CONTRACT – meeting of minds between 2 persons to give 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

Boilerplate - frequently used where a form or document can be reused in a new context without substantial changes to
the text. For example, a bank may use a standard contract for everyone who applies for a home loan.

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

A condition precedent is an event or state of affairs that is required before something else will occur. In contract law, a
condition precedent is an event which must occur, unless its non-occurrence is excused, before performance under a
contract becomes due, i.e., before any contractual duty exists.

Adhesion Contract Definition:

A fine-print consumer form contract which is generally given to consumers at point-of-sale, with no opportunity for
negotiation as to it's terms, and which, typically, sets out the terms and conditions of the sale to advantage the seller.
Covenant

An agreement, contract, or written promise between two individuals that frequently constitutes a pledge to do or
refrain from doing something.

Cure Period

A time frame of 30 to 90 days during which a company that has gone into technical DEFAULT on a contractual payment
is permitted to submit payment without further prejudice, and without being considered to have defaulted.

Equitable remedies are a distinct category of remedies that can be obtained in a breach of contract situation. In general,
remedies may be divided into two categories: legal and equitable. Legal remedies allow the non-breaching party to
recover monetary damages. In contrast, equitable remedies are actions that the court prescribes which will serve to
resolve the breach or dispute.

Equitable remedies are typically granted when legal remedies or monetary compensation cannot adequately resolve the
wrongdoing. It is often a requirement that legal damages be unavailable before a court will decide to issue equitable
relief.

estoppel. n. a bar or impediment (obstruction) which precludes a person from asserting a fact or a right or prevents one
from denying a fact. Such a hindrance is due to a person's actions, conduct, statements, admissions, failure to act or
judgment against the person in an identical legal case.

Intellectual Property (IP) refers to a document or ideas owned by authors, publishers, and corporations. IP is anything
that reflects an original thought that is written down or expressed in any media, such as word-processed documents,
emails, Web sites, and music. Simply put, what you create is your “intellectual property.” Graphics, songs, poems,
pictures, and essays are examples of “properties” that are owned by their creators, properties that are subject to
Philippine copyright laws.

A lien is the right to retain the lawful possession of another person's piece of property until the owner fulfills a legal duty
to the person holding the property, such as the payment of lawful charges for work done on the property. A mortgage is
a common lien.

Recitals in contracts. Most contracts contain, underneath the title and parties’ block but before the body text of the
agreement, a group of paragraphs known also as the ‘preamble‘, ‘recitals’ or ‘whereas’ clauses.

Preamble title. The preamble is usually given the heading Recitals, Whereas or Background, probably written in all-caps
or bold. They address a few key characteristics of the agreement, the related transaction or the parties’ businesses and
help the reader understand the background before digging into the definitions section.

Types of recital clauses. The recitals give background information about the parties, about the context of the agreement
and an introduction to the agreement itself. There are several kinds of whereas clauses:

Party-related recitals: one or more whereas clauses can reflect the relevant business activities of each party.

Context or background recitals: they describe the events or circumstances, which led to the transaction. This is
somewhat of an extension of or elaboration on the contract title: for example, it may explain particularities of a sale,
specify the patents or trademarks of a licence, or clarify why a preceding agreement is amended and restated. Such
background recital may well touch in broad terms upon the purpose of the transaction, which the parties seek to
accomplish.

Compliance-related recitals: in one or more whereas provisions, the parties might want to express that certain
requirements or prerequisites for entering into the agreement have been complied with. For example, a whereas clause
may express that an external party has approved the transaction or that regulatory requirements or works council
regulations have been complied with.
Transaction-structure related recitals: in non-standard, complex transactions, it is sometimes inevitable to explain the
various steps taken pursuant to the contracts (for instance when a sequence of events is of particular importance).

Related-transaction recitals: a preamble might well include one or more recitals regarding agreements being entered
into at the same time.

A step-up recital: many drafters prefer to express a general intention stating that the parties desire to reflect the
preceding considerations in writing. Such a lead-in serves a similar purpose as the words of agreement and is redundant.

The preamble of a contract normally consists of between one and five paragraphs which outline the entire transaction.
In most types of relatively standard contracts, the list of recitals is limited to a few. On the other hand, settlement
agreements and highly bespoke (complex) agreements might have a dozen or more recitals, listing each fact or event,
the uncertainty to be settled or each party’s point of view regarding a dispute.

Contents. The information addressed in the preamble should be limited to intentions, desires or statements of fact. It is
customary to limit these statements to subject matters which may result in the validity or enforceability of the contract
being directly affected. Other particularities which explain the bigger picture of the envisaged transaction, such as the
interdependency of the contract with other agreements (if any) or the requirement that certain crucial conditions be
fulfilled or regulatory approvals be given, can be addressed here as well. Altogether, the matters addressed in a
preamble should be of such importance that if any of them were not true, the contract should be capable of being
nullified on the legal ground of ‘mistake’ (‘error’).

Recitals may be helpful to define (in non-legal terms) the “Transaction”. Do not however use popular or loose language
to describe a subject matter that is otherwise well-defined in a definition as this creates ambiguity.

A drafter should also refrain from filling the recitals with additional non-key definitions (e.g. the Shares, the Company or
the Product) or a multiple of references “(as defined in Article 1)” immediately following every defined term.

No obligations. Whereas-clauses should never contain any obligations, conditions, warranties, policy rules or duties
whatsoever.

Recitals are phrased as traditional paragraphs with grammatically complete sentences rather than several clauses
leading on from the initial preamble. Accordingly, there is no need to limit the recitals to one sentence only. It is good
practice to end each recital with a full stop rather than a semi-colon. This is also preferable in view of contract assembly
software, where paragraphs are automatically inserted or left out.

Representations and Warranties. A representation is an assertion as to a fact, true on the date the representation is
made, that is given to induce another party to enter into a contract or take some other action. A warranty is a promise
of indemnity if the assertion is false.

In contract law, rescission is an equitable remedy which allows a contractual party to cancel the contract. ... Rescission is
the unwinding of a transaction. This is done to bring the parties, as far as possible, back to the position in which they
were before they entered into a contract (the status quo ante).

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 ¼ 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.