Ch.5 - Contracts (General Provisions)

Question 1

What is Art. 1305? (Definition of a contract)

Answer 1

A contract is a meeting of minds between two persons whereby one person binds himself, with respect to the other, to give something or to render some service.

Question 2

What are the essential elements of a contract?

Answer 2

1. Consent of the contracting parties
2. Object certain which is the subject matter of the contract; and
3. Cause of the obligation which is established

Question 3

Classification of contracts according to their relation to other contracts

Answer 3

a. Preparatory
b. Principal
c. Accesssory

Question 4

What is a preparatory contract?

Answer 4

Those which have for their object the establishment of a condition in law which is necessary as a preliminary step towards the celebration of another subsequent contract

Question 5

What is a principal contract?

Answer 5

Those which can subsist independently from other contracts and whose purpose can be fulfilled by themselves

Question 6

What is an accessory contract?

Answer 6

Those which can exist only as a consequence of, or in relation with, another prior contract

Question 7

Enumerate classification of contracts according to their perfection

Answer 7

1. Consensual
2. Real

Question 8

What is a consensual contract?

Answer 8

Those which are perfected by the mere agreement of the parties

Question 9

What is a real contract?

Answer 9

Those which require not only the consent of the parties for their perfection, but also the delivery of the object by any one party to the other

Question 10

Classification of contracts according to their form?

Answer 10

a. Common or informal
b. Special or formal

Question 11

What is a common or informal contract?

Answer 11

Those which do not require some particular form

Question 12

What is a special or formal contract?

Answer 12

Those which require some particular form

Question 13

Classification of contracts according to their purpose?

Answer 13

a. Transfer of ownership
b. Conveyance of use
c. Rendition of services

Question 14

Classification of contracts according to their subject matter

Answer 14

a. Things
b. Services

Question 15

Classification of contracts according to their vinculum which they produce

Answer 15

a. Unilateral
b. Bilateral

Question 16

What is a unilateral contract?

Answer 16

Those which give rise to an obligation for only one of the parties

Question 17

What is a bilateral contract?

Answer 17

Those which give rise to reciprocal obligations for both parties

Question 18

Classifications of contracts according to their clause?

Answer 18

a. Onerous
b. Gratuitous

Question 19

What is an onerous contract?

Answer 19

Those in which of the parties aspires to procure for himself a benefit through the giving of an equivalent or compensation

Question 20

What is a gratuitous contract?

Answer 20

Those in which one of the parties propose to give to the other a benefit without any equivalent or compensation

Question 21

Classification of contracts according to risks involved

Answer 21

a. Commutative
b. Aleatory

Question 22

What is a commutative contract?

Answer 22

Those where each of the parties acquires an equivalent of his prestation and such equivalent is pecuniarily appreciable and already determined from the moment of the celebration of the contract

Question 23

What is an aleatory contract?

Answer 23

Those where each of the parties has to account the acquisition of an equivalent of his prestation, but such equivalent, although pecuniarily appreciable, is not yet determined, at the moment of the celebration of the contract, since it depends upon the happening of an uncertain event, thus charging the parties with the risk of loss or gain

Question 24

Classification of contracts according to their names or norms regulating them

Answer 24

a. Nominate
b. Innominate

Question 25

What is a nominate contract?

Answer 25

Those which have their own individuality and are regulated by special provisions of law

Question 26

What is an innominate contract?

Answer 26

Those which lack individuality and are not regulated by special provisions of law

Question 27

What is a contract of adhesion?

Answer 27

A contract of adhesion is a contract whereby almost all of its provisions are drafted by one party. The participation of the other party is limited to affixing his signature or his "adhesion" to the contract. For this reason, contracts of adhesion are strictly construed against the party who drafted it.

Question 28

Are contracts of adhesion invalid?

Answer 28

No, they are binding as ordinary contracts, since the other party is free to accept or reject it. It is only void when the dominant party takes advantage of the weakness of the other party, completely depriving the latter of the opportunity to bargain on equal footing

Question 29

(Art. 1306) The contracting parties may establish such stipulations, clauses, terms and conditions on their contracts as they deem convenient, provided that?

