Name: ________________________________________ Date: ___________

Course Year & Section: _____________________ Score: __________

Instruction: Answer the following questions. Strictly NO ERASURES are allowed.

MULTIPLE CHOICE. Encircle the letter of your choice.

1. As a rule, this contract of sale involving a piece of land is void,

A. Between a minor and a capacitated person.

B. Between two insane persons who did not act during lucid interval
C. Between first degree cousins
D. Between husband and wife

2. X, 17 years old, sold to Z, of legal age, her necklace worth P20,000 for P15,000. Later, Z
sold the necklace to Y for P20,000. Which of the following statements is correct?

A. X has got a voidable title because at the time of sale, she is a minor
B. X can ask for rescission of the sale to Y because she suffered a lesion of more than
of the value of the property.
C. If Y is in bad faith, Y becomes the owner of the necklace upon delivery to him
but his title is voidable.
D. X can ask for the annulment of the sale to Y because at the time of sale she is a
minor.

3. This serves as a proof of the perfection of the contract of sale

A. Dacion en pago
B. Option money
C. Delivery
D. Arras

4. A contract of sale is not a(an)

A. Onerous contract
B. Accessory contract
C. Commutative contract
D. Bilateral contract

5. Warranty against hidden defects is

A. An essential element
B. A natural element
C. An accidental element
D. An artificial element

6. When a sale of a piece of land or any interest therein is through an agent, the authority of
the agent shall be in writing, otherwise the sale is

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

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7. The sale of an expected thing

A. Dacion en pago
B. Payment by cession
C. Emptiospei
D. Emptio rei-speratae

8. The sale of the hope itself

A. Dacion en pago
B. Payment by cession
C. Emptio spei
D. Emptio rei-speratae

9. One of the following is not correct

A. Things subject to a resolutory condition may be the object of the contract of sale.
B. A thing is generic when it is particularly designated or physically segregated
from all others of the same class.
C. Things having a potential existence may be the object of the contract of sale.
D. The sole owner of a thing may sell an undivided interest therein

10. X needs a size of 10 of model 101 of Leather Shoes regularly available to the public for
her boyfriend Z, but the same is out of stock so she placed an order for one. On the other
hand, Z placed an order for size No. 8, colored violet, (something not ordinarily made by
the company) to be given to X. Which is correct?

A. Both are contracts of sale

B. Both are contracts for a piece of work
C. First is a contract of sale second is a contract for a piece of work
D. First is a contract for a piece of work, second is a contract of sale

11. V offered to sell for P12,000,000 her house and lot to DD who was interested in buying
the same. In her letter to DD, V stated that she is giving DD a period of one month within
which to raise the amount and that as soon as DD is ready, they will sign the deed of sale.
Five days before the expiration of the one month period. V went to DD and told her that
she is no longer willing to sell the property unless the price in increased to P15,000,000.
Which is correct?

A. DD may compel V to accept the P12,000,000 first offered.

B. V may compel DD to pay P15,000,000
C. V and DD should shoulder the P3,000,000 difference
D. DD cannot compel V to accept the P12,000,000 first offered

12. If the object of the contract is specially made or manufactured at the specific order of
another, it is a contract for a piece of work. This is

A. English rule
B. Massachusetts rule
C. New York rule
D. Chicago rule

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13. If the article already exists and subsequently acquired by another, it is a contract of sale,
and if the article is still to be manufactured at the instance of another, it is a contract for a
piece of work. This is

A. English rule
B. Massachusetts rule
C. New York rule
D. Chicago rule

14. If the material used in the manufacturer of the article is more valuable, it is a contract of
sale, and if the labor or skill is more valuable than the material used in the manufacture
of the article, it is a contract for a piece of work. This is

A. English rule
B. Massachusetts rule
C. New York rule
D. Chicago rule

15. The rule observed in the Philippines is

A. English rule
B. Massachusetts rule
C. New York rule
D. Chicago rule

16. The Realty Installment Buyer Protection Act applies to all transactions involving the sale
or financing of real estate on installment but it excludes the following except:

