Question 1

When is the guarantor liable for the obligation of the debtor?

Accepted Answer

A) Once the obligation becomes due and demandable. 
B) Only after judgment is obtained against the principal debtor and he is unable to pay. (Baylon v. CA, August 17, 1999) 
C) The moment the judgment against the debtor becomes final and executory. 
D) Once demand is made for both the debtor and guarantor to pay. 
A) Once the obligation becomes due and demandable. 
B) Only after judgment is obtained against the principal debtor and he is unable to pay. (Baylon v. CA, August 17, 1999) 
C) The moment the judgment against the debtor becomes final and executory. 
D) Once demand is made for both the debtor and guarantor to pay. B

Question 2

P appointed A, his agent for the purpose of selling the former's car for ₱500,000.00. A sold the car in his name to B. After delivery, it was found out that the car has hidden defects which rendered the car unfit for the purpose of B. Can B file an action against P even if A acted in his own name?

Accepted Answer

A) No, because the legal principle than becomes applicable is caveat emptor. 
B) Yes, because while the agent acted in his own name but the agency involves a thing belonging to the principal. 
C) No, since in the law on agency, the Rule is that if the agent acted in his name, the principal is bound to the third person and the third person does not become bound to the principal. 
D) No, because the contract is already perfected and executed. 
A) No, because the legal principle than becomes applicable is caveat emptor. 
B) Yes, because while the agent acted in his own name but the agency involves a thing belonging to the principal. 
C) No, since in the law on agency, the Rule is that if the agent acted in his name, the principal is bound to the third person and the third person does not become bound to the principal. 
D) No, because the contract is already perfected and executed. B

Question 3

A & B entered into a contract of lease over A's house and lot. Without the consent of A, B assigned the lease to C. Is the assignment valid?

Accepted Answer

A) The assignment is valid because B has the right of possession over the leased property and can transfer it to anyone. 
B) The assignment is void because of lack of consent of A. 
C) The assignment is void because the same partakes of the nature of subjective novation which needs the consent of A. 
D) The assignment is valid since it is a property of B which can be disposed of. 
A) The assignment is valid because B has the right of possession over the leased property and can transfer it to anyone. 
B) The assignment is void because of lack of consent of A. 
C) The assignment is void because the same partakes of the nature of subjective novation which needs the consent of A. 
D) The assignment is valid since it is a property of B which can be disposed of. C

Question 4

In an agency to sell real property which of the following renders the authority and contract of sale valid?

Accepted Answer

A) General power of attorney, granting the agent authority to sell real property, not put into writing. 
B) General power of authority put into writing without authority to sell. 
C) A special power of attorney put into writing authorizing the agent to sell real property of the principal. 
D) Special power of attorney couched in general terms without referring to specific acts of dominion. 
A) General power of attorney, granting the agent authority to sell real property, not put into writing. 
B) General power of authority put into writing without authority to sell. 
C) A special power of attorney put into writing authorizing the agent to sell real property of the principal. 
D) Special power of attorney couched in general terms without referring to specific acts of dominion.

Question 5

A leased his house and lot to B with "option to renew." How will the contract be renewed?

Accepted Answer

A) At the option of B. 
B) At the option of A. 
C) Automatically. 
D) Upon agreement of A and B as it must be interpreted to be reciprocal in character where the renewal is subject to agreement of the parties. 
A) At the option of B. 
B) At the option of A. 
C) Automatically. 
D) Upon agreement of A and B as it must be interpreted to be reciprocal in character where the renewal is subject to agreement of the parties.

Question 6

Donna, authorized her friend Joyce to sell his Prada bag worth ₱100,000 on installment basis. Joyce, however, sold the bag on cash in contravention of the authority given to her. Was the sale valid?

Accepted Answer

A) No, because the agent acted beyond the scope of his authority. 
B) Yes, because the sale in cash redounds to the benefit of Donna. Hence, despite violation of the authority given, the sale is valid. 
C) Yes, because Donna as principal is always bound by the act of his agent, Joyce. 
D) No, because the agent violated the terms of the authority given to her. 
A) No, because the agent acted beyond the scope of his authority. 
B) Yes, because the sale in cash redounds to the benefit of Donna. Hence, despite violation of the authority given, the sale is valid. 
C) Yes, because Donna as principal is always bound by the act of his agent, Joyce. 
D) No, because the agent violated the terms of the authority given to her.

Question 7

A, B and C are the partners. A conveyed to X his whole interest in the partnership. What is the effect of the conveyance?

Accepted Answer

A) It dissolved the partnership. 
B) The assignee became a partner. 
C) The assignee has the right to interfere in the management or administration of the partnership business. 
D) Merely gave him the right to receive his shares in the profits (Art. 1813, NC
C)  
A) It dissolved the partnership. 
B) The assignee became a partner. 
C) The assignee has the right to interfere in the management or administration of the partnership business. 
D) Merely gave him the right to receive his shares in the profits (Art. 1813, NC
C)

Question 8

If a partnership has a capital of more than ₱3,000.00 and it is not registered, is the contract valid?

