ESSENTIAL REQUISITES OF CONTRACTS Consent
- the agreement of the will of 1 contracting part with that of another
[1] 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.
CLASSES OF ELEMENTS OF A CONTRACT:
1. Essential Elements ​- no contract can validly exist without these
​ f a contract.
elements; ​requisites o
a. Common ​- present in all contracts (namely, consent,
object, etc.)
b. Special ​- not common to all contracts
i. Form ​- mortgage, delivery in real contracts
ii. Subject matter ​- real property in antichresis
iii. Consideration/Cause ​- price in sale/lease
2. Natural Elements ​- presumed to exist in certain contracts unless
the contrary is expressly stipulated by the parties.
3. Accidental Elements ​- particular stipulations, clauses, terms, or
conditions established by the parties.
CONSENT
[2] 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.
or others, upon the object and terms of the contract.
- meeting of minds or mutual asset between the parties.
Offer
- proposal made by 1 party (offerer) to another (offeree).
- a promise to act.
1. ​Certain/Definite
Offer: Will you buy this watch for P10 000?
Not: I am willing to buy your car.
2. ​An offer made in anger is NOT VALID
Offer: If S offered his watch as a joke, but B didn’t realize that S
was joking and accepted the offer.
Acceptance
- manifestation by the offeree of his assent to all the terms of the
offer.
- absolute, unconditional, or unqualified.
CONSENT = OFFER + ACCEPTANCE
Counter-offer
- a rejection of the original offer
- Attempt by the parties to enter into a contract on a different
basis.
Example:
S offered his car to B for P200 000. B accepted the offer;
however, B proposes to only pay P160 000. In this case, B becomes the
offerer and S becomes the offeree.
[2] ART. 1320
An acceptance may be express or implied.
FORM OF ACCEPTANCE OF OFFER
- may be ​oral ​or ​written
- inferred from ​act​ or c
​ onduct​.
[3] ART. 1321 OFFER BECOMES INEFFECTIVE:
The person making the offer may fix the time, place, and ● Any time BEFORE it is accepted
manner of acceptance, all of which must be complied with. ● Death
● Civil Interdiction
Example: ● Insanity
The offerer may tell the offeree to accept the offer on January 15 ● Insolvency of either party
(time), in the office of the offerer (place), all of which must be complied ● Failure to comply with the conditions
with by E to create a contract. ● Expiration of the period fixed
● Destruction of thing
COMMUNICATION OF THE OFFER ● Rejection of offer
Offer must be COMMUNICATED and RECEIVED by the offeree.
It may be by letter, telephone, email, or the like. It may be [6] ART. 1324
expressed by language or acts by offeror understood by the other party When the offerer has allowed the offeree a certain period to
(nodding). accept, the offer may be withdrawn at any time before acceptance
by communicating such withdrawal, except when the option is
[4] ART. 1322 founded upon a consideration, as something paid or promised.
An offer made through an agent is accepted from the time
acceptance is communicated to him. Option
- the privilege itself given to the offeree to accept an offer within a
COMMUNICATION OF ACCEPTANCE certain period.
1. To Offerer - must be absolute
2. To Agent - considered an extension of the personality of his principal. Option Contract
- one giving a person for a consideration a certain period within
Art. 1322 application: offer is MADE and COMMUNICATED through the which to accept the offer of the offerer.
agent. Option Period
No Contract: principal MADE the offer and acceptance is - the period given within which the offeree must accept the offer.
COMMUNICATED to the agent. Except, agent is AUTHORIZED. Option Money
- the money paid or promised to be paid in consideration for the
[5] ART. 1323 option.
An offer becomes ineffective upon the death, civil - Earnest Payment ​- partial payment of the purchase price and is
interdiction, insanity, or insolvency of either party before considered as proof of the perfection of contract.
acceptance is conveyed.
General Rule:
When the offerer gives the offeree a certain period to accept the
offer, the offer may be withdrawn at any time before acceptance.
Except, when the option is something paid/promised.
Example: [9] ART. 1327
X offers to construct Y’s house for P1 000 000, giving Y 10d to The following cannot give consent to a contract:
decide. (1) Unemancipated minors;
X may withdraw the offer before the lapse of 10d, unless Y had (2) Insane or demented persons, and deaf-mutes
already accepted the offer. If Y accepted the offer, X may still withdraw if who do not know how to write.
Y has not paid/promised to pay.
X may NOT withdraw if Y paid/promised to pay X for giving him The burden of proof on being incapacitated is on the party who
the 10d period. After 10d, without acceptance, the offer is now asserts incapacity.
ineffective.
A contract where one of the parties is incapable is VOIDABLE:
[7] ART. 1325 ● Unemancipated minors
Unless it appears otherwise, business advertisements of - have not yet reached the age of maturity (18) and are
things for sale are not definite offers, but mere invitations to make still subjected to parental authority.
an offer. - Emancipated ​- attainment of the age of maturity,
marriage, concession in the Civil Register, parental
Not Definite: authority
Business advertisements ● Insane or demented persons
For sale: 200 sq.m lot at Green Village, QC for P1 000 000 - tel - need to be proved
no.884-1284 ● Deaf-mutes
- deaf and dumb
Definite: - VALID: knows how to read or write
Advertisements that is complete in all particulars necessary in a - NOT VALID: does not know how to read and write
contract
For sale: 200 sq.m lot at Green Village, QC located at the corner Those three mentioned can easily be the victims of fraud. They
of G and R st. for P1 000 000 cash - tel no. 884-1284. can enter into a contract only through a parent or guardian.

