OBLIGATION juridical necessity to give, to do or not to do

4 ELEMENTS OF OBLIGATION1.ACTIVE SUBJECT (creditor/obligee) whose obligation is constituted2.PASSIVE SUBJECT (debtor/obligor) has duty to give, to do or not to do3.OBJECT/PRESTATION subject matter4.JURIDICAL/LEGAL TIE (vinculum/efficient cause) reason

CIVIL OBLIGATIONNATURAL OBLIGATION

derived from positive lawderived from equity & justice

enforceable by court actionnot enforceable by court action

5 SOURCES OF OBLIGATION1.LAW2.CONTRACTS3.QUASI-CONTRACTS arise fromlawful, voluntary acts; no one shall be unjustly enriched...2Kindsa.Solutio indebiti something received (delivered on a mistake), no right to demand itb.Negotiorum gestio voluntary mgt of property/affairs of another w/o his knowledge/consent4.QUASI-DELICT/TORTS/CULPA AQUILIANA arise from damage;fault/negligence5.CRIMES/ACTS/OMISSIONS punished by law arise fromcivil liabilitythat is a consequence of a criminal offense

DILIGENCE OF A GOOD FATHER OF A FAMILY- care need to be exercised by a debtor to deliver/givedeterminate thingException:When law/stipulation of parties requires a differnt standard of care (slight/extraordinary diligence).

When creditor is entitled to the fruitsRule:The creditor haspersonal right(right to ask for delivery) from the time the obligation to deliver arises.But NOreal right(right enforceable against the whole world) until it is delivered.

3 KINDS OF FRUITS1.NATURAL w/o human intervention2.INDUSTRIAL w/ human intervention3.CIVIL derived by virtue of juridical relation

Creditors rights if debtor fails to comply w/ the obligation1.Determinatea. Performanceb. Damages2.Generica. Performanceb. Damagesc. Obligation be complied at debtors expense

Creditors rights if debtor does in contravention1. Damages2. Ask it be UNDONE at debtors expense

FORTUITOUS EVENT cannot be foreseen, if foreseen, inevitableGeneral Rule:No person liable to fortuitous event.Exceptions:1. Law states2. Stipulation/contract states3. Assumption of risk4. Delay5. Debtor promises deliver to 2/more persons who do not have same interest (bad faith)

EFFECTS OF FORTUITOUS EVENT to thing to be delivered- extinguish the obligation if determinate; generic does not extinguish the obligation

3 MISCELLANEOUS RULES ON PERFORMANCE OF OBLIGA-TION1. When to deliverdeterminate,accessions(additions/ improvements) andaccessories(joined/included with the principal) are INCLUDED even not mentioned.2. If debtor failsto do, it shall be DONE AT HIS EXPENSE, same with doing the contravention; poorly done be undone.3. In obligationnot to do, and obligor does what is forbidden, shall be UNDONE AT HIS EXPENSE.

4 GROUNDS; debtor liable for damages1. Default/mora2. Fraud/dolo3. Negligence/culpa4. Contrary to terms of obligation

1. DEFAULT/MORA delay3kindsa.Mora solvendi debtors delay to give (real ob.), to do (personal ob.)b.Mora accipiende creditors delay to acceptc.Compensatio Morae delay of both in reciprocal obligation

CONCEPT OF DELAYGeneral Rule:No demand, No delayExceptions:1. Law states2. Obligation states3. Time is the essence4. Demand be useless if delay5. Debtor guilty of delay

EFFECTS OF DELAY1. Damages2. When to deliver determinate thing, STILL LIABLE in fortuitous event.2. FRAUD/DOLO conscious, deliberate, intentional evasion of fulfillment2Kindsa.Dolo causante/Causal fraud fraud in obtaining consent; consent is defective, contract is voidable. Remedy: annulmentb.Dolo incidente/Incidental fraud fraud w/c vitiates consent. Remedy: damages

3. NEGLIGENCE/CULPA voluntary act/omission; no bad faith intended3Kindsa.Culpa aquiliana/Civil negligence quasi-delict/torts b.Culpa contractual/Contractual negligence breachc.Culpa criminal/Criminal negligence crime/delict

4. Contrary to the terms of obligation

2 RULES OF PRINCIPAL & INSTALLMENT1. Receipt of principal w/o mention of interest, presumed interest is paid also.2. Receipt of latter installment w/o mention of prior installment, presumed prior installment is paid also.

