Business Law

Obligations and
Contracts
1. That which binds the parties together:
a. Prestation c. Culpa Contractual
b. Vinculum juris d. Object or subject matter

2. The obligation is demandable at once;

a. Subject to suspensive condition
b. Subject to resolutory condition
c. when it depends on the will of the third person
d. when his means will permit me to do so

3. When a person paid his tax over the amount due, the basis of tax refund is
a. Negotiorum gestio c. Equitable recoupment in taxation
b. Solutio Indebiti d. Rule of tax deficiency

4. Which statement is correct?

a. Relatively simulated contracts are voidable
b. Lesion is not a ground to annul a contract
c. In rescission the defect is intrinsic
d. In annulment the object is extrinsic

5. A mode of extinguishing an obligation that may result to donor’s tax liability:

a. compensation c. confusion
b. Remission d. novation
6. A, B, C and D owes E, F, G and H P40,000. How much can E collect from A if there is no agreement if
their obligation is joint or solidary?
a. P2,500 c. P40,000
b. P10,000 d. P5,000

7. In the preceding number, if A, B, C and D are joint debtors while E, F, G and H are solidary creditors,
how much can E collect from A?
a. P2,500 c. P40,000
b. P10,000 d. P5,000

8. The principle by which contracting parties are equal in the eyes of law:
a. Autonomy of contracts c. Relativity of Contracts
b. Mutuality of contracts d. Consensuality of contracts

9. Here, defense of a good father of a family is not a proper defense:

a. Culpa contractual c. Culpa aquiline delicto
b. Tort or quasi-delict d. Culpa criminal

10. 1st Statement: When a fortuitous event concurs with a person’s negligence resulting to loss, he is still
exempt from liability
2nd Statement: The creditor has a right to the fruits of the thing form the time ownership is transferred.
a. Both statements are correct c. Only the first is correct
b. Both statements are false d. Only the second is correct
11. A source of obligation where negligence resulted to crime:
a. culpa contractual
b. quasi-contract
c. culpa delictual
d. culpa aquiliana

12. Which is not a source of obligation?

a. Law
b. Culpa Aquilana
c. Culpa Contractual
d. Quasi Contract

13. Statement No. 1: D oblige himself to give C a specific car tomorrow. If D failed to deliver tomorrow
after demand is made C may compel D to do his obligation and may ask for damages.
Statement No. 2: D oblige himself to deliver a car to C tomorrow. If D failed to deliver tomorrow after
demand is made C's right is to ask a third person to deliver a car to him at the expense of D plus
damage.
a. Both are true
b. Both are false
c. No. 1 is true; No. 2 is false
d. No. 1 is false; No 2 is true
14. Which of the following is considered as quasi-contract?
a. Solutio indebiti
b. When the third person, without the knowledge of the debtor, pays the debt
c. Reimbursement due the person who saved property during fire or storm without the knowledge of
the owner.
d. All of the above.

15. A judicial 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.

16. The wrongful act or tort which causes loss or harm to another is called:
a. Damages
b. Damage
c. Injury
d. Liability

17. Which of the following is not a generic obligation?

a. obligation to pay P5,000 c. obligation to deliver 50 cavans of rice
b. obligation to deliver Toyota INNOVA d. obligation to give a delimited generic object
18. Statement No. 1: An obligation which has for its object the delivery of a "delimited generic" object
may be lost by reason of fortuitous e3vent.
Statement No. 2: There can be no delay in an obligation not to do.
a. Both statement are true
b. Both statements are false
c. Statement No. 1 is true while statement NO.2 is false
d. Statement No. 1 is false while statement No. 2 is true

19. If the obligation is payable in foreign currency

a. the obligation is void.
b. the obligation is valid, but the stipulation is void.
c. the creditor can compel the debtor to pay in foreign currency as per agreement.
d. The stipulation and the obligation are void.

20. "I'll give you my car one year after your death." The obligation is
a. valid, because the event is sure to come.
b. valid, the obligation is conditional.
c. valid, but disregard the condition.
d. void, not legally possible.

