1. What is a contract?

According to Article 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.
In other words a contract is an agreement between two or more parties that is
enforceable by law. A contract consists of voluntary promises to do or not do certain
things. Promises in a contract are legal obligations.
Hector S. De Leon and De Leon, Jr. (2010) Comments and Cases on Obligations
and Contracts

1. Distinguish contract from pacto or stipulation.

Contracts are pacto enforceable through legal proceedings. Those agreements
which cannot be enforced by action in the courts of justice (like an agreement to go
to a dance party) are not contracts but merely moral or social agreements. An
agreement is broader than a contract because the former may not have all the
elements of a contract.
So, all contracts are agreements but not all agreement are contracts.
Hector S. De Leon and De Leon, Jr. (2010) Comments and Cases on Obligations
and Contracts

2. What are the stages in the life of a contract?

Three stages in the life of a contract:
A. Preparation or negotiation – this includes all steps taken by the prospective
parties from the time manifest interest in entering into a contract, leading to the
perfection of the contract.
B. Perfection or birth – this takes place when parties have come to a definite
agreement or meeting of the kinds regarding the terms, that is, the subject matter
and cause of the (consensual) contract (Art. 1319)
C. Consummation or termination – this takes place when the parties have fulfilled or
performed their respective obligations for undertakings under the contract and
the contract may be said to have been fully accomplished or executed, resulting
in the extinguishment thereof.
Hector S. De Leon and De Leon, Jr. (2010) Comments and Cases on Obligations
and Contracts

3. What are the elements of a contract?

Article 1318. There is no contract unless the following requisites concur:
a. Consent of the contracting parties;
b. Object certain which is the subject matter of the contract;
c. Cause of the obligation which is the established.
 New Civil Code of the Philippines (1991)

4. Distinguish express contract from implied contract.

A contract can be either an express contract or an implied contract. An express
contract is one in which the terms are expressed verbally, either orally or in writing.
An implied contract is one in which some of the terms are not expressed in words
while an implied contract can either be implied in fact or implied in law . A contract
which is implied in fact is one in which the circumstances imply that parties have
reached an agreement even though they have not done so expressly. For example,
by going to a doctor for a physical, a patient agrees that he will pay a fair price for
the service. If he refuses to pay after being examined, he has breached a contract
implied in fact.
Express contracts consist of agreements in which the terms are stated by the
parties. The terms may be stated orally or in writing. But the contract as a whole
must reflect the intention of the parties. As a general rule, if an express contract
between the parties is established, a contract embracing the identical subject cannot
be implied in fact, as the law will not normally imply a substitute promise or contract
for an express contract of the parties.
Contracts implied in fact are inferred from the facts and circumstances of the
case or the conduct of the parties. However, such contracts are not formally or
explicitly stated in words. The law makes no distinction between contracts created
by words and those created by conduct. Thus, a contract implied in fact is just as
binding as an express contracts that arises from the parties’ declared intentions, with
the only difference being that for contracts implied in fact courts will infer the parties’
intentions from their business relations and course of dealings.
Chark, LTD (1999-2000) retrieved August 31, 2012v from
http://lawexams.com/implied-contracts

5. What are innominate contracts? Give examples.

Innominate contracts are contracts which have no specific name or designation
in law. Examples includes (1) do ut des (I give that you may give), (2) do ut facias (I
give that you may do), (3) facio ut des (I do that you may give) and (4) facio ut facias
(I do that you may do). Do ut des is, however, no longer an innominate contract. It
has been given a name of its own, i.e., barter or exchange. (Art. 1638).
Hector S. De Leon and De Leon, Jr. (2010) Comments and Cases on Obligations
and Contracts

6. May the validity or compliance of a contract be left to the will of one of the
contracting parties? Why?
 Article 1308. The contract must bind both contracting parties; its validity or
compliance cannot be left to the will of one of them. (1256a)
New Civil Code of the Philippines (1991)

7. To whom are contracts binding?

Generally, a contract only binds the parties to it, and no one else. According to
the doctrine of privity, anyone who is not a party to the contract is considered a third
party and cannot be obligated to do anything required under the contract. If you want
to add another person to the contract, this person should be added as a party and
you should obtain a signature to prove consent. However, if a contract is registered
as a public document, it is considered as binding also even to third persons.
Subsequently, “it is written in Article 1308, the Contracts must bind both
contracting parties”.
Hector S. De Leon and De Leon, Jr. (2010) Comments and Cases on Obligations
and Contracts
Chris Field (n.d) Elements of a Contract from
http://www.lawhandbook.org.au/handbook/ch12s01s02.php#

8. What is a stipulation “pour autrui”? Give example.

A stipulation pour autrui gives the third-party beneficiary a cause of action
against the promisor for specific performance. In order for a third party to be a third-
party beneficiary of a stipulation pour autrui there usu. has to be a legal or factual
relationship between the stipulator and the beneficiary. The whole
Law of life-insurance, when the capital is to be paid to third parties, and –the laws
of accident-insurance by an employer for the benefit of his workmen are two only of
the many applications of this principle, and new cases to which it can be applied are
continually occurring.
Benjamin A. Cabrido Jr. (n.d) Contracts from
www.freewebs.com/homerpablo/.../CONTRACTS.doc

