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Test Bank - LAW 1-albano

Management accounting (Christ the King College)

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OBLIGATIONS & CONTRACTS (Albano)

General Provisions

1.The duty not to recover what has been voluntarily paid although payment was no longer required:
A. Natural obligation C. Civil obligation
B. Moral obligation D. None of the above

3.It is one of the essential elements of an obligation

A. A maker or drawer C. A drawee
B. An object or prestation D. Money

4.Three of the following are requisites of an obligation. Which is the exception?

A. Prestation C. Delivery
B. Efficient cause D. Passive subject

5.Which of the following is not an obligation arising from law?

A. Delict C. Quasi-delict
B. Quasi-contract D. Contract

6.The obligation of the employer to pay death benefits and funeral expenses for his employee’s death
while in the course of employment as sanctioned by the Workmen’s Compensation Act is one that arises
from:
A. Law C. Quasi-contracts
B. Contracts D. Answer not given

7. Which of the following is not considered as quasi-contract?

A. Solution indebiti
B. When the third person, without the knowledge of the debtor, pays the debt.
C. Negotiorum gestio
D. Reimbursement due the person who saved property during fire or storm without the knowledge
of the owner.
E. None of the above.

8. When A voluntarily takes charge of the neglected business of B without the latter’s authority where
reimbursement must be made for necessary and useful expenses, there is a
A. Quasi delict C. Negotiorum gestio
B. Quasi contract D. Solution indebiti

9. A juridical relation known as negotiorum gestio takes place

A. When a person voluntarily takes charge of another’s abandoned business or property
without the owner’s consent.
B. When something is received and there is no right to demand it and it was delivered through
mistake.
C. When a person is appointed by a court to take the property or business of another.
D. None of the above.

13. All of the following except one are civil liabilities arising from crime.
A. Restitution
B. Reparation of the damage caused
C. Imprisonment
D. Indemnification for consequential damages

14. A civil liability which involves the return of the object of the crime whenever possible, plus
allowances for any deterioration or diminution of value as may be determined by the court to the rightful
owner –

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A. Reparation C. Indemnification
B. Restitution D. Imprisonment

17. Culpa aquiliana as distinguished from culpa contractual

A. Proof of due diligence in the selection and supervision of employees is not available as a
defense.
B. Proof of the contact and its breach is sufficient prima facie to warrant recovery.
C. The negligence of the defendant is merely an incident in the performance of the obligation.
D. The source of liability is the defendant’s negligent act or omission itself.

18. A wrong committed independent of contract and without criminal intent is –

A. Culpa contractual C. Delict
B. Culpa aquiliana D. Quasi-contract

19. A wrong committed independent of a contract and with criminal intent –

A. Quasi-contract C. Culpa aquiliana
B. Culpa contractual D. None of the above

II – Nature and Effect of obligations.

24. Unless the law or stipulation of the parties requires another standard of care, the obligation to give a
thing carries with it the obligation to take care of it with:
A. Extra-ordinary diligence C. Diligence of a good father of a family
B. Ordinary diligence D. Answer not given

25. The creditor has a right to the fruits of the thing from
A. The time the thing is delivered.
B. The time the obligation to deliver the thing arises.
C. The time the sale is perfected.
D. The time the fruits are delivered.

28. Which of the following is a determinate thing?

A. A car.
B. A 2010 Mitsubishi adventure GSL Sport DSL
C. A Toyota Revo Sport Runner with Plate No. XCS 888.
D. A car owned by Pedro Cruz.

29. If the thing is determinate, the debtor can be compelled to deliver the thing promised and upon
failure, the creditor has a right to ask for damages.

If the object is generic and the debtor does not comply with the obligation, the creditor can ask a
third person to comply with the prestation at the expense of the debtor, plus damages.

A. True; False C. True; True

B. False; True D. False; False

30. The obligor is not liable for a fortuitous event when

A. There is default or mora on his part.

B. He promised to deliver the same thing to two or more persons.
C. The object is generic.
D. The object is determinate.

31. One is not a requisite needed in order that the obligation shall be extinguished by loss or destruction
of the thing due:
A. When the thing is lost without the fault of the debtor.
B. When the thing lost is generic.

