ART. 1305 - CONTRACTS

• ART.1305> a contract (contractus) 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.
• In a contract, parties bind themselves RECIPROCALLY and SENSUALLY, meaning it is made with consent.
• A single person may create a contract by himself where he represents distinct interests, his own and that of another for whom he acts as agent.
• In a contract, there must be at least 2 persons or parties, because it is impossible for one to contract with himself.
• Contract is one of the sources of obligations
• a contract takes place when an offer by one party, gets accepted by the other
• NO CONTRACT = NO OBLIGATION
• An obligation may exist without a CONTRACT such as the obligation imposed by law to pay taxes
• To be valid and enforceable, the contract must be lawful and all requisites must be validly present
• Moral / Social Agreements - going to a dance party, eat lunch with me cannot be enforced through law.\
• An agreement is broader than a contract
• All contracts are agreements, but not all contracts are agreements.
• According to name or designation = Nominate and Innominate
• According to perfection:

  • Consensual
  • Real
• According to Cause:

  • Onerous - reciprocally obligated with each other
  • Remuneratory or Reward the service remunerated
  • Gratuitous - liberality of the benefactor
• According to form:

  • Informal or common or simple
  • formal or solemn
• According to obligatory force

  • Valid
  • Rescissible
  • Voidable
  • Unenforceable
  • Void or inexistent
• According to person obliged:

  • Unilateral
  • Bilateral
• According to Risk

  • Commutative (sale)
  • Aleatory (insurance) - uncertain event
• According to liability:

  • Unilateral
  • Bilateral
• According to status:

  • Executory - di pa tapos both parties
  • Executed - fully and satisfactorily done by both parties
• According to dependence to another contract

  • Preparatory - entered as a means to an end
  • Accessory -dependent upon another contract for its existence (mortgages)
  • Principal - independent siya and indispensable condition
• According to dependence of part of contract to other parts:

  • Indivisible (entire)
  • Divisible
• ART.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.
• valid contracts are those that meet all the legal requisites for the type of agreement involved and the limitations on contractual stipulations are legally binding and enforceable.
• Possible an magka agreement that meets all the requirements of a valid contract but is unenforceable in a court of law.
• An individual does not have an absolute right to enter into any kind of contract, BUT the freedom of contract is both a constitutional and statutory right.
• the LAW sets the limits of the contracts
• Police Power - when there is no law in existence or the law is silent, the possible exercise of police power of the state can sometimes be of use.
• Law = "rule of conduct, just, obligatory, promulgated by legitimate authority, and of common observance and benefit"
• LAW is superior to a contract.
• Acts executed against prohibitory laws are VOID except when the law itself authorizes their validity.
• all contracts and stipulations must respect the provisions of law
• Morals - deal with norms of good and right conduct evolved in a community. It is ethical and non-ethical, SUBJECTIVE in nature.
• Customs consist of habits and practices which through long usage have been followed and enforced by society. (shared values) (patterns of behavior)
• Good customs are expressly mentioned. Morals are already specified.
• Public Order - refers principally to public safety and public weal (general welfare)
• PUBLIC POLICY IS BROADER THAN PUBLIC ORDER
• Public Policy includes a wide range of societal politics and objectives
• A contract which has a tendency to be injurious to the public is or against the public good is contrary to public policy. Actual injury need not be shown.