TRUE OR FALSE

__________ 1. Statute of fraud is for validity and enforceability.

__________ 2. The right to set up the defense of illegality in void contract can be waived.
__________ 3. Stipulation por autrui is an exception to the rule on consensuality of contracts.
__________ 4. Failure to disclosed facts, when there is a duty to reveal them, as when confidential relations
bind the parties constitutes fraud.
__________ 5. Contracts take effect only between the contracting parties.
__________ 6. Real contracts are perfected by mere consent.
__________ 7. When the real agreement of the parties stated in a contract is void the parties can ask for
reformation of the instrument.
__________ 8. Consummation of a contract is manifested by the offer and acceptance.
__________ 9. Annulment is available only to persons who are obliged principally or subsidiary. It is not
available to third persons
__________10. Cause is the essential or more proximate purpose, which the parties have in view in entering into
the contract. It voids the contract if unlawful like motive.
__________11. When, there having been a meeting of the minds of the parties to a contract, their true intention
is not expressed in reason of mistake, fraud, inequitable conduct or accident, one of the parties
may ask for the reformation of the instrument
__________12. An offer becomes ineffective upon the death, civil interdiction, insanity, or insolvency of either
party before acceptance is conveyed
__________13. Acceptance made by letter or telegram does not bind the offerer except from the time it came to
this knowledge. The contract, in such a case, is presumed to have been entered into in the place
where the offer was made
__________14. Legal life of a contract starts in the conception stage
__________15. Misrepresentation made in good faith is not fraudulent but may constitute error.
__________16. If one party was mistaken and the other acted fraudulently or in such a way that the instrument
does not show their true intention, the former may ask for the annulment of the instrument.
__________17. Mutual promise to marry if orally entered into is unenforceable.
__________18. In the case of an illegal contract where there is a criminal offense, the parties cannot be
prosecuted if they are both in pari-delicto.
__________19. Just like in voidable contracts, rescission is a primary or principal action.
__________20. Observance of a certain forms necessary for validity in contracts under statue of fraud.
__________21. To be valid, unenforceabsle contracts must first be ratified.
__________22. A threat to enforce a legal claim is not a ground that can vitiate consent.
__________23. The liability of a 3rd person who induces another to violate a contract is based on quasi-contract.
__________24. Most contracts in the Civil Code are formal or solemn contracts.
__________25. There can be no action for the reformation of instrument if the real agreement is void.
__________26. An advertisement containing some terms of the offer in print needs no further negotiation but an
offer by itself.
__________27. Lesion is inadequacy of the cause of a contract.
__________28. The rule on mutuality of contracts provides that contracts takes effect between the parties, the
heirs, assigns, except in cases where the rights and obligations arising from contract are not
transmissible by their nature, by law or by stipulation.
__________29. Husband and wife cannot absolutely sell property to each other.
__________30. Contracts entered by demented persons during lucid interval are perfectly valid.
__________31. In avoidable contracts, there is no need to ratify the same before they can be considered valid. In
unenforceable contracts, however, ratification is necessary before they can be considered
enforceable.
__________32. A mere expression of opinion can never result to fraud.
__________33. If the contract does not reflect the true intention of the parties, the main action should be that of
annulment.
__________34. A party who has brought an action to enforce an instrument can still later ask for its reformation.
__________35. A contract, which is direct result of a previous illegal contract, is also void and existent.
__________36. Contracts invalidly agreed upon maybe recorded in cases established by law.
__________37. The statement of a false cause in contracts shall render them void, if it should not be proved that
they were founded upon another cause, which is true and lawful.
__________38. Gross inadequacy of the price does not affect the validity of contracts as a rule.
__________39. The determination of the performance may be left to a 3rd person whose decision shall be
binding immediately.
__________40. The interpretation of obscure words or stipulation in a contract shall not favor the party who
caused the obscurity.
MULTIPLE CHOICE

