Business Law
BL.1801-Drill 2- Contract
1. Severino, orally sold a one- square meter lot for
Ᵽ475.00 to Benedicto, chairman of Barangay
Mapayapa, who was officially authorized in a
barangay resolution to look for and buy a lot
where the barangay would construct a barangay
marker. Since Benedicto did not have sufficient
cash at that time, he told Severino that he would
give the amount the following day. The next day,
Benedicto went to the place of Severino to pay
the price of the lot but Severino refused to accept
it, saying that the sale is unenforceable not being
in writing.
a. The sale of the lot is enforceable although in
writing because the price is less than
Ᵽ500.00.
b. The sale is enforceable because Benedicto
was duly authorized to buy the lot through a
resolution which is in writing.
c. The sale of the lot is void not being in the
public instrument.
d. The sale is unenforceable since the sale of
real property must be in writing regardless
of the price to be enforceable.
2. The defective contracts arranged according to the
degree of their defectiveness from the least
defective to the most defective are:
a. Voidable, rescissible, unenforceable and
void contracts.
b. Rescissible, unenforceable, voidable, and
void contracts
c. Rescissible, voidable, unenforceable, and
void contracts
d. Unenforceable, rescissible, voidable, and
void contracts
3. Orencia is the owner of a car which was sold by
Say without authorization in favor of Billy. The
contract between Say and Billy in so far as Orencia
is concerned is:
a. Valid c. unenforceable
b. Rescissible d. voidable
4. The action for annulment must be brought within
four years. Which of the following is false with
respect to the reckoning of the beginning of the
prescriptive period?
a. In cases of intimidation, violence and undue
influence, the period begins from the time
the defect in the consent ceases.
b. In case of fraud, the period begins to run
from the discovery thereof.
c. In case of mistake, the period begins to run
from the time it was committed.
d. In cases of contracts entered into by minors
or other incapacitated persons, the period
runs from the time guardianship ceases.
5. O agree to transfer to I, verbally, a residential lot
in consideration of a service or benefit already
rendered by the latter in favor of the former.
Which of these is correct?
a. The agreement being verbal involving real
property in unenforceable and therefore
cannot be sued upon in court.
b. The verbal agreement is unenforceable
because it is not covered by the Statute of
Fraud.
c. The law requires the agreement to be in
writing at least since it involves real
property.
d. The transaction is covered by the Statute of
Fraud because it involves the sale of real
property of any interest therein.
6. Which of the following contracts cannot be
ratified?
a. Those whose cause or object did not exist at
the time of the transaction.
b. Unauthorized
c. Those where both parties are incapable of
giving consent.
d. Those that fail to comply with the Statute of
Frauds.
7. A voidable contract:
a. Contract agreed to in state of drunkenness
b. Contract agreed to during hypnotic spell
c. Contract where the consent is given through
undue influence
d. All of the above
8. One of the following statements concerning
ratification of a voidable contract is false. Which
is it?
a. Ratification extinguishes the action to annul
a voidable contract.
b. Ratification cleanses the contract from all its
defects from the moment it was constituted.
c. Ratification requires the conformity of the
party who has no right to bring the action of
annulment.
d. Ratification may be made by the guardian of
the incapacitated person, or the
incapacitated person upon attaining
capacity, or the party whose consent was
vitiated.
9. The following, except one, are the characteristics
of void or inexistent contract. Which is the
exception?
a. They are not subject to ratification
Business Law
BL.1801-Drill 2- Contract
b. The right to raise defense of illegality cannot
be waived.
c. The defense of illegality of the contract is
available to third persons whose interest is
not directly affected.
d. The action or defense for declaration of the
nullity or inexistence of the contract does
not prescribe.
10. S sometime in 2009 sold to B a house and lot
where the former committed fraud. The deed of
sale which was in a public document was
registered with the Register of Deeds in 2010, In
2012, the fraud was discovered by the heirs of B.
Under the law, the action to annul a contract
based on fraud must be filed within four (4) years
from:
a. Year 2009 the date of the contract
b. Year 2010 the date registration with the
Registered of Deeds.
c. Year 2012 the date the fraud was
discovered.
d. The action to annul a contract based on
fraud is not subject to prescription.
11. On June 1, 2011, Mother Lilac, a movie producer,
met Claudine Santos, a movie actress at the lobby
of the Manila Hotel. Mother Lilac informed
Claudine Santos that she was producing a movie
the filming of which would start on August 1, 2012
and that she was offering Claudine Santos the
starring role for a fee of Ᵽ500,000.00. Claudine
Santos accepted the offer and shook hands with
Mother Lilac to seal their agreement. However,
Mother Lilac gave Claudine Santos a check for
Ᵽ100,000.00 as initial payment. On August 1,
2012, Mother Lilac called Claudine Santos for the
shooting of the movie but Claudine Santos
refused to honor the agreement saying that it was
not enforceable not being in writing.
a. Mother Lilac cannot enforce the contract
against Claudine Santos because it was
entered into orally.
b. Mother Lilac can enforce the contract
against Claudine Santos because Claudine
Santos had accepted benefits under the
contract.
c. Claudine Santos may just return the
payment because the agreement was made
orally.
d. Claudine Santos is not bound under her
agreement with Mother Lilac because she
did not sign any writing.
