Contracts PDF

Oblicon CONSUMMATION DEFINITION OF A CONTRACT Stage of consummation of contracts A CONTRACT IS A MEETING OF MINDS beings when the parties perform their BETWEEN TWO PERSONS WHEREBY ONE...

Oblicon CONSUMMATION DEFINITION OF A CONTRACT Stage of consummation of contracts A CONTRACT IS A MEETING OF MINDS beings when the parties perform their BETWEEN TWO PERSONS WHEREBY ONE respective commitments under the BINDS HIMSELF WITH RESPECT TO THE OTHER, contract culminating in the death or TO GIVE SOMETHING OR TO RENDER SOME extinguishment of the contract. SERVICE. One or more persons bind himself or CLASSIFICATION OF CONTRACTS themselves with respect to another or According to Perfection: others, or reciprocally, to the fulfillment 1. CONSENSUAL: Perfected by mere of a prestation to give, to do or not consent such as sale and barter todo. 2. REAL: Perfected by the delivery of the object of the contract, such as pledge, STAGES OF CONTRACT loan and deposit. Negotiation Perfection According to Degree of Importance: Consummation 1. PRINCIPAL: can stand alone such as a sale, barter, deposit, and loan NEGOTIATION 2. ACCESSORY: its existence and validity is Covers the period from the time the dependent upon another contract such prospective contracting parties indicate as pledge, mortgage, guaranty, and interest in the contract to the time the contract of agency contract is concluded (perfected) At any time prior to perfection of the According to Name: contract, either negotiating party may 1. NOMINATE: with a special name such, stop the negotiation. as a pledge, barter, lease, agency, Negotiating can be canceled partnership 2. INNOMINATE: without any name PERFECTION The contract is perfected in consensual According to Cause: contracts at the moment there is a 1. ONERUS: there is an exchange of meeting of minds upon the object and consideration, such sale, barter, and the cause thereof. lease In real contracts, it is perfected upon 2. GRATUITOUS: there is no consideration, delivery of the thing which is the object received in exchange for what has been thereof. given, such as donation, remission and Meeting of the Minds ( Consent ) commodatum or gratuitous loan ELEMENTS OF A CONTRACT REQUISITES OF CONSENT Essential elements: those without 1. Must be manifested by the concurrence which there can be no contract (Article of the offer and acceptance 1318) 2. Parties must possess the necessary legal Common Elements: Present in all contracts capacity 1. Consent 3. Must be intelligent, free, spontaneous, 2. Object and real 3. Consideration DISCERNMENT Special Elements: Only in certain contracts such You know the full consequences of what as delivery in real contracts, and form in solemn you are doing. contracts. Extraordinary elements: peculiar to specific OFFER DEFINED contract ( price in contract of sale ) It is a proposal made by one party (offerrer) to Natural Elements: Those which are derived another to enter into a contract. It is more than from the nature of the contract and ordinarily an expression of desire or hope. It is really a accompany the same ‘ they are presumed by promise to act or to refrain from acting on law ( warranty against eviction in sale, although condition that the terms thereof are accepted the contracting parties may increase, diminish by the person (offeree ) to whom it is made or even suppress it ) OFFER MUST BE CERTAIN ESSENTIAL REQUISITES OF A CONTRACT The offer must be certain or definite and clear, ARTICLE 1318: There is no contract unless the and not vague or speculative so that the liability following requisites concur: ( or the rights) of the parties may be exactly Consent of the contracting parties fixed because it is necessary that the Object certain which is the subject acceptance be identical with the offer to create matter of the contract a contract without any further act on the pat of Consideration or Cause of the obligation the offeror. which is established ACCEPTANCE DEFINED CONSENT DEFINED: It is the manifestation by the offeree of his It is the conformity of wills and with assent to the terms of the offer. Without respect to contracts, it is the agreement acceptance, there can be no meeting of the of the will of one contracting party with mind between the parties. that of another or others, upon the Remember: A MERE OFFER PRODUCES NO object and terms of the contract. OBLIGATION Consent is manifested by the meeting of the offer and the acceptance upon the ACCEPTANCE MUST BE ABSOLUTE thing and the cause which are to The acceptance of an offer must be absolute, constitute the contract. unconditional, or unqualified, that is, it must be identical in all respect with all that of the offer so as to produce the consent or meeting of the Where under the circumstances such minds necessary to perfect a contract. silence constitutes estoppel. - Estoppel prevents one person FORM OF ACCEPTANCE OF OFFER from contradicting an action or An acceptance may be: statement from the past. 1. Express: may be oral or written 2. Implied: one that is inferred from act or WHEN OFFER BECOMES INEFFECTIVE conduct. 1. Upon the death of either party before acceptance is conveyed QUALIFIED ACCEPTANCE 2. Civil Interdiction of either party before Qualified acceptance merely constitutes acceptance is conveyed a counter-offer or a new proposal 3. Insanity of either party before which, in law, is considered a rejection acceptance is conveyed or of the original offer and an attempt by 4. Insolvency of either party before the parties to enter into a contract on a acceptance is conveyed. different basis. A qualified acceptance must, in turn, be BUSINESS ADVERTISEMENT OF THINGS FOR accepted absolutely in order that there SALE will be a contract. Business advertisement of things for An acceptance with a Condition. sale are not definite offers, acceptance of which will not perfect a contract but ACCEPTANCE MADE BY LETTER OR TELEGRAM are merely invitations to the reader to GENERAL RULE: Acceptance made by letter or make an offer or only as proposals. telegram does not bind the offeror Advertisements for bidders is mere EXCEPTION: Except from the time it came to his invitation to submit proposals. knowledge. The contract, in such a case, is Advertisers is not bound to accept the presumed to have been entered into the place highest or lowest bidder unless the where the offer was made. contrary appears. ACCEPTANCE BY SILENCE OR INACTION GENERAL RULE: Silence cannot be constructed as acceptance. The acceptance must be affirmatively and clearly made and evidenced by words or some acts or conduct communicated to the offeror. XPN : Where the parties agree expressly or implied, that it shall amount to acceptance Where specific provisions of law so declare WHO CANNOT GIVE CONSENT THINGS WHICH CANNOT BE OBJECT OF The following cannot given consent to a CONTRACTS contract: General Rule: All things or services may be the 1. Unemancipated minors object of contracts. 