Accepted Answer

A) Void. 
B) Voidable. 
C) It does not invalidate the same as among the partners so long as the contract has the essential requisites. 
D) Unenforceable. 
A) Void. 
B) Voidable. 
C) It does not invalidate the same as among the partners so long as the contract has the essential requisites. 
D) Unenforceable.

Question 9

A is the owner of a parcel of land adjoining B's lot. B, knowing that the lot did not belong to him constructed his house on the lot belonging to A. Which of the following is the not correct?

Accepted Answer

A) A can appropriate the house without paying any compensation. 
B) A can eject B. 
C) B is entitled to at least 50% of the value of the house in the interest of justice and inorder that no one shall enrich himself at the expense of another. 
D) A can compel B to buy the land even if the value is considerably more than the value of the improvement. 
A) A can appropriate the house without paying any compensation. 
B) A can eject B. 
C) B is entitled to at least 50% of the value of the house in the interest of justice and inorder that no one shall enrich himself at the expense of another. 
D) A can compel B to buy the land even if the value is considerably more than the value of the improvement.

Question 10

What is not a requirement for existence of negotiorum gestio?

Accepted Answer

A) A property or business is neglected or abandoned by the owner. 
B) A person has been constituted manager of the property or business so abandoned. 
C) The management of the owner's business was assumed by another not an owner or manager so authorize 
A) A property or business is neglected or abandoned by the owner. 
B) A person has been constituted manager of the property or business so abandoned. 
C) The management of the owner's business was assumed by another not an owner or manager so authorize

Question 11

If the buyer under the Maceda Law has paid less than two (2) years of installments, what is the grace period he is entitled to from the date the installments became due?

Accepted Answer

A) 20 days. 
B) 60 days. 
C) 30 days. 
D) 40 days. 
A) 20 days. 
B) 60 days. 
C) 30 days. 
D) 40 days.

Question 12

A, B and C formed a limited partnership. They named their partnership AB&C. In 2008, the firm incurred an indebtedness of ₱5M. A suit was filed for the recovery of debt. Which of the following statements is correct?

Accepted Answer

A) No partnership was constituted because the word "limited" was omitted in the partnership name. 
B) B and C as limited partners are liable only up to the extent of their contributions. 
C) All are liable as general partners. 
D) A, B and C are not liable because there was a defect in the formation of their partnership. 
A) No partnership was constituted because the word "limited" was omitted in the partnership name. 
B) B and C as limited partners are liable only up to the extent of their contributions. 
C) All are liable as general partners. 
D) A, B and C are not liable because there was a defect in the formation of their partnership.

Question 13

A contract of lease was entered into between A & B with a provision that it is for a period of 5 years renewable for another 5 years. The contract expired on June 30, 2010 but up to now, the lessee is still in possession of the premises. What does the implicit renewal of the contract mean?

Accepted Answer

A) That all the provisions of the contract relative germane to possession are renewed. 
B) That the period originally agreed upon shall likewise be the period in the renewed contract. 
C) That the right to purchase agreed upon in the original contract is impliedly renewe 
A) That all the provisions of the contract relative germane to possession are renewed. 
B) That the period originally agreed upon shall likewise be the period in the renewed contract. 
C) That the right to purchase agreed upon in the original contract is impliedly renewe

Question 14

A leased his house & lot to B who subleased it to C. B failed to pay the rentals. What does A have against C?

Accepted Answer

A) A can sue C for the rentals. 
B) A can hold C liable for the rentals by suing him for ejectment. 
C) A can hold C liable for the rentals, but the liability is merely subsidiary. 
D) A can never make C liable for the rentals because of lack of privity between them. 
A) A can sue C for the rentals. 
B) A can hold C liable for the rentals by suing him for ejectment. 
C) A can hold C liable for the rentals, but the liability is merely subsidiary. 
D) A can never make C liable for the rentals because of lack of privity between them.

Question 15

In connection with the rule of mutual agency of the partners in a partnership which of the following is not correct?

