Legal Aspects in Tourism and Hospitality PDF

LEGAL – H3 Legal Aspects in Tourism and Hospitality CHAPTER 3 Understanding Contracts and Obligations Affecting the Tourism and Hospitality Sectors WHAT IS OBLIGATION?...

LEGAL – H3 Legal Aspects in Tourism and Hospitality CHAPTER 3 Understanding Contracts and Obligations Affecting the Tourism and Hospitality Sectors WHAT IS OBLIGATION? Article 1156 of the Civil Code of the Philippines provides that an obligation is a juridical necessity to give, to do or not to do. Generally, a person who has an obligation arising from whatever sources should comply with its corresponding requirements considering the damage it may produce to one of the contracting parties or even to a third person, if not complied. Non-compliance of what is demanded by the obligation may give the aggrieved party different courses of action such as demand for payment and damages. KINDS OF OBLIGATION UNDER THE LAW 1. Obligation to give - the debtor is obliged to deliver the movable or immovable thing to the creditor. 2. Obligation to do - all kinds of works or services, whether physical or mental. 3. Obligation not to do - means refraining from doing some acts like the obligations of a building proprietor to refrain from committing nuisance through noise, offensive odor, smoke, heat. ELEMENTS OF OBLIGATION 1. Active Subject – it is the one who is demanding the performance of the obligation. He is called the creditor or obligee. 2.Passive Subject – the one bound to perform the presentation to give, to do or not to do. He is called the debtor or obligor. 3.Prestation or Object – it is the subject matter of the obligation which has an economic value or susceptible of pecuniary substitution in case of non-compliance. 4.Efficient Cause – it is the juridical tie or vinculum by virtue of which the debtor has become bound to perform the presentation. KINDS OF OBLIGATION AS TO JUDICAL ENFORCEABILITY 1. Civil Obligation – this is an obligation, which if not fulfilled when it becomes due and demandable, may be enforced in court through action. 2. Natural Obligation – this is a special kind of obligation which cannot be enforced in court but which authorizes the retention of the voluntary payment or performance made by the debtor. 3. Moral Obligation – it arises not from the positive law, but from the moral law developed by the church and not enforceable by the court. KINDS OF OBLIGATION AS BTO NUMBER OF PERSONS BOUND TO PERFORM 1. Unilateral Obligation – it is a kind of obligation in which only one of the parties is bound to fulfill a prestation. 2. Bilateral Obligation – this is kind of obligation in which both parties are bound to perform a part in the obligation. SOURCES OF OBLIGATION Article 1157 of the Civil Code of the Philippines enumerates the sources of obligation as follows: 1. Obligations Arising from Law- the obligation of a party to fulfill an obligation arises from the law itself, rules and regulations, jurisprudence. 2. Obligations Arising from Contracts- this is the duty of the party to fulfill his undertaking in the contract such as the payment for the breakage of utensils used in the catering services as stipulated in the contract. 3. Obligations Arising from Quasi-contracts- it is a juridical relation which arises from a lawful, voluntary and unilateral act or acts executed by somebody for the benefit of another and for which the former must be indemnified to the end. 4. Obligation Arising from Delicts or Crimes – the penal provision of the law specifically provides the obligation to be done by the culprit on his/her victim. 5. Obligation Arising from Quasi-delict or Tort  LEGAL – H3 DILIGENCE NEEDED Article 1163 of the Civil Code of the Philippines provides that every person with obligation to give something is also obliged to take care of it with the proper diligence of a good father of a family, unless the law or the stipulation of the parties requires another standard of care. OTHER IMPORTANT CIVIL CODE PROVISIONS NECESSARY IN THE CONDUCT OF HOSPITALITY BUSINESS. Article 1169, those who are obliged to deliver or to do something incur in delay from the time they oblige judicially or extra-judicially demands from them the fulfillment of their obligation. However, the demand by the creditor shall not be necessary in order that delay may exist: 1. When the obligation or the law expressly so declines. 2. When from the nature and the circumstances of the obligation, it appears that the designation of the time when the thing is to be delivered or the service is to be rendered was controlling motive for the establishment of the contract 3. When the demand would be useless, as when the obligor has rendered it beyond his power to perform. Article 1170, provides that those who in the performance of their obligation are guilty of fraud, negligence, or delay, and those who in any manner contravene the tenor thereof, are liable for damages. According to Article 1171, the responsibility arising from fraud is demandable in all obligations. Any waiver of an action for future fraud is void. MODES OF EXTINGUISHING OBLIGATION An obligation may be extinguished through any of the following modes: A. Payment or performance. In a fine dining restaurant, the obligation of the customer to the management who served them sumptuous food shall be extinguished upon payment by the customer of the exact amount of the food consumed; obligation by the entertainer to the event manager may be extinguished upon the performance of the obligation or which the entertainer was commissioned B. Loss of the thing due. Obligation- arising from a contract may also be extinguished upon the loss of the thing due. Article 1189 par.2 explains the