REGULATORY FRAMEWORK FOR BUSINESS AND TRANSACTIONS

Part 1. Obligations

1. It is Meeting of the minds between two persons whereby one binds himself, with respect to the other, to
give something or to render some service.
A. Law B. Contract C. Quasi-contract D. Quasi-delict

2. In an undue delivery of a thing that produces fruits, the recipient is entitled to the
A. fruits B. loss of impairment C. damages D. all of the above

3. In the absence of an agreement, when there are two or more debtors, or two or more creditors in an
obligation, the obligation
is -
A. joint B. solidary c. a joint and solidary D. bilateral
4. Pure obligations are demandable at once. Hence,
A. B can demand payment upon the happening of the event
B. A will only deliver after the happening of the event
C.payment is immediately demandable
D.the debtor will have to wait after the condition has been fulfilled
5. Which of the following may not be made the object of a contract?
A. Things which are not outside the commerce of men.
B. Rights which are transmissible.
C. Services which are not contrary to law.
D. Things or services which are impossible.
6. In alternative obligations, the obligor who is alternatively bound by different prestations shall - A.
partially perform either of the prestations
B. shall completely perform one of the prestations
C. be bound to perform all of the prestations
D. all of the choices
7. X obliged Y to deliver a yellow Ferrari. Who or what is the passive subject?
A. X B. Y

C. to deliver the sack of rice D. the agreement between X and Y

8. For and in consideration of P50,000.00, Alondra agreed to deliver to Angie 100 sacks of cassava flour
to be used by the latter as main ingredient for her cassava cake. While preparing for the delivery of the
cassava, Pedring hit the country and the cassava flour Alondra was supposed to deliver was damaged
making it unfit for human consumption. Which if the following statement is correct?
A. Alondra is still obliged to deliver the flour;
B. Alondra’s obligation to deliver the flours is extinguished;
C. Angie is still required to pay the flour even though no delivery was made;
D. Angie may still demand fulfillment
9. It is a kind of obligation that does not grant a right of action to enforce its performance, but after
voluntary fulfillment by the obligor, it authorizes the retention of what has been delivered or rendered by
reason thereof.

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 A. Civil Obligation B. Moral Obligation C. Natural Obligation D. Personal Obligation
10. Statement 1 – Generally, Gross inadequacy of price does affect a contract of sale.
Statement 2 – Generally, if the price is simulated, the
sale is void. A. Both statements are true.
B. Both statements are false.
C.Statement 1 is true; statement 2 is false.
D.Statement 1 is false; statement 2 is true.
11. It is the transfer to a third person of all the rights appertaining to the creditor, including the right to
proceed against guarantor, possessor or mortgages, subject to any legal provision or nay modification
that may be agreed upon.
A. Novation B. Subrogation C. Payment by Cession D. Remission
12. Statement A – When the obligor voluntarily prevents the fulfillment of a condition, it is deemed fulfilled.
Statement B – A resolutory condition is one where the fulfillment of the condition results in the
acquisition of rights arising out of the obligation.
A. Statement A is true; Statement B is false. B. Statement B is false, Statement A is true.
C. Both statements are true.
D. Both statements are false.
13. In joint and indivisible obligations-
a.) demand must be made to all the joint debtors
b.) the other joint debtors are liable in case of insolvency of one of the joint debtors
c.) it is sufficient that the creditor proceeds against only one of the joint debtors
d.) delivery can be made only to one of the joint creditors
14. Which of the following does not extinguish an obligation?
A. Loss of the thing due B. Delay c. Condonation D. Payment
15. A owes B P100,000.00. Instead of paying B the said amount, A, with the consent of B, delivers to the
latter his second-hand car. What kind of payment is this?
A. payment by cession C. tender of payment B. dation in payment
D. application of payments
16. Choose the correct example of compensation: A. A owes B P10,000.00; B owes A television set.;

B. A owes B P10,000.00 with C as guarantor; B owes C P10,000.00.;

C. A owes B P10,000.00; B owes A P8,000.00.;
D. A owes B P10,000.00 due today; B owes A P10,000.00 due next month.
17. When the obligation consists in the delivery of an indeterminate or generic thing, whose quality and
circumstances have not been stated -- A. The debtor can deliver a thing of inferior quality; the
creditor can demand a thing of superior quality;
B. The debtor cannot deliver a thing of inferior quality; the creditor can demand a thing of superior
quality;
C. The debtor cannot deliver a thing of inferior quality; the creditor cannot demand a thing of superior
quality;
D. The debtor can deliver a thing of inferior quality; the creditor cannot demand a thing of superior
quality.

