OBLICON REVIEWER
CONTRACTS
CHAPTER 1
ART. 1305 A CONTRACT IS A MEETING OF THE
MINDS BETWEEN TWO PERSONS WHEREBY
ONE BINDS HIMSELF WITH RESPECT TO THE
OTHER, TO GIVE SOMETHING OR TO RENDER
SOME SERVICE.



Contractsa. Meeting of minds between two
contracting parties which take place
when an offer of one party is
accepted by another.
b. There must be at least two persons
or parties
Contract and Obligation distinguished
a. Contract- source of obligation; no
obligation=no contract
b. Obligation- Legal tie that exist after
the contract has been entered into;
can exist even w/o contract (pwede
kasi tong obligation sa law, public
order, custom, etc)
Contract and Agreement Distinguished
a. Contract- binding agreements
enforceable thru legal proceedings.
To be valid and enforceable it must
be lawful and contains all the
requisites of a valid contract.
b. Agreement- Cannot be enforced by
action in courts of justice. Parang
ano lang siya moral and social
agreement, kunwari pumayag ka
lang kumanta or sumayaw para sa
birthday ng jowa mo, sana all.
Broader than contract.
c. All contracts are agreements but
not all agreements are contracts.
CLASSIFICATION OF CONTRACTTS
1.) According to name or designation
a. Nominate
b. Innominate
2.) According to perfection
a. Consensual
b. Real
3.) According to cause
a. Onerous
b. Remunerative
c. Gratuitous
4.) According to form
a. Formal or solemn
b. Informal, common or simple
5.) According to Obligatory Force
a. Valid
b. Voidable
c. Rescissible
d. Void or Inexistent
e. Unenforceable
6.) According to Persons Obliged
a. Unilateral
b. Bilateral
7.) According to Risks
a. Commutative- (sale, lease) when
the undertaking of a party is
considered equivalent to that of
another
b. Aleatory- (insurance, sale of hope)
when it depends upon an uncertain
event or contingency both as to
benefit or loss.
8.) According to Liability
a. Unilateral(commodatum,
gratuitous, deposit), kapag isang
party lang may obligation
b. Bilateral- (sale, lease), kapag pareho
kayong may obligation
9.) According to Status
a. Executory- hindi pa nagagawa ng
both parties
b. Executed- kapag nagawa na
successfully
10.) According to dependence to another
contract
a. Preparatory- (agency, partnership),
means to an end; done before
doing something else.
b. Accessory- (mortgage, guaranty),
dependent upon another contract it
secures or guarantees for its
existence and validity
c. Principal (sale, lease), hindi ‘to
dependent be sa ibang contract,
but necessary siya para sa existence
ng accessory contract.
11.) According to dependence of part of
contract to the other parts
a. Indivisible
(entire, kunwari sale ng shirt with
matching pants), when each part of the
contract is dependent upon the other
parts for satisfactory performance.
b. Divisible
(pwedeng magkahiwalay, kuwari sale of
candy and a piece of cake), when one
part of the contract maybe satisfactorily
performed independently of the other
parts.
(Kind of contract entered into is not
determined by name or title but, by its
nature.)
ART. 1306 The contracting parties may establish
such stipulations, clauses, terms, and conditions
as they may deem convenient, as long as they
are not contrary to law, morals, customs, public
order, and public policy.

Valid Contracts



a. Meet the legal requirements
(consent, object, cause) and
limitations.
b. Legally binding and enforceable
Freedom to contract guaranteed
a. Yung freedom to enter a contract
daw ay isa sa mga liberties na
binibigay ng constitution sa tao
pero dapat yung contract na
papasukan mo lang ay ang mga
conracts na valid. Ibig sabihin wala
talang absolute right to enter into
any kind of contract dahil nga may
limitations.
Limitations on contractual stipulations
1. Law
-basta dapat yung contract mo
ay in accordance and not
repugnant to an applicable
statute.
2. Police Power
-all contractual obligations are
subject to the possible exercise
of police power.
-The exercise of such power
constitutes
a
mere
enforcement.
Contract must not be contrary to law
1. Law--rule
of
conduct,
just,
obligatory,
promulgated
by
legitimate authority, and of
common observance and benefit.
2. A contract cannot be given effect if
it is contrary to law because law is
superior to contract.

