Oblicon Final Exam Reviewer PDF

OBLICON Final Exam Reviewer Classification of Contracts (Definitions) Consensual Contracts: refer to contracts that are perfected by mere consent. Contracts are perfected by mere consent, and from that moment the parties are bound not only to the f...

OBLICON Final Exam Reviewer Classification of Contracts (Definitions) Consensual Contracts: refer to contracts that are perfected by mere consent. Contracts are perfected by mere consent, and from that moment the parties are bound not only to the fulfillment of what has been expressly stipulated but also to all the consequences which, according to their nature, may be in keeping with good faith, usage and law. Formal / Solemn Contracts: refer to contracts that require a solemnity or a formality in addition to the essential requisites in order to be perfected. Contracts for which the law itself requires that they be in some particular form (e.g. in writing) in order to make them valid and enforceable (the so-called solemn contracts). Real Contracts: refer to contracts wherein delivery of the object is required in order to be perfected. Real contracts, such as deposit, pledge and commodatum, are not perfected until the delivery of the object of the obligation. Defective Contracts (Differences) Void Contracts: These have no legal effect from the beginning and cannot be ratified. Examples include contracts with illegal objects or causes. Voidable Contracts: These are valid until annulled. They can be ratified. Examples include contracts entered into by minors or those under duress. Unenforceable Contracts: These cannot be enforced unless ratified. Examples include contracts not in the required form or those without authority. Rescissible Contracts: These are valid but can be rescinded due to damage or injury to one of the parties or third persons. Examples include contracts entered into in fraud of creditors. Reformation of Instrument When It Happens: Reformation occurs when a written contract does not reflect the true intention of the parties due to mistake, fraud, inequitable conduct, or accident. Reformation is a remedy in quity by means of which a written instrument is made or construed so as to express or confirm the real intention of the parties when some error or mistake is committed. Requisites: There must be a meeting of the minds. True intention is not expressed in the instrument; By reason of: (MARFI) a. Mistake; b. Accident; c. Relative simulation; d. Fraud; or e. Inequitable conduct Rescission: This is the cancellation of a contract and the return of the parties to their pre-contractual position. It happens when the contract is rescissible due to damage or injury to one of the parties or third persons. Elements of Contracts (COC) Consent: Agreement of the parties to the terms of the contract. Object: The subject matter of the contract. Cause: The reason why the parties enter into the contract. Requisite of Consent (LM-CR) »Legal capacity of the contracting parties; »Manifestation of the conformity of the contracting parties; »Conformity to the object, cause, terms and condition of the contract must be intelligent, spontaneous and free from all vices of consent; and »Real Persons incapacitated to give consent (DIM) Deaf-mutes Insane or demented persons Minors Vices of consent (MI-VUF) »Mistake »Intimidation  »Violence »Undue influence »Fraud Offer An offer is defined as an expression of willingness to contract certain terms, made with the intention that it shall become binding as soon as it is accepted by the person to whom it is addressed Elements of a valid offer and acceptance Definite unequivocal Intentional Complete unconditional Requisites of an object (DELICT) »Determinate as to kind (even if not determinate, provided it is possible to determine the same without the need of a new contract); »Existing or the potentiality to exist subsequent to the contract; »Must be Licit, »Within the Commerce of man; and »Transmissible Requisites of a cause »Exist »Be true, and »Be licit Kinds of cause Cause of onerous contracts - the prestation or promise of a thing or service by the other. e.g. Contract of Sale. Cause of remuneratory contracts - the service or benefit remunerated. Cause of gratuitous contracts - the mere liberality of the donor or benefactor. e. g. Donation in consideration of a past service which does not constitute a demandable debt. Accessory identical with cause of principal contract - the loan which it derived its life and existence. e.g. mortgage or pledge. Forms of Contract Contracts can be in written or oral form unless the law requires a specific form for validity or enforceability. Kinds of Contracts - According to perfection or formation: Consensual contracts: refer to contracts are perfected by the mere meeting of the minds of the parties (e.g. Sale, Lease) Formal / solemn contracts: contracts which must appear in writing, such as: a. Donations of real estate or of movables if the value exceeds P5,000; b. Partnership to which immovables are contributed; c. Contract of antichresis requires the amount of principal and interest be specified; d. Sale of piece of land or interest therein is through an agent; e. Stipulation to charge interest; f. Stipulation limiting common carrier's duty of extraordinary diligence to ordinary diligence; g. Chattel mortgage; or h. Transfer of large cattle Real contracts: refer to those which require for their perfection both the consent of the parties and the delivery of the object by one party to the other (e.g. creation of real rights over immovable property must be written, deposit and pledge). - According to the degree of dependence: 1. Principal - that which can exist independently of ther contracts (e. g. contract of loan) 2. Accessory - that which cannot exist without a valid principal contract (e. g. guaranty, surety, pledge, mortgage) 3. Preparatory - that which is not an end by itself but only a means for the execution of another contract (e. g. contract of agency as agency does not stop with the agency because the purpose is to enter into other contracts). - According to their relation to other contracts: 1. Preparatory Contracts are those which have for their object the establishment of condition in law which is necessary as a preliminary step towards the celebration of another subsequent contract. (eg. Partnership, Agency). 2. Principal Contracts are those which can subsist independently from other contracts. (e.g. Sale, Lease). 3. Accessory Contracts those which can exist only as a consequence of, or in relation with, another prior contract. (e.g. Pledge, Mortgage). - According to their form: 1. Common or Informal Contracts which require no particular form. are those (e.g. Loan). 