Professional Documents
Culture Documents
Law on Contracts
1. A sent B a letter wherein the former offered to sell his car to the latter for Php 1M. B
signified his intention to buy the same. In As letter he gave B two weeks to raise the
amount. After one week, A raised the price to Php 1.5M. Can B compel A to accept
the Php 1M first offered by A and deliver to him the car?
a. Yes, since there was already offer and acceptance.
b. Yes, because A cannot change his offer without the consent of B.
c. Yes, because A cannot withdraw the offer within two weeks as he is under
estoppel.
d. No, because there was no acceptance yet of the offer.
2. A sold a parcel of land to B by word of mouth and delivered to the latter the Transfer
Certificate of Title of the land. Can B compel A to execute the deed of sale of the
land?
a. B cannot compel A to execute the deed of sale as the sale being oral is
unenforceable.
b. B cannot compel A because the sale is void being oral.
c. B can compel A because the contract is enforceable due to delivery of the TCT to
him.
d. B can compel A because the sale is merely voidable and therefore enforceable,
binding until annulled.
S1 is true, S2 is true.
S1 is true, S2 is false.
Both statements are false.
S1 is false and S2 is true.
S1 is false, S2 is true.
Both statements are true.
Both statements are false.
S1 is true, S2 is false.
6. Statement 1: Contract of lease of a parcel of land for a term of one year must be
written, otherwise, unenforceable.
Statement 2: Contract of sale of a parcel of land must be in public instrument,
otherwise, unenforceable.
a.
b.
c.
d.
S1 is false, S2 is true.
Both statements are true.
S1 is true, S2 is false.
Both statements are false.
7. A contract wherein both contracting parties are incapable of giving consent and yet
ratified by the guardian of either of the parties is:
a.
b.
c.
d.
Rescissible
Voidable
Unenforceable
Void
d. Failure to disclose facts when there is a duty to reveal them as when the parties
are bounded by confidential relations.
12. Statement 1: There is acceptance of the offer only after it has come to the
knowledge of the offeror.
Statement 2: Lesion or inadequacy of cause shall as a rule make a contract
defective.
a.
b.
c.
d.
13. Statement 1: If the cause is not stated in the contract, it is presumed that it does
not exist and therefore the contract is void.
Statement 2: In order that a contract may be voidable, there must be damage.
a.
b.
c.
d.
d. Estoppel
Those
Those
Those
Those
17. Contract which cannot be sued upon unless ratified, thus, it as if they have no effect
yet:
a.
b.
c.
d.
Voidable
Rescissible
Void
Unenforceable
19. A sold to B a genuine bottle of Fundador brandy. However, upon delivery, the former
substituted a fake. B now wants to annul the sale. Decide:
a.
b.
c.
d.
20. G was appointed as the guardian of M who owns a parcel of land valued at P1M. M
sold the land only for P.7M to B. The contract is defective because:
a.
b.
c.
d.
Unenforceable
Rescissible
Voidable
Void
21. S was intimidated by B to sell to the latter his parcel of land at a very low price. C,
the creditor of S was thus damaged since the former has no other means of
collecting from S. The remedy of S:
a.
b.
c.
d.
Rescission
Annulment
Have it declared by the court as void.
Reformation of the contract.
23. S made an offer to B for the sale of his car which was received by the latter on
January 2, 2001. On January 4, 2001, B sent a letter of acceptance by mail. On
January 3, 2001, S sent another letter to B withdrawing his offer. In this case;
a. There was a perfected sale because of the acceptance of the offer by B before he
had knowledge of its withdrawal by S.
b. There was perfected sale because S was estopped from withdrawing his offer
unless B had knowledge thereof before acceptance.
c. No sale took place because before acceptance was conveyed, the offer had been
withdrawn.
d. The offer was ineffective for lack of certainty as to the object.
24. Statement 1: An offer made by the principal is accepted from the time acceptance is
conveyed to him or his agent.
Statement 2: The object of a contract may be future things including future
inheritance.
25. Statement 1: A contract which is the direct result of a void contract is voidable.
Statement 2: If the object of the contract did not exist at the time of the transaction,
it is void. Therefore, this may include sale of future things.
a.
b.
c.
d.
S1 is true, S2 is false.
S1 is false, S2 is true.
Both are false.
Both are true.
26. A sold in writing to B his stereo set for P600. There is no delivery from A and no
payment of the price from B. Contract is:
a.
b.
c.
d.
Voidable
Unenforceable
Void
Enforceable
27. Statement 1: If the words of the contract are clear and leave no doubt on the
intention of the parties, interpretation of contracts may be proper.