Contract must not be contrary to the
following
1. Morals- deal with norms of good
and right conduct
Ex 1. Contract kung saan pumayag
si X na maging asawa ni Y kapalit ng
100000, immoral yun be kaya void
din.
Ex 2. Kapag pumayag si X maging
alipin ni Y ng walang sweldo
hangga’t hindi niya nababayaran
yung utang niya, contrary to sa law.
Gaga talaga tong si X be wag mong
gayahin.
2. Customs- habits and practices
which thru long usage have been
followed and enforced by society.
Ex. Kunwari pumasok ka sa contract
na kung saan inutusan ka ni Y na
sampalin yung teacher mo sa stats,
void yun be against yun sa good
customs of showing respect.
Pagpray na lang natin siya :)
3. Public order- public safety or weal.
Ex. Kapag nakalagay sa contract na
lessor can use force para maeject
yung lessee kapag hindi siya
nakapagbayad, void to be at against
sa public order dapat hindi tayo
gumagamit ng force be.
4. Public policy- broader; refer not
only to public safety but also to
common good. Contract which has
a tendency to be injurious to the
public is contrary to public policy.
Ex. Kapag ninakaw ni X yung kotse
ni Y. Tapos pumasok sila sa contract
na kung saan ang sabi ni Y ay hindi
kita papatayin kung babayaran mo
ako ng 50000. Bawal to be kasi
nagnakaw
siya
so
dapat
maparusahan siya, paano kung
magnakaw siya ulit diba? Against to
sa public policy.
ART. 1307 Innominate contracts shall be
regulated by tge stipulations of the parties by
the provisions of Titles I and II of this book by
the rules governing the most analogous
nominate contracts and by the customs of the
place.
1. Nominate contracts- has specific name
or designation (commodatum, lease,
agency)
2. Innominate contracts- has no specific
name or designation
a. Do ut des- I give that you may give
b. Do ut facias- I give that you may do
c. Facio ut des- I do that you may give
d. Facio ut facias- I do that you may
do
(Pero yung do ut des hindi na siya
innominate ngayon dahil siya na ngayon
ay tinatawag na barter or exchange.
Palakpakan)
A. Rules
governing
innominate
contracts
a. The agreement of parties
b. Provisions of Civil Code
c. Rules governing analogous
contracts
d. Customs of the place
ART. 1308 The contract must bind both
contracting parties, Its validity cannot be left to
the will of one of them.
-It is a fundamental rule that no party can
renounce or violate the law of the contract w/o
the consent of the other. Dapat mutual ang
consent be.
must have clearly conferred a favor upon the
third person.
ART. 1309 THE DETERMINATION OF THE
PERFORMANCE MAY BE LEFT TO A THIRD
PERSON, WHOSE DECISION SHALL NOT BE
BINDING UNTIL IT HAS BEEN MADE KNOWN TO
BOTH CONTRACTING PARTIES.
1. General Rule- party’s right and
obligation derived from the contract is
transmissible to the successor. Contract
takes effect only between the parties,
their assigns, and heirs.
2. Exceptions- when contract is not
transmissible.
a. By nature- when it involves
personal qualifications
b. By stipulation- in accordance with
the principle of freedom to contract
c. By provisions of law- as in agency,
commodatum, lease, when death
extinguishes the legal relationship.
 Third persons affected by a contract
1. Third person has no rights and
obligations under a contract to
which he is a stranger. There are
cases, however when third persons
are affected by the contract.
a. In
contracts
containing
stipulation in favor of a third
person.(Stipulation pour autrui)
b. Contracts entered to defraud
creditors
c. In contracts which have been
violated at the inducement of
third person
 Stipulation Pour Autrui
1.) Definition: stipulation in a contract
conferring a favor upon a third
person who has the right to
demand its fulfillment, provided he
communicated his acceptance to
obligor before its revocation by the
obligee.


