS 7. Which of the following contracts best describes auto-contract? a. It is a contract which has been performed b. It is a contract that has not yet been performed c. It is a contract wherein one party has already prepared form of a contract, containing the stipulations he desires, and he simply asks the other party to agree to them if he wants to enter into the contract d. It is a contract wherein one person contracts with himself. 8. The representative of an absentee orally sold a bike of the latter at a price of P40,000 when its book value is P50,000. The buyer has already paid the price. Rule on the status of the contract. a) The contract is rescissible b) The contract is voidable c) The contract is unenforceable d) The contract is void e) The contract is valid 9. Written contract of sale of inheritance entered into by the heirs of a predecessor after his death. Rule on the status of the contract. a) The contract is rescissible b) The contract is voidable c) The contract is unenforceable d) The contract is void e) The contract is valid 10. A orally sold the cellphone of B, his brother, at a selling price of P1,000. Partial payment was made and was accepted by B. Rule on the status of the contract. a) The contract is rescissible b) The contract is voidable c) The contract is unenforceable d) The contract is void e) The contract is valid 11. G is the guardian of W (ward), G sells the property of W worth P20,000.00 for only P15,000.00. Rescission shall be a) None b) 1/8 of the value of damages c) 5,000 only d) Entire P15,000 12. Prescriptive period in reformation of instruments is a) 10 years from the date of the execution of the instrument b) 10 years from the date of the perfection of the contract c) 5 years from the date of the execution of the instrument d) 5 years from the date of the perfection of the contract 13. A 5-year old child orally entered into a contract of employment without permission from DOLE. Rule on the status of the contract. a) The contract is rescissible b) The contract is voidable c) The contract is unenforceable d) The contract is void e) The contract is valid Downloaded by greenpai lui (greenpai@clevs.ml) lOMoARcPSD|25159190 REVIEWER IN LAW OF CONTRACTS 14. A written contract of sale of a piece of land with a price of P500,000 between a demented and an insane person. Is the contract enforceable? a) Yes, because contract was in writing b) No, since the amount is more than P500 c) No, as the parties are both incapable to give consent d) No, for it involves transfer of real properties. 15. I. Those which are entered into by guardians whenever the wards whom they represented suffer lesion by more than one-fourth of the value of the things which are the object thereof. II. Those agreed upon in representation of absentees, if the latter suffer the lesion stated in the preceding number. III. Those undertaken in fraud of creditors when the latter cannot in any other manner collect the claims due them. IV. 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. V. All other contracts specially declared by law to be subject to rescission VI. Payments made in a state of insolvency for obligations to whose fulfillment the debtor could not be compelled at the time they were effected. Which will not render the contract rescissible? a) All of the statements b) None of the statements c) Statements V and VI only d) Statement VI only 16. An oral contract of sale of B's calculator at a price of P501 entered by A in B's name with authority from B. Rule on the status of the contract. a) The contract is rescissible. b) The contract is voidable. c) The contract is unenforceable. d) The contract is void. e) The contract is valid. 17. I. Defense of illegality of a void contract is available to third persons. II. Inexistent contracts cannot give rise to a valid contract. III. Void contracts can be ratified if both parties so stipulate. Which of the statements are false? a) Statement I only b) Statement II only c) Statement III only d) None of the above 18. An oral contract of lease of house and lot for a term of 2 years entered into between A and B. Rule on the status of the contract. a) he contract is rescissible. b) The contract is voidable. c) The contract is unenforceable. d) The contract is void. e) The contract is valid. 