4 SUCCESSIVE RIGHTS OF CREDITOR to satisfy claim against DEBTOR1. Exact payment2. Attach debtors properties3.Accion subrogatoria exercise rights & actions except inherent in person4.Accion pauliana cancel acts/contracts by debtor to defraud creditor

TRANSMISSIBILITY OF RIGHTSGeneral Rule:ALL RIGHTS are transmissible.Exceptions:1. Law states2. Contract states3. Obligation is purely personal

10 Kinds of Obligation1. Pure2. Conditional3. Alternative4. Facultative5. Joint6. Solidary7. Divisible8. Indivisible9. Obligation w/ a period10. Obligation w/ a penal clause

1. PURE OBLIGATION- w/o condition, demandable at once (pure has resolutory condition/period)

2. CONDITIONAL OBLIGATION- there is condition in performance; future & uncertain2Kindsa.Suspensive condition happening of condition gives RISE to obligationb.Resolutory condition happening of condition EXTINGUISHES obligation

6 MISCELLANEOUS RULES ON CONDITIONAL OBLIGATION1. Impossible conditions, contrary to law, shall ANNUL obligation.2. The condition not to do an impossible thing is considered not agreed upon.3. The condition that happens in determinate time, EXTINGUISHES obligation.4. The condition that happens in INDETERMINATE time, obligation only effective at arrival.5. The condition is fulfilled if DEBTOR prevents fulfillment.6. The effect of conditional obligation, once fulfilled:- to give: retroact to the day of constitution of obligation- has reciprocal prestations: fruits & interests be mutually compensated- has unilateral obligation: debtor shall give fruits & interests

RULES in case of Loss, Improvement, or Deterioration of thing during the pendency of condition1. LOSTa.w/ debtors fault damagesb.w/o debtors fault extinguishes obligation

2. DETERIORATIONa.w/ debtors fault- (1) cancel obligation & damages; or (2) fulfill obligation w/ damagesb.w/o debtors fault creditor suffer impairment

3. IMPROVEMENTa.By nature/time benefit to creditorb.at expense of debtor debtor no right than that granted to usufructuary (debtor no right to compensate amount for improvement)

EFFECTS OF FULFILLMENT OF SUSPENSIVE CONDITIONGeneral Rule:The obligation becomes effective retroactively to the day obligation was constituted.Exceptions:1.In reciprocal obligation, fruits & interests during pendency of condition shall compensate each other.2.In unilateral obligation, debtor gets fruits & interests unless there is a contrary intent.

3 EFFECTS OF FULFILLMENT OF RESOLUTORY CONDITION1. Extinguish obligation.2. Both parties restore what they received plus fruits & interests.3. The rule on L, D, or I will apply to person who has to return the thing.When one of debtors in reciprocal obligation does not comply w/ his obligation1. The right of injured party is (1) cancel contract & damages; or (2) fulfill obligation & damages

3 Kinds of Obligation (Accdng to PERSON OBLIGED)1.UNILATERAL only 1 party obliged to comply2.BILATERAL both parties; performance not same time3.RECIPROCAL both parties; performance same time

3. OBLIGATION W/ A PERIOD- demandability/extinguishment subject to the expiration of period

PERIOD interval of time; either suspends demandability or produces extinguishment

DAY CERTAIN must come, not known when

7 CASES CONSIDERED TO BE OBLIGATION W/ A PERIOD1. Little by little2. In partial payment3. Payable ASAP4. When I can afford it5. When I have the money6. When I am able to7. When my means permit me to do so

PERIODCONDITION

certainuncertain

future onlyfuture/past but unknown

(*influence upon obligation) only upon its demandability(*) on the very existence of obligation itself

FOR WHOSE BENEFIT IS THE PERIOD?General Rule:Both the debtor & creditor.Therefore, NEITHER of them can demand performance of obligation.Exception:If the term of obligation has to favor one of them.