pwede to be kasi hindi siya potestative
condition
(yung
condition
na
nagdedepende sa sole will ng isang
contracting party lang). The decision
however shall bind the parties only
after it has been made known to both
of them.
Ex. Kunwari si X binenta niya lupa niya
kay Y, napagkasunduan nila na si Z na
real estate appraiser ang magdedecide
ng price. Dapat malaman muna ng both
parties yung desisyon ni Z bago ito
maging binding.
ART. 1310 the determination shall not be
obligatory if it is evidently inequitable. in such
case, the courts shall decide what is equitable
under the circumstances.
ART. 1311 contracts take effect only between
the parties, their assigns and heirs except in
case where the rights and obligations asrising
from the contract are not transmissible by their
nature, by stipulation, or by the provisions of
law.
the heir is not liable beyond the value of the
property he received from the decedent.
if a contract should contain some stipulation in
favor of a third person, he may demand its
fulfillment provided he communicated hid
acceptance to the obligor before its revocation.
a mere incidental benefit or an interest of a
person is not sufficient; the contracting parties
2.) Classes:
a. Done beneficiary- stipulation is
intended for the sole benefit of
such person. Parang gift or
donation.
b. Creditor Beneficiary- where an
obligation is due from the
promise to the third person.
Kunwari
nagpromise kang
magbabayad ka sa binili mong
property sa seller na sa third
person mo na lang ibibigay
yung bayad. (‘di ko sure beh ah)
3.) Requisites:
a. Contracting parties must clearly
conferred a favor upon a third
person
b. Third person must have
communicated his acceptance
before revocation by oblige
c. Stipulation should be a part, not
the whole, of the contract
d. Should not be compensated or
conditioned by any kind of
obligation
e. Neither of the parties bear the
legal
representation
or
authorization of third party
ART. 1312 In contracts creating real rights, third
persons who come into possession of the object
of the contract are bound thereby subject to
provisions of Mortgage Law and the Land
Registration Laws
1. Real right is binding against the whole
world kaya kahit yung third person who
come into possession of the object of a
contract is bound thereby.
2. Kapag nakaregister in accordance sa
Property
Registration
Decree
nagcoconstitute siya ng real right.
ART. 1313 Creditors are protected in cases of
contracts intended to defraud them

Creditor is given the right to impugn the
contracts of his debtor to defraud him.
Ex. May utang si X kay Y. Itong si X
binenta yung natitira niyang property
kay Z para hindi makuha ni Y. Kahit
walang kinalaman si Y sa kontrata ni X
at Z maaari niyang ipacancel yung sale
nila para sa kanya na yung property.
ART. 1314 any third person who induces
another to violate his contract shall be liable for
damages to the other contracting party.