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C. When the thing is lost before the debtor has incurred in delay.
D. When the thing lost is specific.

37. Statement 1: Delay or mora in one of the sources of obligation.

Statement 2: There is no delay in an obligation not to do.

A. True; False C. False; True

B. True; True D. False; False

42. Demand is not needed to put debtor in default except

A. When the law so provides.

B. When demand would be useless as when the obligor has rendered it beyond his power to
perform.
C. When the thing is lost due to fortuitous event.
D. When time is of the essence of the contract.

46. Who is liable for the loss of the subject matter by fortuitous event?

A. Creditor C. Both creditor and debtor

B. Debtor D. None of them.

47. When the subject matter of the contract is lost through a fortuitous event, who is liable?
A. The debtor C. None of them
B. The creditor D. Both creditor and debtor

48. No person shall be responsible for events which could not be foreseen, or which, though foreseen,
were inevitable, except:
A. When the debtor is guilty of delay.
B. When the nature of the obligation requires the assumption of risk.
C. When the law expressly provides for the debtor’s liability even in cases of fortuitous events.
D. When the subject of the obligation is a generic thing.
E. All of the above.

49. D obliged himself to give a specific house to C on April 15, 2010, stipulating that D is liable even if
the house is lost through a fortuitous event, and without the need of a demand. On the due date, the
house was destroyed by a typhoon. Which of the following is correct?
A. C can compel D to deliver another house.
B. The obligation is totally extinguished.
C. C can require another person to deliver a house at the expense of D.
D. The obligation remains to subsist but converted into monetary consideration.

51. A bound himself to deliver a determinate horse to B on January 15, 2011. On January 16, 2011 the
horse was struck and killed by a lightning.
A. A is liable for the loss of the horse because he was in delay.
B. A has the obligation to replace the horse.
C. A’s obligation is extinguished.
D. B may claim damages from A.

53. A obliged himself to deliver a specific cow to B which will be butchered and served to the latter’s
guest on the occasion of his wedding on June 20. On June 20 A did not deliver the cow. The following
day, it was killed due to a flood that occurred in their place.
A. A is liable for the loss of the cow because he was in delay.
B. A’s obligation has been extinguished.
C. A is obliged to replace the cow.
D. A is not liable because the cause of the loss is a fortuitous event.

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55. It is not a source of liability which will entitle the injured party to damages:
A. Culpa aquiliana or negligence committed in the performance of a spontaneous act.
B. Mora or delay.
C. Dishonesty, malice or bad faith in the performance of an existing valid obligation.
D. Contravention of the tenor of obligation.

56. Which of the following is not one of the sources of liability for damages?
A. Fraud C. Dolo causanti
B. Negligence D. Delay

59. Which of the following is not an exception to the rule that “all rights acquired in virtue of an
obligation are transmissible”.
A. When the parties agreed against its transmission.
B. When the law prohibits the transmission of rights.
C. When the nature of the obligation is purely personal.
D. When the obligation is real.

III – Diff. kinds of Obligation

61. Every obligation whose performance does not depend upon a future or uncertain event, or upon a
past event unknown to the parties, is demandable at once. This refers to
A. Divisible and indivisible obligations.
B. Joint and solidary obligations
C. Obligations with a period.
D. Pure obligation

62. Demandable at once –

A. Conditional obligation C. Obligation with a period
B. Pure obligation D. Alternative obligation

63. One of the following is not a pure obligation –

A. I promise to pay you P500,000.
B. I will give you P50,000 if you will pass the CPA Board Examination this year.
C. I will pay you P100,000 on demand.
D. I obliged you to give a specific car.