Accepted Answer

A) Partnership is liable to every partner for amounts disbursed on behalf of the partnership, plus interest, from the time the expenses are made. (Art. 1796, NC
C)  
B) Unless otherwise agreed upon, all partners shall be considered agents and whatever any one of them may do alone binds the partnership. (Art. 1803(1). Art. 1818) 
C) Anyone of the partners may make important alterations on the immovable property of the partnership. (Art. 1803, NC
C)  
D) Admission or representation made by a partner concerning partnership affairs is evidence against the partnership. (Art. 1820) 
A) Partnership is liable to every partner for amounts disbursed on behalf of the partnership, plus interest, from the time the expenses are made. (Art. 1796, NC
C)  
B) Unless otherwise agreed upon, all partners shall be considered agents and whatever any one of them may do alone binds the partnership. (Art. 1803(1). Art. 1818) 
C) Anyone of the partners may make important alterations on the immovable property of the partnership. (Art. 1803, NC
C)  
D) Admission or representation made by a partner concerning partnership affairs is evidence against the partnership. (Art. 1820)

Question 16

A partnership begins from:

Accepted Answer

A) The moment of the execution of the contract. 
B) The moment of the notarization of the document of partnership. 
C) The registration with the SEC. 
D) The moment all contributions are paid. 
A) The moment of the execution of the contract. 
B) The moment of the notarization of the document of partnership. 
C) The registration with the SEC. 
D) The moment all contributions are paid.

Question 17

A special power to sell on credit includes the power to:

Accepted Answer

A) Mortgage 
B) Sell in cash 
C) Barter 
D) To enter into a contract of pledge. 
A) Mortgage 
B) Sell in cash 
C) Barter 
D) To enter into a contract of pledge.

Question 18

Under the law on agency, what is the nature of the act when an agent violates the terms of the agency and acts outside the scope of the authority vested in him?

Accepted Answer

A) Void. 
B) Unenforceable. 
C) Voidable. 
D) Valid and binding upon the principal. 
A) Void. 
B) Unenforceable. 
C) Voidable. 
D) Valid and binding upon the principal.

Question 19

A, B and C formed a partnership with C contributing an immovable, but no inventory of such immovable was attached to the contract. Is the contract valid?

Accepted Answer

A) The contract is valid because a contract is valid in any form it may be entered into. 
B) The contract is voidable. 
C) The contract of partnership is void. 
D) The contract is unenforceable. 
A) The contract is valid because a contract is valid in any form it may be entered into. 
B) The contract is voidable. 
C) The contract of partnership is void. 
D) The contract is unenforceable.

Question 20

A sold a parcel of land to B covered by TCT NO. 152 with C as a witness. When D wanted to buy a property, he executed a special power of attorney for E to buy a property for him. E entered into a contract of sale with A for the purchase of the same lot and registered it under the name of D. Who between B and D has a better right over the lot?

Accepted Answer

A) D has a better right because of prior registration. 
B) B has a better right because he is the first buyer. 
C) D has a better right because he is the buyer in good faith. 
D) D has a better right because the knowledge by his agent of a prior sale is immaterial. 
A) D has a better right because of prior registration. 
B) B has a better right because he is the first buyer. 
C) D has a better right because he is the buyer in good faith. 
D) D has a better right because the knowledge by his agent of a prior sale is immaterial.

Exam 21: Legal Contracts, Partnerships, and Agency Law

When is the guarantor liable for the obligation of the debtor?

A & B entered into a contract of lease over A's house and lot. Without the consent of A, B assigned the lease to C. Is the assignment valid?

In an agency to sell real property which of the following renders the authority and contract of sale valid?

A leased his house and lot to B with "option to renew." How will the contract be renewed?

Donna, authorized her friend Joyce to sell his Prada bag worth ₱100,000 on installment basis. Joyce, however, sold the bag on cash in contravention of the authority given to her. Was the sale valid?

A, B and C are the partners. A conveyed to X his whole interest in the partnership. What is the effect of the conveyance?

If a partnership has a capital of more than ₱3,000.00 and it is not registered, is the contract valid?

A is the owner of a parcel of land adjoining B's lot. B, knowing that the lot did not belong to him constructed his house on the lot belonging to A. Which of the following is the not correct?

What is not a requirement for existence of negotiorum gestio?

If the buyer under the Maceda Law has paid less than two (2) years of installments, what is the grace period he is entitled to from the date the installments became due?

A, B and C formed a limited partnership. They named their partnership AB&C. In 2008, the firm incurred an indebtedness of ₱5M. A suit was filed for the recovery of debt. Which of the following statements is correct?

A contract of lease was entered into between A & B with a provision that it is for a period of 5 years renewable for another 5 years. The contract expired on June 30, 2010 but up to now, the lessee is still in possession of the premises. What does the implicit renewal of the contract mean?

A leased his house & lot to B who subleased it to C. B failed to pay the rentals. What does A have against C?

In connection with the rule of mutual agency of the partners in a partnership which of the following is not correct?

A partnership begins from:

A special power to sell on credit includes the power to:

Under the law on agency, what is the nature of the act when an agent violates the terms of the agency and acts outside the scope of the authority vested in him?

A, B and C formed a partnership with C contributing an immovable, but no inventory of such immovable was attached to the contract. Is the contract valid?

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