Rule of American Law, but also proper
under principles of PH Law
Dapat yung contract ay valid at may
knowledge yung third person na yun sa
existence nung contract.
Liability of the third person shall be
based on the theory of quasi-delict.
ART. 1315 Contracts are perfected by mere
consent and from the moment the parties are
bound not only to the fulfillment of what has
been expressly stipulated but also to all the
consequences which, according to their nature,
maybe keeping w/ good faith, usage and law.
ART. 1316 Real contracts, such as deposit,
pledge, commodatum, are not perfected until
the delivery of the object of the obligation.
1. Consensual contracts- perfected by
mere consent (sale, lease, agency). They
come into existence upon their
perfection by mutual consent, even if
the subject is not yet delivered. Sa
perfection na part dito hindi pa
nattransfer yung title pero naggive rise
na siya sa obligation binding upon both
parties.
2. Real Contracts- perfected by delivery of
the
thing
(depositum,
pledge,
commodatum). These contracts have
for their purpose restitution because
they contemplate the return by a party
of what has been received from
another.
3. Solemn Contracts- require compliance
with certain formalities prescribed by
law ( donation of real property which
must be in a public instrument.
 Stages in the life of a contract
1. Preparation or Negotiation- steps
taken; parties have not yet arrived
at any definite agreement.
2. Perfection or birth- parties have
come to a definite agreement ot
meeting of the minds.
3. Consummation or Terminationparties performed their respective
obligations and contract may be
said
to
have
been
fully
accomplished. Termination can also
happen by mutual agreement of
parties.
 Effect of the perfection of contract,
parties are bound not only1. To the fulfillment of the contract
but also
2. The consequences which, according
to their nature, maybe keeping w/
good faith, usage and law.
ART. 1317 No one may contract in the name of
another without being authorized by the latter,
or unless he has by law a right to represent him.
A contract entered in the name of another by
one who has no authority or legal
representation, or whi has acted beyond his
powers, shall be unenforceable, unless it is
ratified expressly or impliedly, by the person on
whose behalf it has been executed, before it is
revoked by the other contracting party.
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
Unauthorized
contracts
are
unenforceable
Unauthorized contract is not to be
confused with a contract for the benefit
of a third person who may demand its
fulfillment provided the requisites
mentioned are present.
Unauthorized contracts can be cured
only by ratification. Ratification must be
clear and express so as not to admit of
any doubt or vagueness.
Ratification cleanses the contract from
all its defects from the moment the
contract was entered into.
When a person is bound by the contract
of another, requisites are:
a. He must be duly authorized
expressly or impliedly.
b. He must act within his power
CHAPTER 2
REQUISITES OF A CONTRACT
ART. 1318 there is no contract unless the ff
requisites occur:
1. Consent
2. Object
3. Cause

Classes of elements of contract
A. Essential elements- no contract
can validly exist without these,
aka requisites of a contract.
a. Common- present in all
contracts (COC)
b. Special- not common to all,
only to specified contracts
B. Natural elements- presumed to
exist in certain contracts. Like
warranty.
C. Accidental Contracts- or the
particular stipulations, clauses,
terms,
and
conditions
established. Exist only when
expressly provided.
SECTION 1.-CONSENT

ART 1319 Consent is manifested by the meeting
of the offer and acceptance upon the thing and
the cause which are to constitute the contract.
The offer must be certain and acceptance must
be absolute. A qualified acceptance constitutes
a counter-offer.
Acceptance made by letter or telegram does
not bind the offerer except it came to his
knowledge. The contract in such a case, is
presumed to have been entered into in the
place where tha offer was made



Consent
-conformity or concurrence of wills
(offer and acceptance) and with respect
to contracts.
-Agreement of the will of one party with
that of another, upon the object or
terms.
-meeting of minds or mutual assent
between parties on the subject matter
and the cause.
Mutual assent and agreement
-takes place when there is an offer and
acceptance of the offer.
Offer
-proposal made by offerer to an
offeree, indicating willingness to enter
into a contract.
-must be certain and seriously
intended, so that liab may be exactly
fikxed bc it is necessary that the
acceptance is identical to the offer.
-Offer made when mad or emotionally
upset or in other ways indicating that it
wasn’t seriously intended is not a valid
offer. But lack of serious intent to enter
into a contract where such condition is
not apparent to the offeree does not
invalidate the offer.
Acceptance
-must be clear, absolute, unconditional,
unqualified, and must be identical with
the offer.
-kapag daw qualified and contract
which means na subject siya sa isang
condition it constitutes daw counteroffer na kung saan yung original offer ay
narereject at nagkakaroon yungparties
ng bagong contract. Yung offerer
nagigingofferee and vice versa.
ART. 1320 An acceptance may be express or
implied
1. Express- written or oral
2. Implied- act or conduct
ART 1321 The person making the offer may fix
the time, place, and manner of the acceptance,
all of which must be complied with.
-Art 1321-1326 have been adopted from
American law.

Communication of the offer
-offer must be communicated and
received by the offeree. Maybe express
or implied. Kahit nod lang counted yun
ART 1322 An offer made through an agent is
accepted from the time acceptance is
communicated to him.