A. Sale or financing of industrial lots

B. Sale or financing of commercial building
C. Sale to tenants under the Land Reform Code
D. Sale of residential condominiums

17. Delivery by merely pointing to the object of sale if it cannot be delivered to the vendee at
the time of the sale is

A. Traditio longa manu

B. Traditio brevi manu
C. Traditio constitutum possessorium
D. Traditio symbolica

18. Effected when the object of sale is already in the possession of the vendee at the time of
sale so that delivery need no longer be made is

A. Traditio longa manu

B. Traditio brevi manu
C. Traditio constitutum possessorium
D. Traditio symbolica
19. When the owner of the thing sells it to vendee, but continues to have possession or
occupation of the thing not as owner but as tenant or lessee

A. Traditio longa manu

B. Traditio brevi manu
C. Traditio constitutum possessorium
D. Traditio symbolica

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20. Goods are deemed in transit

A. When the buyer accepts delivery of the goods upon arrival at destination
B. When the buyer intercepts and lawfully takes possession of the goods at any point
before destination.
C. From the time they are delivered by the seller to a common carrier or other
bailee for transmission to the buyer, up to the time that the buyer or his agent
takes delivery of the goods from the carrier or bailee.
D. When the carrier or bailee, upon arrival of the goods at destination acknowledges to
the buyer or his agent that he is holding the goods as bailee for the latter.

21. Goods are deemed no longer in transit

A. If the goods are rejected by the buyer for a valid reason and the carrier or other bailee
continues in possession of them, even if the seller has refused to receive them back.
B. From the time they are delivered to a carrier by land, water or air for the purpose of
transmission to the buyer.
C. From the time they are delivered to a bailee for the purpose of transmission to the
buyer until the buyer or his agent in that behalf, takes delivery of them from such
bailee.
D. If the carrier or other bailee wrongfully refuses to deliver the goods to the buyer
or his agent in that behalf.

22. X sold to V orally a parcel of land for P200,000. X effected the delivery of the land. The
payment of the price was to be made three month later. At the end of three month period

A. V may refuse to pay claiming in his defense the Statute of Frauds

B. V may return the parcel of land to X
C. X can collect from V because the contract has already been executed
D. V may refuse to pay on the ground that there is no written contract to support the sale.

23. On January 15, 2010, X sold for P2M her house and lot to V. It was agreed that delivery
of the house and lot, and the payment therefore, would be made on March 10, 2010.
Unfortunately, Z a stranger negligently set the house on fire on February 25, 2010, and
the house was completely destroyed. Which is correct?

A. V is not required to pay the P2M since the contract had no subject matter.
B. X must still deliver the lot but is excused from delivering the house, while V must
still pay the P2M
C. X must deliver the lot while V should pay only the amount equivalent to the value of
the lot.
D. X need not deliver the lot while V need not pay the P2M

24. If immovable property should have been sold to different vendees, the ownership shall be
transferred to the person

A. Who have first taken possession in good faith

B. Who presents the oldest title in good faith
C. Who in good faith first recorded it in the Registry of Property
D. Who have paid in good faith the purchase price in full
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25. Using the preceding number, if movable property, it shall belong to the person

A. Who have paid in good the purchase price in full

B. Who in good faith first recorded it in the Registry of Property
C. Who presents the oldest title in good faith
D. Who have first taken possession in good faith

26. Action by the vendee against the vendor to nullify the sale due to some vices or defects
which render the object of sale unfit for the use intended or knowledge of which the
vendee should not have bought the thing

