Ch. 6 - Essential Requisites of Contracts Flashcards
(Art. 1318) There is no contract unless the following requisites concur:
- Consent of the contracting parties;
- Object certain of which is the subject matter of the contract
- Cause of the obligation which is established
What are essential elements?
Are those without which there can be no contract
Essential elements are subdivided into?
a. Common (comunes)
b. Special (especiales)
c. Extraordinary or peculiar (Especialisimos)
What are common elements?
Are those which present in all contracts
What are special elements?
Those present only in certain contracts
What are extraordinary or peculiar elements?
Are those which are peculiar to a specific contract
What are natural elements?
are those which are derived from the nature of the contract and ordinarily accompany the same. They are presumed by the law, although they can be excluded by the contracting parties if they so desire.
What are accidental elements?
are those which exist only when the parties expressly provide for them for the purpose of limiting or modifying the normal effects of the contract
(Art. 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.
(Art. 1319) The offer must be certain and
the acceptance absolute.
(Art. 1319) A qualified acceptance constitutes
a counter-offer
(Art. 1319) Acceptance made by letter or telegram does not
bind the offerer except from the time it came to his knowledge. The contract, in such case, is presumed to have been entered into the place where the offer was made.
What does Art. 1320 state about acceptance?
An acceptance may be express or implied
What is an offer?
Is a unilateral proposition made by one party to another for the celebration of a contract.
How does an offer become certain?
A contract must come into existence by the mere acceptance of the offeree without any further act on the offeror’s part.
An offer must be?
Definite, complete, and intentional
What is policitacion?
An imperfect promise
Is policitacion binding?
An imperfect promise (policitacion) is merely an offer. An imperfect promise that could not be considered a binding commitment
How does consent of corporations work?
Corporation is a juridical person, but it cannot act except through its board of directors. “All corporate powers shall be exercised, and all corporate business shall be conducted by the board of directors.”
(Art. 1321) The person making the offer may
fix the time, place, and manner of acceptance, all of which must be complied with
(Art. 1322) An offer made through an agent is accepted from the time
acceptance is communicated to him
What is a contract of agency?
A person binds himself to render some service or to do something in representation or on behalf of another, with the consent or authority of the latter.
What is the basis of a contract of agency?
The agent acts for and on behalf of the principal on matters within the scope of his authority and said acts have the same legal effect as if they were personally executed by the principal
(Art. 1323) An offer becomes ineffective upon
the death, civil interdiction, insanity, or insolvency of either party before acceptance is conveyed
What is the rationale behind (Art. 1323)
The contract is not perfected except by the concurrence of two wills which exist and continue until the moment they occur. The disappearance of either party or his loss of capacity before perfection prevents the contractual tie from being formed.
(Art. 1324) When the offerer has allowed the offeree a certain period to accept, the offer may be
withdrawn at any time before acceptance by communicating such withdrawal,
(Art. 1324) The offerer is allowed to withdraw an offer when offeree is allowed a certain period to accept, except when?
except when the option is founded upon a consideration, as something paid or promised
What is an option?
Is a contract granting privilege to buy or sell at a determined price within an agreed time. Is a preparatory contract in which one party grans to another, for a fixed period and at a determined price, the privilege to buy or sell, or to decide whether or not to enter into a principal contract.
If the period has a separate condition, what happens?
A contract of “option” is deemed perfected., and it would be a breach of contract to withdraw the offer during the agreed period. The option is an independent contract itself, so although the optionee-offeree may not sue for specific performance on the proposed contract, the optioner-offeror, renders himself liable for damages for the breach of the option.
(Art. 1325) Unless it appears otherwise, business advertisement of things for sale are not definite offers, but mere invitations to make an offer except?
If the business advertisements of things for sale appears to be a definite offer
(Art. 1326) Advertisement for bidders are
simply invitations to make proposals, and the advertiser is not bound to accept the highest or lowest bidder, unless the contrary appears
(Art. 1327) The following cannot give consent to a contract:
- Unemancipated minors;
- Insane or demented persons, and deaf-mutes who do not know how to write
(Art. 1328) Contracts entered into during a lucid interval are
valid. Contracts agreed to in a state of drunkenness or during a hypnotic spell are voidable.
What is a lucid interval?
A brief period during which an insane person regains sanity sufficient enough to have the legal capacity to a contract and act on his or her own behalf
(Art. 1329) The incapacity declared in Art. 1327 is subject to the
modifications determined by law, and is understood to be without prejudice to special disqualifications established in the laws
(Art. 1330) A contract where consent given through ___________________ is voidable
mistake, violence, intimidation, undue influence, or fraud
What are the characteristics of consent?
- It should be intelligent
- It should be free
- It should be spontaneous
What is the concept of voidable contracts?
