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BL Final Exam Ans Key

Accounting (Mindanao State University)

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BL 1: Obligations and Contracts

FINAL EXAMINATION
Name: Score:
Section:

________1. When the object of the contract is outside the commerce of point of a gun, compels B to marry him. Since the contract of
man, the contract is: marriage is voidable, either A or B has the right to file the action
a. Void or annulment.
b. Rescissible a. Case 1 is true but case 2 is false
c. Voidable b. Both cases are false
d. Unenforceable c. Case 1 is false but case 2 is true
d. Both cases are true
________2.In order that fraud may make a contract voidable:
a. It should be serious and should not have been employed by ________8.Contracts entered into during lucid interval are
both contracting parties a.Unenforceable
b. It may incidental but should have been employed by both b. Perfectly valid
parties c. Voidable
c. It should be serious and the parties must be in pari delicto d. Void
d. It may be incidental but both parties should not be in pari
delicto ________9. Three of the following may be valid objects of a contract,
except:
________3.A and B who are both unemancipated minors a. All that are within the commerce of man.
entered into a contract. The contract entered into by and between b. All services which are not contrary to law.
them is: c. Impossible things or services.
a. Unenforceable d. All rights that are transmissible.
b. Rescissible
c. Voidable ________10. A meeting of minds between two persons whereby one
d. Void binds himself with respect to the other to give something or to
render some service is known as:
________4.Which of the following contracts cannot be ratified? a.Obligation
a. Those whose cause or object did not exist at the time of the b.Contract
transaction c. Consent
b. Unauthorized contracts d. Stipulation
c. Those where both parties are incapable of giving consent
d. Those that fail to comply with the Statute of Frauds ________11. The elements of a contract without which a contract would
not exist are known as:
________5. On July 15, 1986, X entered into a contract with Y. On a. Accidental elements
February 10, 1987, X discovered that fraud was committed at the b. Natural elements
time he entered into the contract, a fraud that vitiated his consent. c.Essential elements
The action for annulment shall be brought: d.Special elements
a. Within four years from February 10, 1987
b. Within three years from the time of fraud ________12.A contract that can stand by itself is known as:
c. Within four years from the time A entered into the contract a.Accessory contract
d. On February 10, 1987 b.Commutative contract
c.Principal contract
________6. On September 1, 1987, A entered into a contract with B d.Gratuitous contract
whereby A sells to B 5,000 sacks of sugar to be delivered on the 15th
and to be paid in full on the 30 th. There was no agreement for ________13. A contract that does not have any special name under the
rescission based on nonpayment. A did not deliver on the 15th but law is known as:
on the 30th, he was willing and offering to deliver but b did not make a. Nominate contract
payment on the said date and so A did not like it and refuse to make b. Special contract
delivery. Decide. c.Innominate contract
a. A cannot rescind the contract for nonpayment of the price d.Nominal contract
b. A can rescind the contract for nonpayment of the price
c. A cannot refuse to deliver the goods ________14. The contracting parties may establish such stipulation,
d. B is not entitled to recover damages clauses, terms and conditions as they may deem convenient
provided they are not contrary to law, morals, good customs, public
________7.Case 1 – A hired B for P10,000 to kidnap C, and he paid B order or public policy. This is known as the principle of:
in advance. Before B could kidnap C, and A relented and stopped a. Mutuality of contract
B from performing the contract. The court may not allow A to b. Relativity of contract
recover from B the P5,000 he paid in advance. Case 2 – A, at the

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c.Liberty of contract a. Void

