LAW ON CONTRACTS
A contract is a meeting of minds between two persons whereby one binds himself, with respect to the other, to give
something or to render some service. (Art. 1305)
ESSENTIAL ELEMENTS:
ACCIDENTAL ELEMENTS:
>without which the contract >those w/c are agreed upon by the
parties and w/c cannot exist w/o
cannot exist.
being stipulated.
1 Consent
Interest
ex. Terms of payment
2 Object
3 Cause
Place of payment
1 Warranty against hidden
2 Warranty against eviction
BASIC PRINCIPLES OF CONTRACTS
1 MUTUALITY
NATURAL ELEMENTS:
>those which exist as part of the contract, even if
no stipulation.
(MACRO)
--must bind both parties; compliace can't be left by the will of only one party.
Consequences of mutuality
1 One party cannot revoke or renounce a contract without the consent of the other
2 The determination of the performance may be left to a third person
ESCALATION CLAUSE
2 AUTONOMY
-one increases/decreases compensation of one of the parties.
VOID if solely upon the will of one of the parties
--freedom or liberty to contract provided lacit.
Contrary to Law:
a Waiver of FUTURE FRAUD
b Pactum Leonina
c Pactum Commissorium
d Pactum de non aliendo
3 CONSENSUALITY
-stipulation w/c excludes one party from any share in the P/L
-st: CR appropriates the things given by way of pledge, mortgage
-st: forbidding the owner from alienationg the immovable mortgage
--genrally perfected by the meeting of the minds or consensual
Contract of Adhesion
there is already a prepared form containing the stipulations desired by one party.
4 RELATIVITY
-- contracts takes effect only between the parties, their assigns, and heirs.
GR: 3P do not have a cause of action to enforce or annul a contract nor are they bound by the terms thereof.
EXCEPTIONS:
1
2
3
4
by Law
Contracts entered into to defraud creditors
Tortious interference
Stipulation pur atrui
5 OBLIGATORINESS
--contracts have the force of law.
STAGES OF A CONTRACT
PREPARATION
NEGOTIATION
CONCEPTION
GENERACION
PERFECTION
BIRTH
where the parties provide for their offers and bargain with
each other.
when the parties have already came to a definite
agreement
CONSUMMATION
DEATH
TERMINATION
The terms of the contract have already been performed.
CLASSIFICATIONS OF CONTRACTS
1 DEGREE OF DEPENDENCE
•Preparatory
>"means"-contracts maybe entered into
Ex: Agency, Partnership
•Principal
>can stand by itself
Ex: Sale, Loan
Depends upon another contract
Ex: Pledge, Mortgage
•Accessory
•Consensual
>perfected by mere cosent
Ex: Sale, Lease
2 PERFECTION/FORMATION
•Real
>perfected by delivery
Ex: Depositum, Pledge, Commodatum
•Formal/Solemn
>must be in form provided by law
Ex: Donation of an immovable
•Bilateral
>both parties are reciprocally obliged.
Ex: Lease, Sale
>only one party is obliged.
Ex: Pledge, Guaranty
3 PARTIES OBLIGED
•Unilateral
•Onerous
4 CAUSE
•Gratuitous
•Remunatory
•Commutative
5 RISK
•Aleatory
•Nominate
6 NAME
•Innominate
>there's an exchange of valuable consideration
Ex: Sale, Barter, Lease
>NO equivalent consideraton
Ex: Donation, Commodatum, Remission
>Service or benefit remunerated (past service)
>real fulfillment, equivalent values are given
Ex: Sales, Lease
>fulfillment is deendent upon chance
Ex: Insurance contract
>With designated name under the law
Ex Sale
>Without any name under the law
Ex "DO UT DES"="I give that you may give"
"DO UT FACIAS"="I give that you may do"
"FACIA UT DES"="I do that you may give"
FACIA UT FACIAS"="I do that you may do"
CONSENT
>is the meeting of the offer and the acceptance upon the thing and the cause
OFFER & ACCEPTANCE
offer
acceptance
qualified
acceptance
acceptance
offeror
• certain
• absolute
• counter-offer
• express or implied
•
may fix: time, place,
manner of
acceptance
ADVERTISEMENTS:
Cognition Theory
Manifestation Theory
follows that the acceptance takes effect from the time
offerer has the knowledge
of the acceptance of the once it is manifested by the offeree
offeree
Intervening events (DICI)
•Death •Civil interdiction >an offer become ineffective upon the
happening of which of either party before
•insanity •Insolvency
acceptance is conveyed
are not definite offers, but mere invitations to make an offer.