5 INSTANCES WHEN DEBTOR LOSES RIGHT TO USE PERIOD1. Debtor is insolvent.2. Debtor attempts to abscond.3. Impairment of guarantees/securities.4. Failure to furnish guarantees/securities promised.5. Violation of undertaking.

4. ALTERNATIVE OBLIGATION- w/ 2 or more prestations, only 1 is due.

5. FACULTATIVE OBLIGATION- w/ ONLY 1 prestation but can be substituted.

ALTERNATIVE prestations LOST w/ debtors faultCreditor entitled to damages but needs ff requisites:1. Debtor can choose.2. All prestations lost/become impossible due to debtors fault.

ALTERNATIVE OBLIGATIONFACULTATIVE OBLIGATION

several prestations due, giving one is sufficientone prestation due, but can be subtituted

right to choose (debtor) unless granted to creditorright to choose DEBTOR ONLY

If 1 of the prestation is illegal, others may be valid, obligation remainsnullity of principal carries w/ it nullity of accessory/substitute

loss/impossibility of ALL prestations due, w/o debtors fault, extinguishes obligationloss/impossibility of presta-tion due, w/o debtors fault, extinguishes obligation

(3) SUMMARY OF RULES, OBLIGATIONS, & RIGHTS OF DEBTOR INALTERNATIVE OBLIGATION1. If 1 of prestations lost throughfortuitous event, shall still be perform by choosing (creditor) from the remainder.2. If 1 of prestations lost throughdebtors fault, creditor may claim any of remainders w/ damages.3. If ALL prestations lost throughdebtors fault, creditor choose price w/ damages.

RULES on LOSS/DETERIORATION of the thing intended as SUBSTITUTE in FACULTATIVE OBLIGATION1. If there is a loss/deterioration of thing intended as substitute, debtor is NOT liable if NOT HIS FAULT.But if substitution is already made, debtor is liable for loss of substitute when in DELAY, NEGLIGENCE, or FRAUD.

6. JOINT OBLIGATION- obligation is to be paidproportionatelyby debtors or to be demandedproportionatelyby creditors

7. SOLIDARY OBLIGATION- each one of debtors has right to render or each one of creditors has right to demand theentire compliancew/ prestation

MAXIMS & SYNONYMSMAXIMSSYNONYMS

JOINT ObligationTo each his ownproportionate

SOLIDARY ObligationOne for all, all for oneindividually & collectively

(3) SOLIDARY OBLIGATION EXIST ONLY IF: *RULES1. Law states2. Stipulation states3. Nature of obligation requires

2 PRESUMPTIONS THAT OBLIGATION IS JOINT1. The debts be divided as many shares as there are debtors/creditors.2. The debtors/creditors are distinct from one another.

8. DIVISIBLE OBLIGATION- prestation iscapableof partial performance

9. INDIVISIBLE OBLIGATION- prestationincapableof partial performance

10. OBLIGATION W/ A PENAL CLAUSE- one w/ accessory undertaking attached to obligation to assume greater liablity in case of breach/non-fulfillment of obligation

3 PURPOSES OF PENAL CLAUSE1. Ensure performance of obligation2. Substitute for damages & interest in case of noncompli-ance3. Penalize debtor in case of breach

In case obligation has a PENAL CLAUSEGeneral Rule:Penalty takes the place of damages & interest in case of non-compliance.Exceptions:1. Stipulation states.2. Debtor refuse to pay penalty.3. Debtor guilty of fraud in performance of obligation.