65. If the obligation of the debtor is “I will pay you my debt after I have arrived from abroad”, this is
A. Unenforceable C. Void
B. With a period D. Conditional

66. If the obligor binds himself to perform his obligation as soon as “he shall have obtained a loan”
from a certain bank, this obligation is:
A. With a term C. Suspensive
B. Conditional D. Resolutory

67. The obligation is demandable on the date of the obligation and shall continue to be in force up to the
arrival of the day certain
A. Resolutory period C. Indefinite period
B. Suspensive period D. Legal period

71. When the fulfillment of the condition depends upon the sole will of the debtor, the conditional
obligation shall be
A. Voidable C. Valid
B. Unenforceable D. Void

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85. When the debtor binds himself to pay when his means permit him to do so, the obligation is –
A. Conditional C. Simple
B. Pure D. With a period

91. Whenever in an obligation a period is designated, it is presumed to have been established for the
benefit of:
A. Both the creditor and the debtor C. The debtor
B. The third party D. The creditor

96. The debtor loses the benefit of the period, and his obligation becomes demandable when
A. Demand by the creditor would be useless.
B. The guarantees as promised and delivered by the debtor are not acceptable to the creditor.
C. After contracting the obligation, the creditor suspects that the debtor is becoming insolvent.
D. The debtor attempts to abscond.

102.Facultative as distinguished from alternative obligation

A. The right of choice is given only to the debtor.
B. Various things are due, but the giving of one is sufficient.
C. If one of the prestations is illegal, the others may be valid and the obligation remains.
D. It is impossible to give all except one, that last one must still be given.

104.In an obligation where only one prestation has been agreed upon, but to extinguish the obligation,
the debtor is allowed and does render another substitute, the obligation is
A. Facultative obligation C. Alternative obligation
B. Simple obligation D. Conjoint obligation

107.An obligation wherein various things are due but the complete performance of all of them is
necessary to extinguish the obligation
A. Facultative obligation C. Alternative obligation
B. Simple obligation D. Conjoint obligation

110.In a joint obligation, A, B and C are debtors of joint creditors, D, E and F in the amount of
P180,000. A’s obligation is
A. Pay D P60,000 C. Pay D P120,000
B. Pay D, E and F P180,000 D. Pay D P20,000

111.X, Y and Z joint debtors owe P18,000 to A, B and C, solidary creditors. How much can B collect
from X?
A. P 3,000 C. P9,000
B. P18,000 D. P6,000

113.Which of the following is not a characteristic of a joint indivisible obligation?

A. The creditor must proceed against all the debtors.
B. Each of the debtor can be held liable to pay for the entire obligation.
C. If any of the debtor be insolvent, the others shall not be liable for his share.
D. Demand must b made to all the debtors.

115.A, B and C secured a loan from D. the promissory note which evidence the obligation states: “ I
promise to pay or order P10,000 payable on demand”. (Signed) A B C. the obligation is:
A. Solidary C. Indivisible
B. Divisible D. Joint

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120.A and B are joint debtors of joint creditors C, D, E and f in the amount of P200,000. How much can
D and E collect from A?
A. P200,000 C. P100,000
B. P 25,000 D. P50,000

130.Which of the following statement is false?

A. Obligations to give definite things and those that are not susceptible of partial performance
shall be deemed to be divisible.
B. Execution of a certain number of days of work shall be divisible.
C. Accomplishment of work by metrical units are divisible.
D. An obligation to pay a certain amount in ten annual installments is divisible.

131.Which of the following is an indivisible obligation?

A. Execution of a certain number of days of work.
B. Accomplishment of work by metrical units.
C. Susceptible of partial performance.
D. To give definite things.

133. The indivisibility of an obligation necessarily implies solidarity.

If the contract is entire and a part is illegal, the whole contract in unenforceable.

A. True; False C. False; False

B. False; True D. True; True

134.In obligations with a penal clause, the creditor as a rule may recover from the debtor in case of non-
compliance the following:
A. The principal, the penalty as agreed upon, plus damages and interest.
B. The principal, the penalty, plus interest.
C. The principal and the penalty.
D. The principal, the penalty and damages.

135.A obligated himself to pay B the amount of P30,000, 30 days after May 1, 2011 plus a penalty of
P3,000 if he fails to pay the obligation on due date. After demand for payment by B, A offered to pay on
July 30, 2011. B can demand from A –
A. P30,000 plus P3,000 plus legal interest.
B. P30,000 plus legal interest.
C. P30,000 plus P3,000.
D. P30,000 plus P3,000 plus legal interest plus damages.

