Вы находитесь на странице: 1из 19

LAW ON

OBLIGATIONS
AND
CONTRACTS
ARTICLES 1305-1354

LAW 501 PROJECT

Submitted
by:
KRISTINE
R.
APALE.
MW 12:00 1:30

Submitted to:
ATTY. ADRIAN
INSTRUCTOR
FERNANDEZ

Title II. CONTRACTS


CHAPTER 1
GENERAL PROVISIONS

Art. 1305. 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. (1254a)
QUESTION: What differentiates contract from an obligation?
ANSWER: An obligation is a tie which is recognized by law of which one is
bound to do, not to do, or to give something to another person. A
contract is one of the sources of an obligation which binds one or more
persons to fulfil a prestation in favor of another or others, or
reciprocally.
QUESTION: Are all agreements contracts?
ANSWER: No, but all contracts are agreements. Some agreements may not
have all the elements of a contract that create legally enforceable
obligations.
Art. 1306. The contracting parties may establish such stipulations,
clauses, terms and conditions as they may deem convenient,
provided they are not contrary to law, morals, good customs,
public order, or public policy. (1255a)
QUESTION: What are valid contracts?
ANSWER: They are contracts that have all the required elements and are
within the limitations of the agreement and are, therefore, binding and
enforceable.
QUESTION: If Mimi agrees to stab Nana for P10, 000 from Okok and does it,
can Mimi collect P10, 000 from Okok?
ANSWER: No, because contracts must not be contrary to law, good customs,
public order, or public policy. Stabbing is against and contrary to the
law. Law is superior to a contract and parties must respect the law.
Art.

1307. Innominate contracts shall be regulated by the


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. (n)

QUESTION: Is a contract with no specific name or designation in law


considered valid?

ANSWER: Yes, because it is impossible to anticipate all forms of agreements.


A contract will not be considered invalid because of not strictly
conforming to the standard contract and the presence of all elements
will suffice for a valid contract.
QUESTION: What are the different kinds innominate contract?
ANSWER: They are do ut facias (I give that you may do), facio ut des (I do
that you may give), facio ut facias (I do that you may do). Do ut des (I
give that you may give) is no longer an innominate contract as it has
been named as barter or exchange.
Art. 1308. The contract must bind both contracting parties; its
validity or compliance cannot be left to the will of one of
them. (1256a)
QUESTION: In what case can the validity or compliance of the contract be
left to the will of the sole debtor?
ANSWER: Only if the condition of the obligation is resolutory for it is of the
best interest of the debtor to extinguish his/her obligation.
QUESTION: Can one of the parties renounce the contract without the
consent of the other?
ANSWER: No, because the validity or compliance of the contract cannot be
left to the will of one of them. A contract is a meeting of the mind,
therefore, mutual consent must be there.
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. (n)
QUESTION: Is it possible to let a third person determine the performance of
the contract?
ANSWER: Yes, it is possible because it does not depend on one of the will of
the parties or upon a potestative condition.
QUESTION: When will the decision of the third person be binding?
ANSWER: It will be binding after it has been known to both the contracting
parties.
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. (n)
QUESTION: Are the contracting parties still bound by the determination of
the performance if it is inequitable?

ANSWER: No, they are not bound by the determination of the performance
if it is evidently inequitable.
QUESTION: Who will decide what is equitable under the circumstances?
ANSWER: The court is called upon to 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 arising from the contract are not transmissible by
their nature, or by stipulation or by provision 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 his acceptance to the obligor before its
revocation. A mere incidental benefit or interest of a person is
not sufficient. The contracting parties must have clearly and
deliberately conferred a favor upon a third person. (1257a)
QUESTION: Are the contracts only effective to the contracting parties?
ANSWER: It depends. The contract are only effective to them when the
rights and obligations arising from the contract are not transmissible
by law, stipulation or nature. But in general, the contract take effect
between the parties, their assigns and heirs.
QUESTION: What are the requisites of stipulation pour autrui, the second
paragraph of this article?
ANSWER: The parties by their stipulation must have clearly and deliberately
conferred a favor upon a third person. The favorable stipulation should
not be conditioned or compensated by any kind of obligation
whatsoever. Neither of the contracting parties bears the legal
representation or authorization of third party and the acceptance of
the third person must be communicated to the parties of the contract
before its revocation.
Art. 1312. In contracts creating real rights, third persons who come
into possession of the object of the contract are bound
thereby, subject to the provisions of the Mortgage Law and
the Land Registration Laws. (n)
QUESTION: What is the reason behind this article?
ANSWER: In this article, the real right is produced by the publicity given by
the Registry. A real right binds the property over which it is exercised.

