CONTRACT meeting of minds between 2 persons to give
CONSUMMATION/TERMINATION terms of contract are
something or to render service.
3 ELEMENTS OF CONTRACT
1. ESSENTIAL w/o them, contract cannot exist
a. CONSENT of contracting parties
b. OBJECT CERTAIN subject matter
c. CAUSE/CONSIDERATION
In some contracts, ff are also essential:
d. FORM
e. DELIVERY
2. NATURAL found in certain contract, presumed to exist
unless stipulated
3. ACCIDENTAL various particular stipulations that may be
agreed upon by contracting parties
(7) CLASSIFICATION OF CONTRACTS
According to:
1. PERFECTION/FORMATION
a. CONSENSUAL perfected by mere consent
b. REAL perfected by delivery
c. FORMAL/SOLEMN special formalities are essential
before perfection of contract
2. PARTIES OBLIGATED
a. UNILATERAL only 1 has obligation
b. BILATERAL both parties require to render reciprocal
prestations
3. CAUSE
a. ONEROUS exchange of considerations
b. GRATUITOUS no consideration received in exchange of
what is given
c. REMUNERATORY something is given for benefit/service
that had been rendered previously
4. RISK OF FULFILLMENT
a. COMMUTATIVE equivalent values are given by both
parties
b. ALEATORY fulfillment of contract depends on chance
(eg. insurance)
5. IMPORTANCE
a. PRINCIPAL contract may stand alone (eg. sale,
partnership)
b. ACCESSORY existence depends on another contract
(pledge, guarantee)
c. PREPARATORY contract not an end by itself but a
means thru w/c other contracts may be made (eg. agency)
6. NAME
a. NOMINATE contract given a particular/special name
(eg. partnership)
b. INNOMINATE not given special name (eg. I give that
you may give)
7. SUBJECT MATTER
a. Contracts involving things
b. Contracts involving rights/credits
c. Contracts involving services
3 STAGES OF CONTRACT
1. PREPARATION/CONCEPTION preparatory steps to perfect
contract
2. PERFECTION/BIRTH meeting of minds between 2
contracting parties
3.
performed, & contract is fully executed
5 BASIC PRINCIPLES/CHARACTERISTICS OF A CONTRACT
1. PRINCIPLE OF AUTONOMY (liberty to contract)
Provided they are not contrary to:
a. Law
b. Morals
c. Good customs
d. Public order
e. Public policy
2. MUTUALITY OF CONTRACTS
- the contract must bind both parties; its validity/compliance
cannot be left to the will of one of them
3. RELATIVITY OF CONTRACTS
- Contracts take effect only between the parties, their
assigns & heirs except when there are rights & obligations not
transmissible:
a. by their nature
b. by stipulation (stipulation por autri)
c. by provision of law
4. CONSENSUALITY OF CONTRACTS
- Contracts are perfected by mere consent
Exceptions:
a. REAL CONTRACTS perfected by delivery
b. FORMAL/SOLEMN CONTRACTS special form required
for its perfection
5. OBLIGATORINESS OF CONTRACTS
- The contract, once perfected, has the force of law between
parties which bound to comply in good faith
4 KINDS OF INNOMINATE CONTRACTS
1. I give that you may give
2. I do that you may do
3. I give that you may do
4. I do that you may give
4 RULES FOR INNOMINATE CONTRACTS
1. Agreement of parties
2. Law on Obligations & Contracts
3. Rules on most analogous nominate contract
4. Customs of place
STIPULATION POR AUTRI
- stipulation in favor of 3rd person
5 REQUISITES OF STIPULATION POR AUTRI
1. Stipulation in favor of 3rd person
2. Stipulation is only PART, not the whole of the contract.
3. Both parties must conferred upon a favor of 3rd person
4. 3rd person must accept & say it to debtor before its
revocation/cancellation
5. Neither of both parties be the legal representation/autho-
rization of 3rd person
CONSENT
- meeting of offer (certain) & acceptance (absolute) upon a
thing
5 REQUISITES OF CONSENT
1. Must be given by 2 or more parties
2. Parties are capacitate to enter in contract
3. No vitiation of consent
4. No conflict between declared & intended
5. Legal formalities must be complied
 the person enforcing the contract must FULLY explained the
7 RULES ON OFFER/ACEPTANCE terms to him.
1. An offer must be certain.
2. Business advertisements for sale are NOT offers but ONLY 2. FRAUD/DOLO
invitations to make an offer. - when through insidious words/machinations of one of the
3. Advertisements for bidders are ONLY invitations. parties, INDUCED the other to enter into a contract, & w/o
4. An acceptance made by letter/telegram does NOT them, he will not agree.
bind offeror EXCEPT from the TIME it came to his knowledge.