19. G is the guardian of W (ward), G sells the property of W worth P20,000.00 for only P15,000.00. Rescission shall be a) None b) 1/8 of the value of damages Downloaded by greenpai lui (greenpai@clevs.ml) lOMoARcPSD|25159190 REVIEWER IN LAW OF CONTRACTS c) 5,000 only d) Entire P15,000 20. They are also valid until annulled unless there has been ratification. In this contract, the defect is caused by vice of consent. a) Rescissible contracts b) Voidable contracts c) Unenforceable contracts d) Void and inexistent contracts 21. An oral contract of sale of house and lot for a term of 2 years entered into between A and B. Rule on the status of the contract. a) The contract is rescissible. b) The contract is voidable. c) The contract is unenforceable. d) The contract is void. e) The contract is valid. 22. When the intention is not expressed in the instrument purporting to embody the agreement, by reason of mistake, fraud, inequitable conduct or accident, what is the remedy of one of the parties? a) Annulment b) Damages c) Reformation d) Rescission 23. Written contract of sale of cellphone at a price of P50,000 entered by X and Y after Z pointed a gun to X’s wife in order for X to give consent. Rule on the status of the contract. a) The contract is rescissible. b) The contract is voidable. c) The contract is unenforceable. d) The contract is void. e) The contract is valid. 24. May a person who brought an action to enforce the instrument subsequently ask for its reformation? a) Yes, the remedies are available as successive rights b) Yes, the injuried party can never be estopped c) No, he shall be considered estopped. d) No, there has been an election as between consistent remedies. 25. X, a minor, sold in writing his accounting books worth P10,000 to Y, for P6.000. Rule on the status of the contract. a) The contract is rescissible. b) The contract is voidable. c) The contract is unenforceable. d) The contract is void. e) The contract is valid. 26. Which must appear in a public document in order to insure its efficacy but not for its validity? a) Contract of agency to sell real property b) Renunciation of hereditary rights c) Stipulation limiting common carrier’s duty d) None of the above Downloaded by greenpai lui (greenpai@clevs.ml) lOMoARcPSD|25159190 REVIEWER IN LAW OF CONTRACTS 27. I. The third person who received the property conveyed, if it is by onerous title, has been an accomplice in the fraud. II. The debtor has made a subsequent contract conveying a patrimonial benefit to a third person. III. There is another legal remedy available to the plaintiff. Which is false regarding accion pauliana? a) Statement I and II b) Statement I and III c) Statement II only d) Statement III only 28. An oral contract of lease of house and lot for a term of 2 years entered into between A and B. Rule on the status of the contract. a) The contract is rescissible. b) The contract is voidable. c) The contract is unenforceable. d) The contract is void. e) The contract is valid. 29. Contract of pledge entered in a private instrument with the description and date of the thing to be pledged but with delivery of the thing pledged. Rule on the status of the contract. a) The contract is rescissible. b) The contract is voidable. c) The contract is unenforceable. d) The contract is void. e) The contract is valid. 30. .They are valid because all the essential requisites of a contract exist but by reason of injury or damage to one of the parties or to third persons, such as creditors, the contract may be rescinded. a) Rescissible Contracts b) Voidable Contracts c) Unenforceable Contracts d) Void and Inexistent Contracts 31. What is the prescriptive period for an action to rescind? a) It does not prescribe. c) 6 years b) 4 years d) 10 year 32. G, the guardian of minor M, sold in writing the house and lot of M at a selling price of P7M when its book value is P10M. The sale is without prior approval of guardianship court. Rule on the status of the contract. a) The contract is rescissible. b) The contract is voidable. c) The contract is unenforceable. d) The contract is void. e) The contract is valid. 33. .It is an equitable remedy granted by law to the contracting parties and sometimes even to third persons in order to secure reparation of damages caused them by a valid contract, by means of the restoration of things to their condition prior to the celebration of said contract. a) Rescission c) Annulment b) Ratification d) Prescription Downloaded by greenpai lui (greenpai@clevs.ml) lOMoARcPSD|25159190 REVIEWER IN LAW OF CONTRACTS 34. Written contract of sale of cellphone at a price of P50,000 entered by X and Y after Z pointed a gun to X's wife in order for X to give consent. Rule on the status of the contract. a) The contract is rescissible. b) The contract is voidable. c) The contract is unenforceable. d) The contract is void. e) The contract is valid. 