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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 b. Both cases are false
commerce of man, the contract is: c. Case 1 is false but case 2 is true
a. Void d. Both cases are true
b. Rescissible
c. Voidable ________8. Contracts entered into during lucid interval are
d. Unenforceable a. Unenforceable
b. Perfectly valid
________2. In order that fraud may make a contract voidable: c. Voidable
a. It should be serious and should not have been employed by both d. Void
contracting parties
b. It may incidental but should have been employed by both parties ________9. Three of the following may be valid objects of a
c. It should be serious and the parties must be in pari delicto contract, except:
d. It may be incidental but both parties should not be in pari delicto a. All that are within the commerce of man.
b. All services which are not contrary to law.
________3. A and B who are both unemancipated minors c. Impossible things or services.
entered into a contract. The contract entered into by and between d. All rights that are transmissible.
them is:
a. Unenforceable ________10. A meeting of minds between two persons whereby
b. Rescissible one binds himself with respect to the other to give something or
c. Voidable to render some service is known as:
d. Void a. Obligation
b. Contract
________4. Which of the following contracts cannot be c. Consent
ratified? d. Stipulation
a. Those whose cause or object did not exist at the time of the
transaction ________11. The elements of a contract without which a
b. Unauthorized contracts contract would not exist are known as:
c. Those where both parties are incapable of giving consent a. Accidental elements
d. Those that fail to comply with the Statute of Frauds b. Natural elements
c. Essential elements
________5. On July 15, 1986, X entered into a contract with Y. d. Special elements
On February 10, 1987, X discovered that fraud was committed at
the time he entered into the contract, a fraud that vitiated his ________12. A contract that can stand by itself is known as:
consent. The action for annulment shall be brought: a. Accessory contract
a. Within four years from February 10, 1987 b. Commutative contract
b. Within three years from the time of fraud c. Principal contract
c. Within four years from the time A entered into the contract d. Gratuitous contract
d. On February 10, 1987
________13. A contract that does not have any special name
________6. On September 1, 1987, A entered into a contract under the law is known as:
with B whereby A sells to B 5,000 sacks of sugar to be delivered on a. Nominate contract
the 15th and to be paid in full on the 30th. There was no agreement b. Special contract
for rescission based on nonpayment. A did not deliver on the 15 th c. Innominate contract
but on the 30th, he was willing and offering to deliver but b did not d. Nominal contract
make payment on the said date and so A did not like it and refuse
to make delivery. Decide. ________14. The contracting parties may establish such
a. A cannot rescind the contract for nonpayment of the price stipulation, clauses, terms and conditions as they may deem
b. A can rescind the contract for nonpayment of the price convenient provided they are not contrary to law, morals, good
c. A cannot refuse to deliver the goods customs, public order or public policy. This is known as the
d. B is not entitled to recover damages principle of:
a. Mutuality of contract
________7. Case 1 – A hired B for P10,000 to kidnap C, and he b. Relativity of contract
paid B in advance. Before B could kidnap C, and A relented and c. Liberty of contract
stopped B from performing the contract. The court may not allow d. Obligatory force of contract
A to recover from B the P5,000 he paid in advance.
Case 2 – A, at the point of a gun, compels B to marry him. Since ________15. The contract must bind both contracting parties, its
the contract of marriage is voidable, either A or B has the right to validity or compliance cannot be left to the will of one of them.
file the action or annulment. This is known as the principle of:
a. Case 1 is true but case 2 is false a. Consensuality of contract

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b. Relativity of contract b. Rescissible

c. Mutuality of contract c. Voidable
d. Freedom to contract d. Valid

________16. D borrowed P500,000 from C. D died without ________25. Contract that is effective upon execution but may
having paid his loan obligation to C. He left S, his son and heir, be invalidated later
properties worth P400,000. a. Rescissible
a. S is liable to C for P500,000. b. unenforceable
b. S is liable to C for P100,000. c. voidable
c. S is not liable at all because he should not be made to shoulder d. void
the obligation of his father.
d. S is liable to C for P400,000. ________26. Cannot be sued upon unless ratified
a. Rescissible
________17. A contract may be enforced by or against a third b. voidable
person, except: c. unenforceable
a. In the case of stipulation pour autrui d. void
b. When a third person induces another to violate his contract
c. In case of contracts intended to defraud creditors ________27. Validable contracts
d. When the benefit to the third person is merely incidental a. Rescissible
b. voidable
________18. The principle that contracts are perfected by mere c. unenforceable
consent is known as: d. void
a. Consistency of contract
b. Consummation of contract ________28. Contracts that that has no effect upon execution
c. Mutuality of contract but may be effective upon ratification
d. Consensuality of contract a. Rescissible
b. voidable
________19. One of the following is not a real contract: c. unenforceable
a. Pledge d. void
b. Commodatum
c. Deposit ________29. No effect at all
d. Sale a. Rescissible
b. voidable
________20. It is the manifestation of the meeting of the offer c. void
and the acceptance upon the thing and the cause which are to d. unenforceable
constitute the contract.
a. Consideration ________30. Cannot be ratified nor validated
b. Contract a. Rescissible
c. Cause b. Voidable
d. Consent c. void
d. unenforceable
________21. Three of the following instances will render an offer
ineffective before acceptance is conveyed. Which one will not? ________31. Inexistent contract
a. Civil interdiction of either party a. Rescissible
b. Insolvency of either party b. voidable
c. Intoxication of either party c. unenforceable
d. Insanity of either party d. void

