L-NU AA-23-02-01-18

LYCEUM-NORTHWESTERN UNIVERSITY
Tapuac District, Dagupan City

COLLEGE OF BUSINESS EDUCATION

FINALS EXAMINATION – BL1 Law on Obligations and Contracts

1st Semester, AY 2020– 2021
Prepared by: Amie Jane R. Miranda, CPA

Name:_____________________________________ Score:____________________

Student No.: _______________ Year/Section:___________ Date of Exam: ____________

I. MULTIPLE CHOICE. Choose the best answer from the choices and encircle your answer. Strictly “NO
ERASURES”.

1. I. Contracts are perfected by mere consent, and from the moment the parties are bound not only
to the fulfillment of what has been expressly stipulated but also to all the consequences which,
according to their nature, may be keeping with good faith, usage and law.
II. Real contracts, such as deposit, pledge and commodatum, are not perfected until the delivery
of the object of the obligation.
A. True; True C. True; False
B. False; True D. False; False

2. I. No one may contract in the name of another without being authorized by the latter, or unless he
has by law a right to represent him.
II. A contract entered into in the name of another by one who has no authority or legal
representation, or who has acted beyond his powers, shall be enforceable, unless it is ratified,
expressly or impliedly, by the person on whose behalf it has been executed, before it is revoked by
the other contracting party.
A. True; True C. True; False
B. False; True D. False; False

3. There is no contract unless the following requisites concur:

I. Consent of the contracting parties
II. Object certain which is the subject matter of the contract
III. Cause of the obligation which is established.
IV Delivery

A. I and II only C. I, II and III

B. I, II and IV only D. I, III and IV only

4. I. In order that fraud may make a contract voidable, it should be serious and should not have been
employed by both contracting parties.
II. Incidental fraud only obliges the person employing it to pay damages and interest.
A. True; True C. True; False
B. False; True D. False; False

5. I. All things which are not outside the commerce of men, excluding future things, may be the
object of a contract.
II. All rights which are not intransmissible may also be the object of contracts.
III. All services which are not contrary to law, morals, good customs, public order, or public policy
may likewise be the object of a contract.
A. True; True; True C. True; False; True
B. False; True; True D. False; False; True

6. In order that service may be the object of a contract, the following requisites must concur:
I. The service must be within the commerce of men.
II. It must not be impossible, physically or legally.
III. It must be determinate or capable of being made determinate.

A. I and II only C. I, II and III

B. I and III only D. II and III only

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7. I. Although the cause is not stated in the contract, it is presumed that it exists and is lawful, unless
the debtor proves the contrary.
II. Except in cases specified by law, lesion or inadequacy of cause shall not invalidate a contract,
unless there has been fraud, mistake or undue influence.
A. True; True C. True; False
B. False; True D. False; False

8. Classifications of contracts according to form are

I. Informal or common contract or that which may be entered into in whatever form provided all
the essential requisites for their validity are present.
II. Formal or solemn contract or that which is required by law for its efficacy to be in a certain
specified form.
A. True; True C. True; False
B. False; True D. False; False

9. Sale; lease of thing; partnership are examples of what classification of contract according to cause:
A. Onerous C. Gratuitous
B. Remuneratory D. Bilateral

10. Commodatum; pure donation; guaranty or suretyship unless there is a stipulation to the contrary;
mortgage given by a third person to secure an obligation of a debtor unless a consideration is paid
for such mortgage are examples of what classification of contract according to cause:
A. Onerous C. Gratuitous
B. Remuneratory D. Bilateral

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

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

12. 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.

13. 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
B. Consumption of the sale
C. Consensus of the sale
D. Perfection of the sale.

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

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

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

16. 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.

17. The fulfillment of the contract is dependent upon chance

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

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

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

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

20. 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
B. Solemn contract
C. Real contract
D. Formal contract

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

A. Consensual contract
B. Solemn contract
C. Real contract
D. Formal contract

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

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

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

24. 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
B. Relativity
C. Mutuality of contract
D. Consensuality

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

26. 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.

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D. Where the stipulation arising from the contract are not transmissible by stipulation or by provision
of law.

27. 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.

28. 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.

29. 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
B. P 50,000
C. P200,000
D. Nothing

30. 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.

31. 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.

32. 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.

33. 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.
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.

