 Public order: refers principally to public safety

REVIEWER LAW although it has been considered to mean also the public
weal.
 Contract must not be contrary to public policy
ART 1305 MEMORIZED
 Public policy: refer not only to public safety but
also to considerations which are moved by the common
 A contract is a meeting of minds between two
good.
persons whereby one binds himself, with respect to the
other, to give something or to render some service.
 Nominate contract has a specific name or
 It only takes place when an offer by one party is
designation in law.
accepted by the other.
 Innominate contract has no specific or
 There must be at least two parties because it is
designation in law.
impossible for one to contract with himself.
 Contract is one of the sources of obligation.
 ART 1311
 There is no contract if there is no obligation.
 Binding agreements enforceable through legal
 General rule: a party’s right an obligation
proceedings.
derived from a contract are transmissible to the
 Agreements that cannot be enforced by actions
successors.
in the court of justice (to dance in a party) are not
contracts but merely moral or social agreements.
 Exceptions: the cases where a contract are

effective only between the parties are when the rights and
 All contracts are agreements but not all
obligations arising from the contract are not transmissible.
agreements are contracts.
 Third person: one who has not taken part in a
ART 1306
contract has no right and obligation under the contract to
 Valid contracts those that meet all the legal
which he is a stranger.
requirements and limitations for the type agreement
involve and are, therefore legally binding and enforceable.
 Stipulation or POUR AUTRUI: stipulation in a
 Note: it is possible to have an agreements that
contract clearly and deliberately conferring a favour upon
meets all the criteria of a valid contract but is
a third person who has a right to demand its fulfilment
unenforceable in court of law for failure to comply with
provided he communicates his acceptance to the obligor
the statutes of fraud.
before its revocation by the oblige or the original parties.
 Law: fundamental requirement that the
contract entered into must be in accordance with, and not
 REQUISITES OF STIPULATION POUR AUTRUI -
repugnant to, an applicable statue.
MEMORIZED
 Police power: when there is no law inexistence,
the will of the parties prevails unless their contract
1. The contracting parties by their stipulation
contravenes the limitations of morals or public policy.
must have clearly and deliberately conferred a
 Morals: deal with norms of good and right
favour upon a third person;
conduct evolved in a community.
2. The third person must have communicated his
 Contract must not be contrary to good
acceptance to the obligor before its revocation by
customs.
the oblige or the original parties;
 Customs: consists of habits and practices which
3. The stipulation in favor of the third person
through long usage have been followed or enforced by
should be a part, not the whole, of the contract;
society.
4. The favourable stipulation should not be
 Contract must not be contrary to public order. conditioned or compensated by any kind of
obligation whatever; and

1
 5. Neither of the contracting parties bears the
legal representation or authorization of the third
party for otherwise, the rules on agency will apply.
 THIRD PERSONS ARE BOUND BY CONTRACTS
CREATING REAL RIGHTS
 RIGHT OF CREDITOR TO IMPUGN CONTRACTS
INTENDED TO DEFRAUD THEM
 LIABILITY OF A THIRD PERSON IS RESPONSIBLE
FOR BREACH OF CONTRACT
 CLASSIFICATION OF CONTRACT ACCORDING
TO PERFECTION
1. CONSENSUAL CONTRACT: which is perfected
by mere consent
2. REAL CONTRACT: Which is perfected by the
delivery of the thing subject matter of the
contract.
3. SOLEMN CONTRACT: the only thing that is
written.
It requires compliance with certain formalities
prescribed by law, such prescribed form being
thereby an essential element thereof.
 STAGES IN THE LIFE OF A CONTRACT
1. PREPARATION OR NEGOTIATION: includes all
the steps taken by parties leading to the
perfection of the contract.
2. PERFECTION OF BIRTH: when the parties have
come to a definite agreement or meeting of the
minds regarding the subject matter and cause of
the contract.
3. CONSUMATION OR TERMINATION: when the
parties have performed their respective
obligations and the contract may be aid to have
been fully accomplished or executed, resulting in
the extinguishment or termination thereof.
Contract may also be terminated after its
perfection, not by performance but by mutual
agreements by the parties.
 ART 1317
 UNAUTHORIZED CONTRACTS ARE
ENFORCEABLE
As a general rule, a person is not bound by the
contract of another of which he has no knowledge or to
which he has not given his consent.