2. Special or Formal Contracts are those which require a particular form. (e.g. Donations, Chattel Mortgage). - According to their purpose: 1. Transfer of Ownership (e.g. Sale) 2. Conveyance of Use (e.g. Usufruct, Commodatum) 3. Rendition of Services (e.g. Agency) - According to the nature of the vinculum which they produce: 1. Unilateral Contracts are those which give rise to an obligation only to one of the parties. (e.g. Commodatum) 2. Bilateral Contracts are those which give rise to reciprocal obligations for both parties. (e.g. Sale) - According to their cause: 1. Onerous each party expects to give and receive a benefit or consideration (e. g. Sale) 2. Gratuitous one of the parties intends to benefit the other without expecting anything in return (e. g. donation, commodatum) 3. Remuneratory one where a party gives something to another because of some service or benefit given or rendered by the latter to the former, where such service or benefit was not due as a legal obligation. - According to the risks involved: 1. Commutative Contracts are those where each of the parties acquire an equivalent of his prestation and such equivalent is peculiarly appreciable and already determined from the moment of the perfection of the contract. (e.g. Lease) 2. Aleatory Contracts are those which are dependent upon the happening of an uncertain event, thus, charging the parties with the risk of loss or gain. (e.g. Insurance) - According to their names or norms regulating them: 1. Nominate Contracts are those which have their own name and individuality, and are regulated by provisions of law. e.g. Sale (2003 BAR). 2. Innominate Contracts are those which lack name or individuality, and are not regulated by special provisions of law. Cause of Contract The cause is the essential reason which moves the contracting parties to enter into the contract. Different Kinds of Defective Contracts Void Contracts: No legal effect. Voidable Contracts: Valid until annulled. Unenforceable Contracts: Cannot be enforced unless ratified. Rescissible Contracts: Valid but can be rescinded. Statute of Frauds Certain contracts must be in writing to be enforceable, such as those involving the sale of real property, agreements not to be performed within one year, and surety agreements. 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; their validity or compliance cannot be left to the will of one of them. Relativity: Contracts take effect only between the parties, their assigns, and heirs, except in cases where the rights and obligations are not transmissible by their nature, by stipulation, or by provision of law. Obligatoriness: Contracts have the force of law between the parties and must be complied with in good faith. Consensuality: Contract is born or exist since there is an agreement between the parties regarding the subject matter. If the parties have agreed, every contract is binding on the parties who make the contract Articles to Memorize:  Article 1305: 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. Article 1306: The contracting parties may establish such stipulations, clauses, terms, and conditions as they may deem convenient, provided they are not contrary to law, morals, good customs, public order, or public policy. Article 1308: The contract must bind both contracting parties; its validity or compliance cannot be left to the will of one of them. Article 1311: Contracts take effect only between the parties, their assigns, and heirs, except in cases where the rights and obligations arising from the contract are not transmissible by their nature, or by stipulation or by provision of law. The heir is not liable beyond the value of the property he received from the decedent. Article 1315: Contracts are perfected by mere consent, and from that moment the parties are bound not only to the fulfillment of what has been expressly stipulated but also to all the consequences which, according to their nature, may be in keeping with good faith, usage, and law. Article 1318: There is no contract unless the following requisites concur: (1) Consent of the contracting parties; (2) Object certain which is the subject matter of the contract; (3) Cause of the obligation which is established. Article 1319: Consent is manifested by the meeting of the offer and the acceptance upon the thing and the cause which are to constitute the contract. The offer must be certain and the acceptance absolute. A qualified acceptance constitutes a counter-offer. Article 1345: Simulation of a contract may be absolute or relative. The former takes place when the parties do not intend to be bound at all; the latter, when the parties conceal their true agreement. Article 1346: An absolutely simulated or fictitious contract is void. A relative simulation, when it does not prejudice a third person and is not intended for any purpose contrary to law, morals, good customs, public order, or public policy binds the parties to their real agreement. Article 1347: All things which are not outside the commerce of men, including future things, may be the object of a contract. Article 1356: Contracts shall be obligatory, in whatever form they may have been entered into, provided all the essential requisites for their validity are present. However, when the law requires that a contract be in some form in order that it may be valid or enforceable, or that a contract be proved in a certain way, that requirement is absolute and indispensable. Article 1358: The following must appear in a public document: (1) Acts and contracts which have for their object the creation, transmission, modification, or extinguishment of real rights over immovable property; sales of real property or of an interest therein are governed by Articles 1403, No. 2, and 1405. (2) The cession, repudiation or renunciation of hereditary rights or of those of the conjugal partnership of gains;(3) The power to administer property, or any other power which has for its object an act appearing or which should appear in a public document, or should prejudice a third person;(4) The cession of actions or rights proceeding from an act appearing in a public document.  Article 1359: When, there having been a meeting of the minds of the parties to a contract, their true intention is not expressed in the instrument purporting to embody the agreement, by reason of mistake, fraud, inequitable conduct, or accident, one of the parties may ask for the reformation of the instrument to the end that such true intention may be expressed. Article 1412: If the act in which the unlawful cause consists does not constitute a criminal offense, the following rules shall be observed: (1) When the fault is on the part of both contracting parties, neither may recover what he has given by virtue of the contract, or demand the performance of the other's undertaking. (2) When only one of the contracting parties is at fault, he cannot recover what he has given by reason of the contract, or ask for the fulfillment of what has been promised him. The other, who is not at fault, may demand the return of what he has given without any obligation to comply his promise. Article 1423: Obligations are civil or natural. Civil obligations give a right of action to compel their performance. Natural obligations, not being based on positive law but on equity and natural law, do not grant a right of action to enforce their performance, but after voluntary fulfillment by the obligor, they authorize the retention of what has been delivered or rendered by reason thereof.