34. 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
B. Rescissible
C. Unenforceable
D. Void

35. Pat sold to Mat the computer owned by Cathy without Cathy’s authority. The contract is

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A. Perfectly valid
B. Void
C. Voidable
D. Unenforceable

36. 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.

37. When there is concurrence of the offer and the acceptance, there is –
A. Consent
B. Revocation
C. 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.

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

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

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

41. 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.

42. 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.

43. Contracts entered into during lucid-interval

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

44. 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
B. Voidable
C. Valid
D. Unenforceable

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

46. 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.

47. 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
B. False; False
C. True; True
D. False; True

48. 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
B. Undue influence
C. Intimidation
D. answer not given

49. An 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
B. Void
C. Voidable
D. Unenforceable

50. 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
B. Undue influence
C. Intimidation
D. Mistake

51. 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
B. Mistake
C. Fraud
D. Misrepresentation

52. 1. A delivered his bracelet to B for B’s necklace. No written agreement was signed by the parties.
Which of the following is appropriate description of the contract between A and B?

A. Onerous and bilateral

B. Bilateral and nominate
C. Bilateral and innominate
D. Aleatory and nominate

53. They are the elements that are found in certain contracts and are presumed to exist unless set
aside by the parties
A. Accidental elements
B. Artificial elements
C. Natural elements
D. Incidental elements

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54. They refer to the elements that may be stipulated by the contracting parties

A. Accidental elements
B. Artificial elements
C. Natural elements
D. Incidental elements

55. The following are some accidental elements of a contract of sale, except

A. Terms of payment
B. Place of payment
C. Interest rate
D. Accession and accessories

56. A contract where the cause with respect to each contracting party is the prestation or the promise
of a thing or service by the other is

A. An onerous contract
B. An innominate contract
C. A gratuitous contract
D. An aleatory contract

57. A contract where one party receives no valuable consideration and the cause is the liberality of the
benefactor is

A. A gratuitous contract
B. An onerous contract
C. A unilateral contract
D. A commutative contract

58. A delivered his van to B for the latter’s use for one week without any compensation. The cause of
the contract is

A. The van of A
B. The period of one week
C. The generosity of A
D. The delivery of the van

59. The principle that contracting parties may establish such stipulations, clauses, terms and conditions
as they may deem convenient, provided they are not contrary to law, moral, public policy and
public order, refer to the principle of

A. Liberty of contract
B. Consensuality of contract
C. Relativity of contract
D. Mutuality of contract

60. The following instances will render an offer ineffective before acceptance is conveyed. Which one
will not? When one of the parties

A. Is civilly interdicted
B. Becomes insane
C. Becomes insolvent
D. Is placed under a hypnotic spell

61. The following statements pertain to the cause of a contract. Which statements refer to motive?

A. It is the essential reason of a contract.

B. It is always known to the contracting parties
C. It is illegality does not affect the validity of the contract
D. there will be no contract without it

62. The bargaining point, that is, when negotiation is in progress (stage in the life of a contract)

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A. Consummation
B. Perfection
C. Conception
D. Birth

63. The meeting of minds regarding the object and cause of the contract (stage in the life of a contract)

A. Conception
B. Death
C. Preparation
D. Birth

64. The point where the parties have performed their respective obligations and the contract is
Terminated

A. Preparation
B. Perfection
C. Conception
D. Consummation

65. When there is concurrence of offer and acceptance, there is

A. Payment
B. Consent
C. Consignation
D. Tender of payment

66. An absolutely simulated or fictitious contract is

A. Void
B. Rescissible
C. Voidable
D. Unenforceable

67. A sold to B his cow for P5,000. No date is fixed by the parties for the performance of their
respective obligations. The obligation of A is

A. To deliver the cow immediately as there is a perfected contract.

B. To deliver the cow within the reasonable time from the perfection of the contract
C. To deliver the cow upon the payment by B of P5,000
D. To rescind the contract as there is no time fixed for the delivery and payment.

