1. The motive of an agent in entering into a contract with a third person is material.

The principal is responsible for the

misrepresentations of an agent if the representation is authorized or within the implied authority of the agent.
a. Both true
c. first true, second false
b. Both false
d. first false, second true
Answer: D
2. Mr. X sold a bicycle to Mr. Y on September 22, 2014. It appeared however that the bicycle was sold without the
knowledge of Mr. W, who is the owner of the bicycle. Upon discovery on 24 September 2014, Mr. W ratified the sale. What
is the status of the contract?
a. the contract is unenforceable on 22 September,
c. the contract is valid as of 24 September 2014
2014 and valid on 24 September 2014
upon ratification
b. the contract is void on 22 September 2014, and
d. the contract is valid as of 22 September 2014
valid on 24 Septmber 2014
upon ratification
Answer: D
3. Mr. P and Mr. A entered into a factorage in connection with the sale of merchandise for Php2,000.00. Mr. A sold the
merchandise to B on credit for P2,200.00, without the consent of Mr. P. Which of the following is true:
a. Should Mr. A eventually collect P2,200.00 from
b. Mr. A should turn over the P200.00 benefit or
B, A need not turn over the overprice of Php200.00
interest to Mr. P, as Mr. A should not enrich himself
at the expense of Mr. P
c. Mr. A may not retain the P200.00 as the sale on
d. Mr. A may keep the P200.00 as Mr. P does not
credit is without the consent of Mr. P
know about it anyway
Answer: A
4. A del credere agent may sue in his name and not on behalf of the principal/seller, for the purchase price in the event of
non-performance of the buyer. The liability of the principal is not altered by the fact that the agent may also be liable.
a. Both true
c. first true, second false
b. Both false
d. first false, second true
Answer: A
5. The authority created by ratification is subsequent but it is ________________, thus equivalent to prior authority.
a. post-operative
c. prospective
b. retroactive
d. suspensive
Answer: B
6. Mr. P is an infant and authorized Mr. A, an adult to enter into a contract with Mr. B, an adult. What is the status of the
contract?
a. valid
c. unenforceable
b. voidable
d. void
Answer: B
7. If Mr. P an infant ratified the act of Mr. A which was initially without Ps authority, what is the status of the contract?
a. valid
c. unenforceable
b. voidable
d. void
Answer: B
8. A person may ratify that portion which is beneficial in a contract entered by his agent and repudiate the portion which is
prejudicial. Voidable acts are not inoperative but imperfectly inoperative.
a. Both true
c. first true, second false
b. Both false
d. first false, second true
Answer: A
9.Mr. P in his personal capacity and claiming to be the agent of his wife Ms. A sold to Ms. B the community property on 27
September 2014. Upon discovery of the sale Ms. A, the wife of Mr. P, ratified out of fear the said sale on 1 October 2014.
What is the status of the contract?
a. valid
c. void
b. voidable
d. unenforceable
Answer: B
10. Mr. X, as agent of Y, entered into a contract of fire insurance without authority. Thereafter, a fire occurred. Mr. Y ratified
the unauthorized act. What is the status of the contract?
a. valid
c. void

