Business Law - Oblicon: Chapter 2

Business Law - Oblicon

• Course members: Fundador, Galicia, Labaniego
• Focus: Chapter 2 - Object of Contract

Chapter 2: Object of Contract

• Article 1347: Things not outside commerce of men (including future things) and non-intransmissible rights can be contract objects.
• Actual Object: Something sought or accomplished, equivalent to the obligation created.
• Possible Objects: All things not outside commerce of men, including future things. Something is outside commerce if it cannot be lawfully appropriated. All non-intransmissible rights may also be contract objects.
• Impossibility (Article 1348): Impossible things/services cannot be contract objects. Impossibility is the inability to exist, occur, or be done. Facts/circumstances excusing performance could include subject deterioration, delivery method failure, new law preventing performance, or death/illness.
• Determinable Object (Article 1349): Contract objects must be determinable. Indeterminable quantity doesn't prevent a contract if determinable without new agreement.
• Lesion Defined: Loss from contract non-performance. Injury from not receiving equivalent value bargained for.

Chapter 2: Section 3 - Cause of Contracts

• Article 1350: Cause in onerous contracts is the promise/ prestation of something/service between parties (or service/benefit for remunerative contracts etc.). Cause is the essential reason, separate from motive.
• Cause vs Motive: Cause is the essential reason for the contract, but motive is the individual reason behind the contract. The latter does not invalidate a valid contract.
• Classification of Contracts According to Cause:
  • Onerous: Reciprocally obligated parties. Example: lease
  • Remuneratory: Rewards previous service. Example: freelance consultant agreement
  • Gratuitous: Liberality of the benefactor. Example: pro-bono legal services

Chapter 3: Forms of Contracts

• Article 1356: Contracts are obligatory regardless of form, providing essential requisites are present. Mandatory form requirements are strict.
• Form Defined: Manner of contract creation (payroll evidence/writing). The class (general/limited/corporate) is not critical.

Obligatory Effects of Contracts

• General Rule: Contracts are obligatory in whatever form, even without written form, if all essential elements are present

Article 1357

• If the law mandates a specific form (e.g., writing), the parties must comply. Contract perfection precedes the required form.

Article 1358

• Public document requirements:
  • Creation/transmission/modification/extinguishment of real rights over immovable property.
  • Cession/renunciation/reputation of hereditary/conjugal rights.
  • Power to administer property or other acts affecting third parties.
  • Cessions of actions/rights from actions in public documents.

Public Document Defined

• Public document is an instrument authorized by a notary or competent public official with required solemnity by law. A public instrument, or a legislative enactment is also a public document.

Effect if Contracts in Article 1358 are not in writing

• Contracts under 1358 don't need writing - Binding & enforceable irrespective.

Article 1358 in the context of the Civil Code

• Contracts exceeding 500 pesos must be in writing, but the writing itself is not a necessity for validity/enforceability (as a legal condition).