NULLITY OF PRINCIPAL OBLIGATION OR THE PENAL CLAUSENullity of principal obligation = nullity of penal clauseNullity of penal clause = NOT nullity of principal obligation

10 MODES OF EXTINGUISHMENT OF OBLIGATIONS1. Payment or performance2. Prescription3. Compensation4. Confusion/merger5. Condonation/remission6. Fulfillment of resolutory condition7. Annulment8. Rescission9. Novation10. Loss of thing due

1. PAYMENT/PERFORMANCE- Payment means delivery of money & performance of obligation

2 PLACE OF PAYMENT1. At place agreed upon2. If w/o agreementa. Object isindeterminate paid at domicile of DEBTORb. Object isdeterminate place of thing at the time of constitution of obligation

4 SPECIAL MODES OF PAYMENTa. Application of paymentb. Cessionc. Tender of payment & consignationd. Dacion in payment

a. APPLICATION OF PAYMENT- designation of debttow/c payment must be appliedwhen debtor has several obligations of same kind in favor of same creditor.

3 REQUISITES OF APPLICATION OF PAYMENT1. Only 1 debtor & 1 creditor2. 2 or more debts, same kind3. All debts are due4. Insufficient payment to exinguish ALL debts

3 RIGHTS TO MAKE APPLICATION OF PAYMENT1. Right belongs to CREDITOR.2. If debtor does not avail, creditor can give him receipt designating the debt from which payment will be applied.3. If debtor accepts the receipt, he cannot complain unless THERE IS just cause to invalidate the contract.

b. CESSION- debtor abandons ALL his property for creditors benefit to obtain payment from proceeds of his property

5 REQUISITES OF VALID CESSION1. 1 debtor & 2 or more creditors2. Debtor is in partial/total insolvency.3. Debtor to deliver ALL his property to creditors4. Debt is due & demandable.5. Creditors must sell the properties & apply the proceeds to their respective credits proportionately.

c. DACION IN PAYMENT (dacion en pago)- alienation of property to the creditor in satisfaction of debt

3 REQUISITES OF DACION IN PAYMENT1. Consent of creditor2. NOT prejudicial to another creditor3. Debtor not insolvent declared by a judicial decree

CESSIONDACION IN PAYMENT

all propertiesNOT all properties

require more than 1 creditorNOT require all creditors

NOT act of novationact of novation

NOT transfer ownershiptransfer ownership

requires partial/totalinsol-vencymay happen duringsolvencyof debtor

d. TENDER OF PAYMENT & CONSIGNATIONTENDER OF PAYMENT act of offering the creditor what is due to him w/ a demand that the creditor accept itCONSIGNATION act of depositing thing due w/ the court when creditor cannot/refuses acceptance of payment

5 REQUISITES OF CONSIGNATION1. Debt due.2. Creditor refused the tender of payment w/o just cause3. Notice of consignationalready given to persons interested in fulfillment of obligation4. Consignation of thing/amount due5. Subsequent notice of consignation to interested persons

5 VALID CONSIGNATION W/O PREVIOUS TENDER OF PAYMENT1. Creditor is absent/unknown.2. Creditor is incapacitate to receive at time it is due.3. Creditor refused give a receipt, w/o just cause.4. 2 or more persons claim the right to collect.5. Title of obligation lost.

2. LOSS OF THING DUE- perishes, disappears, or goes out of commerce; existence is unknown; cannot be recovered

3 REQUISITES TO EXTINGUISH OBLIGATION DUE TO LOSS1. Determinate thing.2. W/o debtors fault.3. No delay.

3. CONDONATION/REMISSION- gratuitous abandonment of right by the creditor

3 REQUISITES OF A VALID CONDONATION/REMISSION1. It must be gratuitous.2. Accepted by obligor.3. Obligation is demandable.

4. CONFUSION/MERGER- meeting in 1 person of qualities of debtor & creditor w/ same obligation

3 REQUISITES OF VALID CONFUSION/MERGER1. The merger of characters of debtor & creditor must be in same person.2. Take place between principal debtor & creditor.3. Clear & definite.