A. Accion quanti minoris

B. Accion reinvidicatoria
C. Accion pauliana
D. Redhibilitory action

27. Action to seek a corresponding reduction in price by reason of some vices or defects in
the thing purchased

A. Accion quanti minoris

B. Accion reinvidicatoria
C. Accion pauliana
D. Redhibilitory action

28. The redhibitory action based on the faults or defects of animals must be brought within

A. 30 days from delivery to the vendee

B. 40 days from delivery to the vendee
C. 45 days from delivery to the vendee
D. 6 months from delivery to the vendee

29. In contract of sale, if the price is absolutely simulated, the sale is

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

30. In a contract of sale, of personal property, the price of which is payable in installments,
the vendor may exercise any of the following remedies, except

A. Exact fulfillment of the obligation, should the vendee fail to pay any installment
B. Cancel the sale, should the vendees failure to pay cover two or more installment
C. Foreclose the chattel mortgage on the thing sold, if one has been constituted should
the vendees failure to pay cover two or more installments
D. Rescind the sale should the vendee fail to pay any installment.

31. The right of the seller to stop goods in transit, upon discovering that the buyer does not
have the funds to pay for the goods

A. Pre-emptive right
B. Appraisal right
C. Voting right
D. Right of stoppage in transit
Page 5 of 15
32. A sold to B a parcel of land for P3.8M. The sale is evidenced by a memorandum of
agreement of sale written in the Bicolano dialect. One week later, A sold the same parcel
of land to C for P4M. This is evidenced by a formal deed of sale. Upon buying the
property, C, who was aware of the first sale immediately took possession of the lot. When
informed of the second sale, B subsequently registered an adverse claim to the property.
Later, C registered the deed of sale in her favor. The parcel of land shall belong to

A. B because he has got an older title

B. C because he is the first to register
C. C because he is the first to take possession
D. No one as both sales are void

33. Voluntary renunciation made by the buyer of his right to warranty against eviction where
in case the buyer is evicted, the seller is liable to the value of the thing at the time of
eviction.

A. Waiver intentionada
B. Waiver consciente
C. Waiver cursunada
D. Waiver inocente

34. Using the preceding number, where the seller is no longer liable

A. Waiver intentionada
B. Waiver consciente
C. Waiver cursunada
D. Waiver inocente

35. A contract of sale whereby the seller acquires the right to redeem or repurchase the object
of the sale from the buyer within a certain period agreed upon

A. Equitable mortgage
B. Absolute sale
C. On sale or return
D. Pacto de retro sale

36. A sold to B his car and promised to deliver ten days later. The next day, after the sale to
B, A sold the same car to C and immediately affected delivery. On the day agreed upon,
A did not deliver the car to B. Which is correct?

A. B can cancel the contract between A and C, because the contract between A and B
was perfected ahead of the contract between A and c
B. B should make the demand to make A in default
C. A is liable to B for the value of the car plus damages after B makes a demand
D. A is liable to B for damages and is in default without need of any demand

37. X sold to V her Yamaha organ. It was agreed that X would fix the price a week later. At
the agreed time, X named the price P10,000. V agreed. Was the sale perfected?

A. No, because the price was left to the discretion of one of the contracting parties
B. No, because at the time of sale the price was not fixed
C. Yes, because the price fixed by one of the parties was accepted by the other
D. Yes, because there was agreement that X would fix the price

Page 6 of 15
38. Not an implied warranty in a contract of sale

A. Right to sell the thing at the time of perfection of the contract

B. Reasonably fit for the purpose they are acquired
C. Merchantable in quality
D. Free from charges or encumbrances not declared or known to the buyer

39. After the death of C, A, Cs son, sold his inheritance though its amount has not yet been
determined to B for a consideration of P1,000,000. Which is correct?

A. The contract is valid if the value of inheritance is at least equal to P1,000,000

B. The contract is valid even though the inheritance to be turned over to B is less
than P1M
C. The contract is void as future inheritance cannot be the object of sale
D. The contract is unenforceable

40. X stole a fountain pen from P and sold it to Z Merchandise, a store for pens, which paid
for it in good faith, not knowing it was stolen. The store then sold it to C, a student.
Which is correct?