21. Which statement is incorrect?

a. There is no delay in negative obligation c. Condonation is generally gratuitous
b. Consignation is essential in mora accepiendi d. Legal compensation is automatic
22. A obliged himself to deliver B his dog, his cow, his carabao, his elepahant, or his crocodile. The first
two lost due to fortuitous event and the last three were lost due to A’s fault. What is A’s obligation?
a. Creditor, B may convert to cash any of them plus damages
b. Debtor A may convert to cash the value of the last one lost plus damages.
c. A may rescind the contract plus damages.
d. Creditor, B may convert to cash any of the last three plus damages.

23. A obliged himself to deliver to B his cell phone or as a substitute he may deliver his cute kitten. After
substitution was made, the former was lost due to A’s fault
a. A is liable and must pay damages
b. A will simply deliver his cute kitten plus damages for the loss of the cell phone
c. The loss has no effect to the obligation; obligation to deliver the latter will subsist.
d. Obligation was extinguished.

24. 1st Statement: Mr. X waived in advance his right to sue Mr. A, if A will cause him injury due to A’s
negligence. The waiver is void.
2nd Statement: Liability arising from dolo can be mitigated by the courts
a. True; True c. True; False
b. False; False d. False; True
25. A and B solidarily owe C P50,000; they issued a promissory note in favor of C. C endorsed it to D, D
endorsed it to E, E then endorsed it back to A who is also E’s creditor in the amount of P50,000.
a. The obligation is partially extinguished by merger.
b. The obligation is extinguished and A cannot recover any amount from B
c. The obligation is extinguished and A can recover the share of B which is P25,000
d. The obligation is partially extinguished by compensation.
26. Rose obliged herself to give Jack 1 dozen of eggs on January 15, 2009. When the date arrived, Rose
failed to deliver despite repeated demands from Jack. Jack’s remedy is:
a. Compel Rose to deliver eggs plus damages
b. Compel Rose to pay the amount of the eggs.
c. Rescind the contract
d. Ask a 3rd person to deliver the eggs to him but chargeable to Rose

27. Mary obliged herself to give to Crisse her BMW car on October 10, 2009 but she failed to deliver on
that date. On the following day, a lightning completely destroyed the car.
a. Mary is still liable for she is in default already
b. Mary is no longer liable there being no demand, there is no delay and the thing is lost due to
fortuitous event.
c. Crisse can demand for a substitute
d. Mary is still liable even if she in default.

28. A condonation of an obligation involving a property worth P50,000.

a. Must be in writing c. May be oral
b. Must be in a public instrument d. Either a or c

29. A owes B- P10,000. Without the consent of A, B agreed with C’s proposal (C is suitor of A) to answer
for A’s obligation for which A vehemently objected to but could not do anything. The following week all
of C’s properties were destroyed by fire, hence he could no longer pay the P10,000 obligation due to
insolvency.
a. A’s obligation is revived c. A must answer for ½ of the obligation
b. A’s obligation is not revived d. B cannot collect at all
30. One is an incorrect distinction between solidarity and indivisibility.
a. Solidarity refers to the legal tie whereas indivisibility refers to prestation.
b. Plurality of subject is indispensable in solidarity unlike in indivisibility

c. In case of breach, solidarity character of obligation remains, but the indivisible character of the
obligation is terminated.
d. Solidarity refers to the parties of the obligation and the prestation whereas indivisibility refers to the
vinculum juris.

31. 1st Statement: Payment of income tax is an obligation arising from government contracts.
2nd Statement: Civil liability from a criminal act is an obligation arising from quasi delict.
a. If only the first statement is correct
b. If only the second statement is correct
c. If both statements are correct
d. If both are false

32. All are primary classification of obligation, except one:

a. Pure obligation c. Obligation with a period
b. Real obligation d. Conditional obligation
33. I will pay you P10,000 if I decide to go to USA tonight is what kind of condition;
a. Casual c. Potestative resolutory
b. Potestative suspensive d. Mixed