41. S offers to sell his house to B for P100, 000. B asks him if he would accept P80, 000. Which of the following is
correct?
a. Because of ambiguity, both offers are terminated by operation of law.
b. Bs response is a counter-offer effectively terminating the P10, 000 offer and instigating an offer for P80,
 000.
c. Bs response is a rejection of the P100, 000 offer, and there is no offer for P80, 000 because it is too
indefinite
d. Bs response is a mere inquiry, the P100, 000 offer by S is still in force.
42. By this principle, the validity and efficacy of the contract cannot be left to the will of one of the contracting
parties.
a. Relativity of contract c. Mutuality of contract
b. Obligatoriness of contract d. Freedom of contract
43. This principle means that contracts take effect only upon the contracting parties, their assigns or successors-in-
interest
a. Relativity of contract c. Mutuality of contract
b. Obligatoriness of contract d. Freedom of contract
44. B fraudulently induces S to sell him (B) a masterpiece painting for P10, 000. Subsequently, B sold it to X for
P12, 000, a good faith purchaser. S is entitled to
a. Rescind the contract with B plus damages
b. Recover the painting from X but no damages
c. Recover damages from B
d. Annul the contract plus damages
45. Which of the following is correct?
a. An action to enforce judicially a natural obligation prescribes in 4 years
b. An action for annulment of contract is imprescriptible
c. An action to declare contract void is not subject to prescription
d. An action for rescission of contract prescribes in five (5) years counted from the execution of the contract
46. The following contracts should observe the Statue of Frauds, except:
a. Guaranty
b. Lease of personal property longer than one year
c. Representation as to the credit of a third person
d. Lease of real property longer than one year
47. An invitation to bid, B proposes the following:
I will buy the property for P10, 000 if the bid of any other offerrors or bidders shall be considered the best
terms of amount and conditions, I am to equal that offer.
a. The offer is speculative, because it cannot be considered as against another offer which is certain
b. The offer is considered a counter offer
c. This is a continuing offer which is very certain
d. The advertiser is not bound to accept the higher bidder
48. In the preceding question, which of the following statements is correct?
a. If there is no more offer made, the contract is perfected on the offer of B because he will be considered as
the highest bidder
b. However, if another bidder, X, bidder P15, 000, he will be considered as the highest bidder and the
contract is perfected
c. In letter (b), if X increases his bid for P20, 000, and no more bids equals his bid, the contract is perfected
for P20, 000
d. Answer is not given
49. On July 15, 2004, X entered into a contract with Y. On February 10, 2005, X discovered that fraud was
committed at the time he entered
a. Within three years from the time of the fraud
b. Within four years from February 10, 2005
c. Within four years from the time A entered into the contract
d. On February 10, 2005

50. 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 constitutes a definite offer?
a. An offer made through an agent
b. Business advertisement of things for sale
c. Advertisement for bidders
d. All of the above
51. Example No. 1: The husband, by intimidation, was able to obtain the consent of his wife, with regards to the
sale of a piece of land to him belonging to the wife for P1 million. The contract is voidable because there was
intimidation.
Example No. 2: In the above example, the right of the wife is to go to court and file a motion for annulment
within four (4) years from the time intimidation ceased.
a. Both are true c. No. 1 is true; No. 2 is false
b. Both are false d. No. 1 is false; No. 2 is true
52. An agreement is restraint of trade.
a. Perfectly valid c. Unenforceable
b. Voidable d. Void
53. Rescission of contract can take place in this case:
a. When the things, which are the object of the contract, are legally in the possession of third persons who
 acted in good faith.
b. When he demands rescission can return whatever he may be obliged to restore.
c. When the party seeking resolution can perform only as to part and rescind as to remainder.
d. When the seller cannot return the installment paid to him by the buyer.
54. Which of the following contracts is required to be in writing to be enforceable?
a. An agreement that by its terms is not to be performed within a years from the making thereof.
b. A special promise to answer for the debt, default or miscarriage of another.
c. An agreement made in consideration of marriage, other than a mutual promise to marry.
d. All of the above.
55. S makes an offer to B on January 1, 1997. 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 voidable because one party is insane
b. There is already a meeting of minds, the contract is perfected
c. The contract is not binding because there is meeting of minds
d. Contract is unenforceable.
56. In the preceding number S is perfectly sane but only an unemancipated minor of the time the acceptance is
communicated to him.
a. There is no meeting of minds between the parties, unless ratified by the guardian of S.
b. The contract is not binding because the party is incapacitated
c. The contract is binding between the parties (but voidable)
d. Contract is valid.
57. In a contract, as written, D promises to pay C P10, 000 on September 15, 1997. The consideration received by D
is not stated in the contract.
a. The contract is valid because the cause is always presumed to exist.
b. The contract is valid so long as it in writing
c. The contract is valid because cause is not essential to a contract
d. The contract is void because the cause is not stated.
58. The stage of conception of a contract is:
a. When the contract is fully executed
b. When the parties come to an agreement
c. When negotiations are in progress
d. When there is a meeting of the parties minds.
59. Which of the following contracts is rescissible?
a. Those where one of the parties is incapable of giving consent to a contract
b. Those where both parties are incapable of giving consent to a contract
c. Those, which are entered into by guardians whenever the wards whom they represent suffer a lesion of
more than of the value of the object of the contract.
d. Those, which are absolutely simulated or fictitious.
60. Contracts that cannot be sued upon unless ratified:
a. Voidable c. Rescissible
b. Unenforceable d. Void
61. Contract that is made for a valuable consideration is:
a. Onerous c. Onerous and Gratuitous
b. Gratuitous d. Aleatory
62. Who is liable for the loss of subject matter by fortuitous event?
a. Creditor c. Both creditor and debtor
b. Debtor d. None of them
63. These persons are bound by contracts:
a. Contracting parties c. Heirs
b. Assigns or Assign d. All of them
64. L entered into a contract of lease with X. T, the clerk of L, typed the document. Due to Ts negligence, the
document made was that of sale instead of lease.
a. The remedy is annulment
b. Parties may go to court for interpretation
c. Parties may enforce their right because it is enforceable
d. Remedy is reformation
65. 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. It is imprescriptible as a defense