OBLICON Final Exam Reviewer: Classification of Contracts

Classification of Contracts

• Consensual Contracts: perfected by mere consent, binding from the moment of consent
• Formal / Solemn Contracts: require a solemnity or formality in addition to essential requisites, valid and enforceable only if in a particular form
• Real Contracts: perfected by delivery of the object, not binding until delivery

Defective Contracts

• Void Contracts: no legal effect, cannot be ratified
• Voidable Contracts: valid until annulled, can be ratified
• Unenforceable Contracts: cannot be enforced unless ratified
• Rescissible Contracts: valid but can be rescinded due to damage or injury

Reformation of Instrument

• Occurs when a written contract does not reflect the true intention of the parties due to mistake, fraud, inequitable conduct, or accident
• Requisites: meeting of the minds, true intention not expressed in the instrument, and reason for non-expression (MARFI)
• Purpose: to make the written instrument conform to the true intention of the parties

Rescission

• Cancellation of a contract and return to pre-contractual position
• Occurs when contract is rescissible due to damage or injury to one of the parties or third persons

Elements of Contracts

• Consent: agreement of the parties to the terms of the contract
• Object: subject matter of the contract
• Cause: reason why the parties enter into the contract

Requisites of Consent

• Legal capacity of the contracting parties
• Manifestation of conformity of the contracting parties
• Conformity to the object, cause, terms, and conditions of the contract must be intelligent, spontaneous, and free from vices of consent
• Real intention to contract

Persons Incapacitated to Give Consent

• Deaf-mutes
• Insane or demented persons
• Minors

Vices of Consent

• Mistake
• Intimidation
• Violence
• Undue influence
• Fraud

Offer

• Expression of willingness to contract on certain terms, made with the intention of becoming binding upon acceptance
• Elements: definite, unequivocal, intentional, and complete

Kinds of Contracts

• According to perfection or formation:
  • Consensual contracts
  • Formal / solemn contracts
  • Real contracts
• According to the degree of dependence:
  • Principal contracts
  • Accessory contracts
  • Preparatory contracts
• According to their relation to other contracts:
  • Preparatory contracts
  • Principal contracts
  • Accessory contracts
• According to their form:
  • Common or informal contracts
  • Special or formal contracts
• According to their purpose:
  • Transfer of ownership
  • Conveyance of use
  • Rendition of services
• According to the nature of the vinculum:
  • Unilateral contracts
  • Bilateral contracts
• According to their cause:
  • Onerous contracts
  • Gratuitous contracts
  • Remuneratory contracts
• According to the risks involved:
  • Commutative contracts
  • Aleatory contracts

Cause of Contract

• Essential reason that moves the contracting parties to enter into the contract

Characteristics of Contract

• Autonomy: parties are free to stipulate terms as long as they are not contrary to law, morals, good customs, public order, or public policy
• Mutuality: contracts must bind both parties
• Relativity: contracts take effect only between the parties, their assigns, and heirs
• Obligatoriness: contracts have the force of law between the parties and must be complied with in good faith
• Consensuality: contract is born or exists since there is an agreement between the parties regarding the subject matter