A. C cannot be considered as the owner because the original seller (X) is not the real
owner.
B. P may recover the fountain pen from C without reimbursement because he is the
legal owner.
C. C became the owner because he purchased the pen from a merchant store
D. C became the owner regardless of whether the seller is a store for pens or not because
C bought it in good faith.

41. When goods are delivered to the buyer on sale or return for period of seven days,
ownership of the goods passes to the buyer

A. Upon perfection of the contract

B. Upon acceptance by the buyer of the offer of the seller
C. Upon expiration of seven days
D. Upon delivery of the goods

42. Quasi-traditio is equivalent to

A. Traditio longa manu

B. Traditio brevi manu
C. Traditio constitutum possessorium
D. Execution of a public instrument

43. Vi imported radios from Taiwan and asked for 220 volts radios. The radios arrived
clearly labeled 220 volts and Vi sold them to the public as such. Later the customer
complained that the radios have been mislabeled by the manufacturer and that they were
good only for 110 volts. As a consequence

A. Vi is liable to the vendees for any hidden defects even though he is not aware.
B. Vi is not liable because he is in good faith
C. Vi is not liable under the principle of caveat emptor or let the buyer beware

Page 7 of 15
 D. The vendees may hold the manufacturer liable but not Vi because Vi specifically
asked for 220 volts

44. If the redemption is to be made by the seller, one of the following need not be given to
the Buyer

A. Expenses of the contract

B. Interest on the price of the sale
C. Necessary expenses on the thing sold
D. Price of the sale

45. Not an element of the sellers right of stoppage in transit

A. The goods must be in transit

B. The buyer must be insolvent
C. The seller must be in possession of the goods
D. The seller must be unpaid

46. A sold his only car to B for P300,000 to be paid as follows: P150,000 upon delivery of
the car to B and the balance at P10,000 per month until full payment of the purchase
price. Later the car gets burned in the possession of B through fortuitous event and
without Bs fault, before full payment of the balance. Is B obliged to pay the balance?

A. No, because the car was lost through fortuitous event and without Bs fault, hence Bs
obligation is extinguished.
B. No, because the loss should be borne by the seller as this an installment sale so until
the buyer pays the full amount of the price of the sale, A remains to be the owner.
C. Yes, but A must give another car to B because of the principle genus nunquam
peruit or generic thing never perishes
D. Yes, because the principle res perit domino or the thing perishes with the
owner.

47. A, B and C are co-owners of an undivided parcel of land, A sold his 1/ 3 interest to B
absolutely. Which is correct?

A. C may exercise his right of redemption of the interest sold by A to B

B. C cannot exercise the right of redemption because the sale was made in favor of
a co-owner
C. The sale made by A to B is void because it was not made in favor of a stranger
D. C may redeem only 1 /2 of the interest sold by A to B

48. Using the preceding number, suppose, instead of selling his interest to B, A sold it to D,
who can exercise the right of redemption?

A. Both B and C
B. B but not C
C. C but not B
D. A, B and C

49. Which of the following cannot be the object of a contract of sale?

A. Sale of credit
B. Young animal not yet conceived at the time of perfection
C. Land which the seller expects to buy
D. Future inheritance

Page 8 of 15
50. A offered for sale to B 20 cavans of wagwag rice and fixed the price per cavan at P10
over the price offered at Zs store in Cainta Market. The price is

A. Not certain because the price at Cainta Market is not stated

B. Certain because it has got reference to another thing which is certain
C. Certain because there is a price ceiling for price of land
D. Not certain so court may fix the price

51. X sold his motor vehicle to V who bought it for P200,000. It turned out however, that X
has 2 motor vehicles: Toyota valued at P230,000 and Lancer valued at P220,000. Which
is correct?