SIMULATION:
A Absolute Simulation
B Relative Simulation
•
•
•
•
VOID parties did not intend to be bound at all.
parties merely conceal their true agreement. VALID
CANNOT GIVE CONSENT:
Unemancipated minors
Insane or demented persons (ex lucid interval)
Deaf-mutes (illeterate)
Drunks or hypnotized
OBJECT
-subject matter of the contract.
-is really to create or to end obligations.
Requisites:
1 within the commenrce of men
2 trnasmissible
3 lacit
4 not impossible
5 determinate
CAUSE
A
B
C
ONEROUS
GRATUITOUS
REMUNERATORY
Contracts
a. w/o cause or
RULES
-produces NO EFFECT WHATEVER.
b. False cause
-VOID
c. Cause
d. inadequacy of the price
e. Motive
-presumed that it exists and is lawful
-will not affect the contract.
DEFINITELY DO NOT AFFECT CONTRACT.
OTHER ESSENTIAL ELEMENTS
•
DELIVERY
Real Contracts
-perfected by delivery.
1. Depositum
2. Pledge
3. Commodatum
4. Loan or Mutuum
FORMS OF CONTRACT
GR: NO FORM is required for the validity or perfection of a contract
FORMALITIES ARE REQUIRED FOR:
-VALIDITY
-ENFORCEABILITY
(Statute of Fraud)
-CONVENIENCE
(to bind the 3P)
REFORMATION OF INSTRUMENTS
-is the remedy by means of which a written instrument is made or construed so as to express or conform to the
true intention of the parties when some error or mistake has been committed.
Requirements:
a there's meeting of mind
b there's written instruments
c written intruments does not reflect the true intention of the parties.
Who can ask for reformation:
1. either party or his successor in interest
2. the injured party, or his heirs and assigns
NOT allowed:
a. Simple donations;
b. Wills; and
c.
When the real agreement is VOID
INTERPRETATION OF CONTRACTS
•
•
•
•
the literal meaning of its stipulations shall control, If the terms of a contract are clear and leave no doubt upon
the intention of the contracting parties.
If the words appear to be contrary to the evident intention of the parties, the latter shall prevail over the
former.
In order to judge the intention of the contracting parties, their contemporaneous and subsequent acts shall be
principally considered.
The usage or custom of the place shall be borne in mind in the interpretation of the ambiguities of a contract,
and shall fill the omission of stipulations which are ordinarily established.
DEFECTIVE CONTRACTS
RESCISSIBLE
VOIDABLE
NATURE
valid until rescinded
valid until
annulled
DEFECT
lesion/economic
damage
consent
KINDS
GAPUS/GACTS
VIMFU
REMEDY
PRESCRIPTIVE PERIOD
RATIFICATION
As to who may question
rescission(subsidiary
remedy)-return
whatever is given and
4 yrs
UNENFORCEABLE
VOID
valid but cannot be
produces no effect
enforced
lack of authority, failure illegal object, absent
to observe form, both element, law declares it
are incapable of giving
to be void
USB (SALSAR)
many to mention
ANNULMENT
RATIFICATION
declaration of
NULLITY
4yrs
-
imprescriptible
X -- convalidation by
prescription
YES
YES
X
PARTIES / 3P
PARTIES ONLY
PARTIES ONLY
PARTIES /3P
DIRECTLY AFFECTED