Statement 2: In case of gratuitous contracts, doubt shall be resolved in favor of
greatest reciprocity of interest.
a.
b.
c.
d.
S1 is false, S2 is true.
S1 is true, S2 is false.
Both statements are true.
Both statements are false.
28. S sold his parcel of land only for P1M. Although the value of the same is P2M, he
thus suffered damage or lesion in the sale due to the inadequacy of the price.
Therefore, the contract is:
a.
b.
c.
d.
Voidable
Unenforceable
Valid, not defective
Rescissible
S1 is false, S2 is true.
Both statements are false.
Both statements are true.
S1 is true, S2 is false.
30. Statement 1: Just like the voidable and unenforceable contracts, rescissible contracts
may also be ratified.
Statement 2: In case of fraud or mistake, the action for annulment must be made
within four years from the commission of the vice of consent.
a.
b.
c.
d.
31. D, fearing that his creditor C, would go after his only parcel of land to satisfy his
claim for payment of Ds debt, sold his land to X who did not know of Ds intention.
Decide:
a. C can ask for annulment of the sale as this is voidable contract.
b. C may ask for damages against X since he was damaged by the sale.
c. C can file an action for rescission of the sale.
d. C cannot ask for the rescission of the sale.
32. Statement 1: Mutual error as to the legal effect of an agreement when the purpose
of the parties is frustrated may result in the reformation of the instrument.
Statement 2: Mutual mistake of the parties and the instrument does not express the
true agreement will make the contract voidable.
a.
b.
c.
d.
33. A without authority from B sold the latters car in the name of the latter. The contract
is therefore:
a.
b.
c.
d.
Rescissible
Voidable
Unenforceable
Void
S1 is false, S2 is true.
Both statements are false.
Both statements are true.
S1 is true, S2 is false.
S1 is false, S2 is true.
S1 is true. S2 is false.
Both statements are true.
Both statements are false.
36. The three following contracts are cleansed of its defect by ratification. Which is not so
ratified?
a. Contract where the creditor was damaged by the act of the debtor intended to
defraud him.
b. Contract entered into by a person incapable of giving consent.
c. Sale of chattels orally entered into for a price not less than five hundred pesos.
d. Lease of real property for more than one year orally entered into.
37. A gave B P1M for the latter to kill C. Before B could accomplish his criminal intent to
kill C, A changed his mind and demanded the return of the money from B. Decide:
a. A cannot recover the payment he made to B because it was a void contract which
does not allow recovery by the guilty party.
b. A cannot recover the money because the contract is unenforceable.
c. A can recover the money although the contract is void, since the crime was not
committed.
d. No recovery and both A and B will be prosecuted for their crime.
38. Because A wants to sell his land to B but the latter does not want to buy the same; A
forced B to buy his land. The contract:
a.
b.
c.
d.
39. D borrowed a sum of money from C with G as guarantor. The loan is in writing but
the guaranty is oral. D failed to pay C. Who now is demanding payment from G? Can
G be compelled to pay?
a.
b.
c.
d.
40. A and B agreed on February 3, 2000 that B will construct the house of A in January
2002. The contract was orally entered into. B received a down payment from A with
the balance payable after completion of the house. The contract is:
a. Voidable because it is not in public instrument.
b. Enforceable even if not in writing, having been ratified.
c. Unenforceable because it is not in writing and yet performance there is after one
year from perfection.
d. Void because it is not in writing as required by law.
41. A sold to B a fake Rolex watch on January 3, 2001. On January 13, 2001, B
discovered that the watch he bought from A was an imitation. The law provides that
he can annul the sale as a voidable contract within four years. Prescription starts
from:
a.
b.
c.
d.
42. A and B agreed on a contract of pledge. However, they entered into a contract of
mortgage in the honest belief that the mortgage and pledge are the same. The
instrument may be reformed:
a. No, the document cannot be reformed since the contract is void.
b. No, it cannot be changed. They are bound by the document which speaks for
itself.
c. Yes, it can be reformed because it does not express the true agreement of the
parties.
d. No, it cannot be reformed because there was no meeting of minds between the
parties and the remedy is annulment of contract.
43. A and B entered into a contract of mortgage. However, as written the document
states it is a contract of sale with right of repurchase, the error due to the fault of
the clerk/typist. Hence:
a. The contract of sale must be annulled since it is voidable.
b. The instrument has to be enforced as is for it is the proof of the agreement
between the parties.
c. Because of the negligence of the parties in signing without first reading the
instrument, they are bound by the contents of the same.
d. The instrument may be reformed because it does not express the true agreement
of the parties.