b. voidable
Answer: D

d. unenforceable

11. Mr. A entered into a contract of sale in his own name with Mr. B. Mr. P ratified the contract of sale claiming that he is
the real of owner of the property and has authorized Mr. A to do so.
a. Mr. P may ratify the contract as he is the real
c. Mr. P may not ratify the contract as he is not as
owner
he did not issue a special power of attorney
b. Mr. A acted in his personal capacity and thus a
d. Mr. A is presumed to act for Mr. P as the property
stranger like P cannot acquire rights by attempting
is being claimed by Mr. P
to ratify the contract
Answer: B
12. Mr. A sold the personal property of Mr. P to Mr. B without authorization on 01 October 2014 and possessed it. Mr. P
sold the same personal property to Mr. C on 04 October 2014. However, on 06 October 2014, Mr. P ratified the sale
entered into by Mr. A. Who has the better right over the property?
a. Mr. B as he is first in possession and his contract c. Mr. B as ratification operates retroactively on the
is ratified
date of the contract
b. Mr. C as his right accrued before the right of Mr.
d. Mr. C as the sale was made by the principal
B accrued upon ratification
himself
Answer: B
13. Mr. P authorized Mr. A to sell his real property to Mr. B. Mr. A exceeded his authority and has prejudiced the interests
of Mr. B. Mr. P allowed Mr. A to act as though he had full powers.
Mr. B should sue?
a. Mr. A only
c. Mr. A and Mr. P, solidarily
b. Mr. P only
d. Mr. A and Mr. P, jointly
Answer: C
14. Mr. P authorized Mr. A to barter his apes in exchange of horses. In the performance of his obligations, Mr. A was not
informed by Mr. P that the apes have Simian Flu which made Mr. A mortally ill and refused to deliver the horses to Mr. P
until he is paid indemnity. Which of the following is correct?
a. Mr. A may not retain the horses as there is no
c. Mr. A may sell the horses in case of failure of
contractual pledge
Mr. P to pay damages and be entitled to the
excess amount
b. Mr. A should account to Mr. P the horses as it
d. Mr. A may retain the horses by reason of a
is his obligation to do so
legal pledge
Answer: D
15. Mr. X authorized Mr. Y to contract for the construction of a barn for 1M. Without the knowledge of Mr. Y, Mr. X
contracted with Mr. T for the construction of the same barn on 10 October 2014. Mr. Y contracted with Mr. W for the
construction of the said barn on 01 October 2014.
a. Mr. T should be preferred as he is in good faith c. Mr. T should be preferred as the principal
directly transacted with him
b. Mr. W should be preferred as it is of prior date
d. Mr. W should be preferred as it is made in
good faith
Answer: B
16. The following are cases when death does not extinguish the agency, except:
a. agency coupled with an interest rate
c. in case of judicial foreclosure
b. power of sale in a deed of mortgage
d. an agent without the knowledge of the death of
the principal and the third person is in good faith
Answer: A
17. At least as between the principal and third party, the fulfillment of the purpose for which the agency is created ipso
facto terminates the agency, even though expressed to be irrevocable.
Agency is terminated upon outbreak of war.
a. Both true
c. first true, second false
b. Both false
d. first false, second true
Answer: D
18. Mr. P authorized Mr. A to offer his property for lease. Two days after the issuance of the authority Mr. P unilaterally
revokes the agency. Mr. A sued P.

a. Mr. P may not do this due to the principle of

mutuality of contracts
b. Mr. P may do this as agency may be revoked
at will
Answer: B

c. Mr. P breached the contract

d. Mr. P may not do so as there is no clear
reason for the revocation

19. An agency designated as irrevocable may not be revoked. As between principal and agent, express notice to the
agent that the agency is revoked is always necessary.
a. Both true
c. first true, second false
b. Both false
d. first false, second true
Answer: B
20. Mr. A was appointed by Mr. P and Mr. O, as agent. Mr. P, without knowledge and consent of Mr. O, revoked the
authority of Mr. A.
a. The revocation is invalid because the
c. The revocation is invalid because the manner
revocation must be joint
of appointment must also be the manner of
revocation
b. The revocation is valid because the act of one
d. The revocation is valid because it may be done
is the act of all
at will
Answer: B
21. Mr. P issued a general power of attorney to Mr. A to manage his business. Subsequently, Mr. P issued to Mr. S a
special power of attorney to hire employees. Mr. A then contracts with Mr. C in buying supplies for the business.
a. Mr. As authority to run the business was revoked c. Mr. As authority to buy supplies remains as his
by the special power of attorney
authority to hire employee was revoked
b. Mr. As authority to hire employees remains
d. no answer
despite the issuance of a special power of attorney
Answer: C
22. Ordinary agency is to fiduciary relationship; as Agency coupled with an interest is to ________________.
a. material compensation
c. material breach
b. material interest
d. material consideration
Answer: D
23. Mr. X renders services to Mr. Y who authorizes Mr. X to sell the latters land for not less than a certain price and pay
himself out of the proceeds. Before the land is sold,Y dies. Is the agency extinguished?
a. yes
b. no
24. Mr. X borrows from Mr. Y P5,000.00 payable in one (1) year. Before the due date of the obligation, Mr. X sells his land
to Mr. W and he authorizes Mr. W to pay Mr. Xs debt out of the purchase price. Mr. Y accepts the agency of Mr. W. Why is
the agency not extinguished?
a. there is stipulation pour autrui in favor of Y
c. it is an agency coupled with an interest
b. Y consented to the agency
d. no answer
Answer: A
25. Mr. P authorized his commission agent Mr. A to sell on credit his merchandise worth P2,000.00. The merchandise was
sold for P2,200.00 on credit to Mr. B the whole amount payable on October 15, 2014. However, Mr. A failed to inform Mr. P
of the name of Mr. B on 06 October 2014. Which of the following is incorrect?
a. Mr. P may collect from Mr. A P2,200.00 even
c. Mr. P may collect from Mr. A P2,000.00 even
before the due date of Mr. B
before the due date of Mr. B
b. Mr. P may not collect from Mr. A P2,000.00 as
d. Mr. P should collect from Mr. B the amount of
it is not yet due of Mr. B
P2,200.00
Answer: C