 UNAUTHORIZED CAN BE CURED ONLY BY
RATIFICATION
 A PERSON IS BOUND BY THE CONTRACT OF
ANOTHER
 ART 1318
1. CONSENT OF THE CONTRAC TING PARTIES
2. OBJECT CERTAIN WHICH IS THE SUBJECT
MATTER OF THE CONTRACT
3. CAUSE OF THE OBLIGATION WHICH IS
ESTABLISHED
 CLASSES OF ELEMENTS OF A CONTRACT
1. ESSENTIAL ELEMENTS: those without which no
contract can validly exist regardless of the
intentions of the parties.
a) COMMON those that are present in all
contracts, namely, consent, object and
cause.
b) SPECIAL those that not common to all
contracts or those which must be present
only in, or peculiar to, certain specified
contracts.
2. NATURAL ELEMENTS: those that presumed to
exist in certain contracts, unless the contrary is
expressly stipulated by the parties.
3. ACCIDENTAL ELEMENTS: the particular
stipulations, clauses, terms or conditions
established by the party in their contract.
 ART 1319
 CONSENT: is the conformity or concurrence of
wills (offer and acceptance) with respect to contracts, it is
the agreement of the will of one (1) contracting parties
with that of another or others, upon the object or terms
of contract.
 OFFER: is a proposal made by one (1) party
(offerer) to another (offeree), indicating a willingness to
enter a contract.
 OFFER MUST BE CERTAIN AND SERIOUSLY
INTENDED
 ACCEPTANCE: is the manifestation of the
offeree of his assent to all the terms of the offer.
2
 ACCEPTANCE OF OFFER MUST BE CLEAR AND
ABSOLUTE: contract is consist of an offer and acceptance
of the offer. It must be ABSOLUTE, UNCONDITIONAL, OR
UNQUALIFIED.
 COUNTER OFFER: rejection of the original offer
and an attempt by the parties to enter into a contract on a
different basis. The offerer becomes the offeree and the
latter becomes the former.
 EXPRESS ACCEPTANCE: there is a promise to
pay and it maybe oral or written
 IMPLIED ACCEPTANCE: inferred from act or
conduct
 ART 1324
1. OPTION CONTRACT: one giving a person for
consideration within which to accept the offer of
the offerer
2. OPTION PERIOD: is the period given within
which the offeree must accept the offer.
3. OPTION MONEY: money paid or promise to be
paid in consideration for the option.
 ART 1327
 THE FOLLOWING CANNOT GIVE CONSENT TO
A CONTRACT
1. UNINCAPACITATED MINORS
2. INSANE OR DEMENTED PERSONS
3. DEAF-MUTES
 ART 1328
 LUCID INTERVAL: temporary period of sanity. A
contract entered into by an insane or demented person
during a lucid interval is valid.
 EFFECT OF DRUNKENNESS AND HYPNOTIC
SPELL
- To impair the capacity of a person to give
intelligent consent.
- The conditions are equivalent to temporary
insanity.
 ART 1330 MEMORIZED
- A CONTRACT WHERE CONSENT IS GIVEN
THROUGH MISTAKE, VIOLENCE, INTIMIDATION,
UNDUE INFLUENCE OR FRAUD IS VOIDABLE.
 CHARACTERISTICS OF CONSENT
1. IT IS INTELLIGENT: there is a capacity to act
2. IT IS FREE AND VOLUNTARY: there is no
vitiation of consent by reason of violence or
intimidation.
3. IT IS CONSCIOUS OR SPONTANEOUS: no
vitiation of consent by reason or mistake, undue
influence or fraud.
 VICES OF CONSENT
1.
Error or mistake
2.
Violence or force
3.
Intimidation or threat of duress
4.
Undue influence; and
5.
Fraud or deceit
 CAUSES VITIATING CONSENT AND CAUSES OF
INCAPACITY DISTINGUISHED
1. The former are temporary while the latter are
more or less permanent.
2. The first refer to the contract itself, while the
second is to the person entering a contract.
 MISTAKE OR ERROR: IS THE FALSE NOTION OF
A THING OR A FACT MATERIAL TO THE CONTRACT
 MISTAKE OF LAW is that which arises from
ignorance of some provision of law.
 EFFECT OF MISTAKE OF LAW as a rule mistake
does not invalidate a consent because ignorance of the
law excuses no one from compliance therewith.
 UNDUE INFLUENCE: influence of a kind that so
overpowers the mind of a party as to prevent him from
acting understandingly and voluntarily to do what he
would have done.
 ART 1338
 CAUSAL FRAUD: Is the fraud committed by one
party before or at the time of the celebration of the
contract to secure the consent of the other.
-it can also cancel the contract
-causal fraud can be committed through insidious words
of machinations or by concealment.