[8] ART. 1326 [10] ART. 1328

Advertisements for bidders are simply invitations to make Contracts entered into during a lucid interval are valid.
proposals, and the advertiser is not bound to accept the highest or Contracts agreed to in a state of drunkenness or during a hypnotic
lowest bidder, unless the contrary appears. spell are voidable.

Bidder ​- offerer Lucid Interval

Advertiser ​- offeree; accept/reject - temporary period of sanity

General Rule: Contract entered by an insane period during lucid interval is

The advertiser is not bound to accept the highest or lowest VALID. However, it must be shown that there is a full return of mind to
bidder unless the contrary appears (Juridical sales - auctioneer is bound sanity.
to accept the highest bid).
 Drunkenness and hypnotic spell impair the capacity of a person CHARACTERISTICS OF CONSENT:
to give intelligent consent. Thus, VOIDABLE. This is equal to ​Temporary ● Intelligent ​- there is capacity to act
Insanity. ● Free and voluntary ​- no vitiation of consent by reason of
violence/intimidation
[11] ART. 1329 ● Conscious or spontaneous ​- no vitiation of consent by reason
The incapacity declared in Article 1327 is subject to the of mistake, undue influence, or fraud.
modifications determined by law, and is understood to be without
prejudice to special disqualifications established in the laws. VICES OF CONSENT
Makes the contract voidable
CASES WHERE ENUMERATED PERSONS IN ART. 1237 CAN GIVE 1. Error/Mistake
CONSENT: 2. Violence/Force
1. Necessities​ such as foods are sold 3. Intimidation/Threat/ Duress
2. Minor may contract for ​life, health, & accident insurance. 4. Undue Influence
3. If entered through a ​guardian/legal representative. 5. Fraud/Deceit
4. Minor ​misrepresents his age ​and convincingly led the other
party to believe Causes Vitiating Consent - ​temporary; refers to the contract itself;
5. Minor (18-21) ​voluntarily​ pays/delivers a thing and obligee has voidable
spent it in ​good faith. Cause of Incapacity ​- more or less permanent; to the person entering
into the contract; voidable
INCOMPETENTS:
● Persons suffering the accessory penalty civil interdiction [13] ART. 1331
● Hospitalized lepers In order that mistake may invalidate consent, it should refer
● Prodigals to the substance of the thing which is the object of the contract, or
● Deaf and dumb to those conditions which have principally moved one or both
● With unsound mind even though they have lucid intervals parties to enter into the contract.
● Cannot, without outside aid, take care of themselves and Mistake as to the identity or qualifications of one of the
manage their property parties will vitiate consent only when such identity or qualifications
have been the principal cause of the contract.
PRODIGALS THAT CAN ENTER CONTRACT: A simple mistake of account shall give rise to its correction.
● Insolvents until discharged
● Married woman (art. 39) Mistake/Error
● Husband and wife with respect to the sale of property to - false notion of a thing or a fact material to the conduct
each other 1. May be a fact or of law​ - may arise from ignorance or lack of
● Others disqualified by law knowledge.
2. Substantial mistake of fact ​- party would not have given his consent
[12] ART. 1330.​ had he known of the mistake
A contract where consent is given through mistake, 3. Unilateral ​- only one party is mistaken ; B
​ ilateral ​- both parties are in
violence, intimidation, undue influence, or fraud is voidable. error.
MISTAKE OF FACT TO WHICH LAW REFERS
1. Substance of the thing
- Object of the contract
- A is buying from B a breeding cow but B is selling a
barren cow.
2. Conditions
- Principally moved one/both parties to enter into the
contract
- S is selling his land for P200 000 cash but B is buying
