OBLICON SAMPLE PROBLEMS WITH SUGGESTED ANSWERS (PART 2

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 CONTRACTS)
1. S sold his cabinet to B for P5,000. The parties gave their consent freely to the contractbefore
its perfection. After delivery of the cabinet to B and his payment of the price to S,B was
informed by N, his neighbor that B paid too much for the cabinet since he (N),knew of a similar
item that is sold for a lower amount. B now wants to set aside thecontract because he believed
he got a bad bargain. Decide.
2. A and B entered into a joint venture contract whereby B agreed to put up a
restaurant on the lot of A. N, A’s neighbor who owned a lot across A’s lot, learned of the
transaction between A and B. Anticipating that many customers would patronize therestaurant,
N decided to improve his vacant lot for parking. He incurred P20,000 for aguardhouse and other
improvements which he had not yet paid to his contractor. Later,however, A and B mutually
cancelled their earlier contract and entered into a new onewhereby B agreed to put up the
restaurant on another lot belonging to A which waslocated about 100 meters from the original
area. N learned of the cancellation of thecontract and decided that he would sue A and B for
damages he allegedly sustained byreason threof. Decide
3. D obtained a loan from C amounting to P200,000. To secure the loan, D mortgaged hislot. C
registered the mortgage with the Register of Deeds. Later, D sold the lot to X whowas not
aware that the lot was mortgaged. On the due date of the loan, C demandedpayment but
D could not pay. Accordingly, C decided to foreclose the mortgage on thelot. X, however
opposed the foreclosure claiming that he was not bound by the mortgagesince he was not a
party thereto. Decide.
4. S sold his only horse to B for P30,000. The parties agreed that S shall deliver the horseone
week from the execution of their agreement. B, however, should pay the priceimmediately and
in certified check. In the place of S and B, it was the custom thatanyone selling a horse should
place a horseshoe on its feet. Is the seller bound to placea horseshoe on the horse?
5. On June 1, S offered to sell a specific generator set to B for P300,000. B sent his letterof
acceptance to S on June 8. On June 10, however, S became insolvent. On June 12, Sreceived the
letter of acceptance. Was the contract perfected?
6. P gave a special power of attorney to A to sell P’s house and lot for P2M. On May 7, A, pursuant to
the authority granted to him by P, offered to sell the house and lot to B at theprice of P2M. B
accepted the offer on May 8 by sending a letter of acceptance to A onsuch date, which letter of
acceptance was received by A on May 10. On May 11, P died
before A could inform him of B’s acceptance. Was the contract perfected?
7.On May 1, S offered to sell his car for P500,000 to B who was interested in buying thesame. In
his letter to B, S stated that he was giving B up to May 31 to decide whether to]buy the car or
not. On May 25, S personally went to B to inform him that he was nolonger willing to sell the
car unless the price was increased to P600,000 becauseanother buyer was interested in buying
the car for the said amount of P600,000. May Svalidly withdraw his offer?
8. B purchased 100 pieces of notebook from S at P41.95. When B reached home, hediscovered
that the invoice showed a total amount due of P4,915 instead of P4,195. Isthe contract valid?
9. D has been for more than 10 years the personal physician of P, a sickly man of 70years. D
talked to P almost everyday in the course of giving medical service to P toconvince P to donate
his lot to D since D told him that he was the only one who couldtake care of him. Because of the
persistence of D, P finally signed the deed of donation
of the lot in D’s favor with all the formalities required by law. Is the deed of donation
valid?
10. A, who knew that his ring was embellished with glass, told B that the embellishment
wasemerald. B, who knew that his watch was gold-plated, told A that it was made of pure
gold. Believing that A’s ring was embellished with emerald and A, believing that B’s
watch was made of pure gold, then entered into a contract whereby they exchangedtheir
respective articles. A week later, B discovered that the ring was adorned only withan ordinary
glass. Can B ask for annulment of the contract?
11. S and B entered into a contract where they made it appear that S was selling his lot
andbuilding to B. The truth, however was that S was donating his lot and building to B. Whatis
the status of the contract?
12. S and B orally entered into a contract whereby S sold his one-year production ofmangoes to
B for P100,000. B gave a downpayment of P20,000 for which S issued areceipt. What is the
status of the contract between S and B?