 REQUISITES OF CAUSAL FRAUD
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 1. There must be representation or concealment
of a material fact with knowledge of its
falsity.
2. It must be serious
3. It must have been employed by one of the
contracting parties.
4. It must be made in bad faith or with the intent
to deceive.
5. It must induce the consent of the other
contracting parties
6. It must be alleged and proved by clear and
convincing evidence.
 FRAUD BY CONCEALMENT CONSTITUTE
FRAUD AND SO CONTREACT IS VOIDABLE
 EXPRESSIONS OF OPINION
1. IT MUST BE MADE BY AN EXPERT
2. THE OTHER CONTRACTING PARTIES
HAS RELIED ON THE EXPERTS
OPINION
3. THE OPINION TURNED OUT TO BE
FALSE OR ERRONEOUS.
 ART 1345-1346
 SIMULATION OF A CONTRACT is the act of
deliberately deceiving others, by feigning or pretending.
-can also make a contact void.
 KINDS OF SIMULATION
1. ABSOLUTE SIMULATION: when the contract
does not really exist and the parties do not intend
to be bound at all.
-absolutely simulated or fictitious contracts are
inexistent and void.
2. RELATIVE SIMULATION: when the contract
entered into by the parties is different from their
true agreement.
 ART 1347
-THE OBJECT OF A CONTRACT IS ITS SUBJECT MATTER
 FUTURE INHERITANCE: any property or right
not in existence or capable or determination at the
time of the contract that a person may inherit in the
future such a person having only an expectancy of a
purely hereditary right.
- Inheritance cease to be future upon the death
of the decedent or deceased.
 VALIDITY OF CONTRACT UPON A FUTURE
INHERITANCE
 ART 1350
 CAUSE (CAUSA): is the essential reason or
purpose which the contracting parties in view at the
time of entering into the contract.
 It is the civil code term for CONSIDERATION in
anglo American or common law.
 CAUSE DISTINGUISED FROM OBJECT: In a
bilateral or reciprocal contract like purchase and sale,
the cause for one is the subject matter or object for the
other, and VICE VERSA.
 ONEROUS: or one the cause of which, for each
contracting party is the prestation or promise of a thing
or service by the other.
Ex. Sale, lease of thing, partnership
 REMUNERATORY OR REMUNERATIVE or one
the cause of which is the service or benefit which is
remunerated.
Ex. X rendered services as the defense counsel of Y
agreed to pay X P 10 000 for said services.
 GRATUITOUS: or one the cause of which is the
liberality of the benefactor or giver.
Ex. Commodatum
 MOTIVE is the purely personal or private
reason which the party has in entering a contract. It
is different from the cause of the contract.
 REQUISITES OF CAUSE
1) It must exist at the time the contract is
entered
2) It must be lawful
3) It must be true or real
 INADEQUACY OF CAUSE IS STILL VALID WHILE
LACK OF CAUSE IS VOID
 ILLEGALITY OF CAUSE: implies that there is a
cause but the same is unlawful or illegal
 FALSITY OF CAUSE: can make the contract
void. Is meant that the contract states a valid
consideration but such statement is not true.
4
 CAUSE PRESUMED TO EXIST AND LAWFUL: the
presumption is not conclusive but only a prima facie
(rebuttable) and maybe contradicted by a contrary
evidence.
 LESION: is any damage caused by the fact that
the price is unjust or inadequate.
 GENERAL RULE: LESION OR INADEQUACY OF
CAUSE DOES NOT OF ITSELF INVALIDATE A
CONTRACT.
 EXCEPTIONS: IT WILL ONLY INVALIDATE A
CONTRACT (1) when there has been fraud, mistake
or under influence. (2) in cases specified by law.
 FORM OF A CONTRACT: refers to the manner
in which a contract is executed or manifested.
 INFORMAL OR COMMON OR SIMPLE
CONTRACT: which may be entered in whatever
form provided all the essential requisites for their
validity are present.
 FORMAL OR SOLEMN CONTRACT: which is
required by law for its efficacy to be in a certain
specified form.
 ART 1380
 RESCISSIBLE CONTRACTS are those validly
agreed upon because all the essential elements
exist and therefore legally effective
 RESCISSION is the remedy granted by the law
to the contracting parties and sometimes even to
third persons in order to secure reparation of
damaged cause.
