Michelle L.

Tranquillo
BSE 3A
 
1. Define contract and give an example of a contract.

In 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. (1254a)
A contract is a legally enforceable agreement between two or more parties. The core of
most contracts is a set of mutual promises (in legal terminology, "consideration"). The
promises made by the parties define the rights and obligations of the parties.

Example:
Party 1 wants yard work done and is willing to pay Php20.00 per hour. Party 2 is
interested in cutting grass for Php20.00 an hour.

2. Explain the basic pronciples of contracts.

 Agreement (Offer and Acceptance)
Generally speaking one party has something or can provide a service that the
other party desires. What is important in a contract fulfilling this element is that
both parties have a clear understanding of what is being offered and under what
conditions.
A simple example may illustrate this point. Party 1 wants yard work done and is
willing to pay $10.00 per hour. Party 2 is interested in cutting grass for $10.00 an
hour. They agree in principle, however Part 1 intends that yard work consists of
cutting, raking, edging, bagging the grass while Part 2 only intended cutting the
grass. The point here is carefully qualification of what is wanted and what can be
delivered can later avoid a contract dispute.
 Legal Capacity
Parties to a contract must have the legal capacity to enter into an agreement. Age
is one consideration, for example, a ten year old cannot enter into a contract.
Infirmity and mental capacity of one of the parties will invalidate the contract.
 Consideration
This element states that each party must bring something to the bargain or
agreement. A car dealer exchanges the vehicle and receives money from the
buyer. Consideration states nothing about the “fairness” of what is offered.
Continuing with our grass cutting example, Party 2 can accept the grass cutting
job for a penny. This may not seem fair but if this was the understanding among
the parties it would be enforceable.
 Legal purpose
 The contract cannot be illegal. That is it must be in compliance of the law of the
land and public policy. A contract for the sale of illegal drugs does not constitute
a legal contract.
 Legality of Form
In certain instances the law has stated that certain forms and procedures must be
abided by. For example, in money lending, certain documents or statements such
as “Truth in Lending” must be part of the written contract.
  Intended purpose
Not every detail can be written down when parties enter into contracts. Some
elements rely on intent. For example, if two businessmen, to their mutual benefit,
discuss and agree to contract, whether this is explicitly stated, their cooperation is
sufficient to indicate that their intention was to create a contract.
 Consent to contract
A contract is created when there is an agreement between the parties. A promise
by one party without acceptance by the other does not create a binding contract.
Back to our grass cutting example, if Party 2 says they are going to come over and
cut Party 1’s grass, there is no contract. Party 1 has not entered into a contract and
Party 2 is not legally required to cut the grass.
 Invalidating conditions
If one party misrepresents what they are offering or what they will exchange in
the performance of the contract, the contact is invalid. If the contract were to be
entered into under duress by threatening either physical or economic harm would
also constitute a reason for invalidating the contract.
3. Define consent. Give at least two(2) rules on offer and acceptance.

Consent is the conformity or concurrence of wills( offer and acceptance) and with respect
to contracts, it is the agreement of the will of one contracting party with that of another or
others, upon the object and terms of the contract.

In Art. 1319. Consent is manifested by the meeting of the offer and the acceptance upon
the thing and the cause which are to constitute the contract. The offer must be certain and
the acceptance absolute. A qualified acceptance constitutes a counter-offer.
Acceptance made by letter or telegram does not bind the offerer except from the time it
came to his knowledge. The contract, in such a case, is presumed to have been entered
into in the place where the offer was made. (1262a)

4. Give the vices of consent and when eill each vice vitiate consent.

Vices of consent
 Error or mistake
Art. 1331. In order that mistake may invalidate consent, it should refer to the
substance of the thing which is the object of the contract, or to those conditions
which have principally moved one or both parties to enter into the contract.
Mistake as to the identity or qualifications of one of the parties will vitiate consent
only when such identity or qualifications have been the principal cause of the
contract.
A simple mistake of account shall give rise to its correction. (1266a)
 Violence or force
Art. 1335. There is violence when in order to wrest consent, serious or irresistible
force is employed.
There is intimidation when one of the contracting parties is compelled by a
reasonable and well-grounded fear of an imminent and grave evil upon his person
 or property, or upon the person or property of his spouse, descendants or
ascendants, to give his consent.
To determine the degree of intimidation, the age, sex and condition of the person
shall be borne in mind.
A threat to enforce one's claim through competent authority, if the claim is just or
legal, does not vitiate consent. (1267a)
 Intimidation or threat or dures
Art. 1336. Violence or intimidation shall annul the obligation, although it may
have been employed by a third person who did not take part in the contract.
(1268)
 Undue influence
Art. 1337. There is undue influence when a person takes improper advantage of
his power over the will of another, depriving the latter of a reasonable freedom of
choice. The following circumstances shall be considered: the confidential, family,
spiritual and other relations between the parties, or the fact that the person alleged
to have been unduly influenced was suffering from mental weakness, or was
ignorant or in financial distress. (n)
 Fraud or deceit
Art. 1338. There is fraud when, through insidious words or machinations of one
of the contracting parties, the other is induced to enter into a contract which,
without them, he would not have agreed to. (1269)

