Contracts Flashcards
Requisites for stipulation pour autrui
1) parties must have clearly and deliberately conferred a favor upon a third person
2) 3rd person mustve communicated his acceptance to obligor before its revocation
3) Should be a part and not whole of the contract itself
4) Favorable stipulation shouldnt be conditioned or compensated by any kind of obligation whatever
5) Neither of the parties bears the legal representation/authorization of the third party
Elements of tort interference
(1) existence of a valid contract;
(2) knowledge on the part of the third person of the existence of contract;
(3) interference of the third person is without legal justification or excuse
Liability for a non-trespassory invasion of another’s property
a) one has property rights with respect to the use or enjoyment interfered with
(b) invasion is substantial
(c) defendant’s conduct is a legal cause of the invasion
(d) invasion is either intentional and unreasonable/unintentional and actionable
Contract
Meeting of minds which takes place between at least two parties when an offer by one party is accepted by the other.
Characteristics of contracts
1) Freedom of contracts
2) Obligatoriness
3) Mutuality
4) Consensuality
5) Relativity
Termination vs. rescission
Termination - enforcements of terms prior to the declaration of its end. No judicial intervention necessary
Rescission - restores status quo ante.
Kinds of innominate contracts
- Do ut des (I give that you may give)
* no longer innominate; it has already been given a name, i.e. barter/exchange - Do ut facias (I give that you made do)
- Facio ut des (I do that you may give)
- Facio ut facias (I do that you may do)
Elements of a contract
1) Consent
2) Object certain
3) Cause of the obligation
Consent
The conformity of wills upon the object and cause
Meeting of mind
concurrence of offer and acceptance that expresses intent in entering a contract
Offer
Proposal made by one party toa nother. A promise to act or refrain from acting on condition that the terms are accepted by the offeree
Acceptance
Manifestation by the offeree of his assent. to the terms. Must be Absolute, Unconditional.
Option contract
preparatory contract giving a person for a consideration a certain period and
under specified conditions within which to accept the offer. It is separate and distinct from the principal contract.
Option contract vs. Right of First refusal
Option: one party grants to another, for a fixed period and at a determined price, the privilege to buy or sell
First: contractual grant of the first priority to buy the property.
Option contract vs. Sale
Option: Can’t be enforced yet as its an unaccepted offer
Sale: Fixes definitively the rights and obligation of both parties
Who cannot give consent to a contract
1) Unemancipated minors
2) Insame or demented persons, and deaf-mutes who do not know how to write
Consent must be:
1) Intelligent
2) Voluntary
3) Conscious and spontaneous
Consent is vitiated by
Mistake, violence, intimidation, undue influence, or fraud.
For mistake to vitiate consent, it must refer to:
1) Substance of the thing, object
2) Conditions that principally moved parties to enter
3) Identity or qualifications of parties if it was the principal cause
Requisites for mutual error provision
1) Error must be mutual
2) Error is re legal effect of the agreement
3) Must frustrate the real purpose of the parties
There is violence, intimindation when:
Violence: serious or irresistible force is employed
Intimidation: Party was compelled by a reasonable and well-grounded fear of an imminent and grave evil upon his persons or property
Requidites for intimidation
1) Produces a reasonable and well-grounded fear of an evil
2) Evil is imminent and grave
3) Evil is on his person or property, or that of his spouse, descendants, or descendants
4) Was the reason for his entry into the contract
There is undue influence when:
person takes improper advantage of his power over the will of another, depriving the latter of a reasonable freedom of choice
There is fraud when:
Through insidious words or machinations of one of the contracting parties, the other is induced to enter into a contract w
Fraud is committed through
1) Insidious words
2) machinations
3) concealment
Requisites of causal fraud
1) There must be misrepresentation or nondisclosure
2) Serious in character
3) Must have been employed by one of the parties
4) Made in bad faith
5) Must have induced the consent
6) Alleged and proved by clear and convincing evidence
Requisites for causal fraud
1) Serious
2) Not employed by both parties (In pari delicto)
3) Should not have been known by the other party
Causal fraud v. Incidental fraud
Causal: ground for annulment
Incidental: Makes person liable for damages
Simulation of contract
Act of deliberately deceiving others by feigning or pretending by agreement, the appearance of a contract which is either non-existent or concealed, or is different from that which was really executed.
Requisites for simulation
1) Outward declaration of will different from the will of parties
2) False appearance was intended by mutual agreement
3) purpose is to deceive 3rd persons
Kinds. of simulation
1) Absolute simulation (contracto simulado) - contract doesn’t actually exist -> void
2) Relative simulation (contractor disimulado) - different from the true agreement
Simulated v. Fraudulent contracts
Simulated: Fictitious contract meant to hide the violation of a law
Fraudulent: Real contract meant to attain a prohibited result.
What may be the object of a contract?
All things not outside the commerce of man, inc future things.
All rights not intransmissible. All services.
Cause
The prestation or promise of a thing or service by the other.
The essential, direct, or proximate purpose or reason
Dual aspect of contract
1) Intent/will
2) Expression of will
Form is required when:
1) Donation of real property - public instrument
2) Donation of personal property that exceeds 50k - donation and acceptance must be in writing
3) Sale of land thru agent - authority of agent must in writing, otherwise VOID
4) Contract of antichresis - amount of the principal and interest is in writing
5) Stipulation to pay interest - in writing
6) Contract of partnership - If immovables, must be public instrument.