34. Here, consignation alone is enough to produce payment except;

a. If creditor is unknown c. Creditor is reluctant to issue receipt
b. Creditor is incapacitated d. Two or more persons claim to be creditors

35. The buyer has the right to the fruits of the things sold from;
a. Perfection of contract
b. From the time the obligation to deliver it arises
c. From the time of delivery
d. None of the above

36. Which of the following is correct?

a. An action for rescission of contract prescribes in five (5) years counted from the execution of the
contract.
b. An action to declare contract void is not subject to prescription
c. An action for annulment of contract is imprescriptible
d. An action to enforce judicially a natural obligation prescribes in 4 years
37. The following contracts should observe the Statute of Frauds, except
a. Lease of real property longer than one year
b. Representation as to the credit of a third person
c. Lease of personal property longer than one year
d. Guaranty.

38. Rescission of contract can take place in this case:

a. When the seller cannot return the installment paid to him by the buyer.
b. When the party seeking resolution can perform only as to part and rescind as to remainder.
c. When he demands rescission can return whatever he may be obliged to restore.
d. When the things which are the object of the contract are legally in the possession of third
person.

39. S makes an offer to B on January 1, 2009. B makes known his acceptance in a letter sent on January
2, and received by S on January 10. Meantime, on January 5, S becomes insane.
a. The contract is unenforceable.
b. The contract is not binding because there is no meeting of minds.
c. There is already a meeting of minds, the contract is perfected.
d. The contract is voidable because one party is insane.
40. The stage of “conception” of a contract is:
a. When there is a meeting of the parties’ minds.
b. When negotiations are in progress.
c. When the parties come to an agreement
d. When the contract is fully executed.

41. L entered into a contract of lease with X, T, the clerk of L, typed the document. Due to T’s
negligence, the document made was that of sale instead of lease.
a. Remedy is reformation.
b. Parties may enforce their right because it is enforceable
c. Parties may go to court for interpretation
d. The remedy is annulment.

42. Which of the following can be considered as feature of the void contract?
a. Subject to ratification
b. they exist
c. Action or defense for nullity is subject to prescription
d. None of them.
43. In three of the following defective contracts, ratification cleanses the defects. Which is the
exception?
a. Contracts entered into by a person who has been given no authority.
b. Sale of piece of land thru an agent the authority is oral.
c. Sale of immovable property or interest orally entered into.
d. Both parties are incapable of giving consent.
44. Statement No. 1: Ratification of voidable contract is necessary for its validity.
Statement No. 2: Sales between husband and wife are void always.
a. Both are true
b. Both are false
c. No.1 is true; No.2 is false
d. No.1 is false; No. 2 is true

45. S and B orally agree that S would sell and would buy S’s radio for P400, two years from the date of
the agreement. At the end of the two-year period, S refused to deliver the radio although B was
willing to pay.
a. The object is movable, oral contract is enforceable.
b. No statute of fraud because the price is less than P500.
c. The contract falls under the Statute of Frauds, therefore, unenforceable.
d. B can compel S to deliver because B is willing to pay the price.

46. S, a minor, owns a specific property valued P50,000. B, capacitated, by means of fraud induced S
to sell his property to him (B) for P10,000 which S did so. The contract is in writing.
a. The contract is void
b. The contract is rescissible because the ward suffered lesion by more than ¼ of the value.
c. The contract remains unenforceable because it falls under the Statute of Fraud.
d. The contract is binding from the start.
47. Type of defective contract that creates no rights and impose no obligation, but are susceptible of
ratification.
a. Void contracts.
b. Rescissible contracts.
c. Unenforceable contracts.
d. Voidable contracts.

48. The guradian of an insane person sells a house and lot belonging to the latter valued at P100,000 to B,
buyer for P74,000 with the approval of the court. The contract is:
a. Rescissible
b. Unenforceable
c. Voidable
d. Valid

49. Example No. 1: W sold his land orally to B for one third of its value.
Example No. 2: S sold his house valued at 1 M for only P400,000 to B court employee where case
involving the house is being litigated.
a. Both contracts are binding.
b. No.1 is unenforceable.2nd is rescissible