Contracts

• 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.
• 5 basic principles/characteristics of contracts

  Mutuality

  Autonomy

  Relativity

  Consensual

  Obligatory
• Consensual is perfected by mere consent
• Real is perfected by the delivery of the object of the contract (consent and delivery)
• Commutative - parties give equivalent values/ consideration
• Aleatory - fulfillment depends on chance, uncertain events or contingency both as to benefit of loss
• Executed - when it has been fully and satisfactorily carried out by both parties.
• Executory - when it has not yet been completely performed by both parties.
• 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.
• Valid contracts are those that meet all the legal requisites for the type of agreement involved and the limitations the cope a tag stipulation and are, therefore, legally binding and enforceable.
• Morals deal with norms of good and right conduct evolved in a community. These norms may differ at different times and places and with each group of people.
• Customs consist of habits and practices which through long usage have been followed and enforced by society or some part of it as binding rules of conduct.
• Public order refers principally to public safety although it has been considered to mean also the public weal.
• Public policy is broader than public order, as the former may refer not only to public safety but also to considerations which are moved by the common good.
• Innominate contracts shall be regulated by the stipulations of the parties, by the provisions of Titles I and II of this Book, by the rules governing the most analogous nominate contracts, and by the customs of the place.
• do ut des - I give that you may give
• do ut facias - I give that you may do
• facto ut des - I do that you may give
• facto ut facias - I do that you may do
• Nominate contract or that which has a specific name or designation in law
• Innominate contract or that which has no specifi c name or designation in law.
• Rules governing innominate contracts

  Agreement

  Civil Code

  Analogous 

  Custom of place
• The contracts must bind both contracting parties; its validity or compliance cannot be left to the will of one of them.
• MUTUALITY - GR: Both parties must agree
• The determination of the performance may be left to a third person, whose decision shall not be binding until it has been made known to both contracting parties.
• The determination shall not be obligatory if it is evidently inequitable. In such case, the courts shall decide what is equitable under the circumstances.
• Contracts take effect only between the parties, their assigns and heirs, except in case 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.
• GR: TPs are not bound liable or affected by the contract

  E: TPs are liable

  Stipulation Pour Autrui

  Contracts creating real rights

  Contracts to defraud creditors

  Interference in contractual relation
• Stipulation Pour Autrui - in favor of TP

  Requisites Stipulation must have clearly & deliberately. conferred a favor upon a third person

  2. communicated his acceptance to the obligor before its revocation

  3 should be a part of the contract

  4. should not be conditioned or compensated by any kind of obligation.

  5. Nether bears the legal representation or authorization of the TP
• Stipulation Pour Autrui - in favor of TP

  Requisites

  1. Stipulation must have clearly & deliberately. conferred a favor upon a third person

  2. communicated his acceptance to the obligor before its revocation

  3 should be a part of the contract

  4. should not be conditioned or compensated by any kind of obligation.

  5. Nether bears the legal representation or authorization of the TP
• Stipulation pour autrui is a stipulation in a contract clearly and deliberately conferring a favor upon a third person who has a right to demand its fulfillment, provided, he communicates his acceptance to the obligor before its revocation by the obligee or the original parties.
• In contracts creating real rights, third persons who come into possession of the object of the contract are bound thereby, subject to the provisions of the Mortgage Law and the Land Registration Laws
• Creditors are protected in cases of contracts intended to defraud them.
• Essential - those without which there will be no contract
• Natural - found in certain contracts unless set aside or suppressed by the parties
• Accidental - particular stipulations of the parties
• Unilateral - only one parties is obligated to give or do something
• Bilateral - both parties are required to give or do something
• Auto contract - only one person represents the two opposite parties
• Contract of adhesion - one party drafted the contract