Ateneo de Davao University

School of Business and Governance

Accountancy Program

PRE-ASSESSMENT EXAMINATION FOR BUSINESS LAW

REGULATORY FRAMEWORK FOR BUSINESS TRANSACTION REVIEW)
Purpose of this Activity:
To start a review, it is important to identify the extent of mastery of the
business law subjects. This is aimed primarily to be abreast and keep track of your
development from the initial period up to the final mock board. A reviewee at this
stage must not be thinking of graduation but must be thinking of the ultimate
GOAL of passing the board examination. Good Luck
Law on Obligations & Contracts
1. It connects the active and the passive subjects to the object of the obligation.
a. vinculum juris
c. efficient cause
b. juridical tie
d. all of the above
2. It is required in obligation because in case of non-compliance the courts may be
called upon by the aggrieved party to enforce its fulfillment or in default thereof, the
economic value in the form of damages may be demanded.
a. Legal tie
c. Juridical Necessity
b. Juridical tie
d. All of the above
3. Which of the following is not a source of obligation?
a. Law
c. Quasi-Delicts
b. Damages
d. Contracts
4. The diligence required by law for common carriers (persons or companies engaged
in transportation of persons and/or cargoes).
a. Diligence of a Good Father of the Family
b. Extra-Ordinary Diligence
c. Ordinary Diligence
d. All of the above
5. Paul and Peter are joint debtors of Abel, Bert, Carlo and Dave, solidary creditors to
the amount of P 100,000. How much can Carlo collect from Paul?
a. P 50,000
c. P 25,000
b. P 100,00
d. P 12,500
6. It is an act of abandoning all the debtors property to the creditors so that the latter
may sell the same and apply the proceeds to recover their claims against the debtor
is:
a. Payment by Cession
c. Remission
b. Dation in Payment
d. Novation
7. The mode of extinguishment of obligations which takes place when two persons in
their own right are principal creditors and debtors to each other.
a. Remission
c. Condonation
b. Application of Payment
d. Compensation
8. Ben, while driving his car negligently hit a person crossing the road, inflicting upon
the latter bodily injuries. Ben is liable because of this negligent act known as:
a. Quasi delict
c. Culpa contractual
b. Quasi-contract
d. all of the above
9. Which of the following obligations of a person to give something is false?
a. To preserve and take good care of the thing.
b. To deliver the thing including its fruits.
c. To deliver accessions and accessories if mentioned.
d. To deliver the accessions and accessories.
10. Which concept of delay, default or mora in creditors part?
a. Mora solvendi
c. Pari delicto
b. Mora accipiendi
d. Compensatio Morae
Law on Contracts:
11. Which of the following cannot give intelligent consent?
a. Minors
c. Those disqualified by law

b. Insane persons
d. All of the above
12. A is buying from B a breeding cow but A is selling a barren cow. If the contract is
pursued, in the absence of meeting of the minds, it can be annulled on the ground
of:
a. Error or mistake
c. Undue influence
b. Fraud
d. Negligence
13. When the contract does not really exist and the parties do not intend to be bound in
the contract, there is:
a. Fraud
c. Error or Mistake
b. Absolute Simulation
d. Relative Simulation
14. Which of the following statement is correct?
a. Contracts that are voidable have not effect at all unless it is ratified.
b. Undue influence is not one of the causes of vices of consent.
c. There is relative simulation when the contract entered into by the parties
is different from their true agreement.
d. Expression of opinion by one who is not an expert is fraudulent.
15. A contract that is entered by parties who are all incapacitated is:
a. Voidable
c. Validable
b. Rescissible
d. Void
16. A special promise to answer for anothers debt or default must be in writing
to be
a. enforceable
c. binding to third persons
b b. valid
d. all of the above
17. When a debtor, totally or partially insolvent, pays a debt not yet due to the
prejudice of creditors whose credits are already overdue.
a. Unenforceable
c. Void
b. Rescissible
d. Voidable
18. Aro gave his girlfriend a diamond ring worth P 7,000 as a gift. To be valid, it
must be:
a. in a private document
b. may be given orally or in writing
c. in any form of writing
d. in public instrument
19. Which of the following contracts is valid?
a. Oral contract of agency giving authority to an agent to sell the land
belonging to the principal.
b. Oral partnership with agreement that immovable property is
contributed.
c. Oral contract of sale of an immovable property entered into by an agent
who has given authority orally by the principal.
d. Oral agreement to answer all expenses for the wedding reception if A
married B.
20. I give that you may do
a. Do ut des
c. Facio ut des
b. Do ut facias
d. Facio ut facias
21. A damage caused by the fact that the price is unjust or inadequate.
a. Fraud
c. Error
b. Lesion
d. Culpa
Law on Partnership and Private Corporation
22. A partner who has misappropriated the money of the partnership is bound to do
the following, except:
a. To compensate his contribution with the money misappropriated.
b. To return the amount misappropriated.
c. To pay interest on the sum misappropriated.
d. To pay damages.
23. A partner whose connection with the partnership is open and public, such as by
including his name in the firm name of the partnership.
a. Nominal partner
c. Secret partner
b. Ostensible partner
d. Dormant partner