5. Define a simulated contract and give examples of the two kinds of such contract.

Simulation of a contract is the act of deliberately deceiving others, by feigning or

pretending by agreement the appearance of a contract which is either non- existent or
concealed.
Kinds of simulation:
 Absolute simulation – when the conract does not really exist and the partues do
not intend to be bound at all. Absolutely sun\mulated or fictitious cobtracts are
inexistent and void
Example:
D is indebted to C. upon learning that C is going to enforce his credit, D pretend
to sell his land to B, his father in law. D did not receive a single centavo for the
transaction and he coninued in possession of the land as the contract was merely
simulated and fictitious.
 Relative simulation – when the contract entered into by the parties is different
from their true agreement. The parties are bound by the real agreement provided it
does not prejudicea third person and is not intended for a purpose contrary,
morals, good customs, public order, or public policy.
Example:
A and C entered into a contract of mortgage. But wanting to hide the mortgage, it
was made to appear in the form of a deed of sale.
6. What may be the object of contracts and give its requisites.
 Art. 1347. All things which are not outside the commerce of men, including future things,
may be the object of a contract. All rights which are not intransmissible may also be the
object of contracts.
No contract may be entered into upon future inheritance except in cases expressly
authorized by law.
All services which are not contrary to law, morals, good customs, public order or public
policy may likewise be the object of a contract. (1271a)
The object of the contract is its subject matter in reality, the object of every contract is the
obligation created. But since the contract cannot exists without an obligation, it may be
said that the thing, service, or right which is the object of the obligation is also the object
of a contract.
Requisitis of things as oject of contract
 The thing must be within the commerce of men, that is, it can legally be the
subject of commercial transaction.
Art. 1347. All things which are not outside the commerce of men, including future
things, may be the object of a contract. All rights which are not intransmissible
may also be the object of contracts.
 It must not be impossible legally or physically
Art. 1348. Impossible things or services cannot be the object of contracts. (1272)
 It must be in existence and capable of coming into existence
Art. 1461. Things having a potential existence may be the object of the contract of
sale.
The efficacy of the sale of a mere hope or expectancy is deemed subject to the
condition that the thing will come into existence.
the sale of a vain hope or expectancy is void. (n)
 It must be determinate or determinable without the need of new contract between
the parties.
Art. 1349. The object of every contract must be determinate as to its kind. The
fact that the quantity is not determinate shall not be an obstacle to the existence of
the contract, provided it is possible to determine the same, without the need of a
new contract between the parties. (1273)
7. Give the concept of cause in contracts and its requisites.

Art. 1350. In onerous contracts the cause is understood to be, for each contracting party,
the prestation or promise of a thing or service by the other; in remuneratory ones, the
service or benefit which is remunerated; and in contracts of pure beneficence, the mere
liberality of the benefactor. (1274)

Concept of cause
In a bilateral of reciprocal cpntract like purchase and sale, the cause for one is the
subject matter or object for the other and vice versa. Hence the distinction is only a
matter of viewpoint.

Requisites of cause
 It must exist at the time the contract is entered into
 It must be lawful
  It must be true or real
8. Define rescissible contract and what are the rescissible contracts under the Civil Code.

Art. 1380. Contracts validly agreed upon may be rescinded in the cases established by
law. (1290)
Rescissible contracts are those validly agreed upon because all the essential elements
exists but in the cases established by law the remedy of rescission is granted in the
interest of equity.

Art. 1381. The following contracts are rescissible:

(1) Those which are entered into by guardians whenever the wards whom they represent
suffer lesion by more than one-fourth of the value of the things which are the object
thereof;
(2) Those agreed upon in representation of absentees, if the latter suffer the lesion stated
in the preceding number;
(3) Those undertaken in fraud of creditors when the latter cannot in any other manner
collect the claims due them;
(4) Those which refer to things under litigation if they have been entered into by the
defendant without the knowledge and approval of the litigants or of competent judicial
authority;
(5) All other contracts specially declared by law to be subject to rescission. (1291a)
9. Define voidable contract and what are the voidable contracts under the Civil Code.

Voidable contracts or annuillable contracts are those which possess all the essential
requisites of a valid but one of the parties is incapable of giving consent, is vitiated by
mistake, violence, intimidation, undue influence or fraud.

Art. 1390. The following contracts are voidable or annullable, even though there may
have been no damage to the contracting parties:
(1) Those where one of the parties is incapable of giving consent to a contract;
(2) Those where the consent is vitiated by mistake, violence, intimidation, undue
influence or fraud.
These contracts are binding, unless they are annulled by a proper action in court. They
are susceptible of ratification. (n)

10. Define unenforceable contract and what are the unenforceable contracts.

Unenforceable contracts are those that cannpot be enforced in court or sued upon by
reason of defects provided by law until and unless they are according to law.

Art. 1903. The commission agent shall be responsible for the goods received by him in
the terms and conditions and as described in the consignment, unless upon receiving them
he should make a written statement of the damage and deterioration suffered by the same.
(n)