Contracts

Contracts- 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.

Limitations of contracts:

( law, morals, good customs, public order, public policy)

Different kinds of contracts.

a. According to perfection. Consensual- by mere

consent Real- by the delivery

b. According to degree of importance.

Preparatory-contract is not an end by itself

Accessory-dependent upon another contract

Principal- can stand alone such as sale

c. According to subject matter.. Contract involving

things Contract involving rights

or credits Contracts involving

servicesd. According to name.

Nominate- with a special name

Innominate- without any name.

i) Kinds of Innominate contracts.

DO UT DES- I give that you may give

DO UT FACIAS- I give that you may do

FACTO UT DES- I do that you may give

FACTO UT FACIAS- I do that you may do

e. According to cause. Onerous- exchange of

considerations Gratuitous or lucrative-

no consideration received in exchange

Remuneratory- something is given for benefit Ex.bonus

f. Number of parties obligated. Unilateral

Commodatum******* Mutuum********

Bilateralg. According to risk.

Commutative- equivalent values

Aleatory- contract is dependent upon chance

ART. 1314. Any third person who induces another to violate this contract shall be liable for damages to the other contracting party.

ART. 1316. Real contracts, such as deposit, pledge and commodatum are not perfected until the delivery of the object of the obligation.

A deposit is constituted from the moment a person receives a thing belonging to another

Pledge is the delivery of a personal property by a debtor to a creditor as security for a debt

Commodatum is a contract wherby one of the parties delivers to another something not consumable

Essential Requisites of Contracts

Consent Object Cause

Consent- is the manifestation of the meeting of the offer and the acceptance upon the thing and the cause of the contract.

Five causes vitiating consent:

Error or mistake

Violence or force Intimidation or threat Undue in influence Fraud or deceit

Cause of contracts

The cause of contract is the why of the contract, the essential reason which impels the contracting parties to enter into the contractForms of contract:a. Validity- the form required or

specified by law is essential otherwise the contract is without effect

b. Enforceability- requires the contract to be in writing

c. Convenience- requires a certain form in order to make effective the rights against third persons.

Reformation of Instruments

Reformation of an instrument is that remedy in equity by means of which a written instrument is made or construed to as to express or conform to the real intention of the parties when some error or mistake has been committed

Requisites of reformation:

a. Meeting of minds between the parties

b. Instrument does not express the true intention of the parties

c. The failure of intention is due to mistake, fraud, inequitable conduct, o accident

d. There must be clear and convincing proof

There shall be no reformation in the following cases:

a. Simple donations b. Willsc. When the real agreement is

void

Interpretation of contracts

Interpretation of a contract is the determination of the meaning of the terms or words used by the parties in their contract.

Rescissible contracts

Requisites of rescission:

a. The contract entered into is essentially valid

b. There is lesion or pecuniary prejudice i) Lesion defined as the injury

suffered, in consequence of

inequality of situation, by one who does not receive the full equivalent for what he give in a commutative contract

The four kinds of defective contracts are:

a. Rescissible contracts valid until rescinded.

b. Voidable contracts valid until annulled

c. Unenforceable contracts cannot be sued upon or enforced unless it is ratified

d. Void contract is one that has no effect at all

ART.1383 the action for rescission is subsidiary; it cannot be instituted except when the party suffering damage has no other legal means to obtain reparation for the same

ART.1384 rescission shall be only to the extent necessary to cover the damages caused

Jurisprudence- a substantial breach of a reciprocal obligation, like failure to pay the price in the manner prescribed by the contract, entitles the injured party to rescind the obligation

Presumptions of fraud in a rescissible contract

a. Gratuitous contracts- contracts entered into by the debtor, when he did not reserve sufficient property to pay his debts before donation, are considered fraudulent

b. Onerous contracts Made by persons against

whom some judgement has been rendered even if not yet final

Made by persons against whom some writ of attachment has been issued. The decision or attachment need not refer to the property alienated

Essential features of rescissible contracts:

a. The action for rescission is subsidiary

b. Rescission shall be only to the extent necessary to cover the damaged caused

c. Rescission creates the obligation to return the things which were the object of the contract,

together with the fruits and the price with its interest

d. The action to claim rescission must be commenced within four years