AGUANTA, PRINCESS NICOLE ALLYSON (A-236)

Chapter 2 Section 1 – Consent

STUDY GUIDE – PROBLEMS (p. 369)

1. In a contract containing an option period, when is the offerer not allowed to withdraw his offer
even before acceptance by the offeree? When is the offerer allowed to withdraw his offer even after
acceptance?

Answer:
According to Article 1324, "When the offeror 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may be withdrawn at any time before acceptance by communicating such withdrawal, except when the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 a consideration, something paid or promised." An option period is the time given
within which the offeree must accept the offer..

As a general rule, the offer may be withdrawn by the offeror any time before acceptance. However, there
are some exceptions to this rule. 

First, the offeror may not withdraw the offer if the option is founded upon a consideration S, as something
paid or promised - like a downpayment. Second, the offeror may withdraw the offer even after acceptance
if the contract is a unilateral one that promises to buy or sell a determinate thing not supported by any
consideration distinct from the price from which that thing was intended to be sold.

2. S sold his house to B believing that B was C. Can S legally withdraw from the contract on the
ground of mistake?

Answer:
One of the causes that vitiate consent or render it defective so as to make the contract voidable is error or
mistake. According to Article 1331, in order that mistake may invalidate consent, it should refer to the
substance of the thing which is the object of the contract. Mistakes may be of fact or of law. This article
refers to mistake of fact - which arises from ignorance or, in this case, lack of knowledge.

S cannot legally withdraw from the contract on the ground of mistake. The mistake, which was regarding
the identity of a party, does not vitiate consent. Therefore, it does not make the contract voidable. The
reason behind this is that contracts are entered into more in consideration of the things or services which
form their subject matter rather than persons.

3. S agreed to deliver to B 500 cavans of rice at P600 per cavan. S delivered only 490 cavans
deliberately misrepresenting that the delivery consisted of 500 cavans. Can B ask the court to annul
the contract on the ground of fraud?

Answer:
According to Article 1330, a contract where consent is given through mistake, violence, intimidation,
undue influence, or fraud is voidable. In addition, Article 1331 states that consent may be invalidated
when a mistake is made regarding the substance of the thing, which is the object of the contract.

Applying Article 1331, B can ask the court to annul the contract on the ground of fraud because S
deliberately misrepresented the quantity or amount of the thing to be delivered. This act is deliberate and
intentional. It did not arise from ignorance nor from lack of knowledge, therefore counts as fraud.
4. S sold to B a commercial land for P1,000,000. S assured B that it is certain that in two years time,
the land would increase in market value by 50% or P1,500,000. It turned out that the market value
of the land even decreased to about P800,000. Is S liable to B for misrepresentation?

Answer:
Yes. S is liable to B for misrepresentation. However, in good faith. According to Article 1343,
misrepresentation in good faith is not fraudulent but may constitute error. In this case, S made a
representation - however, in good faith. S made a false statement which he, himself, believed to be true.
This is considered a mere mistake or error, not fraud.

5. Suppose in the same problem, what S sold to B, hardware owner, are 500 bags of cement. S had
every reason to believe that the price of cement would go down. After two weeks, it did go down.
Has B the right to have the sale annulled?

Answer:
Yes. Article 1339 states that failure to disclose facts, when there is duty to reveal them, as when the
parties are bound by confidential relations, constitutes fraud.

What S did, neglecting or failing to communicate or disclose what he knows and ought to communicate,
is called concealment. This is equal to misrepresentation. The injured party, B, is entitled to annul the the
contract whether or not the failure to disclose the facts were intentional.

In this case, since the failure is unintentional, the basis of action for annulment is not fraud, but mistake or
error.