QUESTION: A third person bought a land that was registered in the Register
of Property. Is he bound between the contracts of the debtor who
mortgaged the land and the creditor?
ANSWER: Yes, although he is a stranger to the contract of the debtor and
creditor because the right of the creditor to the mortgage follows the
property over which the real right is exercised.
Art. 1313. Creditors are protected in cases of contracts intended to
defraud them. (n)
QUESTION: What right is focused in these article?
ANSWER: The article focuses in the right of the creditor to impugn contracts
intended to defraud them.
QUESTION: If Mimi, who is indebted to Kiki by the amount of P20, 000,
gratuitously give a parcel of land to Okok so Kiki may not attach the
land in payment of her debt and Mimi has no other property. What can
Kiki do?
ANSWER: The creditor Kiki may ask for the rescission or cancellation of the
condonation of the land as it is her right to impugn contracts intended
to defraud him.
Art. 1314. Any third person who induces another to violate his
contract shall be liable for damages to the other contracting
party. (n)
QUESTION: Who can sue the third person who is responsible for the breach
of contract?
ANSWER: Whoever is injured may properly sue for damages.
QUESTION: What is the source of obligation of the third person who is
responsible for the breach of contract?
ANSWER: His/her liability for damages is based on the theory of quasi-delict.
Art. 1315. Contracts are perfected by mere consent, and from that
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, may be in
keeping with good faith, usage and law. (1258)
QUESTION: What is the classification of this contract according to
perfection?
ANSWER: This is a consensual contract or that which is perfected by mere
consent.
QUESTION: When are consensual contracts perfected?

ANSWER: They are perfected from the moment there is agreement in the
subject matter, and the cause or consideration.
Art. 1316. Real contracts, such as deposit, pledge and
commodatum, are not perfected until the delivery of the
object of the obligation. (n)
QUESTION: What are required in the perfection of real contracts?
ANSWER: Real contracts require consent, subject matter, cause of
consideration and DELIVERY.
QUESTION: Are contracts to make a deposit, to make a pledge or to make a
commodatum refer to real contracts?
ANSWER: No, they are consensual contracts. They will become real
contracts after the delivery of the contract. An agreement to
constitute a deposit, pledge or commodatum is binding, but the real
contract is not perfected until the delivery of the thing.
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 into in the name of another by one who
has no authority or legal representation, or who 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. (1259a)
QUESTION: Can a contract entered into in the name of another person be
enforceable?

ANSWER: No. As a general rule, a person is not bound by the contract of


another without his knowledge and consent unless when the latter
was duly authorized or has by law a right to represent him/her.
QUESTION: What is the cure for unauthorized contracts in which one
entered into in the name of anther by one who has no authority?
ANSWER: It can be enforceable only by subsequent ratification which must
be clear and express of the person whose name was entered into the
contract before it is revoked by the other contracting party.
CHAPTER 2
ESSENTIAL REQUISITES OF CONTRACTS
GENERAL PROVISIONS

Art. 1318. There is no contract unless the following requisites


concur:
(1) Consent of the contracting parties;
(2) Object certain which is the subject matter of the contract;
(3) Cause of the obligation which is established. (1261)
QUESTION: What are the three essential common elements of a contract?
ANSWER: They are consent, object or the subject matter and cause.
QUESTION: What is the effect if there is no consent?
ANSWER: If there is no consent, there is no contract as it is one of the
requisites of a contract.

