Contracts - Finals Flashcards
is a source of obligation
Contract
is a binding agreement enforceable through the
courts, it must be lawful and conforms with all requisites to be
valid.
Contract
not enforceable in
court are mere moral or social agreements, it may not have
all the elements of a contract
agreement
is the legal tie or relation that exists after a contract is executed
obligation
No contract if there is no obligation but there can be an
obligation even without a contract since there are other
sources of obligation, i.e law, j
-
All contracts are agreements but not all agreements are
contracts.
-
Dependence to another contract
- Preparatory (agency, partnership) – entered as a means to
an end (step 1 pa lang ang pag pasok sa contrata and after pagpasok
sa kontrata may panibagong contrata)
- Acessory (mortgage, guaranty) – dependent upon another
contract it secures or guarantees for its existence and validity
(dependent on the principal contract. pag wala yung principal contract,
the accessory can’t stand on it self, accessory follows the principal.)
- Principal (sale, lease) – not dependednt on another for
existence or validity but is indispensable for the existence of
another contract (main contract, can exist without the accessory.
pwede kahit walang accessory because the accessory follows the
principal.)
Dependence to another contract
- Preparatory (agency, partnership)
- Acessory (mortgage, guaranty)
- Principal (sale, lease)
– entered as a means to
an end
Preparatory (agency, partnership)
– dependent upon another
contract it secures or guarantees for its existence and validity
Acessory (mortgage, guaranty)
– not dependednt on another for
existence or validity but is indispensable for the existence of
another contract
Principal (sale, lease)
Dependence of part to other parts
– when each part of the contract is dependent upon other parts for complete satisfaction
- Indivisible
Dependence of part to other parts- - - one part may be satisfied completely without the
divisible
– complies with all legal requirements and limitations
Valid contract
– constitutional right but there is no absolute right
for anyone to enter into any kind of contract
Freedom to contract
– deemed imposed on all contracts
Police power
- Classification of contracts according to name or designation:
● Nominate
● Innominate
– has specific name or designation in law – lease, sale
Nominate
– has no specific name or designation
Innominate
I give that you may give – now barter or exchange
do ut des
I give that you may do
do ut facias
I do that you may give
facto ut des
I do that you may do
facto ut facias
enforceable against the parties
involved – meeting of the minds
Mutuality of contracts
“buyer beware”
Caveat emptor
Stipulation in their favor
stipulation pour autrui
- Contracts according to perfection:
● Consensual – perfected upon consent
● Real – perfected upon delivery –
● Solemn – requires compliance with certain formalities
– perfected upon consent
● Consensual
perfected upon delivery
● Real
– requires compliance with certain formalities
● Solemn
- Stages in the life of a contract:
1. Preparation or negotiation - no agreement yet
2. Perfection or birth – there is already an agreement or meeting of the
minds
3. Consummation or termination – parties have performed their
obligations
- Preparation or negotiation - no agreement yet
- Perfection or birth – there is already an agreement or meeting of the
minds - Consummation or termination – parties have performed their
obligations
– there is already an agreement or meeting of the
minds
Perfection or birth
- no agreement yet
Preparation or negotiation
– parties have performed their
obligations
Consummation or termination
– contracts entered into without knowledge
and consent; not binding
Unauthorized contracts
Essential requisites of contracts
Consent, Object, Cause
Classes of elements of a contracts
Essential – without which a contract will not be valid, a.k.a.
requisites
● Common – present in all contract – consent, object, cause
● Special – peculiar to certain contracts
- Natural – presumed to exist in a contract unless expressly
stipulated – warranties - Accidental – particular stipulations – period, interest,
penalty, conditions
agreement of the will upon the object and terms of the
contract
Consent –
– proposal made a one (offeror) to another (offeree), expressing
willingness to enter into a contract
Must be certain and definite
offer
– offeree’s manifestation of assent to the offer, without
acceptance, there can be no meeting of the minds clear, absolute,
unconditional, unqualified, identical to the offer
Acceptance
– extension of the principal, authorized must be duly
Agent
– giving a person for a consideration a certain period
to accept the offer
option contract
– period within which the offeree must accept
option period
– money paid in consideration of the option
- option money
– when a contract is entered into by a person who
is incapable of giving consent thereto
- Valid until annulled by a proper action in court
- May be ratified
Voidable contract
Persons incapacitated to give consent:
- Unemancipated minor – those who have not yet reachedthe age of majority
- Insane or demented – insanity must exist at the time of contracting
- Deaf-mutes (deaf and dumb) – may contract if they knew how to write
- Lucid interval – temporary period of sanity; proof must be shown
- State of drunkenness or hypnotic spell – considered as a state of
temporary insanity - Persons suffering from the accessory penalty of civil interdiction
- Hospitalized lepers
- Prodigals (spendfrifts)
- Deaf and dumb who are unable to read and write
- Those of unsound mind even if
- Those who by reason of age, disease, weak mind and
other similar cases, cannot without outside aid take care
of themselves and manage their properties
causes that vitiate consent or renders it defective
making the contract voidable:
Vices of consent –
● Error or mistake (Article 331)
● Violence or force (Article 1335)
● Intimidation or threat or duress
● Undue influence (Article 1337)
● Fraud or deceit (Article 1338)
false notion of a thing or a fact material to the
contract
Mistake or error
had the party known the mistake, he
would not have given his consent.
