Contracts

Question 1

What is Contract?

Answer 1

Art. 1305. A contract 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.

Question 2

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

Distinguished Contract and Agreement

Answer 3

Contract-
a. Are agreements enforeceable through legal proceedings
b. all contracts are agreements

Agreement
a. is broader than contract because the agreement may not have all the elements of a contract
b. not all aggrements are contracts.

Question 4

Characteristics of Contracts

Answer 4

(FOM CR)
1. Freedom to stipulate or autonomy of contracts.
2.Obligatoriness of contracts.
3. Mutuality of Contracts
4. Consensuality of contracts
5. Relativity of contracts

Question 5

What is Obligatoriness of Contracts?

Answer 5

Obligations arising from contracts have the force of law between the contracting parties and should be complied with in good faith. (NCC)

Question 6

What is Mutuality of Contracts?

Answer 6

Contracts must bind both nd not one of the contracting parties; their validity or compliance cannot be left to the will of one of them. (NCC)

Question 7

What is consensuality of Contracts?

Answer 7

Contracts are perfected, as a general rule, by mere consent, and from that moment the parties are bound not only by the fulfillment of what has been expressly stipulated but also to all the consequences which, according to their nature, may be in keeping witj good faith, usage and law (NCC).

Question 8

What is Relativity of Contracts?

Answer 8

Contracts take effect only between the parties, their assigns and heirs, except in cases where the rights and obligations arising from the contract are not transmissible by their nature, or by stipulation, or by provision of law. (NCC)

Question 9

Define Contract of adhesion.

Answer 9

Is a contract whereby almost all 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. Because of that, it is strictly construed against the party who drafted it.

Question 10

Public Policy

Answer 10

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

Question 11

Nominate Contract vs. Innominate Contract

Answer 11

Nominate Contract- Those which have their own individuality and are regulated by special provisions of law.

Innominate Contract- Those which lack individuality and are not regulated by special provisions of law.

Question 12

Kinds of Innominate Contract

Answer 12

1. do ut des or I give that you give
2. do ut facias or I give that you do
3. facio ut des or I do that you give
4. facio ut facias or I do that you do

Question 13

Rules on innominate Contracts

Answer 13

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

Question 14

Valid escalation clause

Answer 14

1. The rate of interest will only be increased if the applicable maximum rate of interest is increased by law or by the monetary board
2. When it has a de-escalation clause or when the stipulated interest will be reduced if the applicable minimum rate is reduced by law or Monetary board.

Question 15

Concept of Relativity of Contracts
GR and Expn

Answer 15

GR: Contracts shall take effect only between the contracting parties, their assigns and heirs.

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

Question 16

Define Stipulation pour autrui?

Answer 16

Is a stipulation in a contract clearly an deliberately conferring a favor upon a third person who has a right to demand its fulfillment, provided, he communicates his acceptance to the obligor before its revocation by the obligee or the original parties.

Question 17

Requisites of stipulation pour autrui

Answer 17

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

Question 18

What is tort interference?

Answer 18

A contracting party may sue a third person not for breach of contract but for inducing another to commit such breach.

Question 19

Elements of tort interference

Answer 19

Elements of Tort Interference

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

Question 20

Stages in the life of a contract

Answer 20

1. Preparation or negotiation
2. Perfection or birth of contracts
3. Consummation of the contracts.