IV – Extinguishment of Obligations

137. Which of the following is not a ground for the extinguishment of an obligation?
A. Death of the creditor
B. Confusion or merger
C. Compensation
D. Condonation or remission

138. The following, except one, are secondary modes of extinguishing obligations. Which is the
exception?
A. Annulment
B. Death of both parties
C. Changing the object of the obligation with the consent of the parties.
D. Compromise.

139. The passage of time extinguishes the obligation

A. Proscription C. Rescission
B. Preterition D. Prescription

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141. Which of the following is not a special form of payment?

A. Cession C. Consignation
B. Application of payment D. Dacion in payment

142. Which of the following is not a special mode of payment?

A. Adjudicacion en pago C. Tender of payment
B. Payment by cession D. application of payment

143. Don owes Ces P20,000. Without the consent of Des, Amy paid the debt which was accepted by
Ces. If Amy does not intend to be reimbursed –
A. The payment did not extinguish the debt of Des because it was made without his consent.
B. The payment is valid as to the creditor who has accepted it.
C. The payment is not considered valid because of Amy’s intention.
D. The payment did not extinguish the debt because it was not made by the debtor.

144. Which of the following is a legal tender?

A. Letter of credit C. Promissory note
B. Bank manager’s check D. P20 worth of P0.05 coins.

145. Dan owes Che P20,000 due on April 20, 2011. When the debt matured, Dan is paying Che a
manager’s check worth P20,000.

Question 1: Can Che accept the check?

Question 2: Can Che refuse to accept the check?
Question 3: If Che accepts the check, is the acceptance equivalent to payment?

Question 1 Question 2 Question 3

A. Yes Yes Yes
B. Yes Yes No
C. No Yes No
D. No No Yes

146. The delivery of mercantile documents such as checks will produce the effect of payment:
A. When through the fault of the creditor they have been impaired.
B. Upon delivery of the mercantile document.
C. When they are certified by the bank.
D. When they are presented to the bank for payment.

147. There being no express stipulation and if the undertaking is to deliver a determinate thing, the
payment shall be made –
A. At the domicile of the creditor
B. At the domicile of the debtor.
C. Wherever the thing might be at the moment the obligation is to be fulfilled.
D. Wherever the thing might be at the moment the obligation is to be constituted.

148. Del, a resident of Perez St., Dagupan City, Pangasinan, owes Cony a resident of Sampaloc,
Manila, P20,000 and the contract fails to stipulate the place of payment. The place of payment must be:
A. Wherever they may see each other upon the maturity of the debt.
B. In Sampaloc, Manila
C. Anywhere in Dagupan
D. In the domicile of Del in Perez St., Dagupan City

149. A preferential right given to a debtor to choose the debt, from among several he owes a single
creditor, to which he wants his payment to be applied.
A. Application of payment. C. Cession of payment
B. Dation in payment D. Tender of payment

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150.This is not an essential element of an application of payment.

A. There must be one debtor and one creditor.
B. Two or more debtors and two or more creditors.
C. There are two or more debts of the same kind and nature.
D. The debts are all due and demandable.

151.Jo owes John the following debts:

Debt 1 – P10,000 payable January 1, 2011

Debt 2 – P10,000 payable February 1, 2011
Debt 3 – P10,000 payable March 1, 2011
Debt 4 – P10,000 payable April 1, 2011

Suppose Jo pays John P10,000 on February 1, 2011 without stipulating to which debt his
payment shall be applied. To which of the following debt can he have his payment applied?
A. Debt 1 C. Debt 3
B. Debt 2 D. Debt 4

154.In payment by cession or when the debtor cedes or assigns his property to his creditor in payment of
his debt, he shall be released from his obligation
A. To the full extent of debtor’s obligations.
B. Only to the extent of the net proceeds of the thing assigned.
C. Only to the extent allowed by the debtors.
D. Only to the extent allowed by the creditors.