SECTION 1. - Consent
Art. 1319. Consent is manifested by the meeting of the offer and
the acceptance upon the thing and the cause which are to
constitute the contract. The offer must be certain and the
acceptance absolute. A qualified acceptance constitutes a
counter-offer.
Acceptance made by letter or telegram does not bind the
offerer except from the time it came to his knowledge. The
contract, in such a case, is presumed to have been entered
into in the place where the offer was made. (1262a)
QUESTION: Mimi offered 100 lollipops to Kiki for P2.00 each. Kiki proposes
shed buy if she is to pay only P1.00 each. Is this considered
acceptance of the original offer?
ANSWER: No. His acceptance is qualified and becomes a counter-offer
making the original offer be extinguished.
QUESTION: When is the acceptance made by letter or telegram binding?
ANSWER: It will bind the offerer from the time it has come to his knowledge.
Art. 1320. An acceptance may be express or implied. (n)
QUESTION: What are the forms of acceptance of an offer?
ANSWER: An acceptance may be expressed orally or in writing or implied.
QUESTION: What is an implied acceptance?
ANSWER: It is one that is inferred from a conduct or acceptance of
unsolicited services.

Art. 1321. The person making the offer may fix the time, place, and
manner of acceptance, all of which must be complied with. (n)
QUESTION: Who has the right to prescribe the time, place and manner of
acceptance of the offer?
ANSWER: The offerer has the right to fix the time, place and manner of
acceptance.
QUESTION: Can the prescribed terms be acted in the contrary?
ANSWER: Yes. The act in contrary of the prescribed terms constitutes
counter-offer or counter proposal.
Art. 1322. An offer made through an agent is accepted from the
time acceptance is communicated to him. (n)
QUESTION: Mimi, the principal, appointed Kiki as her agent, to sell a specific
laptop for P20,000. Kiki offered the same to Okok on June 10 by letter
and was received by Okok on the same date. Okok sends his letter of
acceptance to Kiki on June 20 and was received by the latter on the
same date. Kiki communicated to Mimi the acceptance of the offer on
June 30. When was the contract perfected?
ANSWER: It was perfected on June 20 because it was the date when the
acceptance of the offer came into the knowledge of Kiki.
QUESTION: Is there a meeting of the minds if the principal made an offer
and the acceptance is communicated to his/her agent?
ANSWER: No, there would be no meeting of the mind unless the agent is
authorized to receive the acceptance.
Art. 1323. An offer becomes ineffective upon the death, civil
interdiction, insanity, or insolvency of either party before
acceptance is conveyed. (n)
QUESTION: What is the effect to the offer if one of the parties is dead before
acceptance is communicated?
ANSWER: The offer becomes ineffective because there was no meeting of
the minds.
QUESTION: Are there other instances when the offer becomes ineffective
aside from what is stated in Article 1323?
ANSWER: Yes, like when the offeree rejects the offer, when the offer is
accepted with a qualification or consideration, when before the
acceptance, the subject matter becomes illegal or impossible, when
the period fixed in the offer of acceptance expired, when the offer is
revoked in due time, when the thing due is destructed before the
acceptance.

Art. 1324. When the offerer has allowed the offeree a certain period
to accept, the offer may be withdrawn at any time before
acceptance by communicating such withdrawal, except when
the option is founded upon a consideration, as something paid
or promised. (n)
QUESTION: What is the general rule in options?
ANSWER: If the offerer allowed the offeree a certain time to accept the offer,
the offer may be withdrawn at any time by communicating it before
the acceptance.
QUESTION: What is the exception to the rule?
ANSWER: When the option is founded upon a consideration, as something
paid or promised. So if Mimi paid P100 which is distinct from the price
to Kiki in consideration for the option, Kiki cannot withdraw her offer
until after the expiration of the option time.
Art. 1325. Unless it appears otherwise, business advertisements of
things for sale are not definite offers, but mere invitations to
make an offer. (n)
QUESTION: Are all business advertisements of things for sale not definite
offers?
ANSWER: No. When a business advertisement contains all the specific
particulars needed in a contract, it is a definite offer.
QUESTION: For Sale: 1200 sq. meters of lots for P35,000,000 to
P55,0000,000 a lot in Junquera Street Tel 88-8888-8888. Is this a
definite offer?
ANSWER: No, this is merely an invitation to make offer by stating a range for
the price, not the exact one.
Art. 1326. Advertisements for bidders are simply invitations to
make proposals, and the advertiser is not bound to accept the
highest or lowest bidder, unless the contrary appears. (n)
QUESTION: What is the general rule of this article?
ANSWER: The advertiser is not bound to accept the highest bidder (as when
the offer is to buy or purchase) or the lowest bidder (as when the offer
is to contract a building) unless the contrary appears.
QUESTION: Mimi Company published in the newspaper an invitation to bid
to buy an antique vase dated 1700s. Kiki, Lili, Nini, and Okok
submitted bids. When the bids were opened, Okok appeared to be the
highest bidder. However, Mimi Company awarded the contract to Kiki