 ART 1381
 CASES ARE RESCISSIBLE CONTRACTS
1) Contracts entered into in behalf of wards
2) Contracts agreed upon in representation of
absentees
3) Contracts undertaken in front of creditors
4) Contracts which refer to thing under
litigation
5) Other instances
NOTE: ¼ THERE CAN BE A RESCISSION, MORE THAN ¼
OF THE VALUE THERE WILL BE A LESION
 ART 1390
 VOIDABLE OR ANNULLABLE CONTRACTS those
which possess all the essential requisites of a valid
contract but one of the parties is incapable of giving
consent, or consent is vitiated by mistake, violence,
intimidation, undue influence or fraud.
 ANNULMENT is a remedy provided by law, for
reason of public interest, for the declaration of
inefficacy of a contract base on a defect or vice in the
consent of one contracting parties.
 RATIFICATION: means that one voluntarily
adapts or approve some defective or unauthorized
act or contract which, without his subsequent
approval or consent, would not be binding on him.
 WHO MAY RATIFY? (1) THE GUARDIAN (2) THE
INJURED PARTY HIMSELF PROVIDED THAT HE IS
ALREADY CAPACITATED. NOTE: RATIFICATION CAN
BE MADE BY THE PARTY WHOSE CONSENT IS
VITIATED.
 EFFECT OF RATIFICATION RETROACTIVE it
cleanse the contract of all its defects from the
moment it was executed. NOTE: PERFECTED GOING
TO THE PAST
 GUILTY PARTY WITHOUT RIGHT TO BRING
ACTION: including his successor and interest cannot
ask for annulment. This rule is sustained by the
principle that he who comes to court must come with
clean hands.
 ART 1400
WHENEVER A PERSON OBLIGED BY THE DECREE OF
ANNULMENT TO RETURN THE THING CANNOT DO
SO BECAUSE IT HAS BEEN LOST THROUGH HIS
FAULT, HE SHALL RETURN THE FRUITS RECEIVED
AND THE VALUE OF THE THING AT THE TIME OF THE
LOSS, WITH INTEREST FROM THE SAME DATE.
PLAINTIFF: NAGHAHABLA NG KASO
5
 RESPONDENT: ACCUSED
 WHEN A CONRACT IS ANNULED A
RECIPROCAL OBLIGATION OF RESTITUTION IS
CREATED
 ART 1403
 UNENFORCEABLE CONTRACTS: are those that
cannot be enforce or given effect in a court of law or
sued upon by reason of certain defects provided by
law until and unless they are ratified according to
law.
 UNAUTHORIZED CONTRACTS ARE
UNENFORCEABLE
 UNENFORCEABLE CONTRACTS MAY BE
RATIFIED
 IF THERE IS NO CONSENT THERE IS A
RATIFICATION
 ALL DONATIONS ARE PUBLIC INSTRUMENTS
 ART 1407
 WHEN AN UNENFORCEABLE CONTRACT
BECOMES A VOIDABLE CONTRACT when both parties
to a contract are incapable of giving consent the
contract is unenforceable.
 NOTE: VOIDABLE PAG ISA LANG ANG
CONTRACT, UNENFORCEABLE PAG DALAWA.
HAHAHA
 ART 1408
 RIGHT OF A THIRD PERSON TO ASSAIL AN
UNENFORCEABLE CONTRACT strangers to a voidable
contract cannot bring an action to annul the same.
 ART 1409 – MEMORIZED PART OF
ENUMERATION
1) Those whose cause, object or purpose is
contrary to law, moral, good customs, public
order or public policy;
2) Those which are absolutely simulated or
fictitious;
3) Those whose cause or object did not exist at
the time of the transaction;
4) Those whose object is outside the commerce
of man;
5) Those which contemplate an impossible
service;
6) Those where the intention of the parties
relative to the principal object of the contract
cannot be ascertained;
7) Those expressly prohibited or declared void by
law.
 VOID CONTRACTS: are those which because of
certain defects, generally produce no effect at all.
 INEXISTENT CONTRACTS: which lack one or
some or all of the elements.
 ACTIONS OR DEFENSE IS IMPRESCRIPTIBLE if a
contract is void a part can there to always bring a
court action to declare it void or inexistent.
 WHEN BOTH PARTIES ARE IN PARI DELICTO :
BOTH PARTIES ARE AT FAULT
 ART 1421: THE DEFENSE OF ILLEGALITY OF
CONTRACT IS NOT AVAILABLE TO THIRD PERSONS
WHOSE INTEREST ARE NOT DIRECTLY AFFECTED
 ART 1422: A CONTRACT WHICH IS THE DIRCT
RESULT OF A PREVIOUS ILLEGAL CONTRACT, IS
ALSO VOID AND INEXISTENT
GOOD LUCK!!! AND GOD BLESS!!! >-<