155.Debtor Beth in indebted to Jane, Karla and Babe a total amount of P300,000 made up of: Jane –
P100,000; Karla – P50,000 and Babe – P150,000. On maturity, Beth cannot pay his obligation so he
assigns or cedes to them all his property, to be sold by the creditors and the proceeds thereof applied to
their corresponding credits. The creditor’s sold Beth’s properties for only a total of P180,000. Is the
obligation of Beth extinguished? Decide.
A. Yes, the obligation is extinguished.
B. Jane, Babe and Karla will divide the P180,000 equally.
C. Jane will get P60,000; Karla – P30,000; and Babe – P90,000.
D. None of the above.

156.Cession as distinguished from dation en pago.

A. Does not require plurality of creditors.
B. May take place during the solvency of the creditor.
C. Does not affect all the properties of the debtor.
D. Does not transfer ownership upon delivery.

157. The abandonment of all property of the debtor for the benefit of his creditors in order that the latter
may apply the proceeds thereof to the satisfaction of their credit
A. Application of payment C. Dation in payment
B. Payment by cession D. Tender of payment

158.When the debtor abandons and assigns all his properties in favor of his creditors for the latter to sell
to satisfy his credits, this is-
A. Remission C. Dation in payment
B. Payment by cession D. Expromision

159.All of the following, except one, are requisites of cession –

A. The debtor is in a state of insolvency, either partially or totally, at the time of cession.
B. There must be at least one debtor and two or more creditors.
C. There must be one debtor and one creditor.
D. The creditors may sell the property and apply the proceeds to their credits proportionately.

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166.Consignation is a mode of payment which extinguishes an obligation. Which of the following is not
a requisite of consignation?
A. Actual consignation with the proper judicial authorities.
B. Prior notice has not been made.
C. Existence of a valid debt.
D. There must be prior notice of consignation to persons interested in the fulfillment of the
obligation.

169.It is a mode of extinguishing an obligation whereby the debtor alienates in favor of the creditor,
property for the satisfaction of monetary debt
A. Adjudicacion en pago C. Payment by cession
B. Application of payment D. Tender of payment

170.A thing is not demmed lost when it –

A. It perishes
B. Disappears in such a way as its existence is unknown or it cannot be recovered.
C. Goes out of commerce.
D. Deteriorates.

171.One is not a requisite needed in order that the obligation shall be extinguished by loss or destruction
of the thing due:
A. When the thing is lost without the fault of the debtor.
B. When the thing lost is generic.
C. When the thing is lost before the debtor has incurred in delay.
D. When the thing lost is specific.

172.A, B and C are solidary creditors of X for P10,000. A makes a will giving the p10,000 debt to X as
legacy. The obligation is extinguished by
A. Confusion of debt C. Remission of debt
B. Novation of debt D. Payment of debt

173.A owes solidary creditors X, Y and Z P10,000. There is remission of the debts when
A. X borrows P10,000 from A.
B. X waives partially the obligation of P10,000 to A.
C. Z makes a will giving the P10,0000 debt to A as legacy.
D. Y tells that instead of paying P10,000, A shall just deliver a ring to Y.

174.One of the following is not a requisite of a valid remission

A. Must be in a public instrument.
B. Must be gratuitous.
C. Obligation is due and demandable.
D. Acceptance by the debtor.

177. Through an act or series of acts, the principal debtor has become eventually the principal creditor
himself with respect to the same obligation, and the obligation therefore is extinguished because a
person cannot collect or demand from himself payment of the obligation
A. Merger or confusion C. Payment by cession
B. Novation D. Compensation

178.Andy makes a check payable to bearer, and hands the check to Ben, who hands it to Cyn who
finally hands it to Andy. This is an example of –
A. Condonation or remission of debt
B. Confusion or merger of rights
C. Compensation
D. Prescription

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179.When two persons in their own right are reciprocally creditors and debtors of each other and
extinguishes both debts to the concurrent amount, what takes place is known as
A. Compensation C. Confusion or merger
B. Novation D. Remission

180.when the characters of the creditor and the debtor are merged in one and the same person, there is
extinguishment of the obligation by
A. Compensation C. Novation
B. Merger of rights D. Remission

181.It is a mode of extinguishing obligation when two persons in their own right are creditors and
debtors of each other –
A. Confusion C. Compensation
B. Reformation D. Novation

182.Legal compensation cannot take place in the following except –

A. When one debt arises from the obligation of a bailee in commodatum.
B. When one debt arises because of a claim for support due to gratuitous title.
C. When one debt arises from the obligations of a depositary.
D. When one debt arises from a bank deposit.

