1. An offer must be certain.

2. Business advertisements for sale are NOT offers but ONLY invitations to make an offer.
3. Advertisements for bidders are ONLY invitations.
4. An acceptance made by letter/telegram does NOT bind offeror EXCEPT from the TIME it came to his
knowledge.
5. An offer made through an agent is accepted from the TIME the acceptance is done through an agent.
6. An offer is ineffective upon death, insanity, insolvency, of EITHER party BEFORE acceptance is
made.
7. When offeror allowed offeree a certain period to accept, offer MAY be withdrawn AT ANYTIME
unless there is something PAID/PROMISED.

3 persons who CANNOT GIVE CONSENT to a contract (if entered into, contract is voidable)
1. UNEMANCIPATED MINORS
2. INSANE/DEMENTED PERSONS (unless they acted DURING LUCID INTERVAL)
3. DEAF-MUTES who 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 SANITY temporarily, therefore,
capacitated to enter into a valid contract

2 RULES on persons WHO CANNOT GIVE CONSENT to a contract

1. Age of majority is 18 yrs old
2. A contract entered into by UNEMANCIPATED MINOR w/o parents/guardian’s consent is voidable,
except:
a. Minor MISREPRESENTS his age (estoppel)
b. Contract involves sale & delivery of necessities to minor

5 VICES OF CONSENT
- NOTE: When there is a DEFECTIVE CONSENT of EITHER of parties, contract is voidable; Remedy:
annulment of contract.
1. MISTAKE/ERROR
2. FRAUD/DECEIT
3. VIOLENECE
4. INTIMIDATION
5. UNDUE INFLUENCE

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

(2) MISTAKES W/C VITIATES CONSENT

It should refer to:
1. substance of thing that is the OBJECT of contract
2. conditions w/c MOVED either/both parties to enter into contract

4 RULES ON MISTAKE
1. Mistake to identity/qualifications of either of parties will vitiate consent ONLY when IT is the
principal cause of contract.
2. Simple mistake of account must be corrected.
3. No mistake if 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 through insidious words/machinations of one of the parties, INDUCED the other to enter into a
contract, & w/o them, he will not agree.

7 RULES OF FRAUD
1. 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
contract voidable.
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. A mere expression of opinion is NOT FRAUD UNLESS made by an expert & the other party relies on
his special knowledge.
6. Misrepresentation made in good faith is NOT FRAUD but may constitute an error.
7. Misrepresentation by 3rd person DOES NOT vitiate consent UNLESS it created substantial mistake.

3. VIOLENCE
- serious/irresistible force is employed.

2 RULES ON VIOLENCE
1. Serious/irresistible force is employed w/c constitutes the reason why one entered into a contract.
2. Violence ANNULS obligation although it is DONE by 3rd person not part of contract.

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

3 RULES ON INTIMIDATION
1. Age, sex, & condition of person must used to determine the degree of intimidation.
2. Intimidation ANNULS obligation although it is DONE by 3rd person not part of contract.
3. A threat to enforce one’s claim (claim must be just & legal), DOES NOT vitiate consent.

VIOLENCE INTIMIDATION
External Internal
Physical contact/coercion NO physical coercion; ONLY
MENTAL/MORAL coercion

5. UNDUE INFLUENCE
- a person takes improper advantage of his power over other’s will, depriving the other to his reasonable
freedom of choice.

3 RULES ON UNDUE INFLUENCE

1. There is a person who takes improper advantage of his power over other’s will, depriving the other to
his reasonable freedom of choice.
2. Undue influence ANNULS obligation although it is DONE by 3rd person 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 CONTRACT

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

7 REQUISITES OF OBJECT OF CONTRACT

1. Specific & certain
2. Services not contrary to law, morals, good customs, public order, public policy
3. Services/things must NOT be legally/physically impossible
4. Services/things are w/in commerce of man including future things
5. Rights are NOT TRANSMISSIBLE.
6. Determinate (kind) or determinable ( w/o the need of new contract/agreement)
7. NO contract be entered for future inheritance UNLESS law states

4 REQUISITES OF CAUSE
1. 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. Fraud
b. Mistake
c. Undue influence

2 FORM OF CONTRACTS
1. Contracts in writing
2. Contracts in a public instrument

1. Contracts w/c must be IN WRITING to be valid:

a. Donation of personal property exceeds P5000.
b. Agent’s authority in sale of land/any interest.
c. Contract of antichresis.
d Stipulation to pay interest on loans.
e. Stipulation to reduce common carrier’s 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 an error/mistake.

(5) CASES REFORMATION OF INSTRUMENT IS AVAILABLE

1. 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 parties
5. 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 CONTRACTS

1. RESCISSIBLE – valid until rescinded; has ALL essential requisites but because of injury/damage to
one of the parties, the contract may be rescinded.
2. VOIDABLE – valid until annulled; has ALL essential requisites but because of defect in consent,
contract may be annulled.
3. UNENFORCEABLE – cannot be sued/enforced unless ratified; no effect NOW but may take effect
upon ratification.
4. VOID – NO effect at all; cannot be ratified/validated.

5 RESCISSIBLE CONTRACTS
1. Those entered by guardians & suffered LESION by more than ¼ of value of 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 CONTRACTS
1. One of the parties INCAPABLE 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 CONTRACTS
1. Those entered in name of other person, or who acted BEYOND his powers.
2. Those who do not comply w/ the Statute of Frauds.
3. Both parties are incapable of giving consent to a contract.

7 VOID/INEXISTENT CONTRACTS
1. Those w/c are ABSOLUTELY simulated/fictitious.
2. Those w/c contemplate an impossible 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.

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