44. S sold to B his parcel of land worth P1M for only half a million pesos. After the sale
and realizing his damage, S is now seeking to set aside the sale. Decide:
a. The contract is voidable because of mistake of the seller.
b. It is rescissible because of the lesion or damage suffered by S.
c. S has the right for an increase in the price to prevent unjust enrichment on the
part of B.
d. The sale is valid, binding and enforceable because as a rule, lesion or inadequacy
of cause or price in a sale does not invalidate a contract.
45. Statement 1: If the cause is not stated in the contract, it is presumed that it does
not exist.
Statement 2: Lesion or inadequacy of cause, as a rule, invalidates a contract.
a.
b.
c.
d.
S1 is false, S2 is true.
S1 is true, S2 is false.
Both statements are true.
Both statements are false.
46. D borrowed a sum of money from C with a certain rate of interest. C now wants to
increase the rate of interest without the consent of D. What principle in contracts
prohibits C from doing so?
a. Autonomy of contracts
b.
c.
d.
e.
Relativity of contracts
Mutuality of contracts
Consensuality of contracts
Obligatory force and compliance in good faith
47. Three of the following contracts must be in writing to be valid. Which is the
exception?
a.
b.
c.
d.
48. A threatened to kill B if the latter would not marry the formers daughters who was
pregnant with Bs child. Intimidated, B married As daughter against his will.
a. The contract is not voidable because the threat was made by a third person not
by one of the parties.
b. The contract is not voidable because the claim for marriage is just or legal and
therefore, consent is not vitiated.
c. The contract is not voidable since B has to answer for his fault that As daughter
became pregnant.
d. Voidable is the contract due to intimidation even if employed by a third person.
49. The following are characteristics of a void contract. Which is the exception?
a. The action or defense for the declaration of the inexistence of a contract does not
prescribe.
b. It cannot be ratified.
c. A contract which is the direct result of a void or illegal contract is voidable.
d. The defense or illegality of a void contract is not available to third person whose
interests are not directly affected.
Law on Partnership
1. Which of the following is not correct?
a.
b.
c.
d.
A
A
A
A
2. A and B orally agreed to form a partnership two years from today, each one to
contribute P10,000.00. At the arrival of the said, if one refuses to go ahead with
the agreement, can the other enforce the agreement?
a. Yes, since the agreement is to be enforced after one year from the making
thereof, the same should be in writing to be enforceable.
b. Yes, because the prior agreement was voluntarily made.
c. Yes, the contract of partnership is not governed by the Statute of Frauds.
d. No, because the agreement was merely oral.
3. If a partner is insolvent, the first order of preference in the distribution of his
asset is
a. Partnership creditors
b. Partners contribution to the partnership
c. Separate creditors of the debtor
d. Pro-rata between the separate creditors and the partnership creditors
4. The following, except one, are common characteristics of the partnership and
corporation. Which is the exception?
a. The individuals composing both organizations have little voice in the conduct
of the business.
b. Both can only act through agents.
c. Both are business organizations composed of a number of individuals.
d. Both have juridical personalities separate and distinct from that of the
members composing it.
5.
Which of the following is not requisite prescribed by the law in order that the
partners maybe held liable to a third party for the acts of one of the partners
a. The partners bind the partnership by the acquiescence for the obligations he
may have contracted in good faith.
b. The partner must have the authority to bind the partnership.
c. The contact must be in the name of the partnership or for its own account.
d. The partner must act on behalf of the partnership.
6. X, Y and Z are partners in Ace and Co. W represented himself as a partner in the
said partnership to A, who, on the faith of such representation, granted P1M loan
to the partnership. Assuming only X and Y consented to such representation, who
shall be liable to A?
a. Since the partnership benefited from the credit extended by A, all partners X,
Y, and Z are liable.
b. Only X, Y and W are partners by estoppel and are liable are pro rata.
c. Since the loan was extended to the partnership, all the partners and W are
liable.
d. Only W who made the representation shall be liable.
7. Based on the preceding facts:
a. D can participate in the management of the partnership.
b. D cannot inspect the books nor copy them for any information on the
partnership affairs as a partner can.
c. C has ceased to have the rights to use the partnership property.
d. C cannot take part in the control of the business anymore.
8. Still based on the facts:
a. If A and B want to dissolve the partnership, C as a partner need not consent
thereto because he has assigned his interest to D.
b. D may himself ask the court for its dissolution being the assignee of Cs
interest in the partnership.
c. A, B and D may dissolve the partnership even without the consent of C.
d. A, B, and C cannot dissolve the partnership without the consent of D.
