NATIONAL COLLEGE OF BUSINESS AND ARTS

Cubao-Fairview-Taytay
Summer SY 2015-2016

MID-TERM DEPARTMENTAL EXAMINATIONS 2 HRS

BUSINESS LAW 4 SALES, AGENCY, LABOR & OTHER COMMERCIAL LAWS

INSTRUCTIONS: Select the correct answer for each of the following questions. Mark only one answer for
each item by shading the corresponding letter of your choice on the answer sheet provided. STRICTLY
NO ERASURES ALLOWED. Use Pencil No. 2 only.

PART 1
MULTIPLE CHOICE

1. In distinguishing Earnest Money from Option Money, Earnest Money is:

A. Given when there is no contract of sale.
B. Given only when there is a perfected contract of sale.
C. Given to bind the offerer in a unilateral promise to sell or to buy.
D. Given as a separate consideration from the purchase price.

2. Which of the following is not a characteristic of a contract of sale?

A. Bilateral C. Consensual
B. Gratuitous D. Nominate

3. Also known as barter

A. do ut des C. facioutfacias
B. faciout des D.doutfacias

4. A contract or receipt for the transport of goods and their delivery to the person named therein to order
or to bearer is a:
A. warehouse receipt C. bill of lading
B. dock warrant D. quedan

5. 1st statement – Sale of future inheritance is valid as future things may be the object of the contract.
2nd statement – If the consideration of the contract consists partly in money and partly in another
thing, it shall be considered a barter if the value of the thing given as a part of the consideration
exceeds the amount of the money or its equivalent
A. True, True C. False, False
B. True, False D. False, True

6. Which of the following statements is not correct?

A. Actual delivery of the thing or payment of the price is not required for the perfection of the sale.
B. A stipulation that even when the object is delivered to the buyer, ownership will not pass until
the price is fully paid is void.
C. A sale is consummated upon delivery of the thing and the payment of the purchase price.
D. Sales through letters or telegrams are deemed perfected only when acceptance by the buyer
has been received by the seller.

7. Which of the following cannot be an object of a contract of sale

A. Sale of credit
B. Young of animal not yet conceived at the time of perfection
C. Land which the seller expects to buy
D. Vain hope

8. A stole a fountain pen from P and sold it to a “store of pens”, which paid for it in good faith, not
knowing it was stolen. The store then sold it to B, a reviewee, which is correct?
A. B cannot be considered as the owner because the original seller (A) is not the real owner.
B. P may recover the fountain pen from B without reimbursement because he is the legal owner.
C. B is considered the owner because he purchased the pen in a merchant store.
D. When the fountain pen was sold to the store in good faith, ownership was transferred therefore
it can also transfer the ownership to B.
BUSINESS LAW 4 SALES, AGENCY, LABOR & OTHER COMMERCIAL LAWS

9. A warranty of the seller that the buyer shall enjoy legal and peaceful possession of the thing sold:
A. warranty as to quality C.warranty against eviction
B. express warranty D. warranty against hidden defect

10. Angela needs a size 8 of Air23 shoes available to the public for her boyfriend Angelo, but the same is
not available so she placed an order for one. On the other hand, Angelo placed an order for size 6 of
a purple dancing shoes for Angela which is not ordinarily manufactured by the company. Which is
correct?
A. Both are contracts of sale
B. Both are contracts for a piece of work
C. First is a contract of sale, second is a contract for a piece of work
D. First is a contract for a piece of work, second is a contract of sale

11. 1ststatement - The fixing of the price in a sale is at the option of the seller.
2nd statement - If the price is uncertain sale is unenforceable
A. 1st statement is true, 2nd statement is false C. both are false
B. 1st statement is false, 2nd statement is true D. both are true

12. Effected when the object of sale is already in the possession of the vendee at the same time of sale
so that delivery need no longer be made.
A. Traditio longa manu C. Traditioconstitutumpossessorium
B. Traditiobrevimanu D. Traditiosimbolica

13. In a contract of sale of personal property, the price of which is payable in installments, the vendor
may exercise any of the following remedies, except
A. Exact fulfillment of the obligation, should the vendee fail to pay any installment
B. Cancel the sale, should the vendee’s failure to pay cover two or more installments
C. Foreclose the chattel mortgage on the thing sold, if one has been constituted should
the vendee’s failure to pay cover two or more installments
D. Rescind the sale should the vendee fail to pay any installment.

14. Constructive delivery by mere pointing the things sold:

A. traditio longa manu C.symbolical delivery
B. constitutumposessorium D.traditiobrevimanu

15. X placed an order for 500 pieces white collared shirts ranging in size from small to extra-large from
XYZ Garments Corp. The specified sizes, although not then available, are manufactured by the said
corporation and consigned to its sales outlets regularly. Their contract is:
A. Contract for a piece of work C. Contract to sell
B. Contract of sale D. Contract of agency to sell

16. Three of the following are elements of the vendor's right of stoppage in transitu. Which is the
exception?
A. The buyer must be insolvent.
B. The goods must be in transit.
C. The seller must be unpaid.
D. The seller must be in possession of the goods.

