OBLIGATIONS AND CONTRACTS

VENTILACION 1-E 2017

Art. 1318. There is no contract unless the following requisites concur:

(1) Consent of the contracting parties;
(2) Object certain which is the subject matter of the contract;
(3) Cause of the obligation which is established. (1261)
Classes of elements of a contract
 Essential Elements – no contract can validly exist without them (aka requisites of a contract)
o Common – those present in all contracts
 Consent, object, cause
o Special – present only in or peculiar to certain specified contracts, such peculiarity may
be
 Form – Donation of an immovable property
 Subject-matter – real property in antichresis, personal property in pledge
 Consideration or cause – price in sale, liberality in commodatum
 Natural elements – presumed to exist in certain contracts unless the contrary is expressly
stipulated by the parties
o Warranty against eviction, warranty against hidden defects of the sale
 Accidental elements – particular stipulations, clauses, terms, or conditions established by the
parties for the purpose of clarifying, restricting, or modifying its legal effects like conditions,
period, interest, penalty
o Exists only when they are expressly provided by the parties
NOTE: GF is immaterial when determining WON contract is valid – GF is not an essential element of a
contract

Two bases of contracts

 Law: presumes the natural, authorizes the accidental
 Will: conforms to the essential (decisive), accepts unless it rejects the natural (supplementary),
and establishes the accidental (permissive)
 Absent one of the essential requisites = NO CONTRACT
 Non-observance of the natural or accidental elements – affects the effectivity but not the validity

Conflicts rule on essential validity of contracts

 Rule: The intrinsic validity of a contract must be governed by the lex contractus or “proper law of
the contract”
 PH courts: Allows the parties to select the law applicable to their contract, subject to the limitation
that it is not against L, M, PP
o Chosen law must bear a substantive relationship to the transaction