5. An offer made through an agent is accepted from the TIME DOLO CAUSANTE DOLO INCIDENTE
the acceptance is done through an agent. Serious Not serious
6. An offer is ineffective upon death, insanity, insolvency, of cause induces party to ENTER NOT the cause to enter into
EITHER party BEFORE acceptance is made. into contract contract
7. When offeror allowed offeree a certain period make contract voidable contract is valid; liable
to accept, offer MAY be withdrawn AT ANYTIME unless there for damages
is something PAID/PROMISED.
7 RULES OF FRAUD
3 persons who CANNOT GIVE CONSENT to a contract (if
1. Failure to disclose facts when these needs to be revealed,
entered into, contract is voidable)
is a fraud.
1. UNEMANCIPATED MINORS
2. Fraud should be SERIOUS (dolo causante) & SHOULD NOT
2. INSANE/DEMENTED PERSONS (unless they acted DURING
be done by BOTH parties to make contract voidable.
LUCID INTERVAL)
3. Incidental fraud (dolo incidente) ONLY obliges person to
3. DEAF-MUTES who DO NOT know how to write
PAY DAMAGES.
4. Usual exaggerations in trade, when other party know the
DEMENTED PERSON NOT exactly insane; difficult to distin-
real facts, is NOT FRAUD.
guish right from wrong
5. A mere expression of opinion is NOT FRAUD UNLESS made
by an expert & the other party relies on his special
LUCID INTERVAL period when an INSANE has acquired
knowledge.
SANITY temporarily, therefore, capacitated to enter into a
6. Misrepresentation made in good faith is NOT FRAUD but
valid contract
may constitute an error.
7. Misrepresentation by 3rd person DOES NOT vitiate consent
2 RULES on persons WHO CANNOT GIVE CONSENT to a
UNLESS it created substantial mistake.
contract
1. Age of majority is 18 yrs old
3. VIOLENCE
2. A contract entered into by UNEMANCIPATED MINOR w/o
- serious/irresistible force is employed.
parents/guardians consent is voidable, except:
a. Minor MISREPRESENTS his age (estoppel)
2 RULES ON VIOLENCE
b. Contract involves sale & delivery of necessities to
1. Serious/irresistible force is employed w/c constitutes the
minor
reason why one entered into a contract.
2. Violence ANNULS obligation although it is DONE by
5 VICES OF CONSENT
3rd person not part of contract.
- NOTE: When there is a DEFECTIVE CONSENT of EITHER of
parties, contract is voidable; Remedy: annulment of
4. INTIMIDATION
contract.
- 1 of the parties is compelled by a reasonable & well-
1. MISTAKE/ERROR
grounded fear of an imminent & grave evil upon his
2. FRAUD/DECEIT
person/property to give his consent.
3. VIOLENECE
4. INTIMIDATION
3 RULES ON INTIMIDATION
5. UNDUE INFLUENCE
1. Age, sex, & condition of person must used to determine
the degree of intimidation.
1. MISTAKE/ERROR
2. Intimidation ANNULS obligation although it is DONE by
- wrong conception & lack of knowledge upon a thing
3rd person not part of contract.
3. A threat to enforce ones claim (claim must be just &
(2) MISTAKES W/C VITIATES CONSENT
legal), DOES NOT vitiate consent.
It should refer to:
1. substance of thing that is the OBJECT of contract
2. conditions w/c MOVED either/both parties to enter into VIOLENCE INTIMIDATION
contract External Internal
Physical contact/coercion NO physical coercion; ONLY
4 RULES ON MISTAKE MENTAL/MORAL coercion
1. Mistake to identity/qualifications of either of parties will
vitiate consent ONLY when IT is the principal cause of 5. UNDUE INFLUENCE
contract. - a person takes improper advantage of his power over
2. Simple mistake of account must be corrected. others will, depriving the other to his reasonable freedom of
3. No mistake if parties knew the risk/doubt affecting choice.
OBJECT of contract.
4. When one of parties is unable to read or the contract is in 3 RULES ON UNDUE INFLUENCE
language not understood by him, & mistake/fraud is alleged, 1. There is a person who takes improper advantage of his
power over others will, depriving the other to his reasonable
freedom of choice.
2. Undue influence ANNULS obligation although it is DONE by
3rd person not part of contract.
3. To constitute undue influence, ff circumstances must be
considered: (1) confidential, family, spiritual, & other
relations of parties; or (2) the aggrieved party is suffering
from mental weakness; or (3) ignorant; or (4) in financial
distress.
SIMULATION OF CONTRACT
- process of INTENTIONALLY deceiving others by producing a
contract not really exist (absolute simulation), or w/c is
different from true agreement (relative simulation).