68. A owes B P10,000 due on March 10, 2010. A owes B P8,000 due on March 11, 2010. A obliged
himself to deliver to B a cow valued at P6,000 on March 12, 2010. On March 13, 2010, a paid B
P10,000. If A makes an application of payment,

A. The P10,000 should be applied to the first debt only

B. The P10,000 should be applied to the second debt only
C. The P10,000 may be applied either to the first debt or second debt
D. The P10,000 may be applied to the first debt, or to the second debt or to the third debt

69. A contract where both contracting parties are incapable of giving consent is

A. Void
B. Unenforceable
C. Rescissible
D. Voidable

70. The conception of a contract is when

A. When there is meeting of the minds

B. When negotiations are in progress
C. When the contract is executed

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D. When the parties come to an agreement

71. Contract which has no effect at all

A. Rescissible
B. Unenforceable
C. Voidable
D. Void

72. Contract which can not be ratified

A. Rescissible
B. Unenforceable
C. Voidable
D. Void

73. If mistake, fraud, accident or inequitable conduct has prevented a meeting of the minds of the
parties to a contract, the proper remedy is

A. Ratify the contract

B. Annulment of the contract
C. Ask for a specific performance
D. Reformation of the contract

74. A sold his land to B. The sale was made orally. B paid the agree price. B wanted to have the sale
registered but he needs a public instrument. Which is correct?

A. B may sue A for the return of his money as no one shall be unjustly enriched at the expense of
another.
B. B cannot demand the return of the purchase price because the sale is unenforceable.
C. B may compel A to execute the public instrument because the sale is valid.
D. B may only occupy and use the land as buyer in good faith

75. A is the guardian of B, a minor. B sold A’s land in writing to C valued at P1M for P.7M. The sale is
(stage in the life of a contract)

A. Rescissible
B. Unenforceable
C. Voidable
D. Void

76. Although validly agreed upon, courts can nullify this contract because of damage to one of the
parties or to a third person and its enforcement, may cause injustice by reason of some external
facts

A. Rescissible contracts
B. Unenforceable contracts
C. Voidable contracts
D. Void contracts

77. A contract where the fulfillment is dependent upon the chance, so the values may vary because of
the risk or chance.

A. Commutative
B. Remunerative
C. Aleatory
D. Gratuitous

78. A clause providing that the mortgagee will automatically own the property mortgaged if the debt is
not paid at maturity is

A. Dacion en pago
B. Pactum Commissorium
C. Payment by cession

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D. Upset price

79. The contact must bind both contracting parties

A. Consensuality of contract
B. Mutuality of contract
C. Simplicity of contract
D. Relativity of contract

80. Not a characteristic of contract

A. Consensuality of contract
B. Mutuality of contract
C. Simplicity of contract
D. Relativity of contract

81. Contracts are generally effective only between the parties, their assigns and their heirs

A. Consensuality of contract
B. Mutuality of contract
C. Simplicity of contract
D. Relativity of contract

82. A stipulation in favor of a third person

A. Stipulation pour autrui

B. Assignment of credit
C. Stipulation pour over
D. Pactum commissorium

83. Not a requisite of stipulation pour autrui

A. The contracting parties must have clearly and deliberately conferred a favor upon third person
B. The stipulation must be part of the contract
C. The third person communicated his acceptance to the obligor before its revocation
D. There must be an agency between either of the parties and the third person

84. The following contracts are not perfected until the delivery of the object of the obligations, except

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

85. Pledge, deposit and commodatum are

A. Consensual contracts
B. Solemn contracts
C. Real contracts
D. Formal contracts

86. Acceptance of an offer made by letter or telegram shall bind the offeror. From the time the

A. Offeree accepted the offer

B. Offeree sent his letter or telegram
C. Acceptance came to the knowledge of the offeror
D. Offeror made the offer

87. A contract where consent is given through mistake, violence, intimidation, undue influence or fraud
is

A. Rescissible
B. Unenforceable
C. Voidable

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D. Void

88. The mortgagor will execute an instrument to transfer the ownership over the property mortgaged
to the mortgagee if the debt is not paid at maturity is

A. Void
B. Valid
C. Voidable
D. Unenforceable

89. A, B and C are jointly liable to D in the amount of P9,000. D assigns the entire credit to A. In this
case

A. The obligation is extinguished because of confusion

B. B and C will not be liable to A
C. A becomes the new creditor and may demand from B and C P4,500 each
D. A’s share in the obligation is extinguished because of confusion.

90. Characteristic of void contracts, except

A. Defense of illegality cannot be waived

B. Cannot be ratified
C. Action for declaration of inexistense does not prescribe
D. The inexistence can be assailed by third person
ajmiranda
------END-----
Good luck and God bless

Reviewed and Checked by:

Dr. Genoveva Y. Reyes, CPA, FRIAcc

Dean, College of Business Education

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