Answer 29

They are not contrary to law, morals, good customs, public order, or public policy.

Question 30

The provisions of Article 1306 express the?

Answer 30

Principle of autonomy of contracts or freedom of contracts

Question 31

Is the freedom of contracts absolute or not?

Answer 31

The SC held that the freedom of contract is not absolute

Question 32

What is a compromise agreement?

Answer 32

Is a contract whereby the parties, by making reciprocal concessions, avoid litigation or put an end to one already commenced. Compromise is a form of amicable settlement that is not only allowed, but also encouraged in civil cases

Question 33

What is public policy?

Answer 33

refers to the aims of the state to promote the social and general well-being of the inhabitants

Question 34

(Art. 1307) Innominate contracts shall be regulated by?

Answer 34

The stipulations of the parties, by the provisions of Title I and Title II of this book, by the rules governing the most analogous (comparable) nominate contracts, and by the customs of the place

Question 35

What are the kinds of innominate contracts?

Answer 35

1. Do ut des (I give that you give) 2. Do ut facias (I give that you do) 3. facio ut des (I do that you give) 4. facio ut facias (I do that you do)

Question 36

What are the rules on innominate contracts?

Answer 36

1. Stipulations of the parties 2. The provisions of the Civil Code on ObliCon 3. The rules governing the most analogous nominate contracts, and; 4. The customs of the place

Question 37

What is the rationale behind Article 1307

Answer 37

It was stated in the 1903 case of Perez vs Pomar, basically the plaintiff was employed as interpreter but there was no written contract, but the defendant still accepted and made use of the latter. This gives rise to the obligation upon the person benefited of the services to make compensation. Basically, it is also the well-known principle of no one should enrich himself to the damage of another

Question 38

(Art. 1308) The contract must?

Answer 38

Bind both contracting parties; its validity or compliance cannot be left to the will of one of them

Question 39

Article 1308 of the Civil Code expresses what is known in law as the?

Answer 39

Principle of mutuality of contracts

Question 40

What is the purpose of the mutuality principle?

Answer 40

The ultimate purpose of the mutuality principle is thus to nullify a contract containing a condition which makes its fulfillment or pre-termination dependent exclusively upon the uncontrolled will of one of the contracting parties

Question 41

(Art. 1309) The determination of the performance may be left to a third person, whose decision shall not be binding until?

Answer 41

It has been made known to both contracting parties

Question 42

(Art. 1310) The determination shall not be obligatory if?

Answer 42

it is evidently inequitable.

Question 43

(Art. 1310) In such cases where determination is evidently inequitable, then?

Answer 43

the courts shall decide what is equitable under the circumstances

Question 44

(Art. 1311) Contracts take effect only between the parties, their assigns and heirs, except in?

Answer 44

Case where the rights and obligations arising from the contract are not transmissible by their nature, or by stipulation or by provision of law.

Question 45

(Art. 1311) Is the heir liable for the value of the property he received from the decedent?

Answer 45

The heir is not liable beyond the value of the property he received from the decedent

Question 46

(Art. 1311) If a contract should contain some stipulation in favor of a third person, he may demand its fulfillment provided that?

Answer 46

He communicated his acceptance to the obligor before its revocation. A mere incidental benefit or interest of a person is not sufficient. The contracting parties must have clearly and deliberately conferred a favor upon a third person

Question 47

Art. 1311 refers to the?

Answer 47

Relativity of contracts

Question 48

The general rule is that contracts take effect only between parties, their assigns and their heirs. What are the exceptions?

Answer 48

1. Contracts are not transmissible by their nature; 2. Contracts are not transmissible by stipulation; or 3. Contracts are not transmissible by provision of law

Question 49

What is the four exceptional cases to the principle of relativity of contracts?

