CHAPTER 3

CONTRACT- meeting of minds  Stipulation Pour Atrui -3rd person MAY DEMAND
 moral or social agreements are different from FULFILLMENT in obligation provided HE
contracts (not all agreements are contracts) COMMUNICATED HIS ACCEPTANCE BEFORE
 Kind of contract is not determined by the name, REVOCATION. Mere incidental benefit or
but by the nature of the obligation interest is not enough.
 Valid Contracts- meet all legal requirements and  Classes of Pour Atrui –(1) done beneficiary –sole
limitation, binding and enforceable benefit, gift, (2) creditor beneficiary –promise of
 Parties can make any stipulations as long as not principal party to fulfill to 3 rd person (magbayad
contrary to: ang debtor sa 3rd person imbes kang creditor)
 REQUISITES:
(1) Law- rule of conduct, promulgated by authority, (1) Stipulation clearly and deliberately conferred
common observance and benefits (Violation is VOID (2) 3rd person communicated acceptance
AUTOMATIC, except if law validates it) (3) Only part of the obligation, not whole
(2) Morals- norms of good and right conduct in a (4) Stipulation not being considered or
community. Differ in times and places compensated
(3) Good Customs -habits and practices which (5) Not under legal representation/authorization
through long usage have been recognized and (rules of agency applies)
enforced by law as rules.  Real right is binding against the world, IT
(4) Public Order-public safety/weal INCLUDES the 3rd person if he comes into the
(5) Public Policy -considerations moved by the possession on the object of another’s contract
commom good. Actual injury need not shown  If property not registered and 3 rd person in good
faith, HE IS SAVED
 Nomminate Contracts- has name  Creditors can impugn contracts intended to
 Innominate Contracts- has no name defraud them
 kinds: do ut des (barter), do ut facias, facto ut  3rd person’s inducement to violate contract –
des, facto ut facias (do/des- give, facias/facto- quasi-delict
do)  Consensual Contract- perfected by consent. All
 Rules on innominate contracts: requisites of contract be present. Does not
(1) agreement by parties transfer real right, but gives rise to obligations
(2) by civil code  Real Contract- perfected by delivery. Has
(3) rules on most analogous contracts restitution
(4) customs  Solemn Contract –perfected by compliance of
 validity and compliance of contracts must not certain formalities by law
be left to the will of one party  Once perfected, parties are bound to the
 Determination of performance in a contract can fulfillment and consequences (keeping good
be left to a 3 rd person; his decision not binding faith, usage and law)
until known to parties (ex. Appraisers)  STAGES: (1) Preparation, (2) perfection, (3)
 If 3rd persons’ decision is inequitable, it is not consummation
binding; court then decides(unjust, bad faith,  A contract entered by an unauthorized person
mistake) is unenforceable unless RATIFIED BEFORE THE
 Contracts take effect at the principal parties and CONTRACT IS REVOKED by the other party.
their heirs, except in cases of: (1) by NATURE – Lapse of time is not enough
ex. personal qualifications, (2) by STIPULATION  Must be authorized by the party or by law
(3)by LAW  HE MUST NOT ACT BEYOND HIS POWER, or else,
 3rd persons has no right to take part in the unenforceable against the principal, and the
obligation except when: agent will be liable to the other party whose not
(1) Stipulation pour atrui (in favor of 3rd person) notified of the limitations said by the principal
(2) Contracts creating real rights
(3) Contracts entered into to defraud creditors CLASSIFICATIONS:
(4) Contracts which is violated due to a 3 rd *Commutative- undertaking of one party is equivalent
person’s inducement to the other (sale, lease)
CHAPTER 3
*Aleatory-benefit or loss depends on UNCERTAIN (3) Power to administer property
EVENT (4) Cession of actions or rights
*unilateral-one party in an obligation (5) Contracts amount exceeds Php 500 –
*Bilateral-reciprocal obligations
WRITING
*executory- not completed
*executed- completed REFORMATION OF INSTRUMENTS –remedy allowed by
*preparatory-entered as means to an end (ex. Agency)
law by which a written instrument is amended or
*accessory-dependent on another contract (ex.
mortgage) rectified to express the real agreement of parties, when
*principal- (ex. Sale) Does not depend on another the old contract failed to do it due to fraud, mistake,
contract inequitable conduct or accident.
*indivisible-each part is dependent on others
*divisible- one part can be performed

CONSENT -

FORMS OF CONTRACTS – manner which the contract is

executed or manifested.
 May be expressed, implied, oral and writing
 Classified according to form:
(1) informal –any forms as long as object,
consent and cause are present; consensual
(2) formal –required by law in specified form
 Written contract –letter, memorandum, note
 All contract are binding in any form except:
(1) Law requires to be valid
(2) Law requires to be enforceable
(3) Law requires for convenience of parties
 Forms for validity includes:
(1) Donation of real property –public
instrument
(2) Donation of personal property whose value
exceeds Php 5,000 -writing
(3) Sale of land through an agent –writing
(4) Stipulation to pay interest –writing
(5) Contract of partnership –public instrument
w/ signed inventory of property contributed
 Unenforceable –valid pero di makaso
 If the law requires form for the convenience of
parties, parties may compel each other to abide
the form
 Forms for convenience of property includes:
(PUBLIC INSTRUMENT)
(1) Creation, transmission, modification,
extinguishment of real rights over
immovable
(2) Cession or renunciation of hereditary rights
or conjugal partnership gains