Characteristics of Contracts
Contracts are legally binding agreements between two or more parties that
outline the terms and conditions of an exchange.
Mutual agreement: Both parties involved in the contract must agree to the
terms and conditions. This means that there must be an offer and an
acceptance, and both parties must be aware of and understand the terms of
the agreement.
Consideration: Each party involved in the contract must provide something of
value. This could be money, goods, services, or even a promise to do something
(or not do something).
Capacity: All parties involved in the contract must be legally capable of
entering into a binding agreement. This means they must be of legal age, sound
mind, and not under any undue influence.
Legality: The purpose of the contract must be legal. Contracts that violate the
law are unenforceable.
Certainty and possibility of performance: The terms of the contract must be
clear and specific enough for the parties to understand their obligations.
Additionally, the terms of the contract must be possible to perform. Contracts
that are too vague or impossible to perform may be unenforceable.
Article 1306 of the Philippine Civil Code: This article grants contracting parties
the freedom to establish their own stipulations, clauses, terms, and conditions in
their agreements, as long as they don't contradict the law, morals, good
customs, public order, or public policy. Essentially, it allows parties to customize
their contracts within certain boundaries set by law and societal values.
Requisites of Valid Consent:
Freely given: Consent must be given without coercion, undue pressure, or
manipulation. The person consenting should feel they have a genuine choice
and are not forced into agreeing.
Informed: The person consenting must possess all the essential information about
the situation they are consenting to. This includes understanding the potential
risks, benefits, and alternatives.
Specific: Consent should be specific to the particular action or situation at hand.
This ensures the person understands exactly what they are agreeing to.
Competent: The person consenting must have the legal capacity to understand
the information presented and make rational decisions.
Legal Capacity to Consent:
Legal capacity to consent refers to a person's mental state and age, which
allows them to understand and make informed decisions about their rights and
obligations. This can vary depending on the specific context and legal
jurisdiction. Some general principles include:
Minimum age: Most jurisdictions have a minimum age requirement for entering
into contracts or consenting to certain actions. This age may vary depending on
the specific act or decision.
Mental competence: Individuals with certain mental illnesses or cognitive
impairments may be deemed incompetent to provide valid consent due to
their inability to understand the consequences of their choices. This
determination is often made by a qualified professional, such as a doctor or
psychiatrist.
Requisites of Valid Offer
Intention to create legal relations: The offer must demonstrate a genuine
intention to enter into a legally binding agreement. This means the offer
shouldn't be a joke, social invitation, or mere invitation to treat (like displaying
goods in a store, which is an invitation for customers to make offers, not an offer
itself).
2. Communication to the offeree: The offer needs to be communicated to the
intended recipient, the offeree. This means the offeree must be aware of the
offer and its terms. Simply having the intention to offer something without
communicating it to the other party doesn't constitute a valid offer.
3. Definiteness and certainty: The offer must be clear and specific in its terms. This
includes details like the subject matter, price, quantity, and any other essential
elements relevant to the agreement. Ambiguous or vague offers can lead to
disputes later and may not be considered valid.
4. Capacity to contract: The offeror, the person making the offer, must have the
legal capacity to enter into a binding contract. This means they must be of legal
age, of sound mind, and not under any undue influence that could impair their
judgment.
5. Seriousness: The offer must be genuine and serious, not made in jest or with
the intention of misleading the offeree.
Additionally:
Offer must not have lapsed: The offer needs to be valid within a specific
timeframe. If no timeframe is specified, it should be a reasonable time based on
the nature of the offer. An offer that has expired or been revoked by the offeror
is no longer valid.
Offer must not be illegal: The offer's purpose and subject matter cannot be
against the law. Contracts based on illegal activities are unenforceable.
Requisites of Acceptance
1. Unconditional agreement: The acceptance must be a complete and
unconditional agreement to all the terms and conditions laid out in the offer. This
means the offeree cannot introduce new terms or conditions, or attempt to
modify the offer in any way.
2. Communication to the offeror: Similar to the offer, the acceptance needs to
be communicated to the offeror. Silence or inaction generally doesn't constitute
acceptance. The communication method should be consistent with how the
offer was made unless otherwise specified.
3. Capacity to contract: Just like the offeror, the offeree (the person accepting
the offer) must also have the legal capacity to enter into a binding contract.
This means they must be of legal age, of sound mind, and not under any undue
influence.
4. Mirror image rule: In most jurisdictions, the acceptance must be a "mirror
image" of the offer. This means it must precisely match the terms and conditions
presented in the original offer. Any deviation from the offer's terms can be
considered a counter-offer, which essentially rejects the original offer and
potentially opens negotiations for a new agreement.
5. Timely acceptance: The acceptance needs to be received by the offeror
within a reasonable timeframe. This timeframe can be explicitly stated in the
offer, implied based on the nature of the offer, or determined based on
prevailing business practices.