Answer 49

1. If a contract should contain some stipulation in favor of a third person, he may demand its fulfillment provided he communicated his acceptance to the obligor before its revocation 2. In contracts creating real rights, third persons who come into possession of the object of the contract are bound thereby 3. Creditors are protected in cases of contracts intended to defraud them 4. Any third person who induces another to violate his contract shall be liable for damages to the other contracting party

Question 50

Requisites of stipulation pour autrui or stipulations in favor of a third person

Answer 50

1. There must be a stipulation in favor of a third person 2. The stipulation must be a part, not the whole, of the contract 3. The contracting parties must have clearly and deliberately conferred a favor upon a third person, not a mere incidental benefit or interest 4. The third person must have communicated his acceptance to the obligor before its revocation, and 5. Neither of the contracting parties bears the legal representation or authorization of the third party

Question 51

(Art. 1312) In contracts creating real rights, third persons who come into possession of the object are?

Answer 51

bound thereby, subject tot he provisions of the Mortgage Law and the Land Registration Laws

Question 52

(Art. 1313) Creditors are protected in cases of?

Answer 52

Contracts intended to defraud them

Question 53

Art. 1312, 1313 and 1314 are exception to the

Answer 53

Principle of relativity of contracts

Question 54

(Art. 1314) Any third person who induces another to violate his contract shall be?

Answer 54

Liable for damages to the other contracting party

Question 55

Art. 1314 expresses the?

Answer 55

Principle of tort interference

Question 56

What are the elements of tort interference?

Answer 56

1. Existence of a valid contract 2. Knowledge on the part of the third person of the existence of a contract 3. Interference of the third person is without legal justification

Question 57

(Art. 1315) Contracts are perfected by mere consent, and from the moment the parties are bound not only to the fulfillment of what has been expressly stipulated but also

Answer 57

to all the consequences which, according to their nature, may be in keeping with good faith, usage and law

Question 58

(Art. 1316) Real contracts, such as deposit, pledge, and commodatum, are not perfected until

Answer 58

The delivery of the object of the obligation

Question 59

Effect of a judicial approval of a contract

Answer 59

When a compromise agreement is given judicial approval, it becomes more than a contract binding upon the parties. Having been sanctioned by the court, it is entered as a determination of a controversy and has the force and effect of a judgment. It is immediately executory and not appealable, except for ices of consent or forgery. The nonfulfillment of its terms and conditions justifies the issuance of a writ of execution; in such an instance, execution becomes a ministerial duty of the court

Question 60

What is a commodatum?

Answer 60

One of the parties delivers to another, either something not consumable so that the latter may use the same for a certain time and return it

Question 61

What is a deposit?

Answer 61

A deposit is constituted from the moment a person receives a thing belonging to another, with the obligation of safely keeping it and of returning the same

Question 62

What is a pledge?

Answer 62

In a contract of pledge, the creditor is given the right to retain the debtor's movable property in his possession, or in that of a third person to whom it has been delivered, until the debt is paid

Question 63

Effect of the perfection of the contract

Answer 63

The parties are bound not only to the fulfillment of what has been stipulated but also to all the consequences which, according to their nature, may be in keeping with good faith, usage and law

Question 64

(Art. 1317) No one may contract in the name of another without?

Answer 64

Being authorized by the latter, or unless he has by law a right to represent him

Question 65

(Art. 1317) A contract entered into in the name of another by one who has no authority or legal representation, or who has acted beyond his powers, shall be?

Answer 65

Unenforceable, unless it is ratified, expressly or impliedly, by the person on whose behalf it has been executed, before it is revoked by the other contracting party

Question 66

General Rule is that no one may contract in the name of another. Exceptions are?

Answer 66

1. The person entering into a contract in the name of another has been authorized by the latter 2. The person entering into a contract in the name of another has by law a right to represent him

Question 67

General Rule on the Effect of an Unauthorized contract?

Answer 67

A contract entered into the name of another by one who has no authority or legal representation, or who has acted beyond his powers, shall be unenforceable

Question 68

Exception to the effect of an unauthorized contract?

Answer 68

If it is ratified, expressly or impliedly, by the person on whose behalf it has been executed, before it is revoked by the other contracting party