2. Insane or demented persons EXCEPT: 3. Deaf Mutes who do not know how to 1. Things outside the commerce of men write 2. Intransmissible Rights 3. Future inheritance except in cases RULE WHEN INCAPABLE PARTIES ENTER INTO A expressly authorized by law CONTRACT 4. Services contrary to law, morals, good 1. If one of the parties is incapable of customes, public order or public policy giving consent: VOIDABLE 5. Impossible things or services 2. If both parties are incapable of giving 6. Objects not possible of determination consent: Unenforceable unless ratified as to their kind VICES OF CONSENT CAUSE OR CONSIDERATION DEFINED If consent is obtained thru the following vices, It is the immediate, direct or most proximate the consent make a contract voidable: reason which explains and justifies the creation 1. Violence of an obligation through the will of the 2. Intimidation contracting parties. 3. Mistake 4. Fraud BASIC PRINCIPLES OF CONTRACTS 5. Undue Influence Obligatory Force of a Contract Freedom to stipulate and its limitations OBJECT DEFINED Binding effect of a contract Object is the thing or right or service which is Privity of a Contract the subject matter of the obligation arising from Consensuality of Contracts the contract OBLIGATORY FORCE OF A CONTRACT REQUISITES OF A VALID OBJECT Article 1159: Obligations arising from contracts REQUISITES: have the force of law between the contracting 1. Must be within the commerce of Man parties and should be complied with in good 2. Should be real or possible faith. 3. Should be licit ( legal) Article 1315: Contracts are perfected by mere 4. Should be determinate, or at least consent, and from that moment the parties are possible of determination as to its kind bound not only to the fulfilment of what has been expressly stipulated but also to all the consequences which, according to their nature, may be keeping with good faith, usage, and law. OBLIGATORY FORCE OF A CONTRACT 4. Employment contract providing that Key Points: within 5 years from termination, the 1. A Contract once perfected, has the force employee cannot work with another of law between the parties, with which company without the written they are bound to comply in good faith, permission of the employer as being an and neither one may, without consent unreasonable restraint to livelihood. of the other, regene therefrom 5. Waiver of rights to transfer to another 2. Contract are the law and as a result, school in a scholarship grant as being courts must enforce them between the contrary to public order and public contracting parties. policy. 3. Courts cannot make a contract or a stipulation if there is none. BINDING EFFECT OF A CONTRACT Article 1308: The contract must bind both FREEDOM TO STIPULATE AND ITS LIMITATIONS contracting parties; its validity or compliance There are two aspects of this principle: cannot be left to the will of one of them. 1. Freedom to decide whether or not one should enter into a contractual It shall not be obligatory if it is evidently relationship at all. inequitable - the courts may decide 2. Freedom to stipulate upon whatever what is equitable under the terms the parties wish and agreement. circumstances Example: Loan Contracts provide that FREEDOM TO STIPULATE AND ITS LIMITATIONS lender can increase or decrease the This principle is also known as the Autonomy of interest every year as it may deem Contracts necessary. Article 1306: Contracting parties may establish such stipulation, clauses, terms, conditions as BINDING EFFECT OF A CONTRACT they may deem convenient provided they are Article of 1308 of the Civil Code not contrary to law, morals, good custom, public expresses what is known in law as the order or public policy. principle of mutuality of contracts. It provides that the contract must bind AGREEMENTS CONTRARY TO PRINCIPLE OF both the contracting parties; its validity AUTONOMY OF CONTRACTS or compliance cannot be left to the will 1. Sale of Land covered by homestead of one of them. patent within 5-year prohibitory period, This binding effect of a contract on both as being contrary to law. parties is based on the principle that 2. A promise of marriage where carnal the obligations arising from the knowledge is the consideration of the contracts have the force between the promise as being contrary to morals. contracting parties, 3. Quit Claim by Hospital to stop them from paying the victim as contrary to morals and public policy. CONTRACT OF ADHESION A Contract of adhesion is one wherein one party imposes a ready-made form of contract on the other in which almost all of the provisions are drafted by one party, thereby reducing the participation of the other to affixing its signature or to adhering of the contract. QUESTION: Is a contract of adhesion invalid or illegal? PRIVITY OF CONTRACT No. The Contract of adhesion is not by Also known as Principle of relativity of contract default invalid, it is as binding as any General Rule: Contracts take effect only other contracts. between parties, their assigns, and heirs. However, the court may struck down contracts of adhesion as void when the party has been imposed upon in dealing with the dominant bargaining party as to be reduced to the alternative of taking or leaving. Being completely deprived of the opportunity to bargain on equal footing. PRIVITY OF CONTRACT The Basic principle of relativity of contracts is that contracts can only bind the parties who entered into it, and cannot favor or prejudice a third person, even if he is aware of such contract and has acted with knowledge thereof. Indeed, where there is no privity of contract, there is likewise no obligation or liability to speak about.