A. There is no contract of sale between X and V

B. The parties may ask for interpretation or reformation
C. The parties can ask for annulment of the contract
D. V may choose between the Toyota or Lancer

52. X offers to V 100 electric fans for P80,000 payable in 60 days with 12 % interest per
annum. V accepted the offer by telegram provided that interest is reduced to 6%. If there
is no further communication between X and V relating to the terms

A. The contract is perfected because of the acceptance by V

B. There is no contract yet between X and V because V made a counter offer
C. The contract is perfected under the terms of X
D. There is no contract yet unless v gives earnest money

53. X owns 50 mango trees bearing fruits, ready for harvest. She told all the fruits of all the
trees to V who paid P100,000. X told V that he can harvest her fruits anytime he likes and
pointing at the mango trees. For legal purposes, X has fulfilled her obligation to deliver
the mango fruits to V by

A. Traditio longa manu

B. Traditio brevi manu
C. Traditio constitutum possessorium
D. Execution of a public instrument

54. X sold her specific car to V for P200,00 payable in 5 equal installments. X delivered the
car to V but a mortgage was constituted on the car to answer for the unpaid installments.
V paid the first 2 installments but failed to pay the last 3 installments. X foreclosed the
mortgaged property and sold it at public auction for P100,000. Which is correct?

A. X can recover from V the balance of P20,000 even if there is no stipulation to that
effect
B. X can recover from V the balance of P20,000 if there is stipulation to that effect
C. X cannot recover the deficiency except if there is stipulation to that effect
D. X cannot recover the deficiency even if there is stipulation to the contrary

55. Ownership of the thing sold is

A. Retained by the seller in sale or return

B. Transferred to the buyer upon constructive or actual delivery of the thing sold
C. Acquired by the buyer upon perfection of the contract
D. Transferred to the buyer upon acceptance of the price

Page 9 of 15
56. X sold his horse to Y for P40,000. No payment has yet been made and the sales
document does not provide the date of delivery. Before delivery and payment the horse
gave birth to a baby horse, which is correct?

A. Y is entitled to the baby horse which was born after the perfection of the
contract
B. X is entitled to the fruit (baby horse) as Y has not paid the price yet
C. X is entitled to the (baby horse) because it was born before his obligation to deliver
arises
D. Y should pay additional amount for the baby horse to be entitled to it

57. A contract of sale is in the stage of conception when

A. There is meeting of the minds

B. Negotiations are in progress
C. The parties come to an agreement
D. The contract is perfect

58. A seller sold to a buyer a piece of jewelry at a price of P25,000. The contract provides
that the buyer will pay the seller cash, P20,000 and for the balance, the buyer will give
the seller a micro oven worth P5,000. What is the nature of the contract?

A. Sale
B. Partly sale partly barter
C. Barter
D. Commodatum

59. X, the guardian of V, sold Vs house and lot worth P480,0000 for P430,000

A. The contract can be rescinded because of inadequacy of price

B. The contract cannot be rescinded because there is no fraud, mistake or undue
influence
C. The contract cannot be rescinded because all the elements of a contract are present
D. The contract can be rescinded by X.

60. X leased to V a 5 Freezer for two years at a lease rental fee of P1,000 per month and
signed an option in favor of V to buy the freezers at the end of the term of the lease at
P50,000. All rental fee paid are to be considered as partial payment of the sale. After 12
months V was able to pay the rental fee for 9 months and was in arrears for three months.
X terminated the lease contract and repossessed the freezers. The consequence of the
transaction is

A. X can collect the rental fees for three months which are in arrears.
B. X can collect the rental fees for the unexpired 12 months of the lease contract.
C. When X took possession of the generator, he has no further action against V
D. X in terminating the lease and repossessing the generator is obliged to refund the 9
months rental fee, paid by V even if there is a stipulation to the contrary.