They are existent, valid, and binding although they can be annulled because of want of capacity or vitiated consent of one of the parties, but before annulment, they are effective and obligatory between parties. Hence, it is valid until it is set aside and its validity may be assailed only in an action for that purpose. They can be confirmed or ratified
If a vice of consent in a compromise agreement was approved by the court, what should be done by the party?
He must file a motion with the trial court that approved the compromise agreement to reconsider the judgment and nullify or set aside said contract on any of the said grounds for annulment of contract.
(Art. 1331) In order that mistake may invalidate consent,
it should refer to the substance of the thing which is the object of the contract, or to those conditions which have principally moved one or both parties to enter into the contract.
(Art. 1331) Mistake as to the identity or qualifications of one of the parties will vitiate consent only when?
such identity or qualifications have been the principal cause of the contract
(Art. 1331) A simple mistake of account shall give rise to?
its correction
What is a mistake?
It has been defined as a “misunderstanding of the meaning or implication of something” or “a wrong action or statement proceeding from a faulty judgment”
How does a mistake become substantial?
- Mistake should refer to the substance of the thing which is the object of the contract
- Mistake should refer to those conditions which have principally moved one or both parties to enter into the contract; and
- Mistake as to the identity or qualifications of one of the parties will vitiate consent only when such identity or qualifications have been the principal clause of the contract
When is there a mistake of fact?
There is a mistake of fact when one or both of the contracting parties believe that a fact exists when in reality it does not, or that such fact does not exists when in reality it does.
What is the general rule on contracts under mistake of fact
It is only a mistake of fact which will vitiate consent thus rendering the contract voidable
When is there a mistake of law?
There is a mistake of law when one or both of the contracting parties arrive at an erroneous conclusion regarding the interpretation of a question of law or the legal effects of a certain act or transaction
What is the general rule on contracts under mistake of law?
A mistake of law does not render the contract voidable because of the well-known principle that ignorance of the law does not excuse anyone from compliance therewith
(Art. 1332) When one of the parties is unable to read, of if the contract is in a language not understood by him, and mistake or fraud is alleged, the person enforcing the contract must show what?
He must show that the terms thereof have been fully explained to the former
Rationale behind Art. 1332
This was intended for the protection of a party to a contract who is at a disadvantage due to his illiteracy, ignorance, mental weakness, or other handicap.
(Art. 1333) There is no mistake if the party alleging it
knew the doubt, contingency, or risk affecting the object of the contract
(Art. 1334) Mutual error as to the legal effect of an agreement may vitiate consent when?
The real purpose of the parties is frustrated
What are the requisites to mistake of law that may vitiate consent and render a contract voidable?
- The mistake must be with respect to the legal effect of an agreement
- The mistake must be mutual
- The real purpose of the parties must be frustrated
(Art. 1335) There is violence when?
In order to wrest consent, serious or irresistible force is employed
(Art. 1335) There is intimidation when
one of the contacting parties compelled by a reasonable and well-grounded fear of an imminent and grave evil upon his person or property, or upon the consent or property of his spouse, descendants or ascendants, to give his consent.
(Art. 1335) To determine the degree of intimidation, what shall be borne in mind?
The age, sex and condition of the person shall be borne in mind.
(Art. 1335) A threat to enforce claim does not vitiate consent when?
One’s claim is through competent authority, and if the claim is just or legal
What are the requisites of violence?
- The force employed to wrest consent must be serious or irresistible; and
- It must be the determining cause for the party upon whom it is employed in entering into the contract
What are the requisites of intimidation?
- That the intimidation must be the determining cause of the contract, or must have caused the consent to be given
- That the threatened act be unjust or unlawful
- That the threat be real and serious, there being an evident disproportion between the evil and the resistance which all men can offer, leading to the choice of the contract as the lesser evil; and
- That it produces a reasonable and well-grounded fear from the fact that the person whom it comes has the necessary means or ability to inflict the threatened injury
(Art. 1336) Violence or intimidation shall annul the obligation, although it may have been employed by a third person who did not take part in the contract, however, the violence or intimidation must be?
The determining cause for the party upon whom it is employed in entering into the contract
(Art. 1337) There is undue influence when
a person takes improper advantage of his power over the will of another, depriving the latter of a reasonable freedom of choice.