Substantial mistake of fact
only one of the parties is mistaken
Unilateral mistake
both parties are in error
Bilateral mistake
– if it is just as a simple mathematical error, it
may be corrected; if it is a substantial error, it can be aground for the
rescission of the contract
Errors in computation
ignorance of some provision of law or erroneous
interpretation or conclusion
Mistake of law
employment of physical force
- Serious or irresistible
Violence or force –
– influence of a kind that so overpowers the mind of
a party as to effectively prevent a person from acting understandingly
and voluntarily
Undue influence
– committed by one party prior to or at the time of the
celebration of the contract to secure the consent of the other party,
without which the other person would not have agreed.
Causal fraud
How is causal fraud committed?
- Insidious words or machinations – misrepresentation in words
or actions
– failure or neglect to communicate or disclose
a material fact
Fraud by concealment
– ground for annulment, may give rise to damages
Causal
– party guilty thereof is liable for damages
Incidental
– act of deliberately deceiving others, by
feigning or pretending by agreement
Simulation of a contract
subject matter thereof
* It is, in actuality, the obligation created – thing to be delivered, service
to be rendered
Object of a contract
- Requisites of a service as object of a contract:
- Within the commerce of men
- Not legally or physically impossible
- Must be determinate or determinable without need of a new
contract
important reason or purpose that the contracting parties
have when they entered into the contract
- Something bargained for in exchange for a legally enforceable
promise
Cause (causa)
reading in cause
What happens is a contract lacks a cause? - it confers no right and
produces no legal effect (kasi essential element ang cause)
What happens if the cause is inadequate? - not a ground for relief
(what if mayroon cause pero inadequate/kulang? – not a ground for relier, kasi
mayrooncpa ring cause pero kulang nga lang would be determined na kulang nga
yung cause? WALA kasi ang contracting parties ang nakakaalam ng cause na yan.
)
What happens when there is failure of cause? - not a ground to void
the contract (may cause kayo nung una pero may reason kayo pero nawala –
still not ground to void the contract or declare as illegal yung contract)
Illegality of cause – cause is unlawful or illegal – null and void (it is as
if walang contract)
Falsity of cause – contract is void (itinago yung cause, wala naman talagang
cause, may fraud na kasama kaya the contract is void)
Simulated cause – show that there is a hidden or true cause (may tinago
din, pero may totoong cause, kailangan lang ipakita kung ano yung totoong cause
na yun para masabing valid yung contract)
– damage caused because the price is unjust or inadequate
Lesion
manner in which the contract is executed
or manifested
- Oral or in writing; express or implied; public or private
instrument if it is in writing
Form of contract
entered into whatever
form provided that all essential requisites are present (
Informal or common or simple
– required by law to be in a certain form
to be effective
- Formal or solemn
– only one party is mistaken in good
faith, he/she has the right to ask for reformation of the
instrument
Not mutual mistake
– mistake of fact common to both parties which causes
the failure of the instrument to express the true intention of the parties
Mutual mistake
Reformation of Instruments
Requisites:
- There was a meeting of the minds
- Written instrument does not reflect/express the true
agreement or intention of the parties
- Failure to express is due to fraud, accident, mistake,
inequitable conduct
- Facts upon which relief by way of reformation of the
instrument is sought are put in issue by the pleadings
- Clear and convincing evidence of FAMI
FAMI
fraud, accident, mistake,
inequitable conduct
person is permitted by law to control to a certain degree the
disposition of his estate which will take effect after his/her death
Wills
– to ascertain the intent of the contracting parties
- Interpretation
Words versus intent
- intent
– open to different interpretations or meaning
* Should be interpreted to give meaning to the intent of the partie
Ambiguous contracts
– valid contract because all essential requisites of a
contract is present
Rescissible
– valid until annulled unless ratified o Defect is caused by
vice of consent
Voidable
– cannot be enforced or be sued upon unless
ratified o Not really void but not really valid
Unenforceable
– absolutely null and void
o Not subject to ratification
Void/inexistent
– remedy granted by law for reparation of damages
(restoration of things as they were before the execution of the contract
- Rescision
– not enough properties to meet obligations
- Insolvency
– donation of all properties without
reserving sufficient property to cover existing debts prior to the
donation
✓ Alienation by gratuitous title
– when there has been judgment
✓Alienation by onerous title
mutual obligation of restitution (return of what has been
received)
✓ Object with its fruits
✓ Price with legal interest
Rescission
– voluntary adoption or approval of some defective or
unauthorized act or contract; shows intention to be bound
Ratification
✓ Cleans the contract of its defects from its birth
is a UNILATERAL act
Ratification
Both parties are incapacitated –
UNENFORCEABLE
✓ Ratification by the parent/guardian of one of the parties –
VOIDABLE
Ratification by the parent/guardian of both parties –
VALID –
validated
produce no effect at all because of certain defects
- Void contracts
– lacks one or some or all of the essential
elements
Inexistent contracts
– issued to regulate excessively high interest rates on
loan
Usury law
– statute fixing the maximum price of any article or
commodity ✓ Standard retail price
Ceiling law