61. X sold his car to Z for P60,000. No date was fixed for the performance of the obligation
of the seller and the buyer. The obligation of X is

A. To deliver the car immediately because the sale is a perfected contract

B. To deliver the car only after Z writes to X demanding the delivery of the car.
C. To deliver the car only after Z pays the P60,000
D. To rescind the contract because there is no time fixed for the delivery
Page 10 of 15
62. I. The vendor need not be the owner at the time the sale is perfected. It is sufficient that
he is the owner at the time the thing sold is delivered.

II. The sale of a vain hope or expectancy is voidable.

A. First statement is true, second statement is false.

B. First statement is false, second statement is true.
C. Both statements are true.
D. Both statements are false

63. I. There may be a contract of sale of goods, whose acquisition by the seller depends upon
a contingency which may or may not happen.

II. If the consideration of the contract consists partly in money and partly in another
thing, it shall be considered a barter if the value of the thing given as a part of the
consideration exceeds the amount of the money or its equivalent.

A. First statement is true, second statement is false.

B. First statement is false, second statement is true.
C. Both statements are true.
D. Both statements are false

64. I. If the price is grossly inadequate, the sale is void.

II. Whenever option money is given in a contract of sale, it shall be considered as part of
the price and a proof of the perfection of the contract.

A. First statement is true, second statement is false.

B. First statement is false, second statement is true.
C. Both statements are true.
D. Both statements are false

65. I. Earnest money and option money both apply to perfected sale.

II. In a contract of sale of personal property the price of which is payable in installment,
the vendor may cancel the sale should the vendee fail to pay.

A. First statement is true, second statement is false.

B. First statement is false, second statement is true.
C. Both statements are true.
D. Both statements are false

66. I. Should the vendees failure to pay, cover two or more installments, the vendor may
foreclose the chattel mortgage on the thing sold but he shall have no further action
against the purchaser to recover any unpaid balance of the price, except if there is an
agreement to
the contrary.

Page 11 of 15
 II. Sale is a consensual contract, therefore delivery or payment is not essential for
perfection.

A. First statement is true, second statement is false.

B. First statement is false, second statement is true.
C. Both statements are true.
D. Both statements are false

67. I. The ownership of the thing sold shall be transferred to the vendee upon perfection of
the contract.

II. An unaccepted unilateral promise to buy or to sell a determinate thing for a price
certain is binding upon the promissory.

A. First statement is true, second statement is false.

B. First statement is false, second statement is true.
C. Both statements are true.
D. Both statements are false

68. I. The husband and the wife cannot sell property to each other, as a rule.

II. The sale of a piece of land or interest therein when made thru an agent is void unless
the agents authority is in writing even if the sale itself is in s public instrument and has
been registered.

A. First statement is true, second statement is false.

B. First statement is false, second statement is true.
C. Both statements are true.
D. Both statements are false

69. I. The expenses for the execution and registration of the sale shall be borne by the
vendee, unless there is a stipulation to the contrary.

II. If the same thing should have been sold to different vendees the ownership shall be
transferred to the person who may have taken possession thereof in good faith.

A. First statement is true, second statement is false.

B. First statement is false, second statement is true.
C. Both statements are true.
D. Both statements are false

70. I. Any stipulation exempting the vendor from the obligation to answer for eviction shall
be void.

II. The vendor is responsible to the vendee for any hidden faults or defects in the thing
sold only if he was aware thereof.

A. First statement is true, second statement is false.

Page 12 of 15
 B. First statement is false, second statement is true.
C. Both statements are true.
D. Both statements are false

71. I. If the animal sold should die within three (3) days after its purchase, the vendor shall
be liable to the vendee.

II. The fixing of the price can never be left to the discretion on one of the contracting
parties. However, if the price fixed by one of the parties is accepted by the other, the sale
is perfected.

A. First statement is true, second statement is false.

B. First statement is false, second statement is true.
C. Both statements are true.
D. Both statements are false

72. I. Option money is considered as part of the purchase price while earnest money is not.

II. The Maceda Law refers to the sale of personal property by installments while the Recto
Law refers to the sale of real property by installments.