________22. One of the following is not incapable of giving his ________32. X (guardian) sold the land of Y (ward) to Z for
consent P300,000. The value of the land is P500,000.
a. Insane persons a. Y can rescind the contract between X and Z within 4 years after
b. Somnambulist reaching the age of majority
c. Deaf-mutes who know how to read b. Lesion suffered by Y is more than ¼ of the value of the land,
d. Unemancipated minors hence, he can rescind he contract
c. If rescission is proper and it prospers, X should return to Z the
________23. A contract in which one of the parties is money plus interest; Z to X, the land plus fruits
incapacitated d. All of the above
a. Void
b. Rescissible ________33. Consent is vitiated by mistake, violence,
c. Voidable intimidation, undue influence or fraud
d. Unenforceable a. Rescissible
b. unenforceable
________24. Contracts entered into in a state of drunkenness or c. void
during hypnotic spell are: d. voidable
a. Void

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________34. Action for annulment shall be brought within 4 a. The contract is void because what S sold is future inheritance
years which may not be the object of a contract as a rule
a. From the time the defect of consent ceases in cases of b. The contract is valid since the inheritance is an existing
intimidation, violence or undue influence inheritance
b. From the time of discovery in case of mistake or fraud c. The contract is rescissible
c. From the time guardianship ceases d. The contract is unenforceable
d. All of the above
________42. If mistake, fraud, inequitable conduct, or accident
________35. Cures the defect of contract celebrated in the name has prevented a meeting of the minds of the parties to contract,
of another without authority or in excess of authority the proper remedy is
a. Rescission a. sue for specific performance of the contract
b. annulment b. reformation of the contract
c. reformation c. annulment of the contract
d. ratification d. ratify the contract

________36. Which can be enforced in courts? ________43. D is indebted to C for P10,000. For the purpose of
a. Those executed by one in the name of another without any defrauding C, D sold his only parcel of land to X valued at P10,000.
authority or in excess of authority X had no knowledge of the intention of D
b. Those that do not comply with the Statute of Frauds a. The contract between D and X is binding
c. Those where both parties are incapable of giving consent b. The right of C is to rescind the contract because the transaction is
d. None of the above fraudulent
c. The contract is voidable because D is in bad faith
________37. Statute Of Frauds d. the contract between D and X is rescissible
a. Law that requires that certain contracts must be in writing
otherwise they are unenforceable ________44. G was appointed guardian of S, the latter being 16
b. Failure to execute the contract in writing does not render the years old. S sold his parcel of land in writing to B valued at
contract void, only unenforceable P100,000 for P75,000, suffering lesion by ¼ of the value. What is
c. Applies to executory contracts, not to contract totally or partially the status of the contract?
executed a. rescissible
d. All of the above b. voidable
c. unenforceable
________38. It exists when a person takes improper advantage d. enforceable
of his power over the will of another depriving the latter of a
reasonable freedom of choice. ________45. Which of the following contracts is not rescissible?
a. Intimidation a. Those which are entered into by guardians whenever the wards
b. Duress whom they represent suffer a lesion of more than ¼ of the value
c. Threat of the object of the contract
d. Undue influence b. Those where one of the parties is incapable of giving consent to
a contract
________39. Nano and Iking entered into a contract where they c. those executed in representation of absentee, if the latter suffer a
made it appear that Nano was mortgaging his lot and building to lesion of more than ¼ of the value of the object of the contract
Iking to secure a contract of loan. The truth, however, was that d. Those undertaken in fraud of creditors when the latter cannot in
Nano was selling his lot and building to Iking. Which of the any other manner collect the claims due them
following statements is true?
a. The parties are bound by the contract of loan and mortgage. ________46. Which of the following contracts is voidable?
b. The parties are not bound at all. a. Those where both of the parties are incapable of giving consent to
c. The parties are bound by the contract of sale only when third a contract
persons are affected. b. Those where the consent if vitiated by mistake, fraud, violence,
d. The parties are bound by the contract of sale. intimidation or undue influence
c. Those undertaken in fraud of creditors when the latter cannot in
________40. S and B orally entered into a contract whereby S any other manner collect the claims due them
sold his one year production of eggs in his poultry farm to B for d. Those whose object is outside the commerce of men
P50,000 which amount B immediately gave in cash to S. The
contract between S and B is: ________47. Which of the following contracts is rescissible?
a. Void because the object was not existing at the time of execution a. Those where one of the parties is incapable of giving consent to a
of the contract contract
b. Rescissible because B will likely suffer damage if the eggs do not b. Those which are entered into by guardians whenever the wards
come into existence whom they represent suffer lesion by more than ¼ of the value
c. Unenforceable because the contract was not in writing of the object of the contract
d. Valid because future things may be the object of contracts c. Those where both of the parties are incapable of giving consent to
a contract
________41. A died leaving properties estimated at P1 M to his d. Those which are absolutely simulated or fictitious
sons S and T. Subsequently, S sold one-half of his inheritance to X
for P300,000, although his share was still to be delivered ________48. Chai sold her lot consisting of 1,000 square meters
to Ming. However, the deed of sale signed by the parties showed a