17. If immovable property should have been sold to different vendees, the ownership shall be transferred
to the person
A. Who have first taken possession in good faith
B. Who presents the oldest title in good faith
C. Who in good faith first recorded it in the registry of property
D. Who have paid in good faith the purchase price in full

18. 1st Statement – As a rule, the ownership shall not pass to the buyer until he has fully paid the
purchase price.
2nd Statement - The seller is liable for hidden defects only if it will be stipulated in the contract.
A. True, True C. False, False
B. True, False D. False, True

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BUSINESS LAW 4 SALES, AGENCY, LABOR & OTHER COMMERCIAL LAWS
19. 1st statement – Agents cannot acquire by purchase, even at a public auction, either in person or thru
the mediation of another, the property whose administration or sale may have been entrusted to
them, although the consent of the principal has been given
2nd statement – A guardian cannot purchase the property of the ward unless consent of ward is
given
A. True, True C. False, False
B. True, False D. False, True

20. 1st statement – In case of double sale of a movable property, possession is equivalent to title
2nd statement – Sale, as a general rule, is an aleatory contract
A. True, True C.False, False
B. True, False D. False, True

21. Goods are deemed in transit

A. When the buyer accepts delivery of the goods upon arrival at destination
B. When the buyer intercepts and lawfully takes possession of the goods at any point before
destination
C. From the time they are delivered by the seller to a common carrier or other bailee for
transmission to the buyer, up to the time that the buyer or his agent takes delivery of the
goods from the carrier or bailee.
D. When the carrier or bailee, upon arrival of the goods at destination, acknowledges to the
buyer or his agent that he is holding the goods as bailee for the latter.

22. The redhibitory action based on the faults if defects of animals must be brought within
A. 30 days from delivery to the vendee
B. 40 days from deliverry to the vendee
C. 45 days from delivery to the vendee
D. 6 months from delivery to the vendee

23. A contract of sale whereby the seller acquires the right to redeem or repurchase the object of the
sale from the buyer after a certain period agreed upon
A. Equitable mortgage C. Sale on sale or return
B. Absolute sale D. Pacto de retro sale

24. 1ststatement - The buyer is not obligated to accept partial delivery of the thing sold, unless there is a
stipulation to the contrary.
2nd statement - The seller having voidable title to the thing sold can validly transfer title to his buyer,
provided his title has not been avoided at the time of the sale.
A. True, True C. False, False
B. True, False D. False, True

25. Money given by the buyer to the seller in order to bind the bargain and forms part of the purchase
price:
A. earnest money C.option money
B. reservation money D.grease money

26. A sold his house and lot for Php1M to B. The parties failed to reduce their agreement in writing. The
contract of sale is:
A. voidable C.unenforceable
B. rescissible D.void or inexistent

27. What mode of extinguishing a contract of sale is effected when a person is subrogated upon the
same terms and condition stipulated in the contract in the place of one who acquires a thing by
onerous title?
A. Compensation C. Novation
B. Conventional redemption D. Legal redemption

28. When there is a stipulation that the repurchase of the thing sold can be made anytime, the right can
be exercised:
A. any time under the principle of autonomy or freedom of the parties to stipulate
B. within 10 years from the date of the contract
C. after 4 years from the date of delivery
D. within 4 years from the date of the contract
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BUSINESS LAW 4 SALES, AGENCY, LABOR & OTHER COMMERCIAL LAWS

29. X, Y and Z are co-owners of an undivided parcel of land. X sold his 1/3 interest to Z absolutely.
Which is correct?
A. Y may exercise his right of redemption on the interest sold by X to Z
B. Y cannot exercise the right of redemption because the sale was made in favor of a co-owner
C. The sale made by X to Z is void because it was not made in favor of a stranger
D. Y may redeem only ½ of the interest sold by X to Z

30. Using the preceding number, suppose, instead of selling his interest to Z, X sold it to A, who can
exercise the right of redemption?
A. Both Y and Z C. Y only
B. Y but not Z D. X

31. If the agent is authorized to sell, which of the following is not within the scope of his authority?
A. To execute the necessary transfer documents
B. To receive the price, unless he was authorized to solicit orders only
C. To sell on credit
D. To fix the place, time and manner of delivery

32. A special power of attorney is necessary in the following cases except:

A. To waive any obligation gratuitously.
B. To accept or repudiate an inheritance.
C. To lease any real property to another person for less than one year.
D. To bind the principal to render some service without compensation.

33. Which of the following is not a fundamental obligation of an agent:

A. To subordinate his interest in favor of his principal if there is a conflict of interest.
B. To borrow if he is authorized to lend
C. To render an accounting of transactions
D. Not to carry out the agency, even if that is the instruction if he knew it would result in a loss or
damage to his principal

34. Agency which authorized only the performance of particular acts

A. Agency couched in specific terms.
B. Agency couched in general terms.
C. Implied agency.
D. Express agency.

35. Atoy wrote Bitoy, authorizing Bitoy to sell a piece of land of his behalf. The land was purchased by
Caloy but Bitoy kept the money. What can Atoy do?
A. Atoy may refuse to surrender his land to Caloy.
B. Atoy may require Caloy to pay the agreed price again.
C. Atoy may only recover the proceeds of the sale from Bitoy.
D. Atoy may recover his land from Caloy in court.