Communication of Acceptance
1. To offerer- acceptance must be
absolute tapos it must be
communicated to offerer.
2. To agent- act of agent is the act of
the principal. This article applies
only when the offer is made thru
the agent and acceptance is
communicated through him.
ART 1323. An offer becomes ineffective upon
the death, civil interdiction, insanity, or
insolvency of either party before acceptance is
conveyed.




Pwede pa marevoke or mawithdraw
yung offer kapag hindi pa ito naaccept
basta sabihin mo lang na ayaw mo na.
Pero kapag naaccept na perfected na
siya so bawal na narevoke.
Pero pwede rin siya maging ineffective
dahil sa death, civil interdiction,
insanity, and insolvency of one of the
parties before the conveyance of
acceptance of the offer.
Dapat sa time
na acceptance is
communicated, both parties must be
living and capacitated.
Other grounds which render the offer
ineffective
1. Failure to comply sa terms
2. Expiration ng period
3. Destruction
nung
thing
b4
acceptance
4. Rejection nung offer.
ART 1324 When the offerer has allowed the
offeree a certain period to accept, the offer may
be withdrawn at any tine before acceptance by
communication such withdrawn except when
the option is founded upon consideration, as
something paid or promised
1. Option contract-giving consideration of
a certain period within which to accept
the offer
 Option- privilege given to
offeree
 Contract- perfected upon the
acceptance of offer
2. Option period- period given within
which the offeree can accept the offer
3. Option Money- money paid or
promised to be paid in consideration for
the option
 Earnest money- partial payment
of the purchase price
A. Withdrawal of offer where period
stipulated for acceptance
-the offer may be withdrawn as a
matter of right before acceptance,
exception is when the offeree paid
for the consideration.
ART 1325. Unless it appears otherwise business
advertisements of things for sale are not
definite offers, but mere invitations to make an
offer.
a. acceptance of which will perfect a
contract
b. However, if the advertisement is
complete in all the particulars necessary
in a contract, it may amount to a
definite offer.
ART 1326 Advertisements for bidders are simply
invitations to make proposals, and the
advertiser is not bound to accept the highest or
lowest bider, unless the contrary appears
a. It is not the advertiser that is making an
offer but the bidders. Acceptance by
the advertiser is necessary for a
contract to exist.
b. In Judicial Sales (sales ordered by a
court), sheriff is bound to accept the
highest bid.
ART 1327. The ff cannot give consent to a
contract
1. Unemancipated minors
-persons who have not yet reached the
age of majority and are still subject to
parental authority.
2. Insane or demented persons
-insanity must exist at the time of
contracting
3. and deaf-mutes who doesn’t know how
to write
-However, if the deaf-mute knows how
to write contract is valid
>The civil code defines on the contrary who hve
no capacity to give consent.
>Contract entered when one of the parties is
incapable of giving consent is voidable
>Voidable- valid and binding until it is annulled
by an action in court. Susceptible rin siya sa
ratification.
> Reason for disqualification is they can be easily
victims of fraud. They can enter into a contract
only through a parent.
ART 1328. Contracts entered into during Lucid
Interval are valid. Contracts agreed to in state of
drunkness or hypnotic spell are voidable.
a. Lucid Interval- period of temporary
sanity
b. Drunkness or hypnotic spell- impair the
capacity of a person to give intelligent
consent; temporary insanity.
ART 1329. The incapacity declared in art 1328 is
subject to the modifications determined by law,
and is understood to be without prejudice to
special disqualifications established in the laws.
1. When necessaries such as food are
delivered to a minor or other person
w/o capacity, pwede to be basta
babayaran niya.
2. A minor 18 yrs old or above may
contract for life, health and accident
insurance
3. Contract is valid if entered through a
parent or guardian.
4. Contract is valid where the minor
misrepresented his age
5. Contract is valid where a minor bet 1821 voluntary pays money in fulfillment
of his oblig
(MAMAYA NA TO BE HIRAP)
ART 1330. A contract where consent is given
through mistake, fraud, undue influence,