13. A died leaving properties estimated at P1M to his sons S and T. Subsequently, S soldthrough
a private instrument one-half of his inheritance to B for P300,000, although hisshare was still to
be delivered. What is the status of the contract?
14. S sold his car to B for P100,000 so that he can have money to purchase shabu. B
knewnothing of the motive of S. Was the contract valid?
15. D and C entered into a contract wherein D agreed to give to C P50,000 within 30 daysfrom
the date of the execution of their agreement, which however does not state theconsideration
received by D from C. What is the status of the contract?
16. G, the guardian of M, a minor sold the fish harvested from the fishpond of M for
P20,000.The fish, however had a value of P30,000. What is the status of the sale?
17. D owes the following creditors: X, P50,000; Y, P60,000; and Z, P90,000. He has assetsvalued
at P400,000. Subsequently, D donated, among his assets, a parcel of landvalued at P250,000 to
C. The donation and acceptance were made in a publicinstrument. What is the status of the
donation of the land made by D to C?
18. C filed a complaint in court against D to collect a money debt amounting toP500,000. After
due hearing, the court rendered judgment in favor of C. Shortly after the rendition of the judgment
and before C has collected D’s debt, D sold a parcel of land toX. Z, another creditor, learned of the sale
made by D to X and now files an action torescind the sale. Who has a better right to rescind the
sale of D to X?
19. R, the representative of A, an absentee sold the corn with a value of P30,000 and the
palay with a value of P50,000, harvested from A’s agricultural farm for a total price of   P50,000. A, whose
domicile was subsequently known, was informed of the sale made byG. May A seek rescission?
20. S, 17 ½ years old sold his bicycle to B, 24, for P12,000. The price is payable in 12monthly
installments. After reaching 18, S continued to collect the remaining sixinstallments until the
price was paid in full. Can S annul the contract?
21. M, the manager of an electric company offered to buy a one-square meter lot from S
forP400. M showed S his power of attorney executed by the electric company and dulysigned
by the board of directors. M informed S that the lot would be the site of an electricpost which
the electric company would erect. S agreed to the order of M. M agreed tocome back the
following day to give the company check for the purchase price as wellas the written contract.
When M returned to the place of S, S refused to sign the contractand accept the check. S told M
that at any rate, M or the electric company could notenforce the contract since it was not in
writing. Is S correct?
22. On June 1, 2005, B, a businessman, met by chance C, a building contractor at the lobbyof a
hotel. Over a cup of coffee, B informed C that he would need the services of C forthe
construction of a three-storey building that B was planning to put up beginningAugust 1, 2006.
B added that he would be paying C the amount of P4M for the construction. C agreed to B’s proposal.
In the meantime, B gave C a check for P500,000 representing the downpayment on the contract price.
Except for the table napkin onwhich B made some sketches of the building, no written contract
was signed by theparties. On August 1, 2006, B called up C to inform him that the construction
wouldbegin within the next two weeks. C told B that he would no longer want to proceed
withthe contract and that he would be returning the downpayment. May B enforce
thecontract?
23. D was checking out of a hotel when he found out that he had lost his wallet. Since he had no
money to pay his bills, he texted G, a businessman friend to help him. Upon reading the text
message, G texted M, the hotel manager, who knew G since G was afrequent guest at the hotel
whenever he visited the area. The text message read:
“Please let D leave. If he does not pay, I will be the one to pay.” No other information
was contained in the text message. Thereafter, D signed a promissory note in favor ofthe hotel.
Is the promise of G enforceable?
24. S, insane, orally sold his radio to B, 17 years old for P400. When T, the mother of Slearned
about the sale, she asked S to give to her the amount that he had received. Sobediently gave
the amount of P400 which his mother used to buy their food. What is thestatus of the contract?
25. Francis promised to give P10,000 by way of support to Mitch, if Mitch agrees to live
withFrancis as his wife without the benefit of marriage. Mitch because she truly loves
Francisaccepted his promise. After 6 months, because Mitch was seen with Edgar, her ex-
boyfriend, Francis left their home and never came back. Can Mitch now still receive thesupport
promised by Francis?