9. Spouses A and B formed a limited partnership to engage in real state business
and A contributed P1M only. Is the partnership between the spouses is valid?
a. The partnership is not valid because spouses cannot enter into a limited
partnership.
b. The partnership is valid because spouses can enter into a partnership, limited
or general, universal or particular.
c. The partnership is not valid because spouses cannot enter into any kind of
partnership for business except conjugal partnership.
d. The partnership is valid because spouses are prohibited to enter into a
universal partnership only.
10. Statement I: A corporation cannot enter into a partnership contract with a
natural person but with a juridical person it can.
Statement II: A general partner is always the capitalist in a limited partnership.
a. Both statements are false.
b. First is true, second is false.
c. Both are true.
18. A and B are capitalist partners while C is industrial partner. Both A and B equally
contributed P15,000.00 each to the capital. A contractual liability in favor of X
was incurred in the amount of P40,000.00. After exhausting partnership assets
there is a balance recoverable from
a. A and B only.
b. A, B and C.
c. A, B and C and C can get reimbursement from A and B.
d. A, B and C without reimbursement from A and B in Cs favor.
19. Statement I: After dissolution, the partners can still enter into new business
transactions in the name of the dissolved partnership although not for the
purpose of winding up partnership affairs.
Statement II: Insanity of either general or limited partner is a limited partnership
shall dissolve the partnership.
a.
b.
c.
d.
20. A and B orally entered into a partnership with each of them contributing
P3,000.00 each and some personal properties in the amount of P1,000.00each.
the partnership contract is:
a. Unenforceable because the amount involved exceeds P500.00.
b. Void because it is not in public instrument.
c. Valid.
d. Void because it is not registered with the SEC.
21. A partnership which must b in public instrument to be valid is:
a. Contribution immovable or real rights therein regardless of the value
thereof.
b. Contribution is P3,000.00 or more or personal property.
c. General partnership.
d. Particular partnership.
22. Statement I: A universal partnership entered into without designation is
considered one of profits.
Statement II: A limited partners surname cannot appear in the partnership name
if it is also the surname of a general partner to prevent misinterpretation to third
person.
a. Both statements are false.
b. First is true, second is false.
c. Both are true.
d. First is false, second is true.
23. Which of the following statement is not correct?
a. A partnership contract is not covered by the statutes of frauds.
b. A limited partnership shall not be bound by the obligations of the
partnership.
c. A limited partner who takes part in the control of the business shall be
liable as a general partner.
d. A stipulation which includes a partner for sharing in the profits or loss is
void.
24. Which of the following is incorrect?
a. An industrial partner who engages in business for himself maybe excluded
from the firm.
b. An industrial partner may not engage in business for himself unless there
is a contrary stipulation.
c. A capitalist partner may engage in the same line of business as that of the
partnership.
d. An offending capitalist partner may not be excluded from the firm.
25. Statement I: A partners interest in the partnership is not assignable unless the
other partners consent.
Statement II: An act of strict dominion may be performed by a partner without
the consent of his co-partner if it is advantageous to the partnership.
a. Both statements are false.
b. Both are true.
c. First is true, second is false.
d. First is false, second is true.
26. Statement I: The death, insanity, insolvency or civil interdiction of a limited
partner does not dissolve the partnership.
Statement II: In a general partnership, the fact that the business can only be
carried on at a loss does not result in the dissolution of the partnership.
a. First statement is false, second is true.
b. First is true, second is false.
c. Both are true.
d. Both are false.
27. Statement I: A partnership contract begins from the moment of the execution of
the contract unless it is otherwise stipulated.
Statement II: even if a third person in good faith, the partnership is not bound in
the contract entered into by a partner after the dissolution of the partnership if
the business of the partnership has become unlawful.
a. First statement is false, second is true.
b. First statement is true, second is false.
c. Both are false.
d. Both are true.
28. Statement I: A substituted limited partner becomes as such from the time the
certificate of limited partnership is properly amended.
Statement II: Only those interest have not been assigned may dissolve the
partnership.
a. Both statements are true.
b. Both are false.
c. First is true, second is false.
d. First is false, second is true.
29. A, B and C formed a partnership with the name ABC & co. Partnership as a
limited partnership in mind. It is therefore:
a. Limited partnership.
b. General partnership.
c. If registered with the SEC, it is a limited partnership.
d. Partnership by estoppel.
30. Stamen I: In the absence of stipulation, the share of the industrial partner in the
profits shall be equal to the share of a capitalist partner with the smallest share.
