Contract Law: Interpretation and Nullity

Essential Elements of a Contract

• A contract is an agreement between two parties with a meeting of the minds, where one binds themselves to give something or render a service, with the force of law between them.
• The contract must be complied with in good faith, meaning fairness and honesty of intention in performance.

Elements of a Contract

• Consent: a meeting of the minds between parties regarding the object and cause.
• Object: the thing, right, or service to be provided or performed under the contract.
• Cause: the essential purpose or reason for the contract, which varies depending on the type of contract (onerous, remuneratory, or contract of pure beneficence).

Types of Contracts

• Private instrument: a set of unsigned written agreements without acknowledgement from a notary public or authorized official.
• Public instrument: a written agreement with acknowledgement from a notary public or authorized official.

Interpretation of Contracts

• In incidental circumstances of a gratuitous contract, interpretation should be made which would result in the least transmission of rights and interests.
• In onerous contracts, interpretation should be in favor of the greatest reciprocity of interests.

Classification of Contracts

• Formal contract: in a form required by law, according to the involvement of the parties.
• Informal contract: in any form as long as all the requisites or essential elements for its validity are present.
• Unilateral contract: one party is bound to fulfill an obligation for an act by another party.
• Bilateral contract: both parties are bound to fulfill their mutual promises or respective obligations to each other reciprocally.
• Nominate contract: has a specific name or designation in law, such as commodatum, lease, agency, and sale.
• Innominate contract: has no specific name or designation in law, regulated by stipulations of the parties, Civil Code, rules governing the most analogous nominate contracts, and customs of the place.

Perfection of Contracts

• Consensual contract: perfected by mere consent, such as the contract of sale, lease, and agency.

Causes of Contract Termination

• Prescription: loss of certain rights upon lapse of time.
• Happening of a fortuitous event.
• Arrival of resolutory period.
• Impossibility of fulfillment of the obligation.
• Death of a party in case of a purely personal obligation.
• Compromise, by making reciprocal concessions.
• Mutual desistance or withdrawal (mutuo disenso).

Test your understanding of contract law with this quiz, covering interpretation rules, nullity of contracts, and the differences between gratuitous and onerous contracts. Learn how to apply these principles in various scenarios. Improve your knowledge of contract law and its applications.