2 KINDS OF SIMULATED CONTRACT
1. ABSOLUTE SIMULATION (the parties DO NOT intend to be
bound at all)
- completely fictitious/make-believe; VOID
2. RELATIVE SIMULATION (parties conceal their true/real
agreement)
- parties are bound to real/true agreement, EXCEPT:
a. contract prejudice 3rd person
b. purpose is contrary to law, morals, good customs,
public order, public policy
7 REQUISITES OF OBJECT OF CONTRACT
1. Specific & certain
2. Services not contrary to law, morals, good customs, public
order, public policy
3. Services/things must NOT be legally/physically impossible
4. Services/things are w/in commerce of man including
future things
5. Rights are NOT TRANSMISSIBLE.
6. Determinate (kind) or determinable ( w/o the need of new
contract/agreement)
7. NO contract be entered for future inheritance UNLESS law
states
4 REQUISITES OF CAUSE
1. It is just & equitable.
2. It exists.
3. It is lawful.
4. It is true.
LESION
- inadequacy of cause (eg. insufficient price for thing sold)
RULES ON LESION
- Lesion DOES NOT invalidate contract, except there is:
a. Fraud
b. Mistake
c. Undue influence
2 FORM OF CONTRACTS
1. Contracts in writing
2. Contracts in a public instrument
1. Contracts w/c must be IN WRITING to be valid:
a. Donation of personal property exceeds P5000.
b. Agents authority in sale of land/any interest.
c. Contract of antichresis.
d Stipulation to pay interest on loans.
e. Stipulation to reduce common carriers extraordinary
diligence & to limit its liability.
2. Contracts w/c must be IN A PUBLIC INSTRUMENT to be
valid:
a. Donation of real property (both the donation & accep-
tance).
b. Sale of real property.
c. Partnership where real property/rights is contributed;
or when capital contribution exceeds P3000.
REFORMATION OF INSTRUMENTS
- REMEDY in equity in w/c a written instrument is
made/construed to the REAL intention of parties when there
is an error/mistake.
(5) CASES REFORMATION OF INSTRUMENT IS AVAILABLE
1. Mutual mistake of parties.
2. One party was mistaken & the other acted fraud.
3. One party was mistaken & the other knew/believed that
the instrument did not state their REAL agreement.
4. Ignorance, lack of skill, negligence, or bad faith of person
drafting the instrument DOES NOT state the TRUE INTENTION
of parties
5. Two parties agree on mortgage/pledge of personal/real
property BUT the instrument states the property is sold
ABSOLUTELY, or w/ the right to repurchase.
(3) NO REFORMATION OF INSTRUMENT WHEN:
1. Simple donation inter vivos where NO CONDITION is
imposed.
2. Will.
3. Real agreement is VOID.
4 KINDS OF DEFECTIVE CONTRACTS
1. RESCISSIBLE valid until rescinded; has ALL essential
requisites but because of injury/damage to one of the
parties, the contract may be rescinded.
2. VOIDABLE valid until annulled; has ALL essential
requisites but because of defect in consent, contract may be
annulled.
3. UNENFORCEABLE cannot be sued/enforced unless
ratified; no effect NOW but may take effect upon
ratification.
4. VOID NO effect at all; cannot be ratified/validated.
5 RESCISSIBLE CONTRACTS
1. Those entered by guardians & suffered LESION by more
than of value of the value that is the OBJECT.
2. Those agreed upon in representation of absentees, if the
absentees suffered LESION.
3. Those undertaken in FRAUD of creditors when the creditors
cannot further claim.
4. If entered into contract w/o knowledge/approval of
litigants under litigation.
5. Contracts subjected to rescission declared by law.
3 VOIDABLE CONTRACTS
1. One of the parties INCAPABLE of giving consent to a
contract.
2. Those where consent vitiates by vices of consent. (MFVIU)
3. Those agreed in the state of drunkenness/hypnotic spell.
3 UNENFORCEABLE CONTRACTS
1. Those entered in name of other person, or who acted
BEYOND his powers.
2. Those who do not comply w/ the Statute of Frauds.
3. Both parties are incapable of giving consent to a contract.
7 VOID/INEXISTENT CONTRACTS
1. Those w/c are ABSOLUTELY simulated/fictitious.
2. Those w/c contemplate an impossible service.
3. Those whose OBJECT is outside the commerce of man.
4. Those whose CAUSE/OBJECT did not exist at time of tran-saction.
5. Those whose CAUSE/OBJECT/PURPOSE is contrary to law, morals,
good customs, public order, or public policy.
6. Those where INTENTION of parties to principal object CANNOT be
ascertained.
7. Those expressly prohibited/declared VOID by law.