Statement II: the industrial partner shall not share in the losses unless
stipulated.
a. First statement is false, second is true.
b. First statement is true, second is true.
c. Both are true.
d. Both are false.
31. A, B and C were partners. While acting within the scope of his authority in the
conduct of business. A committed a tort against X, a third person. Who shall be
liable and to what extend?
a. All partners are liable jointly or pro rata after the partnership assets have
been exhausted.
b. All partners shall be liable solidarily after the partnership assets have been
exhausted.
c. All partners and the partnership are liable solidarily.
d. All the partners and the partnership are liable solidarily.
32. Statement I: A limited partner shall not be bound by the obligations of the
partnership.
Statement II: a general partner shall be bound by the obligations of the
partnership.
a. Both statements are true.
b. Both are false.
c. First is false, second is true.
d. First is true, second is false.
33. A and B entered into universal partnership of profits. Subsequently A became a
professor in a university. Will As salary belong to the partnership?
a. Yes, because the salary was acquired through As industry or work.
b. No, unless it is stipulated that his salary shall be deemed contributed.
c. No, because it is not considered a profit acquired from a property.
d. Yes, if stipulated by the partner.
34. A and B entered into a universal partnership of profits. Later, A purchased a
parcel of land. Will the fruits of the said land belong to the partnership?
a. Yes because universal partnerships means contribution of all properties,
present and future.
b. No, because the land and the fruits are future properties, nor existing at
the time of the celebration of the contract.
c. No, even if stipulated, both as to the fruits and the land.
d. Yes, if there was stipulation that the land to be inhered shall be considered
contributed.
35. A and
profits
a.
b.
c.
d.
36. A and B agreed on a profit sharing ratio in their partnership. A being the
industrial partner and B a capitalist partner. It was also stipulated that A shall
also share in the same ratio as to the losses. Is A liable for losses?
a. No, because the law exempts the industrial partner losses.
b. No, because the partners cannot stipulate that the industrial partner shall
be liable for losses.
c. Yes, even if the absence of stipulation.
d. Yes, because it was so stipulated.
37. Partnership Assets and Liabilities are as follows:
December 31, 2006
December 31, 2007
Assets
P 200,000
P 50,000
Liabilities
100,000
200,000
Capital A- P 50,000
100,000
150,000
B- P 50,000
A and B general partners have fully paid the capital contributions. What is the
remedy of creditor C?
a.
b.
c.
d.
39.
XYZ partnership composed of three (3) capitalist partners and one industrial
a. Can recover from the partnership P 100,000 and the balance of P 60,000
from the other capitalist.
b. Can recover from the partnership P100,000 and the balance of P 60,000
from any of the partners.
c.
Can recover from the partnership P100,000 and the balance of P 60,000
from the (4) partners jointly including the industrial partner.
d. Can recover from the partnership P 100,000 only and suffer as his list in
the balance of P 60,000.
40. Which of the following persons are not disqualified from a universal partnership?
a. Those guilty of adultery and concubinage.
b. Husband and wife.
c. Brother and sister.
d. Those guilty of the same of the criminal offense. If the partnership is
entered into a consideration of the same.
41. A limited partnership formed in 2004 by X as general partner and Y and Z as
limited partners in 2006. X and Z got married. Did the marriage dissolve or
change the form of the partnership.
1st answer Yes, partnership is dissolved by the marriage because there is a
change in equity and status among the partners.
2ns answer No, because spouses can enter into a universal partnership.
a. Both answers are correct
b. 1st answer wrong, 2nd answer correct
c. Both answers are wrong
d. 1st answer correct, 2nd answer wrong
42. Which of the following incidents maybe a cause for involuntary dissolution of a
partnership?
a. Expulsion of any partner.
b. Insolvency of any partner.
c. Express will of any partner.
d. Termination of term of the partnership.
43. Which of the following liabilities of the partnership shall rank first in the order of
payment?
a. Those owing to creditors others than partners.
b. Those owing to partners in respect to profits.
c. Those owing to partners in respect to capital.
d. Those owing to partners other than for capital and profit.
44. X, Y and Z are partners and contributed. To the partners and partnership P
40,000, P 30,000 and services, respectively. The partnership was later liquidated
and after payment of the partnership indebtedness, only P20, 000 worth of asset
remained. How much is the share of Z?
a. Zero
b. Equal to the share of X
c. Equal to the share of Y
d. P6, 000
45. The following are instances, except one, when a partnership is unlawful. Which is
the exception
a. a partnership formed to furnished apartment houses to be used as venue
for illegal gambling
b. a partnership formed to create cartel for monopoles
c. a partnership formed for smuggling of contrabands