Article 1305 - Contracts PDF

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lOMoARcPSD|44807398 Article-1305- Contracts Accountancy (Divine Word College of Legazpi) Scan to open on Studocu Studocu is not sponsored or endorsed by any college or university Downloaded by Annonymous Palaka ([email protected])  lOMoARcPSD|44807398 Article 1305 CONTRACTS liable beyond the value of the property he received Contracts is the meeting of minds between two persons from the descent. whereby one binds himself, with respect to the other, to If the contract should contain some stipulation in favor give something or render something. of a third person, he may demanded its fulfillment provided that he communicate its acceptance to the CLASSIFICATIONS OF CONTRACTS obligor before the revocation. A mere incidental 1. NOMINATE- contracts with specific names or benefits or interest of a person is not sufficient. The designation in law contract must be clearly and deliberately conferred in 2. INNOMINATES- contracts with no specific names or favor upon a third person. designation in law 3. UNILATERAL- when it creates an obligations on the ARTICLE 1313. Creditors are protected in case of part of only one of the parties contracts intended to defraud them. 4. BILATERAL- when it give rise to reciprocal obligations for both parties ARTICLE 1314. Any person who induces another to 5. ACCESSORY- when it is dependent upon another violate his contract shall be liable for the damages to contract it secures or guarantees for its existence and the other contracting parties. (never ever induced validity another to violate a contract.) 6. PRINCIPAL- when it does not depend for its existence and validity upon another contract but is an PERFECTION PF CONTRACTS indispensable condition for existence of an accessory Contracts are perfected by mere consent, and contract. from that moment the parties are bound not only to the 7. INDIVISIBLE- when each part of the contract is fulfillment of what has been expressly stipulated but dependent upon the others parts for satisfactory also to all the consequences which, according to their performance nature, may be keeping with good faith, usage and law. 8. DIVISIBLE- when one part of the contracts may be satisfactory performed independently of the other CLASSIFICATIOONS OF PERFECTION OF CONTRACTS parts. 1. Consensual Contracts- contracts that are perfected by mere consent of the parties regarding the subject LIMITATIONS OF CONTRACTS matter and the cause of the contracts. e.g sales, lease, Article 1306- The contracting parties may establish such agency stipulations, clauses, terms and conditions as they may 2. Real Contracts – perfected by the delivery of subject deem convenient, provided they are not: matter of the contract. e.g depositum, pledge, CONTRARY TO LAW - the fundamental requirements commodatum. MORALS- deal with norms of good and right conduct 3. Solemn Contracts- which requires compliance with GOOD CUSTOMS certain formalities prescribed by law, such prescribed PUBLIC ORDER- refers principally to public safety from being thereby an essential elements thereof. e.g although it has been considered to mean also the public donation of real property w/c must me in public weal. instruments PUBLIC POLICY- is broader than public order, as the former may refer not only to public safety but also to STAGES OF THE LIFE OF A CONTRACT considerations which are moved by the common good. 1. Preparation or negotiation- steps taken by the parties leading to the perfection of the contracts. 2. Perfection or birth- when parties have come to Valid Contracts- are those that meet all the legal definite agreement or meeting of minds regarding the requirement and limitations for the type of agreement subject matter and cause of the contract involved and are, therefore legally binding and 3. Consummation or termination enforceable. ARTICLE 1317. No one may contract in the name of KINDS OF INNOMINATES CONTRACTS another without being authorized by the latter, or 1. do ut des- I gave that you may give unless he has by law a right to represent him. 2. do ut facias- I gave that you may do A contracts entered into in the name of another 3. facto ut des- I do that you may give by one who has no authority or legal representation, or 4. facto ut facias- I do that you may do who has acted beyond his powers, shall be unenforceable, unless it is ratified, expressly or ARTICLE 1308. The contract must bind both contracting impliedly, by the person on whose behalf it has been parties, its validity or compliance cannot be left to the executed, before it is revoked by the other contracting will of one of them. party. Article 1311 Contracts shall take effect only between *UNAUTHORIZED CONTRACTS ARE UNFORCEABLE. the contracting parties, their assigns and heirs except in any case where the right and obligations arising from a *UNAUTHORIZED CONTRACTS CAN BE CURED ONLY BY contract are not transmissible by their nature, by the RATIFICATION stipulation or by the provision of law. The heir is not 3 ESSENTIAL ELEMENTS OF A CONTRACTS (1318) Downloaded by Annonymous Palaka ([email protected])  lOMoARcPSD|44807398 1. CONSENT of contracting parties Article 1325. Unless it appears otherwise, business 2. OBJECT certain w/c is the subject matter of a advertisement of things for sale are not definite offers, contracts but mere invitations to make an offers. 