Obligations and Contracts Oral Exam Review

• An obligation is a juridical necessity to give, to do, or not to do.
• A pure obligation is an obligation where one whose effectivity does not depend upon the fulfillment and non-fulfillment of a condition or upon the expiration of a term or a period.
• The four elements of an obligation are active subject, passive subject, prestation, and vinculum juris.
• Active Subject or the obligee/creditor is the person who has the right or power to demand the prestation.
• Passive subject or the obligor/debtor is the person who is bound to perform the prestation.
• Prestation or the object of an obligation is the one that must be observed by the obligor/debtor.
• Vinculum Juris or the juridical/legal tie; efficient cause is what binds the both parties to the obligation.
• What is an obligation?


  It is a juridical necessity to give, to do, or not to do.
• The requisites of an obligation involve passive subject, active subject, prestation, and juridical tie.
• What are the four requisites of a fortuitous event?

  1. The cause is independent of the will of the debtor.
  2. The event must be unforeseeable or unavoidable.
  3. Occurrence renders it absolutely impossible for the debtor to fulfill his obligation in a normal manner; impossibility must be absolute not partial; otherwise not force majeure.
  4. The debtor must be free of any participation in aggravation of the injury resulting to the creditor.
• The general rule for loss due to fortuitous event is there is no liability for loss in case of fortuitous event.
• It is a provision in a contract that frees both parties from obligation if an extraordinary event directly prevents one or both parties from performing.

  Force majeure
• When is a thing considered lost?

  1. The thing is considered lost when it perishes.
  2. Goes out of the commerce — impossible to legally transfer or re-acquire
  3. Disappears in such a way that its existence is unknown or it cannot be recovered.
• Joint obligation


  It is an obligation where there is a concurrence of several creditors, or of several debtors, or of several creditors and debtors by virtue which each of the creditors has the right to demand, and each of the debtors is bound to render, compliance with his proportionate part of the prestation which constitutes the obligation.
• Solidary obligation


  It is an obligation where there is a concurrence of several creditors, or of several debtors, or of several creditors and debtors by virtue which each of the creditors has the right to demand, and each of the debtors is bound to render, entire compliance of the prestation which constitutes the obligation.
• State Article 1231 of the New Civil Code


  Art. 1231: Obligations are extinguished:

  1. By payment or performance
  2. By the loss of the thing due
  3. By the condonation or remission of the debt
  4. By the confusion or merger of rights of the creditor and debtor
  5. By compensation
  6. By novation
• What are the other extinguishment of the obligations which are not stated in Article 1231?

  1. Annulment
  2. Rescission
  3. Fulfillment of resolutory condition
  4. Prescription
• A contract is a meeting of minds whereby one binds himself with respect to the other, to give something or to render some service.
• What article of the New Civil Code lays out the essential requisites that makes a contract legally binding?

  State Article 1318 of the New Civil Code
• What are the three requisites of the contract?

  1. Consent of the contracting parties
  2. Object certain which is the subject matter of the contract
  3. Cause of the obligation
• What are the vices of consent?

  1. error or mistake
  2. violence or force
  3. intimidation or threat or duress
  4. undue influence
  5. fraud or deceit
• Requisites of things as object of a contract

  1. The things must be within the commerce of men, that is, it can legally be a subject of commercial transaction.
  2. It must not be impossible, legally or physically.
  3. It must be in existence or capable of coming into existence.
  4. It must be determinate or determinable without the need of a new contract between parties.
• Contracts which failed to meet or partially meet the legal test of validity because of lack of an essential element, the parties thereto lack the capacity to contract, there is a vice in consent in one of the parties, and there is a lesion in a certain case.


  Defective contracts
• The loss of a generic thing shall not exempt a party for complying with the obligation, as the thing can be replaced by another of the same kind or quality.


  Genus nunquam perit
• What contracts are considered rescissible?

  • Those which entered into by guardians whenever the ward whom they represent suffer lesion by more than one-fourth of the things which are the objects thereof
  • Those agreed upon the representation of absentees, if the latter suffers the lesion stated in the preceding number
  • Those undertaken in fraud of creditors if the latter cannot, in any other manner, collect the claims due them
• The following contracts are voidable or annullable, even though there may have been no damage to the contracting parties.

  Article 1390

  
  

  (1) Those where one of the parties is incapable of giving consent to a contract;

  (2) Those where the consent is vitiated by mistake, violence, intimidation, undue influence or fraud.

  
  

  These contracts are binding, unless they are annulled by a proper action in court. They are susceptible of ratification.
• Examples of a void contract

  1. Contracts whose cause, object or purpose is contrary to law, morals, good customs, public order or public policy.
  2. Contracts whose object is outside the commerce of man.
  3. Contracts which contemplate an impossible service.
  4. Contracts where the intention of the parties relative to the object cannot be ascertained.
  5. Contracts expressly prohibited or declared void by law.
• In Pari Delicto


  Latin for "in equal fault,'' it connotes that two or more people are at fault or are guilty of a crime.
• Condition


  future and uncertain fact or event upon which an obligation is subordinated or made to depend.
• Term/period

  a term will surely pass and may or may not know when exactly; characterized by futurity and certainty