d.Obligatory force of contract b. Rescissible
c.Voidable
________15. The contract must bind both contracting parties, its validity d.Unenforceable
or compliance cannot be left to the will of one of them. This is
known as the principle of: ________24. Contracts entered into in a state of drunkenness or during
a. Consensuality of contract hypnotic spell are:
b. Relativity of contract a. Void
c.Mutuality of contract b. Rescissible
d.Freedom to contract c.Voidable
d.Valid
________16. D borrowed P500,000 from C. D died without having paid
his loan obligation to C. He left S, his son and heir, properties worth ________25. Contract that is effective upon execution but may be
P400,000. invalidated later
a. S is liable to C for P500,000. a. Rescissible
b. S is liable to C for P100,000. b. unenforceable
c. S is not liable at all because he should not be made to shoulder c.voidable
the obligation of his father. d.void
d. S is liable to C for P400,000.
________26.Cannot be sued upon unless ratified
________17. A contract may be enforced by or against a third person, a.Rescissible
except: b.voidable
a. In the case of stipulation pour autrui c.unenforceable
b. When a third person induces another to violate his contract d.void
c. In case of contracts intended to defraud creditors
d.When the benefit to the third person is merely incidental ________27.Validable contracts
a.Rescissible
________18. The principle that contracts are perfected by mere consent b.voidable
is known as: c.unenforceable
a. Consistency of contract d.void
b. Consummation of contract
c. Mutuality of contract ________28. Contracts that that has no effect upon execution but may
d.Consensuality of contract be effective upon ratification
a. Rescissible
________19.One of the following is not a real contract: a.Pledge b. voidable
b. Commodatum c.unenforceable
c. Deposit d.void
d.Sale
________29.No effect at all
________20. It is the manifestation of the meeting of the offer and the a.Rescissible
acceptance upon the thing and the cause which are to constitute b.voidable
the contract. c.void
a. Consideration d.unenforceable
b. Contract
c. Cause ________30.Cannot be ratified nor validated
d.Consent a.Rescissible
b.Voidable
________21. Three of the following instances will render an offer c.void
ineffective before acceptance is conveyed. Which one will not? d.unenforceable
a. Civil interdiction of either party
b. Insolvency of either party ________31.Inexistent contract
c.Intoxication of either party a.Rescissible
d.Insanity of either party b. voidable
c. unenforceable
________22.One of the following is not incapable of giving his consent d.void
a. Insane persons
b. Somnambulist ________32. X (guardian) sold the land of Y (ward) to Z for P300,000. The
c.Deaf-mutes who know how to read value of the land is P500,000.
d.Unemancipated minors a. Y can rescind the contract between X and Z within 4 years after
reaching the age of majority
________23.A contract in which one of the parties is incapacitated
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b. Lesion suffered by Y is more than ¼ of the value of the land, ________40. S and B orally entered into a contract whereby S sold his
hence, he can rescind he contract one year production of eggs in his poultry farm to B for P50,000
c. If rescission is proper and it prospers, X should return to Z the which amount B immediately gave in cash to S. The contract
money plus interest; Z to X, the land plus fruits between S and B is:
d.All of the above a. Void because the object was not existing at the time of
execution of the contract
________33.Consent is vitiated by mistake, violence, intimidation, b. Rescissible because B will likely suffer damage if the eggs do
undue influence or fraud not come into existence
a. Rescissible c. Unenforceable because the contract was not in writing
b. unenforceable d.Valid because future things may be the object of contracts
c. void
d.voidable ________41. A died leaving properties estimated at P1 M to his sons S
________34. Action for annulment shall be brought within 4 years and T. Subsequently, S sold one-half of his inheritance to X for
a. From the time the defect of consent ceases in cases of P300,000, although his share was still to be delivered
intimidation, violence or undue influence a. The contract is void because what S sold is future inheritance
b. From the time of discovery in case of mistake or fraud which may not be the object of a contract as a rule
c. From the time guardianship ceases b. The contract is valid since the inheritance is an existing
d.All of the above inheritance
c. The contract is rescissible
________35. Cures the defect of contract celebrated in the name of d. The contract is unenforceable
another without authority or in excess of authority
a. Rescission ________42.If mistake, fraud, inequitable conduct, or accident has
b. annulment prevented a meeting of the minds of the parties to contract, the
c. reformation proper remedy is
d.ratification a.sue for specific performance of the contract
b.reformation of the contract
________36.Which can be enforced in courts? c. annulment of the contract
a. Those executed by one in the name of another without any d. ratify the contract
authority or in excess of authority
b. Those that do not comply with the Statute of Frauds ________43.D is indebted to C for P10,000. For the purpose of
c. Those where both parties are incapable of giving consent defrauding C, D sold his only parcel of land to X valued at P10,000.
d.None of the above X had no knowledge of the intention of D
a. The contract between D and X is binding
________37.Statute Of Frauds b. The right of C is to rescind the contract because the transaction
a. Law that requires that certain contracts must be in writing is fraudulent
otherwise they are unenforceable c. The contract is voidable because D is in bad faith
b. Failure to execute the contract in writing does not render the d. the contract between D and X is rescissible
contract void, only unenforceable
c. Applies to executory contracts, not to contract totally or ________44.G was appointed guardian of S, the latter being 16 years
partially executed old. S sold his parcel of land in writing to B valued at P100,000 for
d.All of the above P75,000, suffering lesion by ¼ of the value. What is the status of
the contract?
________38. It exists when a person takes improper advantage of his a.rescissible
power over the will of another depriving the latter of a reasonable b.voidable
freedom of choice. c. unenforceable
a. Intimidation d. enforceable
b. Duress
c. Threat ________45.Which of the following contracts is not rescissible?
d.Undue influence a.Those which are entered into by guardians whenever the wards
whom they represent suffer a lesion of more than ¼ of the value of
the object of the contract
________39. Nano and Iking entered into a contract where they made it
b.Those where one of the parties is incapable of giving consent to a
appear that Nano was mortgaging his lot and building to Iking to
secure a contract of loan. The truth, however, was that Nano was contract
selling his lot and building to Iking. Which of the following c. those executed in representation of absentee, if the latter
statements is true? suffer a lesion of more than ¼ of the value of the object of the
a. The parties are bound by the contract of loan and mortgage. contract
b. The parties are not bound at all. d. Those undertaken in fraud of creditors when the latter cannot
in any other manner collect the claims due them
c. The parties are bound by the contract of sale only when third
persons are affected.
________46.Which of the following contracts is voidable?
d. The parties are bound by the contract of sale.