(Art. 1337) The following circumstances shall be considered:
- The confidential, family, spiritual and other relations between the parties, or;
- The fact that the person alleged to have been unduly influenced was suffering from mental weakness, or;
- The fact that the person alleged to have been unduly influenced was ignorant, or;
- The fact that the person alleged to have been unduly influenced was in financial distress
(Art. 1338) There is fraud when,
through insidious words or machinations of one of the contracting parties, the other is induced to enter into a contract which, without them, he would not have agreed to
Requisites of causal fraud or dolo causante
- It must have been employed by one contracting party upon the other
- It must have induced the other party to enter into the contract
- It must have been serious
- It must have resulted in damage and injury to the party seeking annulment
(Art. 1339) Failure to disclose facts, when there is duty to reveal them, as when the parties bound by confidential relations, constitutes
Fraud
Art. 1339 explains the
Principle of concealment which is another form of fraud
(Art. 1340) The usual exaggerations in trade, when the other party had an opportunity to know the facts, are
not in themselves fraudulent
(Art. 1341) General Rule is a mere expression of opinion does not signify fraud. Exception is?
The expression of opinion signify fraud, if made by an expert and the other party has relied on the former’s special knowledge
(Art. 1342) General rule is misrepresentation by a third person does not vitiate consent. Exception is
Misrepresentation by a third person vitiates consent if the misrepresentation has created substantial mistake and the same is mutual
(Art. 1343) Misrepresentation made in good faith is
not fraudulent but may constitute error
(Art. 1344) In order that fraud may make a contract voidable,
it should be serious and should not have been employed by both contracting parties
(Art. 1344) Incidental fraud only obliges the person employing it to
pay for damages
What is the degree of evidence needed to prove the existence of fraud?
The standard proof required is “clear and convincing evidence.” This standard proof is derived from American common law. It is less than proof beyond reasonable doubt but greater than preponderance of evidence.
(Art. 1345) Stimulation 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 parties conceal their true agreement
(Art. 1346) An absolutely stimulated or fictitious contract is
void. A relative stimulation, 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
What is an absolute stimulation?
There is a colorable contract but it has no substance as the parties have no intention to be bound by it.
What is the main characteristic of absoulute stimulation?
Its that the apparent contract is not really desired or intended to produce legal effect or in any way alter the juridical situation of the parties. As a result, an absolutely stimulated or fictitious contract is void, and the parties may recover from each other what they may have given under the contract
What is a relative stimulation?
The parties state a false cause in the contract to conceal their real agreement, this a relatively stimulated contract and the parties are still bound by the “real” agreement.
Two juridical acts involved in relative stimulation
- Ostensible act
- Hidden Act
What is ostensible act?
Is the contract that the parties pretend to have executed
What is hidden act?
is the true agreement between the parties
(Art. 1347) All things which are not outside the commerce of men, including future things, may be
the object of a contract. All rights which are not transmissible may also be the object of contracts
(Art. 1347) No contract may be entered into upon
future inheritance except in cases expressly authorized by law
(Art. 1347) These thing that is not contrary to law, morals, good customs, public order or public policy may likewise be the object of a contract
Services
What are the kinds of object of contracts?
- Things
- Rights
- Services
Art. 1347, paragraph 2 of the Civil Code characterizes a contract entered into upon future inheritance as void. This law applies when the following requisites concur:
- The succession has not yet been opened
- The object of the contract forms part of the inheritance; and
- The promissor has, with respect to the object, an expectancy of a right which is purely hereditary in nature
What is future inheritance?
Any property or right not in existence or capable of determination at the time of the contract, that a person may in the future acquire by succession
(Art. 1348) ______________ cannot be the object of contracts
Impossible things or services
(Art. 1349) The object of every contract must be
determinate as to its kind. The fact that the quantity is not determinable shall not be an obstacle to the existence of the contract, provided it is possible to determine the same, without the need of a new contract between the parties
(Art. 1350) In onerous contracts the cause is understood to be
for each contracting party, the prestation or promise of a thing or service by the other
(Art. 1350) In remuneratory ones the cause is understood to be
the service or benefit which is remunerated
(Art. 1350) In gratuitous contracts, the cause is understood to be
the mere liberality of the benefactor
What is cause?
Is the why of the contract or the essential reason which moves the contracting parties to enter into the contract. For the cause to be valid, it must be lawful such that it is not contrary to law, morals, good customs, public order or public policy
Differentiate cause and motive
Cause is the essential reason for the contract, motive is the particular reason of a contracting parties which does not affect the other party.
(Art. 1352) Contracts without cause, or unlawful cause, produce
no effect whatsoever. The cause is unlawful if it is contrary to law, morals, good customs, public order or public policy
(Art. 1353) The statement of a false cause in contracts shall render them
void, if it should not be proved that they were founded upon another cause which is true and unlawful
(Art. 1354) Although the cause is not stated in the contract,
it is presumed that it exists and is lawful, unless the debtor proves the contrary
(Art. 1355) Except in cases specified by law, lesion or inadequacy of cause shall
not invalidate a contract unless there has been fraud, mistake, or undue influence
(Art. 1355) General Rule is lesion or inadequacy of cause shall not invalidate a contract. Exceptions are?
- In cases specified by law
- When there has been fraud
- When there has been mistake and;
- When there has been undue influence