intimidation, or violence is voidable.
A. CHARACTERISTICS OF CONSENT
a. It is intelligent- it has the capacity to
act
b. It is free and voluntary- there is no
vitiation of consent by reason of
mistake violence and intimidation
c. It is conscious and spontaneousthere is no vitiation of consent by
reason of mistake, undue influenct,
and fraud.
B. VICES OF CONSENT
a. Error or mistake
b. Violence or force
c. Undue influence
d. Intimidation or threat
e. Fraud or deceit
ART. 1331 In order that mistake may validate
consent. It should refer to the substance of the
thing which is the object of the contract, or to
those conditions which have principally moved
one or both parties to enter into the contract.
Mistakes as to the identity or qualifications of
one of the parties will vitiate consent only when
such identity or qualifications have been the
principal cause of the contract.
Simply mistake of account shall give rise to its
correction.
 Mistake or error- false notion of a
thing or a fact material to the
contract.
A. NATURE OF MISTAKE
a. Mistake of fact- may arise from the
ignorance or lack of knowledge
b. Mistake of law- substantial mistake
of fact. That given his consent hais,
the party would not have given his
consent had he known of the
mistake.
B. MISTAKE OF FACT
a.
SECTION 2- Object of Contracts
ART. 1347 All things which are not outside the
commerce of men, including future things, may
be the object of the contract. All rights which
are not transmissible may also be the object of
contracts.
No contract may be entered into upon future
inheritance except in cases expressly authorized
by law.
All services which are not contrary to law,
morals, good customs, public order, or public
policy may likewise be the object of the
contract.
 Object of contract- subject matter;
obligation created. Object obligation=
object of contract.
 Maybe things (sale), rights (assignment
of credit), or services (agency)
 REQUISITES: (OBJECT)
a. Within commerce of men, can
legally be the subject of commercial
transaction
b. It should not be impossible, legally,
or physically
c. It must be in existence or capable of
existing
d. Must be determinate w/o the need
of a new contract
 REQUISITES: (SERVICES)
a. Within commerce of men
b. It should not be impossible, legally,
or physically
c. Must be determinate
 RIGHTS AS OBJECT OF CONTRACT
-all rights can be the object of contract
exceptions are when they are not
transmissible.
1. Outside the commerce of men- kalye,
tulay, tawiran, ulan, araw, siya.
2. Impossible physicall, or legally- drugs,
pumatay, soil sa Jupiter.
3. Determinable things- manok na pula
sa bodega ko, yung pinakamaliit kong
lupa.
4 Future things or rights- wine that a
vineyard is expected to produce, wool
that shall thereafter grow upon a
sheep, etc. Kapag sa future right
naman, royalty that an author is
expecting to receive from his publisher.
5.Intransmissible rights- right to vote,
parental rights, etc.
 FUTURE INHERITANCE
-Property or right not in existence at
time of contract, ineexpect pa lang.
-Except kapag authorized by law, void
to.
-Law permits contracts on future
inheritance—
a. in case of donation by reason of
marriage between future spouses
b. partition of property by act of inter
vivos (transfer or gift) by a person to
take effect upon his death
 KINDS OF IMPOSSIBILITY
a. Physical- if it cannot exist or
performed (monkey that talks).
Kapag sa services:
 Absolute- no one could peform
it (fly like a bird)
 Relative- when it arises from
the
special
circumstances
(make payment to a dead
person) or special conditions of
the obligor (to paint portrait by
a blind person)
b. Legal- contrary to law, morals,
custom, etc.
 Contrary to law= forbidden
by penal law (to sell shabu)
 Contrary to law= rule of law
makes it impossible (make
valid donation w/o public
instrument)
ART. 1349 The object of every contract must be
determinate as to its kind. The fact that the
quantity is not determinate shall not be an
obstacle to the existence of the contract,
provided it is possible to determine the same,
without the need of the new contract between
the parties.
-when the oblig consists in the delivery of a
generic thing, art 1246 governs.
SECTION 3- Cause of Contracts
ART 1350 In onerous contracts the cause is
understood to be, for each contracting party,
the prestation or promise of the thing or service
by another; in r