5. COMPENSATION- 2 persons are debtors & creditors of each other

6 ESSENTIAL REQUISITES OF COMPENSATION1. Parties both principal debtors & creditors of each other.2. Compensation is not prohibited by law.3. No retention/controversy by 3rdperson.4. 2 debts are due & demandable.5. 2 debts are liquidated.6. 2 debts both in money/consumable things.

(2) CLASSES OF COMPENSATION1. As to effecta.TOTAL obligations completely extinguished.b.PARTIAL a balance remains

2. As to origin or causea.LEGAL by lawb.VOLUNTARY/CONVENTIONAL agreement of partiesc.JUDICIAL order from the courtd.FACULTATIVE 1 of parties can choose/oppose claiming compensation

6. NOVATION- substitution/change of obligation- substitution of debtor- subrogation of creditor

(3) OBLIGATIONS MAY BE MODIFIED BY:1. Changing object/principal conditions.(REAL NOVATION)2. Changing the person of debtor/creditor.(PERSONAL NOVATION)a.Substitution change of debtorb.Subrogation change of creditor3. Changing person of the parties & the objects of principal condition.(MIXED NOVATION)

4 REQUISITES OF NOVATION1. Old valid obligation.2. Agreement of parties to new obligation.3. Extinguishment of old obligation.4. Validity of new obligation.

2 FORMS OF NOVATION BY SUBSTITUTION OF DEBTOR1.EXPROMISION w/ consent of creditor, NO consent of old debtor2REQUISITESa. Initiative of 3rdperson.b. Consent of creditor.2.DELEGACION all must agree (creditor, old debtor, new debtor)3REQUISITESa. Initiative from old debtor.b. Consent of debtor.c. Acceptance by creditor.

7. SUBROGATION- change of creditor

2 KINDS OF SUBROGATION1.CONVENTIONAL consent of original parties & 3rdperson2.LEGAL by lawa. creditor pays another preferred creditor even w/o debtors knowledgeb. 3rdperson pays the express approval of debtorc. 3rdperson pays even w/o knowledge of debtor

CONTRACT meeting of minds between 2 persons to give something or to render service.

3 ELEMENTS OF CONTRACT1.ESSENTIAL w/o them, contract cannot exista. CONSENT of contracting partiesb. OBJECT CERTAIN subject matterc. CAUSE/CONSIDERATIONIn some contracts, ff are also essential:d. FORMe. DELIVERY

2.NATURAL found in certain contract, presumed to exist unless stipulated

3.ACCIDENTAL various particular stipulations that may be agreed upon by contracting parties

(7) CLASSIFICATION OF CONTRACTSAccording to:1. PERFECTION/FORMATIONa.CONSENSUAL perfected by mere consentb.REAL perfected by deliveryc.FORMAL/SOLEMN special formalities are essential before perfection of contract

2. PARTIES OBLIGATEDa.UNILATERAL only 1 has obligationb.BILATERAL both parties require to render reciprocal prestations

3. CAUSEa.ONEROUS exchange of considerationsb.GRATUITOUS no consideration received in exchange of what is givenc.REMUNERATORY something is given for benefit/service that had been rendered previously

4. RISK OF FULFILLMENTa.COMMUTATIVE equivalent values are given by both partiesb.ALEATORY fulfillment of contract depends on chance (eg. insurance)

5. IMPORTANCEa.PRINCIPAL contract may stand alone (eg. sale, partnership)b.ACCESSORY existence depends on another contract (pledge, guarantee)c.PREPARATORY contract not an end by itself but a means thru w/c other contracts may be made (eg. agency)

6. NAMEa.NOMINATE contract given a particular/special name (eg. partnership)b.INNOMINATE not given special name (eg. I give that you may give)