as she is the most responsible bidder among the four though she has
the lowest bid. Is this possible?
ANSWER: Yes, because the advertiser is not bound to accept the highest
bidder who was Okok in this case.
Art. 1327. The following cannot give consent to a contract:
(1) Unemancipated minors;
(2) Insane or demented persons, and deaf-mutes who do not
know how to write. (1263a)
QUESTION: Who are considered as minors?
ANSWER: Minors are persons who have not yet reached the age of majority.
In the Philippines, according to Republic Act No. 6809, majority
commences at the age of eighteen years.
QUESTION: Are deaf-mutes who know how to read but cannot write
considered incapacitated?
ANSWER: No, they are capable of understanding the contract, therefore
considered capacitated.
Art. 1328. Contracts entered into during a lucid interval are valid.
Contracts agreed to in a state of drunkenness or during a
hypnotic spell are voidable. (n)
QUESTION: What is a lucid interval?
ANSWER: It is a temporary period of sanity. This is the period of suspension
of insanity to sanity to insanity again.
QUESTION: What is the effect of contracts of the people in the state of
drunkenness and during a hypnotic spell in giving consent?
ANSWER: The contracts are considered voidable or valid until annulled by
court. Being in a state of drunkenness and during a hypnotic spell
impairs their capacity to give intelligent consent.
Art. 1329. The incapacity declared in Article 1327 is subject to the
modifications determined by law, and is understood to be
without prejudice to special disqualifications established in
the laws. (1264)
QUESTION: Is it possible that the incapacitated persons declared in Article
1327 give valid consent?
ANSWER: Yes, there are some certain cases wherein their incapacity may be
modified by law that they can give valid consent like when minors can
enter contracts of life insurance in favor of their parents, spouse,
children, brothers, sisters and provided that the minor is 18 years old
and above.

QUESTION: Can a hospitalized leper, an incompetent under the Rules of


Court, not placed under guardianship enter a valid contract?
ANSWER: Yes. He is presumed to be capacitated to enter into a contract but
if it can be shown that intelligent consent was absent, the contract
can be considered voidable.
Art. 1330. A contract where consent is given through mistake,
violence, intimidation, undue influence, or fraud is voidable.
(1265a)
QUESTION: What is the nature of a voidable contract?
ANSWER: Voidable contracts are binding and valid unless annulled by a
proper action in the court, however annulment cannot prosper when
they have been ratified.
QUESTION: What is the difference between the causes of vitiating consent
and causes of incapacity?
ANSWER: Vitiating consent refers to the contract itself while the second
refers to the person who are entering the contract.
Art. 1331. In order that mistake may invalidate 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.
Mistake 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.
A simple mistake of account shall give rise to its correction.
(1266a)
QUESTION: What is a mistake or error?
ANSWER: It is a false belief about a fact material to the contract or a thing.
QUESTION: What does mistakes of fact refer to that may vitiate consent?
ANSWER: Mistake of fact must be substantial regarding to the object of the
contract, or conditions which principally moved one or both parties to
enter into the contract, or identify or qualifications of persons.
Art. 1332. When one of the parties is unable to read, or if the
contract is in a language not understood by him, and mistake
or fraud is alleged, the person enforcing the contract must
show that the terms thereof have been fully explained to the
former. (n)
QUESTION: What is the presumption in this article?