3. CAUSE OF OBLIGATION which is established Business advertisement generally not definite offers CLASSES OF ELEMENTS OF THE CONTRACT 1. ESSENTIAL ELEMENTS OR THE REQUISITES OF PERSONS WHO CANNOT GIVE CONSENT (1327) CONTRACTS 1. Unemancipated minors- they refer to those persons a. Common or those present in all contracts, who have not reached the age of majority (18 years old) namely, consent, object, and cause. and are subjected still to parental consent. b. Special or those not common to all contracts 2. Insane or demented persons- (Epso jure) insanity or those may be present only in, or peculiar, certain must exist at the time of contracting unless proved specified contracts, and such peculiarity may be: form, otherwise, a person is presumed sane. subject matter, considerations. 3. Deaf-mutes- persons who are deaf and dumb. 2. NATURAL ELEMENTS-presumed exist in a contracts HOWEVER deaf-mutes who can able to write can give 3. ACCIDENTAL ELEMENTS- particular stipulations, consent. clauses, terms and etc. Parents is an EPSO JURE- the guardian of their children. HOW CONSENT IS MANIFESTED? Consent is manifested by the meeting of the Article 1328. Contracts entered into during a lucid offer and acceptance upon the thing and the cause intervals are valid. Contracts agreed to in a state of which are to constitute the contract. The offer must be drunkenness or during a hypnotic spell are voidable. certain and the acceptance is absolute. LUCID INTERVAL- a temporary period of sanity. CONSENT- is the conformity or concurrence of wills (offer and acceptance) and with respect to contracts, it ARTICLE 1330. A contract where consent is given is the agreement of the will of one contracting parties through mistake, violence, intimidation, undue with that another upon the object and terms of the influence, or fraud is voidable. contract. Characteristics of consent OFFER-is a proposal made by one party to another, 1. It is intelligent indicating a willingness to enter into a contracts. OFFER 2. It is free and voluntary MUST BE CERTAIN AND SERIOUSLY INTENDED 3. It is conscious or spontaneous ACCEPATANCE- is the manifestation by the offeree by his GROUNDS OF ANNULLMENT OF VOIDABLE assent to all terms of the offer. ACCEPATANCE OF OFFER CONTRACTS/ VICES OF CONSENT MUST BE CLEAR AND ABSOLUTE. 1. Error or mistake 2. Violence or force ARTICLE 1320. An acceptance may be express or 3. Intimidation or threat or duress implied. 4. Undue influence 5. Fraud or deceit Article 1321. The person making the offer may fix the time, place, and the manner of acceptance, all of which must be complies with. Article 1331 In order that mistake may invalidate consent, it should refer to the substance of the thing Article 1322. An offer made through an agent is which is the object of the contract, or to those accepted from the time acceptance is communicated to conditions which have principally moved one or both him. parties to enter into the contract. Mistakes as to the identity of qualifications of one of the parties will vitiate GROUNDS (Article 1323) consent only when such identity or qualification have An offer becomes ineffective upon the death, been the principal cause of a contracts. civil interdiction, insanity, or insolvency of either party before acceptance is conveyed. Mistake or error- is the false notion of a thing or a fact material to the contracts. Option contract- is one giving a person for a consideration a certain period to the offer of the offerer. MISTAKES OF FACTS WHICH DOES NOT VITIATE A Option period- period given within which the offeree to CONTRACT. accept an offer. 1. Error as regard the incidents of a thing or accidental Option money- is the money paid or promised to be qualities. paid in consideration for the option. 2. Mistakes as to quantity or amount 3. Error as regards to the motives of the contract 4. Mistake as regard the identity or qualifications of a party Downloaded by Annonymous Palaka ([email protected])  lOMoARcPSD|44807398 5. Error which could have been avoided ARTICLE 1340. The usual exaggerations in trade, when the other party had an opportunity to know the facts, ARTICLE 1332. When one of the contracting parties is are not in themselves fraudulent. unable to read, or if the contracts is in language not understood by him, and mistake or fraud is alleged, the ARTCILE 1341. A mere expression of an opinion not person enforcing the contract must show that the terms signify fraud unless made by an expert and other party thereof have been fully explained to the former. (Read has relied on the former’s