7. SUBJECT MATTERa. Contracts involving thingsb. Contracts involving rights/creditsc. Contracts involving services

3 STAGES OF CONTRACT1.PREPARATION/CONCEPTION preparatory steps to perfect contract2.PERFECTION/BIRTH meeting of minds between 2 contracting parties3.CONSUMMATION/TERMINATION terms of contract are performed, & contract is fully executed

5 BASIC PRINCIPLES/CHARACTERISTICS OF A CONTRACT1. PRINCIPLE OF AUTONOMY (liberty to contract)Provided they are not contrary to:a. Lawb. Moralsc. Good customsd. Public ordere. Public policy

2. MUTUALITY OF CONTRACTS- the contract must bind both parties; its validity/compliance cannot be left to the will of one of them

3. RELATIVITY OF CONTRACTS- Contracts take effect only between the parties, their assigns & heirs except when there are rights & obligations not transmissible:a. by their natureb. by stipulation (stipulation por autri)c. by provision of law

4. CONSENSUALITY OF CONTRACTS- Contracts are perfected by mere consentExceptions:a.REAL CONTRACTS perfected by deliveryb.FORMAL/SOLEMN CONTRACTS special form required for its perfection

5. OBLIGATORINESS OF CONTRACTS- The contract, once perfected, has the force of law between parties which bound to comply in good faith

4 KINDS OF INNOMINATE CONTRACTS1. I give that you may give2. I do that you may do3. I give that you may do4. I do that you may give

4 RULES FOR INNOMINATE CONTRACTS1. Agreement of parties2. Law on Obligations & Contracts3. Rules on most analogous nominate contract4. Customs of place

STIPULATION POR AUTRI- stipulation infavor of 3rdperson

5 REQUISITES OF STIPULATION POR AUTRI1. Stipulation in favor of 3rdperson2. Stipulation is only PART, not the whole of the contract.3. Both parties must conferred upon a favor of 3rdperson4. 3rdperson must accept & say it to debtor before its revocation/cancellation5. Neither of both parties be the legal representation/autho-rization of 3rdperson

CONSENT- meeting ofoffer (certain) & acceptance (absolute)upon a thing

5 REQUISITES OF CONSENT1. Must be given by 2 or more parties2. Parties are capacitate to enter in contract3. No vitiation of consent4. No conflict betweendeclared & intended5. Legal formalities must be complied

7 RULES ON OFFER/ACEPTANCE1. Anoffermust becertain.2. Business advertisements for sale are NOT offers but ONLY invitations to make an offer.3. Advertisements for bidders are ONLY invitations.4. Anacceptancemade by letter/telegram does NOT bindofferorEXCEPT from the TIME it came to his knowledge.5. Anoffermade through anagentis accepted from the TIME the acceptance is done through anagent.6. Anofferisineffective upon death, insanity, insolvency, of EITHER party BEFORE acceptance is made.7. Whenofferorallowedoffereea certain period toaccept,offerMAY be withdrawn AT ANYTIME unless there is something PAID/PROMISED.

3 persons who CANNOT GIVE CONSENT to a contract(if entered into, contract isvoidable)1.UNEMANCIPATED MINORS2.INSANE/DEMENTED PERSONS(unless they acted DURING LUCID INTERVAL)3.DEAF-MUTESwho DO NOT know how to write

DEMENTED PERSON NOT exactly insane; difficult to distin-guish right from wrong

LUCID INTERVAL period when an INSANE has acquired SANITYtemporarily, therefore, capacitated to enter into a valid contract

2 RULES on persons WHO CANNOT GIVE CONSENT to a contract1. Age of majority is18 yrs old2. A contract entered into by UNEMANCIPATED MINOR w/o parents/guardians consent isvoidable, except:a. Minor MISREPRESENTS his age (estoppel)b. Contract involvessale & deliveryof necessities to minor

5 VICES OF CONSENT-NOTE:When there is a DEFECTIVE CONSENT of EITHER of parties, contract isvoidable; Remedy:annulment of contract.1. MISTAKE/ERROR2. FRAUD/DECEIT3. VIOLENECE4. INTIMIDATION5. UNDUE INFLUENCE

