CONTRACTS

• Contract


  A meeting of the minds between two persons whereby one binds himself to give something or render some service
• Obligation


  A legal tie that exists after a contract is entered into
• No contract


  No obligation
• Obligation


  May exist without a contract
• Agreement


  Enforceable through legal proceedings. All contracts are agreements but not vice versa.
• Stages of a contract

  1. Preparation

  2. Perfection

  3. Consummation
• Characteristics of a contract

  • Autonomy
  • Consensuality
  • Mutuality
  • Obligatoriness
  • Relativity
• Autonomy


  Contracting parties may establish contract as long as it is not contrary to law, public policy, morals
• Consensuality


  Perfected by mere consent
• Mutuality


  Contract is binding to both parties
• Obligatoriness


  Contract is complied with good faith
• Relativity


  Contracts take effect only between the parties, their assigns and heirs
• Stipulation pour autrui


  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 such
• Creditors are protected in cases of contracts intended to defraud them
• Unauthorized contracts


  Unenforceable in nature, but can be cured by ratification
• Essential requisites of contracts

  • Consent
  • Object
  • Cause
• Consent


  Conformity of the wills of both parties, manifested by meeting of the offer and the acceptance
• Offer


  A proposal made by one party to another to enter into a contract
• Acceptance


  Manifestation by the offeree of his assent to the terms of the offer
• Offer becomes ineffective upon death, civil interdiction, insanity, insolvency of either party
• Contract of option


  When the period of the offer's acceptance is certain, it is withdrawable until it is not yet accepted
• Business advertisements are not definite offers, only mere invitations
• Persons who cannot give consent

  • Unemancipated minors
  • Insane or demented persons
  • Deaf-mutes/illiterates
• Mistake or error


  The false notion of a thing or a fact material to the contract
• The party enforcing the contract has the duty to show that there is no mistake or fraud on the terms of the contract
• Mistake of law


  Arises from an ignorance of some provision of law, or from an erroneous interpretation of its meaning
• Violence


  Requires physical force
• Intimidation


  There is a reasonable and well-grounded fear of an imminent and grave evil upon a person or property
• Undue influence


  When a person takes improper advantage of his power over the will of another
• Fraud


  Causal fraud (dolo causante) - employed prior to or simultaneous to the consent or creation of the contract
• Requisites of causal fraud

  • Misrepresentation or concealment
  • Serious
  • Employed by only one contracting party
  • Made in bad faith or with intent to deceive
  • Induced the consent of the other party
  • Alleged and proved by clear and convincing evidence
• Fraud by concealment


  A neglect or failure to communicate that which a party to a contract knows and ought to communicate
• Causal fraud


  May be a ground for annulment of a contract, and gives rise to action for damages
• Incidental fraud


  Renders only the party who employs it liable for damages
• Simulation of a contract

  The act of deliberately deceiving others, by feigning or pretending by agreement, the appearance of a contract which is neither inexistent or concealed
• Types of simulation


  • Absolute
  • Relative
• Objects of a contract

  • Things
  • Rights
  • Services
• Future inheritance cannot be the object of a contract, unless expressly stipulated by law
• Impossible things


  Cannot be the object of a contract
• The object of a contract must be determinate as to its kind, but the quantity need not be determinate