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total area of 1,200 square meters due to the secretary’s mistake.

Later, Chai discovered the mistake. What remedy is available to A. Aleatory contract
either party? B. Annulment
a. rescission C. Preparation of a contract
b. reformation D. Lucid interval
c. annulment E. Cause
d. d. declaration of nullity F. Onerous contract
G. Natural elements
________49. On June 1, Shin Hyee offered to sell a specific H. Commutative contract
generator set to Min Ho for 300,000. Min Ho sent his letter of I. Mutuality of contract
acceptance to Shin Hyee on June 8. On June 10, however, Min Ho J. Nominate contract
became insane. On June 12, Shin Hyee received Min Ho’s letter of K. Perfection of a contract
acceptance. L. Ratification
a. The contract was perfected on June 8 when Min Ho sent his letter M. Auto contract
of acceptance, at which time he was still sane. N. Consideration
b. The contract was not perfected because the insanity of Min Ho O. State of drunkenness
occurred before Shin Hyee came to learn of the acceptance of his P. Innominate contract
offer by Min Ho. Q. Relativity of contract
c. The contract was perfected on June 12 when Shin Hyee learned of R. Real contract
acceptance. S. Essential elements
d. The contract was perfected on June 1 because the acceptance T. Consensual contract
made by Min Ho on June 8 retroacts to the date of the offer.
Items
________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 ________1. A contract whose fulfillment depends upon chance.
acceptance should be sent by registered mail and must be A
received by S not later than March 31. On March 20, B accepted ________2. The action that is brought to set aside a voidable
the offer of S by sending an e-mail message on the same day to S contract. B
whose e-mail address was indicated in the letter. S read the ________3. Involves preliminary negotiations and bargaining,
message the following day, March 21. Was there a perfected with no arrival yet of a definite agreement. C
contract between S and B? ________4. The period of temporary sanity of an insane person.
a. Yes, on March 1. D
b. No, no contract was perfected at all. ________5. The essential reason of a party in entering into a
c. Yes, on March 20. contract. E
d. Yes, on March 21. ________6. A contract that does not have any special name
under the law. P
II. Write TRUE if the statement is correct and wrong if it is FALSE. ________7. The principle that contracts take effect only
between the contracting parties, their assigns and heirs. Q
________1. A relatively simulated contract is void. wrong ________8. The delivery of the object is required for its
________2. The illegality of the motive of a party to a contract perfection. R
renders the contract void. wrong ________9. Elements without which a contract would not exist.
________3. The action of rescission must be commenced within S
three years. wrong ________10. A contract that is perfected by mere consent. T
________4. A party who employed violence, intimidation,
undue influence, or fraud, or who caused mistake may bring an
action to annul the contract on any such ground. wrong
________5. Option money is part of a purchase price. Wrong
________6. Contracts entered into during a lucid interval are
valid. TRUE
________7. The usual exaggerations in trade, when the other
party had an opportunity to know the facts, are not in themselves
fraudulent. TRUE
________8. Incidental fraud does not render a contract
voidable but only obliges the person employing the damages.
TRUE
________9. Reformation cannot be availed of in the case of a
last will and testament. TRUE
________10. Reformation is not available if the contract is void.
TRUE

II. MATCHING TYPE. Indicate your answers by writing the letter

representing the statement or phrase that best describes, defines or
explains the numbered items.

Terms

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