183.Compensaton shall takes place when –

A. One of the debts arises from the depositum or from the obligations of a depository or of a bailee
in commodatum.
B. One of the debts consists in civil liability arising from a penal offense.
C. Two persons, in their own right, are creditors and debtors of each other.
D. Answer not given.

184.Which one of the following is not an element of legal compensation?

A. Debts to be compensated are due and demandable.
B. There is controversy or adverse claim over any debts to be compensated.
C. There are two or more debts of the same kind.
D. There are two or more persons who are creditors or debtors of each other.

187.Dan and Doll are jointly indebted to Cris for P20,000. Cris endorsed the instrument to Ane, Ane to
Jun, Jun endorsed it back to Dan only. Whose obligation has been extinguished?
A. Dan only
B. Doll only.
C. Both Dan and Doll.
D. Neither Dan nor Doll.

188.The substitution of an obligation by another which modifies or extinguishes it by changing its object
or principal condition or substituting the person of the debtor or subrogating a third person in the rights
of another is –
A. Compensation C. Subrogation
B. Novation D. Confusion of rights

189.A obliged himself to give B a car if B places among the top ten in the CPA Board Exam.
Subsequently, they agreed that A would give B the car if B merely passes the CPA Board. This is an
example of
A. Mixed novation C. Implied novation
B. Real novation D. Personal novation

190.If an obligation is modified by changing the object and also changing the principal condition
A. There is mixed novation.
B. The original obligation remains.
C. There is real novation.

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D. There is personal novation.

192.When a third person assumes the payment of the obligation even without the knowledge and
consent of the debtor but with the consent of the creditor
A. There is novation.
B. There is delegacion if debtor is released.
C. There is subrogation.
D. There is expromision if debtor is released.

193.If the substitution is without the knowledge of the original debtor and the new debtor is insolvent
and cannot pay the obligation:
A. The original debtor and the new one will share the value of the obligation.
B. The old debtor can still be liable to pay the obligation.
C. The old debtor is free from any liability after the substitution.
D. The old debtor, the new debtor and the creditor will share the value of the obligation.

195.In delegacion, the creditor can still collect from the original debtor –
A. If the new debtor is already insolvent at the time of substitution and his insolvency is neither of
public knowledge nor known to the original debtor.
B. If the obligation is extinguished.
C. The new debtor is already insolvent at the time of substitution and same was of public
knowledge even if not known to the original debtor.
D. Even if the novation of the obligation is accepted by the creditor.

197.If a third person pays without the debtor’s knowledge or against his will, the payor is entitled to

Reimbursement of what he has paid.

Subrogation to the rights of the creditor.

A. False; True C. False; False

B. True; False D. True; True

198.Which of the following is not a legal subrogation?

A. When a creditor pays another creditor who is preferred.
B. When a third person, not interested in obligation, pays with the approval of the debtor.
C. When a third person interested in the obligation, pays even without the approval of the debtor.
D. None of them.

CONTRACTS

1.Which of the following is not a valid stage of a contract?

A. Introduction C. Perfection
B. Conception D. Termination

2. A contract in a stage of conception when:

A. There is a meeting of the mind.
B. Negotiations are in progress.
C. The parties come to an agreement.
D. The contract is perfected.

3. The period when the minds of the seller and the buyer have met on the subject matter and cause of
the interest is –
A. Negotiation of the sale C. Consumption of the sale
B. Consensus of the sale D. Perfection of the sale.