7) Transfer/sale of large cattle - needs registration
8) Negotiable instruments - writing
Statute of Frauds
(a) An agreement that by its terms is not to be performed within a year from the making thereof;
(b) A special promise to answer for the debt, default, or miscarriage of another;
(c) An agreement made in consideration of marriage, other than a mutual promise to marry;
(d) An agreement for the sale of goods, chattels or things in action, at a price not less than five
hundred pesos, unless the buyer accept and receive part of such goods and chattels, or the evidences, or some of them, of such things in action, or pay at the time some part of the purchase money; but when a sale is made by auction and entry is made by the auctioneer in his sales book, at the time of the sale, of the amount and kind of property sold, terms of sale, price, names of the purchasers and person on whose account the sale is made, it is a sufficient memorandum;
(e) An agreement for the leasing for a longer period than one year, or for the sale of real property or of an interest therein;
(f) A representation as to the credit of a third person.
Requisites for reformation
- A meeting of the minds of the parties to the contract.
- The written instrument does not express the true agreement or intention of the parties.
- Failure to express true intention is due to mistake, fraud, inequitable conduct, or accident.
- The facts are put in issue by the pleadings.
- There is clear and convincing evidence of the mistake, fraud, inequitable conduct, or accident.
Facts to be alleged in an action for reformation
a. The true intention or agreement of the parties.
b. The instrument to be reformed, which does not express such agreement or intention.
Reformation vs parol evidence rule
General rule: Can’t introduce parol evidence
Exception: CAN when it’s alleged that it involves:
(a) intrinsic ambiguity, mistake, or imperfection in the written agreement;
(b) The failure of the written agreement to express the true intent and agreement of the
parties thereto;
(c) The validity of the written agreement; or
(d) The existence of other terms agreed to by the parties
Reformation vs. Annulment
Reformation: There exists a meeting of the minds. Real contract just can’t be enforced until reformed
Annulment: No meeting of minds bec consent was vitiated; nullifies contract.
Requisites of mutual mistake for reformation
- The mistake must be of fact, for if it is one of law, the remedy is annulment.
- Such mistake must be proved by clear and convincing evidence.
- The mistake must be mutual.
- The mistake must cause the failure of the instrument to express the true intention.
No reformation in the ff cases
1) Simple donations inter vivos with no condition imposed
2) Wills
3) Real agreement is void
Who may bring action for reformation
1) Either party if mutual mistake
2) All other cases, injured party
3) Heirs/successors in interest in lieu of party entitled
Interpretation
process or method of discovering and determining the meaning of the terms or words used by the parties in their written agreement.
Rescissible contracts
1) entered into by guardians whenever the wards whom they represent
suffer lesion by more than one-fourth of the value of the things
2) agreed upon in representation of absentees, if the latter suffer the lesion
3) undertaken in fraud of creditors when the latter cannot in any other manner collect
the claims due them
4) refer to things under litigation if they have been entered into by the defendant without the knowledge and approval of the litigants
5) all other contracts specially declared by law to be subject to rescission
Requisites for rescission for reason of fraud for creditors
- An existing credit prior to the contract to be rescinded.
- The subsequent contract made by the debtor conveys a patrimonial benefit to a
third person. - Fraud on the part of the debtor, which may be presumed or proved.
- If contract is onerous, the third person has been a party to the fraud.
- The creditor has no other legal remedy to satisfy his claim.
Art. 1191 v. Art. 1381
1191: principal action, predicated on breach of faith
1381: subsidiary action, predicated on lesion or economic prejudice
Who may bring action for annulment
1) Plaintiff who has an interest
2) Victim
Ratification
voluntarily adopts and gives sanction to some defective or
unauthorized contract,
Rescission vs. Annulment
1) Predicated on what
2) Who may bring
3) Principal/subsidiary
4) Presupposes what re legal effectivity
5) Based on principle of
6) Relationship with indemnity
Who may bring action for rescission
1) Injured party
2) Heirs, successors in interest
3) Creditors of the above
Unenforceable contracts
1) Entered into in the name of another person by one with no authority or legal representation; acting beyond his powers
2) Don’t comply with Statute of Frauds
3) Both are incapable of giving consent
Application of statute
1) Presupposes existence of perfected contract
2) Only limited to listed transaction
3) Not applicable where the contract is admitted
4) Applicable only to executory contract
5) Not applicable where writing doesn’t express truee agreement of the parties
6) Does not declare the contracts infringing it as void, only unenforceable
7) Does not determine credibility/weight of evidence; only regulates admission of it
8) Subject to waiver
9) Personal to the parties
Satisfying the Statute
1) Giving of a note or memorandum
2) Acceptance and receipt of part of goods sold
3) Payment
Void contracts
1) Contrary to law, etc
2) Absolutely simulated or fictitious
3) Cause or object doesn’t exist at the time of the transaction
4) Contemplate an impossible service
5) Intention re the object can’t be ascertained
6) Declared void by law
7) outside commerce of man
Estoppel
An admission or representation is rendered conclusive upon the person making it, and cannot be denied or disproved as against the person relying thereon.