ANSWER: The presumption is that when one is signing a document, he does


it with due care and signs with full knowledge and understanding of its
content. He is bound by all of its terms.
QUESTION: When does the presumption in this article not apply?
ANSWER: Presumption does not apply when one of the parties is unable to
read, or if a contract is in a language that is not understood by one of
the parties.
Art. 1333. There is no mistake if the party alleging it knew the
doubt, contingency or risk affecting the object of the contract.
(n)
QUESTION: Can a party claim mistake if the party who made allegations
about it knew beforehand of the doubt, contingency or risk of the
object of the contract?
ANSWER: No. If the party knew beforehand it is to be assumed that he was
willing to take the risk.
QUESTION: Mimi bought a marker which was represented as possibly being
able to write even underwater. She knew that the markers
underwater writing ability is questionable and yet she still bought it.
Can she allege mistake?
ANSWER: No, she cant because she knew beforehand of the doubt,
contingency or risk affecting the object of the contract.
Art. 1334. Mutual error as to the legal effect of an agreement when
the real purpose of the parties is frustrated, may vitiate
consent. (n)
QUESTION: What does mistake of the law mean?
ANSWER: This is the mistake that arises from ignorance of some provision of
the law or misinterpretation of its meaning or from an erroneous
conclusion as to the legal effect of an agreement, of one of the
parties.
QUESTION: What is the effect of the mistake of law on one of the parties
consent?
ANSWER: Mistake of law does not invalidate consent as it follows that
ignorance of the law does not excuse one from compliance therewith.
Art. 1335. There is violence when in order to wrest consent, serious
or irresistible force is employed.
There is intimidation when one of the contracting parties is
compelled by a reasonable and well-grounded fear of an
imminent and grave evil upon his person or property, or upon

the person or property of his spouse, descendants or


ascendants, to give his consent.
To determine the degree of intimidation, the age, sex and
condition of the person shall be borne in mind.
A threat to enforce one's claim through competent authority,
if the claim is just or legal, does not vitiate consent. (1267a)
QUESTION: How can intimidation be distinguished from violence?
ANSWER: There is intimidation when there is mental or moral coercion while
in violence, there is physical contact between the persons that is
either serious or irresistible or there is physical coercion.
QUESTION: What requisites must be present for the intimidation to vitiate
the consent of a party to a contract?
ANSWER: Intimidation must produce a reasonable and well-grounded fear of
an evil. The evil must be grave and imminent and must be upon his
person or property or that of his spouse, descendants or ascendants.
It is the reason why he enters into the contract.
Art. 1336. Violence or intimidation shall annul the obligation,
although it may have been employed by a third person who
did not take part in the contract. (1268)
QUESTION: Can violence employed by a third person annual the obligation?
ANSWER: Yes, violence or intimation employed by a third person annuls the
obligation though he/she did not take part in the contract.
QUESTION: What is the effect of the violence employed by a third person to
the contract?
ANSWER: The contract is voidable or annullable.
Art. 1337. There is undue influence when a person takes improper
advantage of his power over the will of another, depriving the
latter of a reasonable freedom of choice. The following
circumstances shall be considered: the confidential, family,
spiritual and other relations between the parties, or the fact
that the person alleged to have been unduly influenced was
suffering from mental weakness, or was ignorant or in
financial distress. (n)
QUESTION: What is undue influence?
ANSWER: It is the influence that overpowers the mind of a party as to
destroy the partys free agency.

QUESTION: What is the effect to the consent if the undue influence was
exercised by a third person?
ANSWER: Undue influence from a third person vitiate consent just like in
violence and intimidation.
Art. 1338. There is fraud when, through insidious words or
machinations of one of the contracting parties, the other is
induced to enter into a contract which, without them, he
would not have agreed to. (1269)
QUESTION: What is causal fraud?
ANSWER: It is the fraud committed before or at the time of perfection of the
contract to secure the consent of the other.
QUESTION: How is causal fraud committed?
ANSWER: It may be committed through the use of insidious words and

machinations, which includes misrepresentation of words or actions by one


of the contracting parts or by concealment.