A. First statement is true, second statement is false.

B. First statement is false, second statement is true.
C. Both statements are true.
D. Both statements are false

73. I. If two or more animals are sold together, whether for lump sum or for a separate price
for each of them, the redhibitory defect of one shall give rise to the redhibition of the
others.

II. There is no warranty against hidden defects of animals sold at fairs or at public
auctions or of livestock sold as condemned.

A. First statement is true, second statement is false.

B. First statement is false, second statement is true.
C. Both statements are true.
D. Both statements are false

74. I. The ownership in the thing shall not pass to the purchaser until he has fully paid the
price.

II. If at the time the contract of sale is perfected, the thing which is the object of the
contract has been partially lost, the contract shall be without effect.

A. First statement is true, second statement is false.

B. First statement is false, second statement is true.
C. Both statements are true.
D. Both statements are false

75. I. Where the seller of goods has a voidable title thereto, but his title has not been avoided
at the time of the sale, the buyer acquires a good title to the goods.

II. If the vendee has renounced the right to warranty in case of eviction, and eviction
should take place, the vendor shall only pay the value which the thing sold had at the time
of sale.

Page 13 of 15
 A. First statement is true, second statement is false.
B. First statement is false, second statement is true.
C. Both statements are true.
D. Both statements are false

76. I. Unless otherwise agreed, the buyer of goods is not bound to accept delivery thereof by
installment.

II. In case of doubt, a contract purporting to be an equitable mortgage shall be construed

as a sale with a right to repurchase.

A. First statement is true, second statement is false.

B. First statement is false, second statement is true.
C. Both statements are true.
D. Both statements are false

77. I. The creditors of the vendor cannot make use of the right of redemption against the
vendee, until they have exhausted the property of the vendor.

II. Sale is a real contract because delivery is necessary to transfer ownership to the buyer.

A. First statement is true, second statement is false.

B. First statement is false, second statement is true.
C. Both statements are true.
D. Both statements are false

78. A principal could be liable for the acts of an agent that exceeded its actual authority based
on

A. Apparent authority
B. Express authority
C. Necessity
D. Implied authority

79. Which of the following is not an implied obligation or duty of an agent to its principal?

A. To demonstrate good faith

B. To act with competence and diligence
C. To pay reasonable expenses of the agency agreement
D. To protect confidentiality

80. An agency by agreement is one in which the agent derives its power from

A. Actions of the principal that lead third parties to reasonably conclude an agency
relationship exists
B. Adoption by the principal of a contract entered on its behalf by the agent, although the
agent did not have authority at the time when it acted as agent
C. A contract between the principal and the agent
D. Agreement by the third party to be bound by commitments made to the agent
E. Circumstances that necessitated acting without authority from the principal

81. When an agent acts for a principal to enter a contract with a third party, the parties to the
contract thus formed are
A. The principal and the agent
B. The principal and the third party
C. The agent and the third party
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D. The principal, the agent, and the third party
E. None of the above

82. An agent:

A. Has the authority to bind the corporation

B. Cannot enter into agreements on behalf of the principal
C. Has no authority to bind the corporation
D. Can only act in the presence of the principal

83. If an agent enters into a contract with a third party, who is ordinarily liable?

A. The agent
B. The principal
C. The third party
D. Any witnesses to the contract

84. If the principal fails to give notice to third parties when an agency relationship is
terminated,
A. The principal will be bound by any contracts entered with third parties by the
(former) agent that were formed through the agent's exercise of apparent authority
B. The agent will not be able to bind the principal in any contractual dealings with third
parties
C. The principal will not be able to sue the (former) agent for continuing to act as an agent
D. The principal will not be able to sue the (former) agent for continuing to act as an agent

85. Which of the following is a necessary part of the agency relationship?

A. Principal
B. Buyer
C. Seller
D. Franchisor

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