special knowledge. and understand the contract.) ARTICLE 1342. Misrepresentation by a third person does MISTAKES OF LAW is that which arises from the not vitiate consent, unless such misrepresentation has ignorance of some provision of law, or from an created substantial mistakes and the same is mutual. erroneous interpretation of its meaning or from the erroneous conclusion as to the legal effect of an ARTICLE 1343. Misrepresentation made in good faith is agreement, on the part of the parties. not fraudulent but may constitute error. EFFECT OF MISTAKES OF LAW- “ignorance of the law ARTICLE 1345. In order that fraud may make a contract excuses no one from compliance therewith”. voidable, it should be serious and should not have been employed by both contracting parties. Incidental fraud ARTICLE 1335 only obliges the person employing it to pay damages There is violence when in order to wrest consent, serious or irresistible force is employed. TWO KINDS OF FRAUD IN MAKING OF CONTRACT There is intimidation when one of the 1. CAUSAL FRAUD- which is ground for the annulment contracting parties is compelled by a reason able and of a contract, although it may also give rise to an action well-grounded fear an imminent and grave evil upon his for damages. person or property, or upon the person or property of REQUISITES OF CAUSAL FRAUD his spouse, descendants or ascendants, to give his *It should be serious consent. * It should not have been employed by both contracting To determine the degree of the intimidation, parties. the age, sex and condition of the person shall be borne *It should not have been known by the other in mind. contracting parties 2. INCIDENTAL FRAUD- which only renders the party “Violence and intimidation will vitiate the contract” who employs it liable for damages because the fraud was not the principal inducement that led the other to “Violence and intimidation shall annul the obligation, give his consent. although it may have been employed by a third person who did not take part in the contract.” SIMULATION OF A CONTRACT is the act of deliberately UNDUE INFLUENCE or the grounds to vitiate a deceiving others, by feigning or pretending by contracts- is the influence of a kind that so overpowers agreement, the appearance of a contract which is either the min of a party as to prevent him from acting non-existent or concealed. understandingly and voluntarily to do what he would have done of he had been left to exercise freely his own KINDS OF SIMULATION judgment and discretion. (Article 1337) 1. ABSOLUTE SIMULATION- when the contracts does not really exist and the parties do not intend to be ARTICLE 1338. There is fraud when, through insidious bound at all. words or machinations of one of the contracting parties, 2. RELATIVE SIMULATION- when the contract entered the other is induced to enter into a contract which, into by the parties is different from their true without them, he would not have agreed to. (form of agreement. The parties are bound by their real daya through insidious words that cause a person to agreement. In other words there is a concealment of believe into it.) the real amounts. CAUSAL FRAUD- is the fraud committed by one party SECTION 2 OBJECTS OF CONTRACTS before or the time of the celebration of the contract to ARTICLE 1347 secure the consent of the other. It may be committed All things which are not outside the commerce through insidious words or machinations or by of men, including future things, may be the object of a concealment. contract. All rights which are not intransmissible may also be the object of contracts. No contracts may be ARTICLE 1339. Failure to disclose facts, when there is a entered into upon future inheritance except in cases duty to reveal them, as when the parties are bound by expressly authorize by law. All services which are not confidential relations, constitutes fraud. contrary to law, morals, good customs, public order, or public policy may likewise be the object of a contract. CONCEALMENT- false representation. “OBJECT OF THE CONTRACT is its subject matter.” But since a contract cannot exist without an obligation, it Downloaded by Annonymous Palaka ([email protected])  lOMoARcPSD|44807398 may be said that the things, service or right which is the ARTICLE 1353. The statement of a false cause in object of the obligation is also the object of contract contracts shall render them void, if it should not be proved that they were founded upon another cause CAN A FUTURE THING BE VALID? which is true and lawful. FUTURE THINGS may be valid contract provided they have a potentiality to happen in the future. Absence is want of cause means there is total lack of any valid consideration for the contract. It should be ARTICLE 1348- Impossible things or services cannot be distinguished from inadequacy of cause which, as a the object of contracts. general rule, is not ground for relief and from failure of FUTURE INHERITANCE- is any property or right, nit in