12. Mistake in three of the following will make a
contract voidable. Which one will not?
a. Mistake as to the substance of the thing
which is the object of the contract.
b. Mistake as to the principal conditions which
is principally moved one or both parties to
enter into the contract.
c. Mistake as to the identity or qualifications of
one of the parties, which identity or
qualifications have been the principal cause
of the contract.
d. Simple mistake of account
13. Statute of Frauds is applicable to
a. Partially executed contract
b. Oral contract of loan when the amount
involved is less than Ᵽ500
c. Contract not to be performed within, a year
from the making thereof
d. All of the above
14. The statute of Frauds applies only to:
a. Wholly executed contracts
b. Contracts wholly or partially executed on the
part of the debtor
c. Contracts wholly or partially executed on the
part of the creditor
d. Wholly executory contracts.
15. The presence of a vice of consent vitiates the
consent of a party in a contract and his renders
the contract (2011 Bar)
a. Rescissible c. voidable
b. Unenforceable d. void
16. When bilateral contracts are vitiated with vices of
consent, they are rendered (2011 Bar)
a. Rescissible unenforceable
b. void d. voidable
17. the statute of Frauds applies only to:
a. wholly executed contracts
b. Contracts wholly or partially executed on the
part of the debtor.
c. Contracts wholly or partially executed on the
part of the creditor,
d. Wholly executory contracts.
18. S, an employee of a private company, sold his car
for Ᵽ100,000.00 to B, whom he knew was only 17
years old. S delivered the car to B who
immediately paid the amount of Ᵽ100,000.00.
later, S was transferred to another branch of his
employer which was quiet a distance from his
residence. He wanted to get back the car from B
so that will have something to use in going to and
from his new office. Neither B nor his guardian
has registered the sale with the land
transportation office.
Business Law
BL.1801-Drill 2- Contract
a. S can file an action to annul the sale he made
to B because he was mistaken in selling the
car which he realized he badly needed.
b. S can ask the court to annul the sale because
B was a minor when the contract of sale was
entered into.
c. Only B, when he attains the age of majority,
or his guardian, while B is still a minor, can
bring an action to annul the contract.
d. The minority of B has no effect on the
validity of contract since the parties entered
into the contract of sale freely.
19. The following agreements are covered by Statute
of Fraud. Choose the exception.
a. An oral agreement which by its terns is not
be performed which one year from the
making thereof.
b. An oral special promise to answer for the
debt, default or miscarriage of another.
c. An oral agreement in consideration of
marriage
d. An oral contract of partnership where the
contribution in money or personal property
amounts to Ᵽ3,000 or more.
e. None of the above.
20. Caloy the guardian of Martinez bought a fertilizer
for land cultivation from Jonas for Ᵽ400,000 but
the market value is only Ᵽ320,000. The contract
is:
a. Rescissible c. unenforceable
b. Voidable d. Valid
21. S sold his only car for Ᵽ100,000.00 to B. Unknown
to S, B bought the car from him so that he could
use the same in a bank robbery. What is the status
of the sale of the car by S to B?
a. The sale is void because the motive of B is
illegal.
b. The sale is valid because the illegality of the
motive of the parties to the contract does
not have any effect on its validity.
c. The sale is voidable because of the failure of
disclose his motive to S.
d. The sale is rescissible at the instance of S
would be damaged by illegal motive of B.
22. Andy is the representative of Babes, an absentee
sells a house and lot valued at Ᵽ1,000,000 for only
Ᵽ600,000. The contract is:
a. Valid c. unenforceable
b. Rescissible d. voidable
23. To defraud his creditor Carlo, Melody sold his
condominium unit to Jane. When Carlo is now
collecting his credit, Orlando lent Melody enough
money to cover on his debt with Carlo. The sale of
the condominium unit:
a. The sale cannot be rescinded because Carlo
can collect the claim due him.
b. The sale can be rescinded because this is an
act to defraud the creditor.
c. The sale cannot be rescinded because there
is no vices of consent.
d. The sale can be rescinded on the ground that
the sale was undertaken in fraud of creditor
Carlo when the latter cannot in any other
manner collect the claims due them.
24. A piece of land was subject of a litigation between
Mariano and City of Manila. After the case had
been decided in favor of Mariano his sold it to
Bugaring.
A. The sale can be rescinded because the
subject matter is the subject of litigation.
B. The sale cannot be rescinded because the
litigation had been decided in favor of
Mariano prior to the sale.
C. The sale can be rescinded because it is
considered an act to defraud creditor.
D. The sale cannot be rescinded because
disposition of the things under litigation
without the approval of the litigant or
competent court is not ground for rescission
to prosper.
25. Angelita Madaya, guardian of Nene Batambata, a
minor, sold the palay, harvested from the land
belonging to Nene Batambata for Ᵽ39,000.00 on
January 15, 2008. The palay had a value
Ᵽ80,000.00. at the time of the sale, Nene
Batambata was only (17) years and 354 days old.
On July 25, 2012, Nene wants to recover the
damages he suffered under the contract entered
into by his guardian. What is the remedy available
to Nene Batambata?
a. Annulment because Nene Batambata was
only 17 years and 354 days old at the time
the sale was made by Angelita Madaya.
b. Rescission because Nene Batambata
suffered lesion of Ᵽ41,000.00 .
c. Both rescission and annulment at the option
of Nene Batambata.
d. Nene Batambata cannot rescind nor annul
the contract.