9. When do contracts become perfect?

According to Article 1315, Contracts are perfected by mere consent, and from
that moment the parties are bound not only to the fulfillment of what has been
expressly stipulated but also to all the consequences which, according to their
nature, may be in keeping with good faith, usage and law. (1258)
Hector S. De Leon and De Leon, Jr. (2010) Comments and Cases on Obligations
and Contracts
11. What are the essential requisites of a contract?
Article 1318. There is no contract unless the following requisites concur:
a. Consent of the contracting parties;
 b. Object certain which is the subject matter of the contract;
c. Cause of the obligation which is the established.
New Civil Code of the Philippines (1991)

12. What is consent?

Consent is the conformity of wills and with respect to contract, 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.
Hector S. De Leon and De Leon, Jr. (2010) Comments and Cases on Obligations
and Contracts

13. How is consent manifested?

Article 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 offer except from the
time it came to his knowledge. The contract, in such case, is presumed to have been
entered into a place where the offer was made.(1262a)
New Civil Code of the Philippines (1991)

14. What is an offer?

Offer is a proposal made by one party (offerer) to another to enter a contract. It is
more than an expression of desire or hope. It is really a promise to act or to refrain
from acting on condition that the terms thereof are accepted by the person to whom
it is made.
Hector S. De Leon and De Leon, Jr. (2010) Comments and Cases on Obligations
and Contracts

15. What is acceptance?

Acceptance is a manifestation by the offeree of his assent to the terms of the
offer. Without acceptance, there can be no meeting of the minds between the
parties. (Art 1305.) A mere offer produces no obligation
Hector S. De Leon and De Leon, Jr. (2010) Comments and Cases on Obligations
and Contracts

16. M offered to trade his sawmill for some tractors of L Company. Upon receipt of the
offer, the manager of the L Company replied that the company was “willing to the
proposition” and he advised M to see the property officer of the Company for a
possible arrangement. Is there a perfect contract of barter as to entitle M to demand
specific performance? Reasons.
A contract of Barter is one which is considered as “consensual” or one which is
perfected by mere consent of the contracting parties. Moreover, Article 1319 of the
New Civil Code provides that “Consent is manifested by the meeting of the offer and
the acceptance upon the thing and the cause which are to constitute a contract. The
offer and the acceptance must be absolute. A qualified acceptance constitutes
counter-offer”
It is notable that what has been manifested by the L Company was “mere
willingness” to accept the proposal or offer made by M, and not the actual
acceptance of the same, hence, the contract between them is not yet deemed
perfected.
New Civil Code of the Philippines (1991)

17. When will an offer become ineffective?

Article 1323. An offer becomes ineffective upon the death, civil interdiction,
insanity, or insolvency of either party before acceptance is conveyed.
New Civil Code of the Philippines (1991)

18. Arturo offered to sell to Benito a parcel of land, the offer to remain open until
March 5, 1966; Arturo notified Benito that he withdrew his offer. Nevertheless, on
March 2, 1966, Benito tendered the purchase money, which Arturo refused to
accept. Can Benito compel Arturo to sell the land? Why?

Under Article 1324 of the new Civil Code “When the offeree has allowed
the offeree a certain period to accept, the offer may be withdrawn at any time
before acceptance by communicating such withdrawal, except when the option is
founded upon consideration, as something paid or promised”. Therefore, since
there is no consideration involved, Arturo has the right conferred by the
aforementioned statutory provision to withdraw the offer made by him. Moreover,
after Benito has been notified of such withdrawal, the offer was deemed
cancelled, hence the former can no longer compel Arturo to sell the land.
New Civil Code of the Philippines (1991)

19. What is an option?

An option is a contract made for consideration to keep an offer open for a

prescribed period. It is also a right which acts as a continuing offer, given for
consideration, to purchased or leased property at an agreed upon price and
terms, within a specified time.
 Henry Campbell Black, M. A. (1891-1991) Black’s Law Dictionary with
pronunciations.

20. X, in Legaspi, wrote Y, in Manila, offering certain goods for sale at a certain price.
Y wrote a letter to X accepting the offer and sent it through the mail. Before X
received the letter, he received a telegram from Y stating that he withdrew the
acceptance. Was a valid contract made? Reasons.

No, Article 1319 (par. 2) of the New Civil Code states that “Acceptance
made by letter or telegram does not bind the offerer except from the time it came
to his knowledge”. Therefore, the acceptance made by Y through a letter (not
received by X) imposed no obligations whatsoever, what will prevail was the
withdrawal of the same through telegram since it came to the knowledge of X.
New Civil Code of the Philippines (1991)
 ADAMSON UNIVERSITY
900 San Marcelino St., Ermita Manila
College of Engineering
Electronics Engineering Department
1st SEMESTER (S.Y. 2012-2013)

Subject: ECE Laws and Contracts

Name:De Guzman, Mara Roselle E. Score:

Schedule: Monday& Friday 5:00 – 6:30PM Date: August 31, 2012
Professor: Engr. Evelyn Raguindin