Law Chapter 2 Contract

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Chapter 2 Contract

Contract it state there it is the meeting of minds of two parties that one of them has the obligation to

give, renders or gave serve and the other one has the obligation to receive.

Limitation on contractual stipulation

1. LawEvery contract must be in line with the law.

2. Police PowerIt is where there is no law in existence or when the law is silent, the will of the

parties prevails unless their contract contravenes the limitation of morals, good

customs, etc.

According to name or designation

a. Nominate contracthas a specific name or designation in the law.

b. Innominate contract (ART.1307)Has no specific name or designation in the law.

Kinds of innominate contract;

Do ut des (I give that you may give) these are no longer innominate contract

Do ut facias (I give that you may gave)

Facto ut des (I do that you may give)

Facto ut facias (I do that you may do)

Stipulation pour autrui

It is a stipulation in the contract clearly and 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 oblige or the original parties.

Requisites of stipulation pour autrui

1. The contracting parties by their stipulation must have clearly and deliberatelyconferred a favor upon a third person

2. The third person must have communicated his acceptance to the obligor before itsrevocation by the oblige or the original parties

3. The stipulation in favor of the third person should be apart, not the whole, of thecontract

4. The favorable stipulation should not be conditioned or compensated by any kind ofobligation whatever

5. Neither of the contracting parties bears the legal representation or authorized of thethird party for otherwise, the rules on agency will apply.


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2. According to perfection;

a. Consensual contract

Perfected by the mere consent of the parties regarding the subject matter and the cause

of the contract.

b.Real contract

It cannot be perfected only by mere consent but by the delivery, actual or constructive,

of the object of the obligation.

c. Solem ContractIt is required by the law, in the cases of transferring of property which must be in the

public instrument.

Offer is a proposal made by one party to another to enter into a contract.

Acceptance is the manifestation by the offered of his asset to the term of the offer. Without this there is

no meeting of minds of both parties

Person who cannot give consent (ART 1327)

1. Unemancipated minorsIt refer to the person who does not reached the age of majority (18 years)

2. Insane or demented personThe insanity must exist at the time of contracting. Unless proved otherwise a

person is presumed sane.

3. Deaf-mutesIt refers to the person who is deft and dumb. But when the deafmute is know

how to write the contract is valid.

Characteristic of consent

1. It is intelligent2. It is free and voluntary3. It is conscious or spountaneous

3. According to cause;

a. Onerous

It is the contract that both parties are reciprocally obligated to each other.

b. Remuneratory or remunerative

The purpose of this contract is to reward the service that had been previously renderedby the party remunerated.

c.Gratuitous

It is one the cause of which is the liberality of the benefactor or giver.

Motive is the purely personal or private reason which a party has in entering into a contract.

Cause distinguished from motive.


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1. Cause is the immediate or direct reason, while motive is the remote or indirectreason;

2. Cause is always known to the other contracting party, while motive may beunknown.

3. Cause is an essential element of a contract, while motive is not.4. The illegality of the cause affects the validity of a contract, while the illegality of

ones motive does not render the contract void.

Effect of absence of cause

It means that there is a big portion that lack in the contract.

Effect of failure of cause

It means that the contract is void.

Effect of illegality of cause

Implies that there is a cause but the same is unlawful or illegal.

Effect of falsity of cause

It means that the contract states a valid consideration but such statement is not true.

Lesion is any damage caused by the fact that the price is unjust or inadequate.

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5.According to obligatory force;

a) Valid (ART.1306)To be valid the contract must not against the law, morals , good customs ,public

order or public policy.

b) RescissibleIt is agreed upon the both parties because all the essential elements exist andtherefore, legally. In case of law, it is granted by the interest of equity.

Recquiste of rescission

1. The contract must be validly agreed upon2. There must be lesion or pecuniary prejudice to one of the parties or to a

third person.

3. The rescission must be based upon a case espicially4. There must be no other legal remedy to obtain reparation for the damage5. The party asking for rescission must be able to return what he is obliged to

restore by reason of the contract6. The object of the contract must not legally be in the possession of third

person who did not act in bad faith

7. The period for filling the action for rescission must not have prescribed.c) Voidable Contract (ART. 1390)

It is also valid until annulled unless there has been ratification. In a voidable

contract, the defect is caused by vice of consent.


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Kinds of voidable contract

1. Legal incapacity to give consent, where one of the parties is incapable ofgiving consent to the contract

2. Violation of consent, where the vitiation is done by mistake, violence,intimidation, undue influence, or fraud

Ratification (ART. 1392)

That means that one voluntarily adopts some defective or authorized

act or contract which, without his subsequent approval or consent,

would not be binding on him.

Requisites of ratification

a. There must be knowledge of the reason which renders the contractvoidable

b. Such reason must have ceasedc. The injured party must have executed an act which necessarily

implies an intention to waive his right.

d) Unenforceable (ART.1403)Those are that cannot be enforced in the court.

Kinds of unenforceable contract

1. Those entered into in the name of another by one without or actingin excess of authority

2. Those that do not comply with the Statute of Frauds3. Those where both parties are incapable of giving.4.

e) Void or Inexsistent Contract (ART. 1409)Void those contract that not valid.

Inexsistent refer to agreement which lack one or some or the entire element.

Charactirestic of void or inexistent contract

1. Generally, it produce no force ad effect whatsoever2. It cannot be ratified3. The right to set up the defense or illegality cannot be waived4. The action or defense for the declaration of its inexistense does not

prescribed

5. The defense of illegality is not available to third person whose interest arenot directly affected

6. It cannot give rise to valid contract6.According to person obliged


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a. Unilateral

It is when only one party is obliged to comply with prestation.

b. Bilateral (1191)

It is when both parties are mutually bound to each other. A bilateral obligation may be

reciprocal or non-reciprocal.

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Law Chapter 2 Contract