7STUDY GUIDE

Chapter 7 – Voidable Contracts

A. True or False (Explain briefly your answer citing the legal basis thereof)

1. There is fraud when a person takes improper advantage of his power over the will of another,
depriving the latter of a reasonable freedom of choice.
2. An action for rescission of contract is one filed where consent is vitiated by lack of legal capacity
of one of the contracting parties, or by mistake, violence, intimidation, undue influence or fraud.
3. Ratification of a voidable contract must be effected expressly only.
4. Ratification may not be effected by the guardian of the incapacitated person.
5. Ratification requires the conformity of the contracting party who has no right to bring the action
for annulment.
6. The action for annulment of contracts shall be extinguished when the thing which is the object
thereof is lost through the fraud of the person who has a right to institute the proceedings.
7. As long as one of the contracting parties does not restore what in virtue of the decree of
annulment he is bound to return, the other cannot be compelled to comply with what is
incumbent upon him.
8. A voidable or annullable contract is one in which has no force and effect from the very
beginning.
9. A voidable or inexistent contract is one in which the essential requisites for validity are present,
but vitiated by want of capacity, error, violence, intimidation, undue influence, or deceit.
10. Contracts where consent is given through fraud are annullable.
11. If the contract is ratified, the action to annul is not extinguished.
12. For undue influence to be present, the influence exerted must have so overpowered the mind of
a contracting party as to destroy his free agency, making him express the will of another rather
than his own.
13. Ratification cleanses the contract from all its defects from the moment it was constituted.
14. An obligation having been annulled, the contracting parties shall restore to each other the
things which have been the subject matter of the contract, with their fruits, and the price with
its interest.
15. The effect of the annulment of the contract is to wipe it out of existence, and to restore the
parties to their original situation before the contract was entered into.

B. Multiple Choice (Explain briefly your answer citing the legal basis thereof)

1. A sold B a genuine bottle of brand “X” wine. However, upon delivery the former substituted a
fake. B now wants to annul the sale. Decide.
a. The contract is void ab initio therefore, it can be annulled.
b. The contract can be annulled since it is voidable due to fraud.
c. The contract cannot be annulled because it is only incidental fraud.
d. There is dolo incidente therefore, it can be annulled.

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 2. The following are attributes of a voidable contract. Which is not?
a. It is binding, valid and enforceable before annulment.
b. Damage is material to be voidable contract.
c. It can be ratified and ratification has retroactive effect.
d. The capacitated cannot allege the incapacity of the other party.

3. D. forced C to execute a promissory note

a. Contract is rescissible because the contract is fraudulent.
b. The contract is void.
c. D. cannot demand payment from C because the contract is unenforceable.
d. Contract remains to be valid.

4. Which of the following contract is voidable?

a. Those were both parties are incapable of giving consent to a contract
b. Those undertaken in fraud of creditors when the latter cannot in any manner collect the
claims due them
c. Those where the consent is vitiated by mistake, violence, intimidation, undue influence or
fraud
d. Those whose object is outside the commerce of men.

5. G was appointed guardian of S, the latter being 16 years old. S sold his parcel of land in writing to
B valued at P100,000 for P75,000 suffering lesion by ¼ of the value. What is the status of the contract?
a. Rescissible
b. Unenforceable
c. Void
d. Voidable

6. S makes an offer to B on June 1, 2015. B makes known his acceptance in letter sent June 2, 2015
and received by S on June 5, 2015. Meantime, on June 3, 2015, S became insane.
a. The contract is voidable because one party is insane.
b. There is already a meeting of minds, the contract is perfected.
c. The contract is voidable because one party is insane.
d. The contract is void the offer being ineffective.

7. Which one of the following constitutes fraud?

a. Failure to disclose facts when there is a duty to reveal them.
b. Misrepresentation made in good faith.
c. Misrepresentation by a third person and both parties were mistaken.
d. Usual exaggeration in trade.

8. G was appointed as the guardian of W who owns a parcel of land valued at P 1,000,000. W sold
the land only for P 700,000 to X. The contract was defective because:
a. unenforceable
b. rescissible
c. voidable
d. void

9. Which of the following contracts is voidable?

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 a. Those where both parties are incapable of giving consent to a contract
b. Those undertaken in Fraud of creditors when the latter cannot in any manner collect the
claims due them.
c. Those whose object is outside the commerce of men.
d. Those where the consent is vitiated by mistake, violence, intimidation, undue influence or
fraud.

10. These contracts are existent, valid, and binding, although they can be annulled because of want
of capacity or vitiated consent of one of the parties, but before annulment, they are effective and
obligatory between parties.
a. Resdssible contracts
b. Voidable contracts
c. Unenforceable contracts
d. Void and inexistent contract

11. Z sold a parcel of Jand with a right of repurchase in favor of spouses H and W on December 31,
1985. On February 1, 1989, Z sold half of the same parcel of land to X and Y for the price of P75,000 on
the understanding that X and Y shall pay the amount of -1210,000 as partial payment and the balance to
be paid by monthly installments. Z received the partial payment of Pl0,000 but signed a deed of absolute
sale, disposing half of the property in favor of X and Y purportedly in consideration of the amount
received. Subsequently, X and Y defaulted on their monthly installments. Z repeatedly demanded for the
payment of the balance of 1265,000 from X and Y but the latter refused to pay.
On August 19, 1991, Z repurchased the parcel of land from the spouses H and W. She also
offered to repurchase from X and Y the portion of the disputed land which she sold to them but the
latter refused. On May 27, 1993, Z filed a complaint for the annulment of the subject deed of sale on the
basis of the previous deed of sale with right of repurchase Z executed in favor the spouses H and W.
a. The sale is void because Z knew perfectly well that when she offered the subject property for
sale to X and Y she had already previously sold it to the spouses H and W. It is undeniable then that z
fraudulently obtained the consent of X and Y in the execution of the assailed deed of sale.
b. Z's action for annulment of the subject deed should be dismissed because the person who
employed fraud cannot base his action for the annulment of contracts upon such flaw of the contract.
c. Z employed fraud which she herself has caused. Hence, the prop r remedy is rescission not
annulment.
d. Z sold the subject property to herein X and Y; hence, she no longer had any right to do so for
having previously sold the same property to other vendees. The contract is unenforceable.

12. Because A wants to sell his land to B but the latter does not want to buy the same, A forced B to
buy his land. The contract is:
a. Not binding upon B since his consent was vitiated
b. Unenforceable as against B but not against A
c. May be ratified expressly and tacitly by A
d. Valid, binding and enforceable

13. The act or means by virtue of which efficacy is given to a contract which suffers from a vice of
curable nullity.
a. Ratification
b. Reformation
c. Interpretation

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 d. Annulment

14. S sold to Ba cellphone on June 3, 2015. On July 1, 2015, B discovered that the cellphone he
bought from A was an imitation. The law provides that he can annul the sale as a voidable contract
within four years. Prescription starts from:
a. June 3, 2015 when the sale was perfected.
b. The time of delivery of the cellphone to B.
c. The time they first talked about the sale of the cellphone.
d. July 1, 2015 when the fraud was discovered.

15. The requisites of ratification are the following, except:

a. The contract should be tainted with a vice which is susceptibl of being cured.
b. The confirmation should be effected by the person who i entitled to do so under the law.
c. It should be effected with knowledge of the reason which renders the contract voidable.
d. The reason which renders the contract voidable should have not disappeared.