1. MISTAKE/ERROR- wrong conception & lack of knowledge upon a thing

(2) MISTAKES W/C VITIATES CONSENTIt should refer to:1.substance of thingthat is the OBJECT of contract2.conditionsw/c MOVED either/both parties to enter into contract

4 RULES ON MISTAKE1.Mistake to identity/qualificationsof either of parties will vitiate consent ONLY when IT is theprincipal cause of contract.2. Simple mistake of account must becorrected.3.No mistakeif parties knew the risk/doubt affecting OBJECT of contract.4. When one of parties is unable to read or the contract is in language not understood by him, & mistake/fraud is alleged, the person enforcing the contract must FULLY explained the terms to him.

2. FRAUD/DOLO- when throughinsidious words/machinationsof one of the parties, INDUCED the other to enter into a contract, & w/o them, he will not agree.

DOLO CAUSANTEDOLO INCIDENTE

SeriousNot serious

cause induces party to ENTER into contractNOT the cause to enter into contract

make contractvoidablecontract is valid; liable fordamages

7 RULES OF FRAUD1. Failure to disclose facts when these needs to be revealed, is a fraud.2. Fraud should be SERIOUS (dolo causante) & SHOULD NOT be done by BOTH parties to make contractvoidable.3. Incidental fraud (dolo incidente) ONLY obliges person to PAY DAMAGES.4.Usual exaggerations in trade, when other party know the real facts, is NOT FRAUD.5. Amere expression of opinionis NOT FRAUD UNLESS made by anexpert& the other party relies onhis special knowledge.6.Misrepresentation made in good faithis NOT FRAUD but may constitute anerror.7.Misrepresentation by 3rdpersonDOES NOT vitiate consent UNLESS it createdsubstantial mistake.

3. VIOLENCE-serious/irresistible forceis employed.

2 RULES ON VIOLENCE1.Serious/irresistible forceis employed w/c constitutes the reason why one entered into a contract.2. Violence ANNULS obligation although it is DONE by 3rdperson not part of contract.

4. INTIMIDATION- 1 of the parties is compelled by areasonable & well-grounded fear of an imminent & grave evilupon his person/property to give his consent.

3 RULES ON INTIMIDATION1.Age, sex, & condition of personmust used to determine the degree of intimidation.2. Intimidation ANNULS obligation although it is DONE by 3rdperson not part of contract.3. Athreat to enforce ones claim(claim must be just & legal), DOES NOT vitiate consent.

VIOLENCEINTIMIDATION

ExternalInternal

Physical contact/coercionNO physical coercion; ONLY MENTAL/MORAL coercion

5. UNDUE INFLUENCE- a person takesimproper advantage of his powerover others will, depriving the other to hisreasonable freedom of choice.

3 RULES ON UNDUE INFLUENCE1. There is a person who takesimproper advantage of his powerover others will, depriving the other to hisreasonable freedom of choice.2. Undue influence ANNULS obligation although it is DONE by 3rdperson not part of contract.3. To constitute undue influence, ff circumstances must be considered: (1) confidential, family, spiritual, & other relations of parties; or (2) the aggrieved party is suffering from mental weakness; or (3) ignorant; or (4) in financial distress.

SIMULATION OF CONTRACT- process of INTENTIONALLY deceiving others by producing a contract not really exist(absolute simulation),or w/c is different from true agreement(relative simulation).