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4. The contract may be said to have been fully executed when there is
A. Preparation C. Perfection
B. Conception D. Consummation

5. There is no contract unless the following requisites concur, except

A. Consent of the contracting parties.
B. Object certain which is the subject matter of the contract.
C. Delivery of the subject matter.
D. Cause of the obligation which is established.

6. Three of the following are essential elements of a contract, except:

A. Cause of the obligation which is established.
B. Consent of the contracting parties.
C. Motive of the parties.
D. Object certain which is the subject matter of the contract.

7. The fulfillment of the contract is dependent upon chance

A. Adhesion C. Commutative
B. Onerous D. Aleatory

8. A contract in which a person literally contracts with himself is

A. Commutative contract C. Auto contract
B. Aleatory contract D. Unilateral contract

9. Perfected from the moment there is consent on the subject matter, and the cause or consideration
A. Consensual contract C. Solemn contract
B. Real contract D. Formal contract

10. The statement contracts shall be obligatory in whatever form they have been entered into provided
all the requisites for their validity are present refers to:
A. Consensual contract C. Solemn contract
B. Real contract D. Formal contract

11. Require consent, subject matter, cause or consideration, and delivery

A. Consensual contract C. Solemn contract

B. Real contract D. Formal contract

12. Which of the following is not a real contract?

A. Deposit C. Pledge
B. Sale D. Commodatum

13. Contracts which must be in the form provided by law for their perfection
A. Consensual contract C. Solemn contract
B. Real contract D. Formal contract

14. The contracting parties may establish such stipulations, clauses, terms and conditions as they may
deem convenient, provided they are not contrary to law, morals, good customs, public order, or public
policy.
A. Liberty to contract C. Relativity
B. Mutuality of contract D. Consensuality

18. The contract must bind both contracting parties; its validity or compliance cannot be left to the will
of one of them.
A. Mutuality C. Principle of freedom
B. Consesuality D. Relativity

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20. Contracts are effective and binding only between the parties, their assigns and heirs. Three of the
following enumerations are exceptions as provided by law. Which does not belong to the exception?
A. When there is stipulation in favor of a third party.
B. Where one of the parties to the contract dies and thereafter a suit is filed on the basis of the
contract.
C. Where the obligation arising from the contract are not transmissible by their nature.
D. Where the stipulation arising from the contract are not transmissible by stipulation or by
provision of law.

21. Which of the following is not exception to the principle of relativity?

A. When the obligations arising from the contract are not transmissible by their nature, by
stipulation, or by provision of law.
B. Where there is a stipulation pour autri.
C. When a third person induces another to violate his contract.
D. None of them.

23. D owes C P500,000. Before the debt was paid, D died leaving his only son, B –
A. If the value of the properties left by D is P1,000,000, B is obliged to pay the entire P1,000,000 to
C.
B. If the value of the properties left by D is P500,000, B is obliged to pay the entirety to C.
C. If the value of the properties left by D is P400,000, B is has to pay the entire P400,000 and make
good the deficiency of P100,000.
D. If B did not inherit anything from D and B is very rich in his own right, B can be compelled by C
to pay the debt of his father.

24. A owes B P200,000 payable December 31, 2010. On December 1, 2010, A died leaving property
worth P100,000 to his son, C. C should pay B
A. P100,000 C. P 50,000
B. P200,000 D. Nothing

25. These are the basic principles or characteristics of a contract. Which is the exception?
A. Freedom or liberty to stipulate.
B. Obligatory force and compliance in good faith.
C. Binding on third parties.
D. Perfection by mere consent.

26. In order that a stipulation in favor of a third person in a contract would be valid and binding upon the
parties thereto, three of the requisites are mentioned in the following enumerations. Which among them
is not a requisite?
A. There must be 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.

27. Not a requisite of stipulation pour autri

A. The third person is incidentally benefited by the stipulation.
B. The stipulation in favor of a third person must be a part of the contract, and not the contract
itself.
C. The favorable stipulation should not be conditioned or compensated by any kind of obligation.
D. Neither of the contracting parties bears the legal representation or authorization of the third
party.

28. Don borrowed P100,000 from Cris payable in 2 years. The contract stipulates that Don will pay 1%
monthly interest equivalent to P1,000 per month to Emy, Cris brother, on the 25th of each month for
Emy’s support. Emy signified his acceptance before it could be revoked.