Art. 1339. Failure to disclose facts, when there is a duty to reveal


them, as when the parties are bound by confidential relations,
constitutes fraud. (n)
QUESTION: Is concealment of facts considered as fraud?
ANSWER: Yes, it constitutes fraud when there is a duty to reveal to them.
QUESTION: What is the right of the injured party because of the intentional
concealment of facts by another party?
ANSWER: The injured party has the right to rescind or annul the contract.
Art. 1340. The usual exaggerations in trade, when the other party
had an opportunity to know the facts, are not in themselves
fraudulent. (n)
QUESTION: You bought a ballpoint pen because it advertises like this, Do
you want your child to get higher grades? Buy GENIUS ballpoint pen.
After using, your child did not get higher grades. Is there fraud here?
ANSWER: No. Exaggerations in trade like the advertisement, when the other
party had an opportunity to know the facts, are not in themselves
fraudulent.
QUESTION: What rule is stressed in this article?
ANSWER: The rule of caveat emptor is stressed in this article which means
Let the buyer beware. Caveat emptor simply means that a buyer
must be on his own guard and it is his duty to check the title of the
seller.

Art. 1341. A mere expression of an opinion does not signify fraud,


unless made by an expert and the other party has relied on
the former's special knowledge. (n)
QUESTION: Mimi, just a saleslady, offered for a sale to Kiki who was buying a
watch that it was a good watch and that the watch need not to be
rewinded for one year in her opinion. Six months after the sale, the
watch stopped. Can Kiki annul the contract on the ground of fraud?
ANSWER: No, because the statement made by Mimi is only a mere
expression of an opinion.
QUESTION: Would it still be the same if the one said the statement was a
watch expert?
ANSWER: No, Kiki can annul the contract on the ground of fraud. An experts
opinion is almost in the same category of fact, particularly when
his/her knowledge is relied upon by the other party.
Art. 1342. Misrepresentation by a third person does not vitiate
consent, unless such misrepresentation has created
substantial mistake and the same is mutual. (n)
QUESTION: Why does a misrepresentation by a third person does not vitiate
consent?
ANSWER: It is because the third person has no connection in the contract
which consequently, a misrepresentation by him does not vitiate
contract. A party should not suffer for the imprudence of another in
believing fraud of a third person in the presumption that both parties
are acting in good faith.
QUESTION: What is the difference if the third person employed in force and
if he/she participated in fraud?
ANSWER: Force by a third person makes the contract voidable while fraud by
a third person does not make the contract voidable unless the
representation has created a substantial mistake and the mistake is
mutual which affects both parties. It is voidable on the ground of
mistake or error.
Art. 1343. Misrepresentation made in good faith is not fraudulent
but may constitute error. (n)
QUESTION: Is it considered as fraud if the misrepresentation is not
intentional but made in good faith?
ANSWER: No. It is considered as a mere mistake or error.

QUESTION: Mimi sold a ring to Kiki. Mimi believes in her heart that what she
sold was a diamond ring but it turned out that it was not. Is there
fraud?
ANSWER: No, the misrepresentation is a mere mistake which makes the
contract voidable on the ground of mistake or error.
Art. 1344. In order that fraud may make a contract voidable, it
should be serious and should not have been employed by both
contracting parties.
Incidental fraud only obliges the person employing it to pay
damages. (1270)
QUESTION: What is an incidental fraud?
ANSWER: It is committed after the perfection of a contract and it was not
the principal inducement that led the other to give his/her consent.
QUESTION: If both parties employed fraud, can one of them annul the
contract?
ANSWER: No. The contract is considered valid. Neither may ask for
annulment as the fraud of one offsets or neutralizes the fraud of the
other.
Art. 1345. Simulation of a contract may be absolute or relative. The
former takes place when the parties do not intend to be bound
at all; the latter, when the parties conceal their true
agreement. (n)
QUESTION: What is simulation?
ANSWER: It is a process of deceiving others by producing the appearance of
a transaction which does not exist at all or is different from their
original agreement.
QUESTION: What is the difference between absolute and relative
simulation?
ANSWER: In an absolute simulation, the parties do not intend to be bounded
from the very beginning while in relative simulation, the parties
conceal their true agreement by a different agreement.
Art. 1346. An absolutely simulated or fictitious contract is void. A
relative simulation, when it does not prejudice a third person
and is not intended for any purpose contrary to law, morals,
good customs, public order or public policy binds the parties
to their real agreement. (n)
QUESTION: What is the effect of an absolutely simulated contract?