2 KINDS OF SIMULATED CONTRACT1.ABSOLUTE SIMULATION(the parties DO NOT intend to be bound at all)- completely fictitious/make-believe; VOID2.RELATIVE SIMULATION(parties conceal their true/real agreement)- parties are bound to real/true agreement,EXCEPT:a. contract prejudice 3rdpersonb. purpose is contrary to law, morals, good customs, public order, public policy

7 REQUISITES OF OBJECT OF CONTRACT1. Specific & certain2. Services not contrary to law, morals, good customs, public order, public policy3. Services/things must NOT be legally/physically impossible4. Services/things arew/in commerce of man including future things5. Rights are NOT TRANSMISSIBLE.6. Determinate (kind) or determinable ( w/o the need of new contract/agreement)7. NO contract be entered forfuture inheritanceUNLESS law states

4 REQUISITES OF CAUSE1. It is just & equitable.2. It exists.3. It is lawful.4. It is true.

LESION- inadequacy of cause (eg. insufficient price for thing sold)

RULES ON LESION- Lesion DOES NOT invalidate contract, except there is:a. Fraudb. Mistakec. Undue influence

2 FORM OF CONTRACTS1. Contracts in writing2. Contracts in a public instrument

1. Contracts w/c must be IN WRITING to be valid:a. Donation of personal property exceeds P5000.b. Agents authority in sale of land/any interest.c. Contract of antichresis.d Stipulation to pay interest on loans.e. Stipulation to reduce common carriers extraordinary diligence & to limit its liability.

2.Contracts w/c must be IN A PUBLIC INSTRUMENT to be valid:a. Donation of real property (both the donation & accep-tance).b. Sale of real property.c. Partnership where real property/rights is contributed; or when capital contribution exceeds P3000.

REFORMATION OF INSTRUMENTS- REMEDY in equity in w/c a written instrument is made/construed to the REAL intention of parties when there is anerror/mistake.

(5) CASES REFORMATION OF INSTRUMENT IS AVAILABLE1. Mutual mistake of parties.2. One party was mistaken & the other acted fraud.3. One party was mistaken & the other knew/believed that the instrument did not state their REAL agreement.4. Ignorance, lack of skill, negligence, or bad faith of person drafting the instrument DOES NOT state the TRUE INTENTION of parties5. Two parties agree on mortgage/pledge of personal/real property BUT the instrument states the property is sold ABSOLUTELY, or w/ the right to repurchase.

(3) NO REFORMATION OF INSTRUMENT WHEN:1. Simple donation inter vivos where NO CONDITION is imposed.2. Will.3. Real agreement is VOID.

4 KINDS OF DEFECTIVE CONTRACTS1.RESCISSIBLE valid until rescinded; has ALL essential requisites but because ofinjury/damageto one of the parties, the contract may be rescinded.2.VOIDABLE valid until annulled; has ALL essential requisites but because ofdefectin consent, contract may be annulled.3.UNENFORCEABLE cannot be sued/enforcedunless ratified; no effect NOW but may take effect upon ratification.4. VOID NO effect at all;cannot be ratified/validated.

5 RESCISSIBLE CONTRACTS1. Those entered by guardians & suffered LESIONby more than of valueof the value that is the OBJECT.2. Those agreed upon in representation of absentees, if the absentees suffered LESION.3. Those undertaken in FRAUD of creditors when the creditors cannot further claim.4. If entered into contract w/o knowledge/approval of litigants under litigation.5. Contracts subjected to rescission declared by law.

3 VOIDABLE CONTRACTS1.One of the partiesINCAPABLE of giving consent to a contract.2. Those where consent vitiates by vices of consent. (MFVIU)3. Those agreed in the state of drunkenness/hypnotic spell.

3 UNENFORCEABLE CONTRACTS1. Those entered in name of other person, or who acted BEYOND his powers.2. Those who do not comply w/ theStatute of Frauds.3.Both partiesare incapable of giving consent to a contract.

7 VOID/INEXISTENT CONTRACTS1. Those w/c are ABSOLUTELY simulated/fictitious.2. Those w/c contemplate animpossible service.3. Those whose OBJECT is outside the commerce of man.4. Those whose CAUSE/OBJECT did not exist at time of tran-saction.5. Those whose CAUSE/OBJECT/PURPOSE is contrary to law, morals, good customs, public order, or public policy.6. Those where INTENTION of parties to principal object CANNOT be ascertained.7. Those expressly prohibited/declared VOID by law.