26. B, a law student informed O that he needed a bicycle which he would use in going toand
from San Beda College of Law-Alabang. O told B that he may get the bicycle in O’sroom. Was
there a perfected contract?

ANSWERS:
 1. B may not set aside the contract based on the principle of Mutuality of Contract.
2 .   A i s n o t e n ti t l e d t o s u e A a n d B f o r t h e d a m a g e s h e s u s t a i n e d . T h i s i s
n o t a c a s e o f a sti pulati on pour autrui, where the parti es in a contract
deliberately conferred upon athird person a favor or benefit. The benefit that would have
been received by N fromthe contract between A and B was only incidental and did not give him
the right torecover damages.
3. X was bound by the mortgage. Subsequent purchaser is bound by the mortgageregistered in
the Register of Deeds even if he is not aware of it. The contract herein isone which creates real
rights therefore third persons who come into possession of theobject of contract is bound
thereby. (1312)
4. S is obliged to place a horseshoe on the horse because the observance of custom orusage is
a consequence of entering into a contract. (1315)
5. The contract was not perfected because the insolvency of S occurred before he came tolearn
of the acceptance of his offer. It is well settled rule that an offer becomesineffective upon the
insolvency of either party before acceptance is conveyed. (1323)
6. The contract was perfected on May 10 when A received the letter of acceptance.An offer
made through an agent is accepted from the time acceptance is communicatedto him. (1322)
7. S may validly withdraw his offer to B and all that S needs to do is to inform B of
suchwithdrawal. Such withdrawal must be made before the lapse of the period of
acceptance,unless there is an option founded upon a consideration, as something paid or
promised.(1324)
8. The contract is valid. The mistake is a simple mistake of account and does not renderthe
consent of the parties vitiated. This shall only give rise to correction. Mistake tovitiate consent
must refer to the substance of the thing which is the object of the contractor to a principal
condition which moved the parties to enter into a contract (1331). Theexcess P720.00 should
be returned by B
9. The deed of donation is voidable on the ground of undue influence. (1337)10. Neither party
can ask for annulment since both are guilty of fraud. The contract thereforeis valid. In order
that a contract may be considered voidable and be annulled fraud mustnot be committed by
both parties. (1344)
11. The contract is a relative simulated contract. Therefore the parties are bound by
thecontract of donation, their true intention, since no third person is prejudiced and
theirpurpose is not contrary to law, moral, good customs, public order or public policy. (1346)
12. The contract is valid. Future things may be the object of contracts. (1347 par 1)
13. The contract is valid since the inheritance is an existing inheritance. (1347 par 2)
14. The contract is valid because the illegal motive of S does not affect its validity. Motive
isdifferent from the cause of the contract. (1351)
15. The contract is valid because the cause is presumed to exist and is lawful unless thecontrary
is proved by the debtor. (1354)
16. The sale is rescissible because M suffered the minimum amount of lesionrequired by law to
make the contract rescissible. (1/4 x 30,000= 7,500, the lesion is10,000). (1381 par 1)
17. The donation is rescissible. It is presumed to have been made in fraud of creditors.
Theremaining value of the assets after donation would be insufficient to cover the
debtscontracted by D before the donation. (1387 par 1)
18. Both C and Z have a right to rescind the sale since the sale is presumed in fraud of creditors
having been made by the party against whom judgment has been rendered.(1387 par 2)
19. A may seek rescission of the total sale to recover the damages he suffered. (1381 par 2)
20. S may no longer annul the contract. There was implied ratification when S upon reaching
the age of majority continued to collect the remaining instalments. (1393)
21. The contract must be in writing for it to be enforceable against S. This is a sale of real
property
.22. B may enforce the contract against C although there was no formal agreement signed by
the parties because C was deemed to have ratified the contract by his acceptance of the down
payment.
23. If D cannot pay, M cannot enforce the promise of G since G’s promise is not the
 writing required by law. (1403 2b)
24. The contract is voidable because the mother of S is deemed to have ratified the contract.
(1407)
25. The contract between Francis and Mitch is illegal and constitutes an offense, therefore it is
void.
26. Yes. The contract is one of commodatum, where one party loaned something to another. In
this case, the bicycle was loaned by O to B.