the land thinking that it is payable for installments.
3. Identity or qualifications
- the same was the principal cause of the contract
- A donated his car to B, thinking that B is his brother. It
turned out that B is not related to A. (Material)
- A sold his car to B. A thought that B, who is a lawyer,
was a doctor. (Not Material).
MISTAKE OF FACT WHICH DOES NOT VITIATE CONTRACT
1. Incidents of a thing/accidental qualities
2. Mistake to quantity or amount ​- gives rise to correction only
3. Motives of the contract ​- unless motives constitutes a condition
4. Identity/qualifications of a party ​- unless it is the principal
cause
5. Errors which could have been avoided​ - fact known to him
EFFECT OF MISTAKE:
1. Simple
- a simple mistake of account or calculation does not
avoid a contract.
- The purchase prise stated is 285 305, when it should be
235 305.
2. Gross
- It was stated that the are is 567meters but with an actual
area of only 467 meters.
[14] ART. 1332
When one of the parties is unable to read, or if the contract
is in a language not understood by him, and mistake or fraud is
alleged, the person enforcing the contract must show that the terms
thereof have been fully explained to the former.
It is the party enforcing the contract who is duty-bound to show
that there has been no fraud or mistake and the terms of the contract
have been fully explained to the other party.
[15] ART. 1333
There is no mistake if the party alleging it knew the doubt,
contingency or risk affecting the object of the contract.
[16] ART. 1334
Mutual error as to the legal effect of an agreement when the
real purpose of the parties is frustrated, may vitiate consent.
Mistake of Law
- Arises from an ignorance of some provision of law, or from an
erroneous interpretation of its meaning, or from an erroneous
conclusion.
- Does not invalidate consent
- Ignorantia legis neminem excusat (ignorance of the law excuses
no one)
REQUISITES FOR ART 1334:
● Error must be mutual
● Legal effect of an agreement
● Frustrate the real purpose of the parties
[17] 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.
Violence
- Requires the employment of physical force
- X signs a contract because every time he refuses he is hit by the
butt of a gun.
REQUISITES FOR INTIMIDATION TO VITIATE CONSENT:
● Must produce a​ ​REASONABLE and WELL-GROUNDED FEAR
of an evil
● Evil must be IMMINENT and GRAVE
● Evil must be upon his PERSON OR PROPERTY, or that of his
SPOUSE, DESCENDANTS, OR ASCENDANTS.
● The reason why ENTERS into the contracts
FACTORS TO DETERMINE DEGREE OF INTIMIDATION:
● Age, Sex, and Condition of the person
● Reverential Fear
- The fear of displeasing a person to whom respect and
obedience are due
- VALID
● The threat of a court is VALID.
[18] 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.
[20] 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.
Undue Influence
- Influence of a kind that so overpowers the mind of a party as to
prevent him from acting understandingly and voluntarily
- Must be undue or improper
1. Confidential, family, spiritual, and other relation between parties
2. Mental weakness
3. Ignorance
4. Financial distress of the person alleged to have been unduly
influences
[21] 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.
Causal Fraud
- Committed by 1 party before/at the time of the celebration of the
contract to secure the consent of the other.
- To induce the other to enter into a contract w/o which the latter
would not have agreed to.
- Committed through “​Insidious words or Machinations (​ any
misrepresentation in words/actions done with a fraudulent
purpose”​ or by Concealment
REQUISITES:
1. Misrepresentation or concealment ​of a material fact with
knowledge of its falsify