24. A partner in a limited partnership cannot contribute

a. Cash
c. Partly cash and partly property
b. Property
d. Services
25. The contribution of the fruits or income coming from inheritance, legacy or
donation is allowed if stipulated by the partners.
a. Universal partnership
c. All present Properties
b. Particular partnership
d. All Profits
26. The remedy of capitalist partners against an industrial partner who engaged in a
business for himself without the expressed permission from the partnership is:
a. To compel the industrial partner to sell his interest to the said
capitalist partner.
b. To exclude him from sharing in the profits of the partnership.
c. To remove him as manger if he is appointed as one.
d. To expel him from the partnership and claim for damages.
27. Which of the following is considered prima facie evidence of the existence of a
partnership?
a. Where payment of interest on a loan varies with profits of the
business.
b. The receipts by a person of share of the profits.
c. The sharing in the gross returns of the business.
d. Where the parties are established as co-owners of a property.
28. Shares issued by the corporation when expressly so provided in the articles of
incorporation allowing the corporation to purchase shares held by stockholders
even if there is no unrestricted retained earnings in the books of the corporation.
a. Treasury shares
c. Callable shares
b. Founder shares
d. No-par value shares
29. Shares when so issued shall be deemed fully paid and non-assessable and the holder
of such shares shall not be liable to the corporation or to its creditors in respect
thereto.
a. Treasury shares
c. Callable shares
b. Founder shares
d. No-par value shares
30. Which of the following requires the majority vote of the stockholders representing
outstanding capital stock with voting rights only?
a. Extending or shortening corporate term
b. Incurring, creating or increasing of bonded indebtedness
c. Investment of funds in other corporations
d. Election of Board of Directors
31. It is the right given to existing stockholders of a corporation to subscribe for or
purchase shares of stock in proportion to their respective shareholdings before the
shares of the corporation are offered to the general public.
a. Appraisal Right
c. Right to Repurchase
b. Pre-emptive Right
d. Derivative Suit
Law on Sales, Agency, Pledge, Real and Chattel Mortgage
32. It includes all chattels personal but not things in action or legal tender in the
Philippines. The term includes growing fruits or crops.
a. Fungible
c. Goods
b. Assignment of credit
d. Incorporeal Things
33. Delivery of movable property made by mere consent or agreement of the parties.
a. Traditio Brevi Manu
c. Symbolic Delivery
b. Traditio Longa Manu
d.Traditio Constitutum Possessorium
34. Which of the following is not a requisite of warranty against hidden defects?
a. The defect must be serious;
b. It must be hidden;
c. It must exist at the time of the delivery.
d. There must be no waiver of warranty on the part of the vendee.
35. When one of the parties binds himself to give one thing in consideration of the
others promise to give another thing.
a. Contract of Sale
c. Contract of Barter
b. Contract of Piece of Work
d. Dation in Payment
36. On March 1, S, in Surigao City, sent a letter offering to sell 100 sacks of rice stored
in his warehouse at P600.00 per sack (cash basis), to B, who is based in Bacolod

