Contract Law Basics

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Questions and Answers

What types of things may be the object of a contract?

Only current physical items.
All things which are not outside the commerce of men, including future things. (correct)
Future inheritances without restrictions.
All things outside the commerce of men.

Which of the following cannot be an object of a contract?

A thing that is not contrary to good customs.
A future service that is contractual.
A service that promotes public good.
A legal right that is intransmissible. (correct)

What is required for the object of a contract regarding its kind?

It must be determinate.
It must be fully negative.
It must be determinate as to its kind. (correct)
It must be impossible to define.

What makes a contract without cause produce no effects?

The presence of an unlawful cause. (A) Signup and view all the answers

Which statement is true regarding the cause of contracts?

The cause is presumed lawful unless proven otherwise. (B) Signup and view all the answers

When can fraud, mistake, or undue influence invalidate a contract?

If there is lesion or inadequacy of the cause. (D) Signup and view all the answers

What does Article 1356 state about the form of contracts?

Validity requires essential requisites, regardless of form. (A) Signup and view all the answers

What is the implication of stating a false cause in a contract?

It renders the contract void unless proven otherwise. (C) Signup and view all the answers

What is required for a contract to be perfected?

Consent, object, and cause of obligation (C) Signup and view all the answers

What happens if a person contracts in the name of another without authorization?

The contract is unenforceable unless ratified (B) Signup and view all the answers

What constitutes a qualified acceptance in a contract?

Acceptance that includes additional terms (B) Signup and view all the answers

When does an offer become ineffective?

Upon the death or civil incapacity of either party (C) Signup and view all the answers

How can acceptance of an offer be communicated?

Via letter, telegram, or verbally (D) Signup and view all the answers

What is the primary purpose of establishing a cause of obligation in a contract?

To explain the reasons for the contract's existence (C) Signup and view all the answers

What must be true for acceptance to bind the offerer?

Acceptance must adhere to stipulated conditions set by the offerer (D) Signup and view all the answers

In which case is an offer withdrawn after a specified acceptance period?

If it is communicated to the offeree (B) Signup and view all the answers

What can lead to the reformation of an instrument according to Article 1364?

Concealment of true intentions by one party (B) Signup and view all the answers

In which situation is reformation of an instrument NOT allowed?

When simple donations are made without conditions (D) Signup and view all the answers

Which of the following statements aligns with Article 1370 regarding clear contract terms?

Evident intention of the parties supersedes the literal stipulations. (C) Signup and view all the answers

When can reformation be requested according to Article 1368?

When a mistake was mutual, or by the injured party (D) Signup and view all the answers

According to Article 1371, what factors are primarily considered to judge the intention of contracting parties?

The contemporaneous and subsequent acts of the parties (D) Signup and view all the answers

What meaning should be attributed to a stipulation that allows for several interpretations according to Article 1373?

The meaning that is most adequate to render it effectual (C) Signup and view all the answers

What is the procedure for the reformation of instruments governed by according to Article 1369?

Rules of court to be promulgated by the Supreme Court (B) Signup and view all the answers

What is necessary for the interpretation of various stipulations of a contract according to Article 1374?

Stipulations should be interpreted together as a cohesive whole. (A) Signup and view all the answers

Which of the following must be documented in a public document according to the legal provisions?

Cession of actions or rights from a public document. (C) Signup and view all the answers

What is the required form for contracts involving real rights over immovable property?

Public document. (D) Signup and view all the answers

In the event that an instrument fails to express the true intentions of the parties due to a mutual mistake, what is the appropriate legal remedy?

Reformation of the instrument. (A) Signup and view all the answers

What is the legal status of contracts where the amount exceeds five hundred pesos?

They must be documented in writing. (C) Signup and view all the answers

If one party to a contract was mistaken and the other acted fraudulently, what remedy can the mistaken party seek?

Reformation of the instrument. (D) Signup and view all the answers

Which of the following statements regarding the reformation of instruments is true?

Reformation can correct mistakes resulting from fraud or inequitable conduct. (C) Signup and view all the answers

What must a party prove to seek reformation of a contract due to mistake?

That the true intention was agreed upon but not expressed. (D) Signup and view all the answers

Which of the following does NOT require a public document for validity?

Modification of written contracts below five hundred pesos. (B) Signup and view all the answers

What happens when both parties to a contract are at fault?

Neither party may recover what they have given. (B) Signup and view all the answers

In a situation where one party is not at fault, what can they demand?

They can return what they have given. (C) Signup and view all the answers

What recourse does a debtor have if they have paid interest in excess of what is allowed by usury laws?

The debtor can recover the excess amount paid with additional interest. (C) Signup and view all the answers

When can a party repudiate a contract that involves an illegal purpose?

Before the purpose is accomplished or any damage occurs. (A) Signup and view all the answers

What limitation is set regarding the recovery of excess payments for commodities priced by law?

Any excess payment made above the maximum price can be recovered. (D) Signup and view all the answers

Under what condition can an incapacitated person recover property delivered under an illegal contract?

If the interest of justice demands it. (B) Signup and view all the answers

What can a laborer do if they work more hours than the maximum allowed by law?

They may demand additional compensation for services rendered beyond the time limit. (A) Signup and view all the answers

If someone pays for an agreement that is merely prohibited by law, what can they potentially recover?

They may recover what they paid if public policy is enhanced. (A) Signup and view all the answers

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Study Notes

Perfection of Contracts

Contracts are binding upon mere consent among parties, requiring fulfillment of explicit stipulations and implied consequences adhering to good faith, usage, and law.
Real contracts (e.g., deposit, pledge, commodatum) are not perfected until the delivery of the object.

Authority in Contracts

A person cannot contract without authorization from the other party, except in cases authorized by law.
Contracts made without authority are unenforceable unless ratified by the represented party before revocation.

Essential Requisites of Contracts

Contracts require three essential requisites:
- Consent of the contracting parties
- A specific object that serves as the subject matter
- A lawful cause for the obligation

Consent requires a clear offer and absolute acceptance. Qualified acceptance results in a counter-offer.
Acceptance can be expressed or implied, and it binds the offeror upon communication.
Offers may specify acceptance terms, including time, place, and manner.

Object of Contracts

Objects must be lawful and within commerce, including future things and transferable rights.
Contracts cannot involve impossible objects or services.
The object must be determinate as to its kind, with undetermined quantity not obstructing validity.

Cause of Contracts

In onerous contracts, causes involve mutual prestations; in remuneratory contracts, the service provided is compensated; in pure beneficence, the motivation is mere generosity.
Contracts lacking cause or with unlawful causes have no legal effect.
False statements of cause can render contracts void unless proven to have a lawful cause.

Form of Contracts

Contracts are valid in any form unless the law requires a specific format for enforceability.
Certain contracts must be documented publicly, including real estate transactions and cession of rights exceeding defined values.

Reformation of Instruments

Mistakes, fraud, or inequitably conducted agreements can lead to reformation, not annulment; this corrects the expressed document to reflect true intentions.
Mutual mistakes or known inequities by one party can also serve as grounds for reforming an instrument.

Interpretation of Contracts

Clear terms of contracts take precedence over interpretations; if ambiguous, intentions more clearly defined by subsequent actions or combined stipulations prevail.
The principles for interpreting terms include the context of intentions and the adequacy of meanings tailored to serve the agreement effectively.

Illegal Contracts

If an illegal act does not constitute a criminal offense, mutual fault stops recovery from either party.
If illegal contracts relate to a protected party, they may recover payments if public policy permits.
In cases of unlawful price fixing or labor hours, parties may recover amounts paid in excess or claim additional compensation if terms exceed legal limits.

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