2. Serious
 3. Employed by only one of the contracting parties; ​unless, (3rd
person) it was practiced in connivance with the knowledge of the
favored contracting party [25].
4. Bad faith or with intent to deceive ​the other part who had no
knowledge of the fraud
5. Induced the consent of the other party
6. Alleged and proved by clear and convincing evidence
Examples:
S offered to sell to B a ring, claiming that it is gold. S knows that
it is not gold. If B buys the ring, the sale may be annulled.
[22] ART. 1339
Failure to disclose facts, when there is a duty to reveal
them, as when the parties are bound by confidential relations,
constitutes fraud.
Concealment
- Neglect or failure to communicate/disclose that which a party to
a contract knows and ought to communicate
- “Misrepresentation or false representation”
- Injured party is entitled to rescind or annul the contract
[23] ART. 1340
The usual exaggerations in trade, when the other party had
an opportunity to know the facts, are not in themselves fraudulent.
When the person dealing with merchants/traders had the chance
to know the facts, it is not fraud.
The misrepresentation must be of a ​fact, past/present, and not
a mere expression of an opinion.
Examples:
“The refreshment of friendship”
“First in quality”
[24] ART. 1341
A mere expression of an opinion does not signify fraud,
unless made by an expert and the other party has relied on the
former's special knowledge.
FRAUD MUST BE:
● Made by an expert
● Other party relies on the expert’s opinion
● Opinion turned out to be false or erroneous
Example:
X found a ring and sells it to Y, saying that it is a diamond ring.
If X is a farmer and has no knowldge about rings, there is NO
FRAUD. If X is an expert on stones, contract is VOIDABLE because
there is FRAUD.
[25] ART. 1342
Misrepresentation by a third person does not vitiate
consent, unless such misrepresentation has created substantial
mistake and the same is mutual.
Examples:
B bought the land of S for P2 000 per sq.m. The reasonable
prince of that land is P2 500; but S only sold it for P2 000 because C
convinced him. Contract cannot be annulled; unless, B was a party to the
fraud.
[27] ART. 1343
Misrepresentation made in good faith is not fraudulent but
may constitute error.
[28] ART. 1344
In order that fraud may make a contract voidable, it should
be serious and should not have been employed by both contracting
parties.
Incidental fraud only obliges the person employing it to pay
damages.
Causal Fraud
- Ground for the annulment of a contract
- Serious, not employed by both parties, and not known by
the other party.

Incidental Fraud
- The party who employs it is liable for damages - the fraud was
not the principal inducement that led the other to give his
consent.

[29] ART. 1345

Simulation of a contract may be absolute or relative. The
former takes place when the parties do not intend to be bound at
all; the latter, when the parties conceal their true agreement.

[30] ART. 1346

An absolutely simulated or fictitious contract is void. A
relative simulation, when it does not prejudice a third person and is
not intended for any purpose contrary to law, morals, good
customs, public order or public policy binds the parties to their real
agreement.

Simulation of a Contract
- Act of deliberately deceiving others, by feigning or pretending by
agreement, the appearance of a contract which is either
non-existent or concealed.

1. Absolute Simulation
- Contract does not really exist; parties do not intend to be bound
at all
- Inexistent and void
- D is indebted to C. D pretended to sell his land to A upon
learning that C is going to enforce his credit.
2. Relative Simulation
- Contract entered into by the parties is different from their true
agreement.