35. S sues B for the recovery of a parcel of land. If, during the pendency of the case, B sells the land to C without the approval of S or of the court, is the sale is rescissible? a) Yes, because the land is a thing under litigation. b) No, since C is a possessor in bad faith. c) No, this is an unenforceable contract. d) No, the contract of sale is valid. 36. It is the act or means by virtue of which, efficacy is given to a contract which suffers from a vice of curable nullity. a) Rescission c) Annulment b) Ratification d) Prescription 37. They cannot be sued upon or enforced unless they are ratified. a) Rescissible Contracts b) Voidable Contracts c) Unenforceable Contracts d) Void and Inexistent Contracts 38. Oral contract of lease of laptop for a period of 3 years entered into between an insane lessee and a perfectly capacitated lessor. Rule on the status of the contract. a) The contract is rescissible. b) The contract is voidable. c) The contract is unenforceable. d) The contract is void. e) The contract is valid. 39. Oral contract of sale of a cellphone with a price of P400 but delivery and payment will be made after 10 months. Rule on the status of the contract. a) The contract is rescissible. b) The contract is voidable. c) The contract is unenforceable. d) The contract is void. e) The contract is valid. 40. A is a judgment debtor in an action to collect a sum of money. A writ of attachment has been issued against A. The car of A is the first to be levied. A sold in writing his car at a selling price of P500,000 to B. Rule on the status of the contract. a) The contract is rescissible. b) The contract is voidable. c) The contract is unenforceable. d) The contract is void. e) The contract is valid. Downloaded by greenpai lui (greenpai@clevs.ml) lOMoARcPSD|25159190 REVIEWER IN LAW OF CONTRACTS 41. What is the prescriptive period for an action to annul? a) It does not prescribe b) 4 years c) 6 years d) 10 years 42. Oral contract of lease of laptop for a period of 3 years entered into between an insane lessee. during his lucid interval, and a perfectly capacitated lessor. Rule on the status of the contract. a) The contract is rescissible. b) The contract is voidable. c) The contract is unenforceable. d) The contract is void. e) The contract is valid. 43. .I. Contracts whose cause, object or purpose is contrary to law, morals, good customs, public order or public policy. II. Contracts expressly prohibited or declared void by law. Considering the difference between void from inexistent contracts, which is/are void contracts? a) All of the statements b) Statements I only c) Statement II only d) None of the above 44. When it is impossible to settle doubts by the rules established in the preceding numbers and the doubts refer to incidental circumstances of an onerous contract such as sale or lease, what shall be the interpretation of the contract. a) The doubt shall be settled in favor of the greatest reciprocity of interest b) The least transmission of rights and interest shall prevail c) The doubt shall be resolved in favor of the debtor d) The greatest transmission of rights and interest shall prevail. 45. An 18-year old student orally entered into a contract of service to be a prostitute. Rule on the status of the contract. a) The contract is rescissible. b) The contract is voidable. c) The contract is unenforceable. d) The contract is void. e) The contract is valid. 46. A, B and C entered into a contract partnership. They agreed not to include A in the profit sharing computation. Rule on the status of the contract. a) The contract is rescissible. b) The contract is voidable. c) The contract is unenforceable. d) The contract is void. e) The contract is valid. 47. An oral contract of guaranty. Rule on the status of the contract. a) The contract is rescissible. b) The contract is voidable. c) The contract is unenforceable. d) The contract is void. e) The contract is valid. Downloaded by greenpai lui (greenpai@clevs.ml) lOMoARcPSD|25159190 REVIEWER IN LAW OF CONTRACTS 48. X, the debtor and Z, the creditor, entered into a contract of loan secured by personal properties of X. To defraud Z. X sold in writing all his properties to Y at a price equivalent to its fair market value. Rule on the status of the contract. a) The contract is rescissible. b) The contract is voidable. c) The contract is unenforceable. d) The contract is void. e) The contract is valid. 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