City. On March 5, B sent his letter of acceptance agreeing to all the terms of the
offer. On March 9, S received and read the letter of acceptance.
I. The contract was perfected on March 9.
II. The contract was deemed perfected in Bacolod City.
Which of the foregoing statements is correct?
a. Both statements are correct.
b. Both statements are incorrect.
c. Only Statement 1 is correct.
d. Only Statement II is correct.
37. S offered to sell his cell phone to B for P5,000.00 cash. B accepts the offer but is
willing to pay only P4,000.00 cash.
a.
The contract was perfected at the price of P5,000.00.
b.
The contract was perfected at the price of P4,000.00.
c.
The contract was perfected at the price of P4,500, the average
price of S's offer and B's acceptance.
d.
The contract will be perfected if S accepts B's counteroffer of
P4,000.00.
38. Which of the following contracts of sale is void being contrary to public interest?
a.Purchase by a guardian of the property of his ward.
b.Purchase by an agent of his principal's property whose administration was
entrusted to him with the agent not obtaining the principal's consent to the sale.
c. Purchase by an executor of a property of the estate under his administration.
d.Purchase by a government employee of government property whose administration
was entrusted to him.
39. Which of the following would best characterize Agency as a contract?
a. Accessory
c. Indivisible
b. Preparatory
d. Inseparable
40. The basis for Agency is
a. Fiduciary relations
b. Extend personality of the principal
c. Representation
d. All of the above
41. When two persons contract with regard to the same immovable thing, one of them
with the agent, and the other with the principal, and the contracts are incompatible
with each other, ownership shall be transferred to:
a. the first purchaser in good faith.
b. the first who completed the payment of the price in good faith.
c. the first who will register in good faith the transaction.
d. the one who presents the oldest title who must be in good faith.'
42. An agency is impliedly revoked in three of the following cases. Which is the
exception?
a. When a new agent is appointed for the same business or
transaction.
b. When the principal directly manages the business entrusted to
the agent, dealing directly with third persons.
c. When a special power of attorney is granted to another agent
pertaining to a special matter involved in a general power of
attorney issued to a previous agent.
d. When the desire of the principal is assist the agent manage the
business.
43. Which of the following statements regarding contract of pledge is incorrect?
a. A pledge shall not be constituted unless the thing pledged is
placed in the possession of the creditor.
b. Pledge is a real contract because it is perfected by delivery of the
thing pledged.1.
c. Pledge is an accessory contract because it needs a principal
obligation in order to exist.
d. A pledge cannot be constituted to secure the performance of a
voidable or unenforceable or even a natural obligation.
44. This characteristic belongs to mortgage only.
a. Accessory
c. onerous

b. Indivisible

d. Inseparable

45. Which of the following accessory contract is real contract?

a. Pledge
c. Real Mortgage
b. Chattel Mortgage
d. Antichresis
46. In real mortgage, the following rules are valid, except to one:
a. A stipulation in the mortgage contract prohibiting the owner from alienating the
immovable is valid.
b. The mortgagee may alienate the mortgage credit or assign to a third person in
whole or in part.
c. Any stipulation allowing the mortgage creditor to appropriate the property
mortgaged is null and void.
d. If alienation of the mortgage credit is not registered, it is still valid between the
parties.
Negotiable Instruments Law
47. In a negotiable instrument payable to bearer, the holder is the possessor of the
negotiable instrument
a. payee or indorsee
b. payee or indorsee who is also in possession of the instrument
c. both a and b
d. all of the above
48. A negotiable instrument payable to bearer may be negotiated by
a. in money only
b. partly in money and partly in kinds or goods
c. in kind or goods only
d. either in money or in goods
49. An undated instrument is considered dated at the time of its
a. first indorsement
b. issue
c. acceptance
d. last indorsement
50. I promise to pay to the order of B P 5,000.00 ten (10) days after Bs father dies is
an instrument payable
a. subject to a condition
b. at a determinable future time
c. on demand
d. non-negotiable because payment is indefinite.
51. I promise to pay to the order of Queen Sheba is a promissory note payable to
a. the payee so named.
b. The possessor or bearer of the instrument
c. A non-existing person because it is non-negotiable
d. The maker himself
52. Pay to the order of B P 5,000 30 days after sight. The maturity date of the
instrument is based on the
a. date of instrument
b. date of issue
c. date of first presentment for acceptance
d. date of last indorsement
53. When payee fails to deliver the consideration on agreed date, payor may refuse to
pay because there is
a. failure of consideration
b. absence or lack of consideration
c. partial failure of consideration
d. invalid consideration
54. A negotiable instrument payable to bearer is negotiated by
a. a special indorsement
b. assignment
c. operation of law

d. blank indorsement plus delivery

55. Pay to C for collection only is a
a. qualified indorsement
b. special indorsement
c. restrictive indorsement
d. conditional indorsement

Suggested Answers for Pre-Assessment Examination for Business Law Review

1. D
2. C
3. B
4. A
5. A
6. A
7. D
8. A
9. C
10. B
11. D
12. A
13. B
14. C
15. C
16. A
17. B
18. C
19. C
20. B
21. B
22. A
23. B
24. D
25. C
26. D
27. B
28. C
29. D
30. D
31. B
32. C
33. B
34. C
35. C
36. C
37. D
38. D
39. B
40. C
41. C
42. D
43. D
44. D
45. A
46. A
47. D
48. A
49. B
50. B

51. B
52. C
53. A
54. D
55. C