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A. Emy has no right to receive the monthly payment on the interest not being a party to the contract.
B. Emy is not entitled to the monthly interest unless the money loaned is his.
C. Emy is entitled to the monthly interest because the amount involved per month is his.
D. Emy is entitled to the monthly interest even if he is not a party to the contract because
there is a clear case of the stipulation pour autri.

30. A contract entered into in the name of another by one who has no authority or legal representation,
or who has acted beyond his power.
A. Voidable C. Rescissible
B. Unenforceable D. Void

31. Pat sold to Mat the computer owned by Cathy without Cathy’s authority. The contract is
A. Perfectly valid C. Void
B. Voidable D. Unenforceable

32. Consent is manifested by the meeting of the offer and the acceptance upon the thing and the cause
which are to constitute the contract. Which of the following constitute an offer?
A. An offer made to an agent.
B. Business advertisement of things for sale.
C. Advertisement for bidders.
D. Answer not given.

33. When there is concurrence of the offer and the acceptance, there is –
A. Consent C. Revocation
B. Payment D. None of the above

38. Ann offered to sell her cellular phone for P10,000 to her friend, Beth. Beth accepted the offer but is
willing to pay only P8,000. Is there a perfected contract?
A. Yes, for a price of P10,000.
B. Yes, for a price of P8,000.
C. No, because the acceptance was qualified and it constituted a counter-offer.
D. No, because the offer was rejected.

41. An offer made through an agent is accepted from the time acceptance is communicated to the –
A. Agent C. Agent and the principal
B. Principal D. Agent and/ or the principal

43. Money paid or promised to be paid in consideration for an option

A. Option period C. Earnest money
B. Option money D. Payment

45. A offered to sell his car for P500,000 to B. A stated that he was giving B a period of one week
within which to raise the amount, and that as soon as B is ready, they will sign the deed of sale. A had
been given P5,000 by b in consideration for the option. Which of the following is not correct?
A. A cannot sell his car to another because of the money given by B.
B. A can still sell the car before the acceptance is made known to him by B.
C. A can sell the car only after one week.
D. A cannot sell the car until after one week.

48. Which of the following is qualified to give consent to a contract?

A. Unemancipated minors
B. Insane or demented persons.
C. Deaf mutes who do not know how to write.
D. Deaf mutes who know how to read but do not know how to write.

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49. Contracts entered into during lucid-interval

A. Voidable C. Void
B. Unenforceable D. None of the above.

51. Reluctantly and against her good sense and judgment, Tess entered into a contract for the delivery of
five (5) tables to Cora for the price of P15,000. The contract is
A. Void C. Voidable
B. Valid D. Unenforceable

52. Contract entered into in a state of drunkenness or during a hypnotic spell are
A. Void C. Voidable
B. Valid D. Legal

53. Choose the contract which are voidable:

A. Those undertaken in fraud of creditors when the latter cannot if any manner collect the claims
due them.
B. Those where the consent is vitiated by mistake, violence, intimidation, undue influence or
fraud.
C. Those whose object is outside the commerce of man.
D. Those where both parties are incapable of giving consent to a contract.

54. I - A simple mistake of account shall give rise to its correction.

II – In order that mistake may invalidate consent, it should refer to the substance of the thing which
is the object of the contract.

A. True; False C. False; False

B. True; True D. False; True

57. When one of the parties to a contract is compelled to give his consent 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, there is –
A. Violence C. Undue influence
B. Intimidation D. answer not given

58. A intimidated B to marry A’s daughter. After a 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. Rescissible C. Void
B. Voidable D. Unenforceable

61. When a person takes improper advantage of his power over the will of another, depriving the latter
of a reasonable freedom of choice there is
A. Violence C. Undue influence
B. Intimidation D. Mistake

62. Through insidious words or machinations, A was able to induce B to enter into a contract which
without them B would not have agreed to it. There is:
A. Undue influence C. Mistake
B. Fraud D. Misrepresentation

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