ANSWER: The absolutely simulated or fictitious contracts are inexistent and


are void.
QUESTION: What is the effect of a relatively simulated contract?
ANSWER: The parties are bound to the real obligation or true agreement
except if the contract shall prejudice a third person and is not
intended for any purpose contrary to the law, morals, good customs,
public order or public policy.

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 a contract. All
rights which are not intransmissible 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 a contract. (1271a)
QUESTION: When Mimis father dies, but before the delivery of the property
to her, Mimi sold her share of the property inherited. Is this valid?
ANSWER: Yes, it is valid because the inheritance here is not a future
inheritance but existing inheritance. The right to receive future
inheritance is transmissible.
QUESTION: Can all rights be the object of a contract?
ANSWER: No. As a general rule, all rights may be the object of a contract
except when they are intransmissible by nature, or by stipulation or by
provision of law.
Art. 1348. Impossible things or services cannot be the object of
contracts. (1272)
QUESTION: Can the act to fly like a bird be an object of a contract?
ANSWER: No. It is considered as an absolute impossibility. No person can
naturally fly like a bird.
QUESTION: Can the act of selling of shabu be an object of a contract?
ANSWER: No. the act is contrary to the law making it legally impossible.
Impossible services cannot be an object of contracts.

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 a new
contract between the parties. (1273)
QUESTION: If the object of the contract is not determinate or determinable,
is the contract valid?
ANSWER: No. The contract is void. The object of a contract, which is one of
its requisites, must be determinate or determinable without the need
of a new agreement.
QUESTION: If Mimi obligated herself to give Kiki a property. Is the contract
void?
ANSWER: Yes, it is void because the object is not determinate as to its kind
or determinable without the new of a new agreement.
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 a thing or
service by the other; in remuneratory ones, the service or
benefit which is remunerated; and in contracts of pure
beneficence, the mere liberality of the benefactor. (1274)
QUESTION: What is a cause?
ANSWER: Cause is the purpose why the contracting parties enter into the
contract. It is the why of the contract.
QUESTION: What is the difference between onerous and remuneratory
contracts?
ANSWER: In onerous contract, the cause is the prestation of a thing or a
service or the promise that the parties are reciprocally obligated to
each other while in remuneratory contracts, the purpose of the
contract is to reward the service that had been previously rendered by
the party remunerated.
Art. 1351. The particular motives of the parties in entering into a
contract are different from the cause thereof. (n)
QUESTION: What is motive?
ANSWER: Motive is a psychological, individual and personal reason why the
party is induced into a contract.
QUESTION: If the motive is unlawful, does it make the contract void?

ANSWER: No, the illegality of one's motive does not make a void contract for
it is not an essential elememt of a contract.
Art. 1352. Contracts without cause, or with unlawful cause, produce
no effect whatever. The cause is unlawful if it is contrary to
law, morals, good customs, public order or public policy.
(1275a)
QUESTION: What are the requisites of cause?
ANSWER: The cause must be present that it must exist at the time the
contract is entered into. It must also be lawful and true or real.
QUESTION: What is the effect of unlawful of cause to the contract?
ANSWER: If the object of the contact is unlawful, the contract is void.
Art. 1353. The statement of a false cause in contracts shall render
them void, if it should not be proved that they were founded
upon another cause which is true and lawful. (1276)
QUESTION: What is false clause?
ANSWER: It is meant that the contract states valid and legal cause but thr
estatement is not true.
QUESTION: Is it necessary that if the clause is false, the contract is void?
ANSWER: No. It is necessary for the parties are given the chance to prove
the clause exists and it is true and lawful.
Art. 1354. Although the cause is not stated in the contract, it is
presumed that it exists and is lawful, unless the debtor proves
the contrary. (1277)
QUESTION: Is it necessary to state the cause of the contract?
ANSWER: No, because its existence is presumed.
QUESTION:
ANSWER:

Вам также может понравиться