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a.Those where both of the parties are incapable of giving consent to a ________4. A party who employed violence, intimidation, undue
contract influence, or fraud, or who caused mistake may bring an
b.Those where the consent if vitiated by mistake, fraud, violence, action to annul the contract on any such ground. wrong
intimidation or undue influence ________5.Option money is part of a purchase price. Wrong
c. Those undertaken in fraud of creditors when the latter cannot ________6. Contracts entered into during a lucid interval are valid. TRUE
in any other manner collect the claims due them ________7. The usual exaggerations in trade, when the other party had
d. Those whose object is outside the commerce of men an opportunity to know the facts, are not in themselves fraudulent.
TRUE
________47.Which of the following contracts is rescissible? ________8. Incidental fraud does not render a contract voidable but only
a.Those where one of the parties is incapable of giving consent to a obliges the person employing the damages. TRUE
contract ________9. Reformation cannot be availed of in the case of a last will
b.Those which are entered into by guardians whenever the wards and testament. TRUE
whom they represent suffer lesion by more than ¼ of the value of ________10. Reformation is not available if the contract is void. TRUE
the object of the contract
c. Those where both of the parties are incapable of giving II. MATCHING TYPE. Indicate your answers by writing the letter
consent to a contract representing the statement or phrase that best describes, defines or
d. Those which are absolutely simulated or fictitious explains the numbered items.

________48. Chai sold her lot consisting of 1,000 square meters to Ming. Terms
However, the deed of sale signed by the parties showed a A. Aleatory contract
total area of 1,200 square meters due to the secretary’s mistake.
Later, Chai discovered the mistake. What remedy is available to B. Annulment
either party?
C. Preparation of a contract
a.rescission
b.reformation D. Lucid interval
c. annulment
d. d. declaration of nullity E. Cause

F. Onerous contract
________49. On June 1, Shin Hyee offered to sell a specific generator set
to Min Ho for 300,000. Min Ho sent his letter of acceptance to Shin G. Natural elements
Hyee on June 8. On June 10, however, Min Ho became insane. On
June 12, Shin Hyee received Min Ho’s letter of acceptance. H. Commutative contract
a. The contract was perfected on June 8 when Min Ho sent his
letter of acceptance, at which time he was still sane. I. Mutuality of contract
b. The contract was not perfected because the insanity of Min Ho
J. Nominate contract
occurred before Shin Hyee came to learn of the acceptance of his
offer by Min Ho. K. Perfection of a contract
c. The contract was perfected on June 12 when Shin Hyee
learned of acceptance. L. Ratification
d. The contract was perfected on June 1 because the acceptance
made by Min Ho on June 8 retroacts to the date of the offer. M. Auto contract

N. Consideration
________50. On March 1, S sent a letter offering the sale of his car for
P200,000 cash to B. In his letter, S stated that B’s acceptance should O. State of drunkenness
be sent by registered mail and must be received by S not later than
March 31. On March 20, B accepted the offer of S by sending an e- P. Innominate contract
mail message on the same day to S whose e-mail address was
indicated in the letter. S read the message the following day, March Q. Relativity of contract
21. Was there a perfected contract between S and B? R. Real contract
a. Yes, on March 1.
b. No, no contract was perfected at all. S. Essential elements
c. Yes, on March 20.
d. Yes, on March 21. T. Consensual contract

Items
II. Write TRUE if the statement is correct and wrong if it is FALSE.
________1.A contract whose fulfillment depends upon chance.
________1.A relatively simulated contract is void. wrong
________2. The illegality of the motive of a party to a contract renders A
the contract void. wrong
________3.The action of rescission must be commenced within three ________2.The action that is brought to set aside a voidable
years. wrong
contract. B
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________3.Involves preliminary negotiations and bargaining,

with no arrival yet of a definite agreement. C

________4.The period of temporary sanity of an insane person.

________5. The essential reason of a party in entering into a contract. E

________6. A contract that does not have any special name under the
law. P
________7. The principle that contracts take effect only between the
contracting parties, their assigns and heirs. Q
________8. The delivery of the object is required for its perfection. R
________9. Elements without which a contract would not exist. S
________10.A contract that is perfected by mere consent. T

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