36. Mario, before going to Europe, appointed Caloy as his agent to administer his properties in the
Philippines. Afterwards. Caloy wrote Mario that he was withdrawing from the agency because of
failing health. Caloy, in the same letter, said that he appointed Jose as his substitute and that Mario
should extend a new appointment to Jose. Jose took over the duties of Caloy but Mario did not
bother to appoint Jose to act as his agent until Mario’s death. Now Mario’s heirs brought an action
against Jose for accounting. Jose raised the defense that he was not validly constituted as an agent
of Mario. In the case at bar, defense is not tenable because there is:
A. An actual agency. C. A general agency.
B. An implied agency. D. An agency by operation of law.

37. If an agent contracts in the name of the principal exceeding his authority, the contract entered into is:
A. voidable C. unenforceable
B. rescissible D. void or inexistent

38. X, Y and Z were appointed by A as his agents to administer his building which were rented by
various tenants while A was. In the course of management, X caused through his fault damage to
the building which was assessed at P45,000. A can claim:
A. P15,000 from each of X, Y and Z C. P45,000 from X.
B. P45,000 from X and Y D. P45,000 from either X, Y or Z.

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BUSINESS LAW 4 SALES, AGENCY, LABOR & OTHER COMMERCIAL LAWS

39. Atoy appointed Bitoy as his agent to sell his land; which of the following is valid?
A. The authority of Bitoy was orally given and he sold the land written in Ilocano dialect
B. The authority of Bitoy is in writing and he sold the land orally.
C. The authority of Bitoy was given thru a letter and he sold the land in writing.
D. The authority of Bitoy is in writing but the sold the land beyond the period expressly set forth
by Atoy.

40. Which of the following is not a mode of extinguishing a contract of agency?

A. Dissolution of the firm or corporation which entrusted or accepted the agency
B. Death, civil interdiction or insanity of the agent
C. Withdrawal of the agent from the contract
D. Appointment of a substitute agent

41. Bears the risk of collecting from the buyer the price of the sale.
A. Agente del credere C. Ordinary agent
B. Commission agent D. Agents of the law

42. The power to sell carries with it:

A. The power to mortgage
B. The power to execute necessary transfer documents
C. The power to sell on credit
D. The power to hire another agent to act in behalf of the agent.

43. A guarantee commission agent:

A. Bears the risk of collection on the same terms agreed upon with the purchaser.
B. Is not liable to the principal even if the buyer is really insolvent.
C. Is not liable for damages if he will not collect the credit on time.
D. Is not entitled to another commission aside from ordinary commission.

44. Atoy appointed Bitoy as his agent to sell his car for P100,000 with 10% commission. Bitoy using
persuasive skills was able to sell it for P150,000 on credit. After the sale but before payment of the
buyer:
A. Bitoy must give P 100,000 only.
B. Bitoy must give P 100,000 minus the commission.
C. Bitoy must give P 150,000 minus the commission.
D. Bitoy must give P 150,000 only.

45. Atoy appointed Bitoy to be his agent to administer his apartment units while Atoy was in Hong Kong.
Bitoy died leaving his son of legal age to take care of the property until Atoy arrived. This is an
example of agency created by:
A. Ratification C. Operation of law
B. Estoppel D. Consent of the principal

PART 2 - TRUE OR FALSE

CHOICES FOR ITEMS 46 – 60
A. TRUE B. FALSE

46. Agents represent capacitated persons A

47. The contract of agency is extinguished by the insanity of the agent or of the principal. A

48. An agent cannot purchase the property of his principal, even if the consent of the principal is given.B

49. If the authority is to mortgage a land, the contract of agency must be in writing otherwise the contract
will be voidB

50. The agent is expected to carry out an agency unless its execution would manifestly result in loss or
damage to the principal.A

51. The authority to sell a property in behalf of the principal necessarily includes the authority to
mortgage.B

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BUSINESS LAW 4 SALES, AGENCY, LABOR & OTHER COMMERCIAL LAWS

52. A third person cannot set up the fact that the agent has exceeded his powers, if the principal has
ratified, or has signified his willingness to ratify the agent's acts. A

53. An agency cannot be revoked if a bilateral contract depends upon it, or if it is the means of fulfilling
an obligation already contracted.A

54. A special power to compromise does not authorize the agent to submit the issue into arbitration.A

55. There is substantially no difference between an agent and a broker.B

56. A general power of attorney is revoked by a special one granted to another agent, as regards the
special matter involved in the latter.A

57. A stipulation exempting the agent from the obligation to render an account of his transactions to the
principal is valid.B

58. The principal is not liable for the expenses incurred by the agent when the expenses were due to the
fault of the agent.A

59. An agency couched in general terms comprises only acts of administration, unless the principal
should state that he withholds no power.B

60. The agency is revoked, if the principal directly manages the business entrusted to the agent.A

/cde

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