cause which does not render a contract void. existence or capable of determination at the time of the ILLEGALITY OF CAUSE implies that there is cause but te contract, that a person may inherit in the future. same is unlawful or illegal. Inheritance ceases to be future upon the death of the FALSITY OF CAUSE is meant that the contract states a decedent or deceased. valid consideration but such statements is not true. LESION is any damage caused by the fact that the price INCHOATE RIGHTS- a right of expectancy is unjust or inadequate. KINDS OF IMPOSSIBILITY FORM OF CONTRACTS 1. PHYSICAL- when the things or service in the very ARTICLE 1356. Contract shall be obligatory in whatever nature of things cannot exist or be performed. form they may have been entered into, provided all the * Absolute- when the act cannot be done in essential requisites from their validity are present. any case so that nobody can perform it. However, when the law requires that a contract in some * Relative- when it arises from the special from in order that it may be valid or enforceable, or that circumstances of case or other special conditions or a contract be prove in a certain way, that requirement is qualifications of the obligor. ABSOLUTE and indispensable. In such case, the right of the parties stated in the following article cannot be 2. LEGAL- when the thing or services is contrary to law, exercised. morals, good customs, public order, or public policy. THE FORM OF CONTRACTS REFERS TO THE MANNER IN SECTION 3 CAUSE OF CONTRACTS WHICH A CONTRACT IS EXECUTED OR MANIFESTED. CAUSE (causa) - is the essential reason or purpose which the contracting parties have in view at the time of CLASSIFICATION ACCORDING TO FORM entering into the contracts. 1. INFORMAL OR COMMON SIMPLE CONTRACT or that which may be entered into in whatever from provided CLASSIFICATIONS OF CONTRACTS ACCORDING TO all the essential requisites for their validity are present. CAUSE 2. FORMAL OR SOLEMN CONTRACT or that which is 1. ONEROUS- or one the cause of which, for each required by law for its efficacy to be in certain specified contracting party is the prestations or promise of a thing form. or a service by the other. In other words, the parties are reciprocally obligated to each other. Example: Sales, RULES FOR INTERPRETATION OF A CONTRACT lease of thing; partnership ARTICLE 1370. If the terms of a contract are clear and leave no doubt upon the intention of the contracting 2. REMUNERATORY OR REMUNERATIVE- or one the parties, the literal meaning of its stipulations shall cause which is the service or benefit which is control. If the words appear to be contrary to the remunerated. The purpose of the contract is to reward evident intention of the parties, the latter shall prevail the service that had been previously rendered by the over the former. party remunerated. Example paying defense counsel for the agreed money INTERPRETATIONS OF A CONTRACT is the determination of the meaning of the terms or words used by the 3. GRATITIOUS- or one the cause of which is the parties in their written contract. liberality of the benefactor or giver. Examples pure donation Literal meaning controls when language clear MOTIVES- is the purely personal or private reason which Evident intention of parties prevails over terms of a a party has entering into a contract. contract ARTICLE 1351. The particular motives of the parties in Contemporaneous and subsequent acts relevant in the entering into a contract are different from the cause determination of intention. 1371 thereof. Special intent prevails over a general intent. 1372 ARTICLE 1352. Contracts without cause, or with unlawful cause, produce no effect whatever. The cause Interpretations of stipulation with several meanings is unlawful if it is contrary to law, morals, good customs, one of which would render it effectual, it should be public order or public policy. given that obligation. 1373 Downloaded by Annonymous Palaka ([email protected])  lOMoARcPSD|44807398 Various interpretation of contracts shall be interpreted together, attributing to the doubtful ones that sense which may result from all of them taken jointly. 1374 Words which may have different significations shall be understood in that which is most in keeping with the nature and object of contract. 1375 KINDS OF DEFECTIVE CONTRACTS 1. Rescissible Contracts- are those validly agreed upon because all the essential elements exist, and therefore, legally effective, but in the cases established by law, the remedy of rescission is granted in the interest of equity. 2. Voidable Contracts- are those which possess all the essential requisite of a valid contract but one of the parties are incapable of giving consent, or consent is vitiated by mistakes, violence, fraud and etc. 3. Unenforceable Contracts- cannot be sue upon or enforced unless they are ratified. 4. Void or inexistent contracts- they are absolutely void or null. Downloaded by Annonymous Palaka ([email protected])