CONTRACTS

Atty. Wilson 03/19/2015

CHAPTER 1 - General Provisions

CHAPTER 2 - Essential Requisites of
Contracts
CHAPTER 3 - Form of Contracts
CHAPTER 4 - Reformation of Instruments
CHAPTER 5 - Interpretation of Contracts
CHAPTERS 6 to 9 Rescissible; Voidable;
Unenforceable; Void and Inexistent
Contracts

General Provisions
Article 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.
Article 1157. Obligations arise from:
(1) Law;
(2) Contracts;
(3) Quasi-contracts;
(4) Acts or omissions punished by law; and
(5) Quasi-delicts.

General Provisions

Autonomy of Contracts 1306

Limitations law, morals, good customs,

public order, or public policy

Innominate Contracts 1307

Do ut des (I give that you give)

Do ut facias (I give that you do)
Facio ut des (I do that you give)
Facio ut facias (I do that you do)

General Provisions

Mutuality 1308

1308 subject to 1309

1309

subject to 1310

Contract

of Adhesion Contracts in which one

of the contracting parties imposes a readymade form of contract but which the other
party may accept or reject, but which the latter
cannot modify

General Provisions

Relativity 1311

The general rule

Exceptions?
Rights

and Obligations which are not

transmissible or purely personal

Stipulation Pour Autrui / Beneficial

Stipulation
A

stipulation in favor of a third person

General Provisions

Consensuality 1315

General Rule: Perfected by mere consent

Exception 1316 Real contracts

Stages in the life of a contract

Preparation or negotiation
Perfection
Consummation or termination

General Provisions

CHARACTERISTICS OF CONTRACTS

Obligatory force
Mutuality
Autonomy
Relativity
Consensuality

General Provisions

ELEMENTS OF CONTRACTS

Natural those which are derived from the nature of

the contract and ordinarily accompany the same;
they are presumed by law, although they can be
excluded by the contracting parties if they so desire

Accidental those which exist only when the parties

expressly provide them for the purpose of limiting or
modifying the normal effects of the contract

Essential no contract unless those elements concur

Essential Requisites
General Provisions
Article 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)

Essential Requisites
Article 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)
Article 1320. An acceptance may be express or implied. (n)

Essential Requisites

Theories that determine the exact moment

of perfection when acceptance is made by
letter or telegram:
(1) Cognition Theory followed by the Civil
Code; perfected from the moment the
acceptance comes to the knowledge of the
offeror
(2) Manifestation Theory perfected from
the moment the acceptance is declared or
made (code of commerce)

Essential Requisites

(3) Expedition Theory perfected from

the moment the offeree transmits the
notification of acceptance to the offeror
(4) Reception Theory perfected from the
moment that the notification is in the
hands of the offeror in such a manner
that he can, under ordinary conditions,
procure the knowledge of its contents,
even if he is not able to actually acquire
such knowledge

Essential Requisites

Silence = consent?

Requisites:
There

is a duty or responsibility to express

oneself
The manifestation of the will cannot be
interpreted in any other way
There is clear identity in the effect of the
silence and the undisclosed will

Essential Requisites

Article 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)
OPTION CONTRACT a preparatory contract in
which one party grants to the other, for a fixed
period and under specified conditions, to decide
whether or not to enter into a principal contract

Essential Requisites

Article 1325. Unless it appears otherwise,

business advertisements of things for sale
are not definite offers, but mere invitations
to make an offer. (n)

Article 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)

Essential Requisites
Article 1327. The following cannot give consent
to a contract:
(1) Unemancipated minors;
(2) Insane or demented persons, and deafmutes who do not know how to write. (1263a)
Article 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)

Essential Requisites

Article 1330. A contract where consent is

given through mistake, violence,
intimidation, undue influence, or fraud is
voidable. (1265a)

Why? Because consent should be

intelligently, freely and spontaneously
given.

Essential Requisites
Article 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)

Essential Requisites
Article 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)

Essential Requisites
Article 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)
Article 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)

Essential Requisites
OBJECT
Article 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)

Essential Requisites

Cause it is the immediate, direct or

most proximate reason which explains
and justifies the creation of an obligation
through the will of the contracting
parties.
(1) must be existing at the time of the
celebration of the contract
(2) licit and lawful
(3) true

Essential There
Requisites
is total lack or
The contact confers

ARTS. 1352-1355
Lack of cause

CAUSE

EFFECT

absence of cause

no right and produces

no legal effect

Illegality of cause

The cause is contrary

to law, morals good
customs, public order
and public policy

The contract is null

and void

Falsity of cause

The cause is stated

but it is not true

The contract is void if

it should be proved
that they were
founded upon
another cause which
is true and lawful

Lesion or inadequacy
of price

Shall not invalidate

the contract, UNLESS:
(1)There is fraud,
mistake or undue
influence; or
(2)When the parties
intended a donation
or some other

FORM/REFORMATION/
INTERPRETATION

1356 Spiritual System

Exceptions:

General Rule
law requires
Statute of frauds 1403

Must reflect true intention of parties

If not? Reform

FORM/REFORMATION/
INTERPRETATION

Reformation

Requisites:
Meeting of the minds of parties
True intention not expressed in instrument
Failure to express true intention is due to
fraud, mistake, inequitable conduct or
accident
Clear and convincing proof

Defective Contracts

VOID

VOIDABLE

RESCISSIBLE

UNENFORCEA
BLE

Defect is
caused by lack
of essential
elements or
illegality

Defect is
Defect is
caused by vices caused by
of consent
injury/damage
either to one of
the parties or to
a 3rd person

Defect is
caused by lack
of form,
authority, or
capacity of both
parties not
cured by
prescription

Do not, as a
general rule,
produce any
legal effect

Valid and
unenforceable
until annulled
by a competent
court

Valid and
enforceable
until rescinded
by a competent
court

Cannot be
enforced by a
proper court
action

Action for the

declaration of
nullity or
inexistence or
defense of
nullity or
inexistence

Action for
annulment or
defense of
annulability
may prescribe

Action for
rescission may
prescribe

Corresponding
action for
recovery, if
there was total
or partial
performance of
the

VOID

VOIDABLE

RESCISSIBLE

UNENFORCEA
BLE

Not cured by
prescription

Cured by
prescription

Cured by
prescription

Not cured by
prescription

Cannot be
ratified

Can be ratified

Need not be
ratified

Can be ratified

Assailed by a
contracting
party and a
third person
whose interest
is directly
affected

Assailed only
by a
contracting
party

Assailed by a
contracting
party and a
third person
who is
prejudiced or
damaged by
the contract

Assailed only
by a
contracting
party

Assailed
directly or
collaterally

Assailed
directly or
collaterally

Assailed
directly only

Assailed
directly or
collaterally