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 18. It refers to an obligation to deliver money, to deliver a thing (other than money), to do an act, or not to
do an act

A. Prestation C. Debt
B. Credit D. Commitment
19. It is whereby property is alienated to the creditor in satisfaction of a debt in money, shall be governed
by the law of sales
A. application of payment C. tender of payment
B. dation in payment D. consignation
20. Is that currency which a debtor can legally compel a creditor to accept in payment of a debt in money
when tendered by the debtor in the right amount.
a. Philippine Peso C. Bills
b. Legal Tender D. Coins

Part 2. Contracts

1. If mistake, fraud, inequitable conduct, or accident has prevented the meeting of the minds of the parties
to a contract, the proper remedy is an action for _____________.
A. reformation B. rescission C. ratification D. annulment
2. It is a processing to render inefficacious the contract validly entered into and normally binding, by
reason of external conditions, causing economic prejudice to a party or his creditor.
A. Reformation B. Rescission C. Ratification D. Annulment
3. The legal remedy given to one of the parties when, there having been a meeting of the minds of the
parties, their true intention is not expressed in the instrument purporting to embody the agreement, by
reason of mistake, fraud, inequitable conduct or accident.
A. Reformation B. Rescission C. Ratification D. Annulment
4. Romela, an Astronaut, was sent to Mars on board Apollo 1 to study what are the living organism in the
said planet. Thinking and hoping that the mission was unsuccessful, Rona, the sister of Romela, sold
the latter’s vacation house in Cebu. What is the status of the sale?
A. Void B. Valid C. Unenforceable D. Voidable

5. A contract which has no effect at all.

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

6. Their defect consists in the vitiation of consent or in the legal incapacity of one of the contracting
parties. They cannot be attacked or assailed by third persons.
A. Voidable B. Unenforceable C. Rescissible D. Void
7. __________ elements of contracts exist only when the parties expressly provide them for the purpose
of limiting or modifying the normal effects of the contract.
A. Accidental B. Essential C. Natural D. Accessory
8. A law which requires certain acts and contracts to be in writing is known as –
A. Recto Law B. Statute of Fraud C. Commercial Law D. Political Law

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9. 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 minds of the parties.
10. If the contract states a false cause, it is -
A. Void B. Valid C. Rescissible D. Unenforceable
11. Which of the following contract is void?
a.Sale of stolen goods;
b.Sale of perishable goods;
c. Sale of consumable goods;
d.Answer not given
12. Which of the following is not necessary for the validity of the contract?
a. Price B. Consent C. Object D. Cause
13. It is a contract where one of the parties obligates himself to transfer the ownership of and to deliver a
determinate thing and the other to pay therefore a price certain in money or its equivalent.
A. Obligation B. Contracts C. Sale D. Barter
14. It is the stage of a contract of sale wherein the object is delivered and the price is paid.
A. Preparation B. Perfection C. Consummation D. Negotiation
15. The offer becomes ineffective in case of –
a. Death B. Civil Interdiction C. Insanity D. All of the choices
16. There is _____________ when in order to wrest consent, serious or irresistible force is employed.
a. Fraud B. Violence C. Undue Influence D. Mistake
17. Which contract is valid?
a.Contract those contract entered into during lucid interval;
b.Contract entered into during the state of drunkenness;
c. Contract entered into during hypnotic spell;
d.Contract with undetermined object.
18. An absolutely simulated contract is –
a. Valid B. Void C. Unenforceable D. Rescissible
19. The following are the essential requisites of a contract, except: A. consent of the contracting parties
B. object certain which is the subject matter of the contract;
C. stipulation as to the payment of interest or penalty
D. cause of the obligation which is established
20. Choose the correct example of a valid offer: A. “I am thinking of selling to you my watch.”
B. “Will you buy my watch?”
C. “I am selling to you my brand new Guess watch
for P7,000.00”
D. D. “Please buy my watch. I am in dire need of
money.”