Contracts and Void Agreements

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Questions and Answers

What is a requirement for a contract to be valid?

It must be approved by the Philippine Overseas Employment Administration

It must not be contrary to law, morals, good customs, public order, and public policy (correct)

It must be in writing

It must be signed by all parties in thepresence of a lawyer

What is the consequence of a contract being void?

The parties involved are penalized

The contract is considered valid but unenforceable

The contract is suspended until further notice

No obligations will arise (correct)

What must be observed by parties in a contract to prevent unfair advantage?

Law and morality

Public order and policy

Justice and equality

Good faith and fair dealing (correct)

What is required for a contract to take effect if it requires government approval?

Verification and approval by the government Signup and view all the answers

What is the primary governing force behind obligations arising from contracts?

The agreement of the contracting parties Signup and view all the answers

What is the importance of good faith in contract performance?

To prevent unfair advantage and ensure fairness Signup and view all the answers

What is the necessary condition for contracts to have the force of law between parties?

Consent of both parties Signup and view all the answers

What is the result of a contract being contrary to law, morals, good customs, public order, or public policy?

The contract is invalid or void Signup and view all the answers

What is the relationship between the party who holds the legal estate and the party who pays the price in an implied trust?

Beneficiary and trustee Signup and view all the answers

What is a contract in the context of contractual obligations?

A formal agreement between two persons to give something or to render some service Signup and view all the answers

What happens when one party reneges from a valid contract without the consent of the other?

The other party can take legal action Signup and view all the answers

What is the essential characteristic of a binding and valid agreement?

It is a formal expression of rights and obligations Signup and view all the answers

What is the consequence of a party evading their legitimate obligations after receiving benefits under a contract?

Unjust enrichment Signup and view all the answers

What is the principle recognized by our law on contracts regarding contractual breach?

Actionable injury inheres in every contractual breach Signup and view all the answers

What is the discretion of the court regarding breach of contract damages?

To award interest on damages for breach of contract Signup and view all the answers

What is the effect of a party's failure to demand performance of the obligation of the other for an unreasonable length of time?

The contract becomes ineffective Signup and view all the answers

What is the consequence of a party's failure to respond to a demand letter in the absence of other circumstances?

No consequence Signup and view all the answers

What is the principle that aims to protect the interest of the promisee in a contract?

Preservation of interest of the promisee Signup and view all the answers

Study Notes

Validity of a Contract

A contract is valid if it is not contrary to law, morals, good customs, public order, and public policy.
If a contract is contrary to law, morals, good customs, public order, or public policy, it is invalid or void.

Effect of Void Contract

A void contract does not exist in the eyes of the law.
No obligations arise from a void contract.

Government Approval

Where a contract requires government approval, it becomes the law between the contracting parties only when approved.
The validity of the contract must be sustained if there is nothing in it contrary to law, etc.

Compliance in Good Faith

Compliance in good faith means performance in accordance with the stipulations or terms of the contract or agreement.
Good faith and fair dealing must be observed to prevent one party from taking unfair advantage over the other.

Contractual Obligations

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.
Obligations arising from contracts are governed primarily by the agreement of the contracting parties.

Binding Force of Contracts

Valid contracts have the force of law between the parties who are bound to comply therewith in good faith.
Neither party may, without the consent of the other, renege from the contract.

Implied Trust

An implied trust arises when property is sold, and the legal estate is granted to one party, but the price is paid by another.
The former is the trustee, while the latter is the beneficiary.

Liability for Breach of Contract

A party cannot breach a contract with impunity.
Actionable injury inheres in every contractual breach.
Interest may be allowed upon damages awarded for breach of contract upon equitable grounds.

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Description

Test your knowledge on the validity of contracts and the circumstances that make them void. Learn about the essential elements of a contract and the consequences of entering into an invalid agreement. Assess your understanding of contracts that go against the law, morals, and public policy.