meaning of the term “loss”. It is understood that the thing is lost when it perishes, or goes out of commerce, or disappears in such a way that its existence is unknown or it cannot be recovered. C. Condonation or remission pertains to the act of liberality on the part of the creditor wherein she/he forgives or remits a debt. D. Confusion or merger of the rights of the creditor and debtor. Article 1275 of the civil code of the Philippines provides that the obligation is extinguished from the time the characters of the creditor and debtor are merged in the same person. E. Compensation as a means of extinguishing an obligation is the offsetting of the respective obligations of two persons who stand as principal creditors and debtors of each other, resulting to the extinguishment of their obligations to their concurrent amount. F. Novation pertains to the change or modification of an obligation by another, resulting to the extinguishment of an obligation. G. Annulment H. Rescission I. Fulfillment of the resolutory condition J. Prescription. WHAT IS CONTRACT? It is the meeting of the minds between two persons whereby one binds himself, with respect to the others, to give something or to render some service. ESSENTIAL ELEMENTS OF A CONTRACT 1. Consent – signifies the meeting of the offer and the acceptance upon the thing and the cause which are to constitute the contract. It comprises the following elements a. concurrence of the offer and the acceptance  LEGAL – H3 b. contracting parties must possess the necessary legal capacity (implied) c. consent must be intelligent, free, spontaneous and real. Vices of Consent a. Violence. For a violence to be considered as a vice that could vitiate consent, it must be serious or irresistible. The contract would have been a void contract if the consent given by one of the parties was obtained only because of the use of violence – meaning that there is a physical pain. b. Intimidation. The use of intimidation by one of the parties to the contract to obtain the consent of the other party can vitiate the consent if there is an infliction of mental pain. There is no chance that a contract can be perfected if the intimidation is very evident. A threat to a family or friends might be considered as a form of intimidation. c. Mistake may be attributed to the nature of human to commit error whether in fact or in law. Mistake or fact may arise if there is an ignorance or lack of knowledge on the object of the contract. d. Fraud. The presence of fraud is evident if there are insidious words or if there is a scheme or machination which includes other party to enter into a contract. Causal Fraud – committed by one party in order that the other party would agree to the terms and conditions of the contract. Incidental Fraud – pertains to fraud without which consent would have still been given but the person giving it would not have agreed. e. Undue influence is the direct influence that overpowers the mind of the party to decide based on the ideas and principles of the others. 2. Object Certain – It could be any of the following: a. thing; b. right; c. service The object certain must have the following requisites: a. Objects should be within the commerce of men. b. It should be real or possible. It should exist at the moment of the celebration of contract or at least it can exist subsequently or in the future. c. Objects should be licit or not be contrary to law, morals, good customs, public order or public policy. d. It should be determinate or at least possible of determination as to its kind. 3. Cause – It is the why of the contract or the essential reason which moves the contracting parties to enter into the contract. It should have the following requisites: a. should be in existence b. should be lecit or lawful c. should be true CLASSIFICATION OF CONTRACTS ACCORDING TO CAUSE 1. Onerous Contract – the parties are reciprocally obligated to each other. 2. Remunerative Contract – the purpose is to give remuneration to the services previously rendered or given by the other party. 3. Gratuitous – one party is giving something out of his or her generosity or liberality. PERFECTION OF CONTRACTS According to the CC Art 1319, par 2, the contract is perfected from the moment that the offer or has knowledge of such acceptance, while according to the Article 54 of the Code of Commerce, the contract is perfected from the moment an answer is made accepting the offer. CONTRACT STAGES 1. Generation – it is the preliminary stage or process for the information of the contract. 2. Perfection – the birth of the contract. 3. Consummation – it is the fulfillment of the purpose for which the contract was constituted.  LEGAL – H3 CHARACTERISTICS OF CONTRACTS 1. Obligatory force – once the contract is perfected, it shall be of obligatory force upon both of the contracting parties. 2. Autonomy of the contracts – contracting parties are free to enter into a contract and to establish such stipulations, clauses, terms and conditions as they may deem convenient. 3. Mutuality of the contracts – the contract must bind both parties. 4. Relativity of the contracts – contract takes effect only between the parties, their assigns and their heirs. DEFECTIVE CONTRACTS 1. Rescissible Contract – a valid contract because it contains all of the essential requisites prescribed by law, but which is defective due to injury or damage to either of the contracting parties. 2. Voidable – a contract which is valid until annulled. 3. Unenforceable contracts – those that cannot be enforced by a proper action in court UNLESS they are ratified. 4. Void Contract– considered to be inexistent by operation of law, thus, confers no right to any party thereto.