Reviewer in OBLICON
- a stipulation in a contract and
Final Exam (Coverage: Articles 1305 -1422)
Chapter 1: General Provisions
ART. 1305
CONTRACT
- a meeting of minds between two persons
whereby one binds himself, with respect
to the other, to give something or to
render some service.
- one of the sources of obligations
- there can be no contract without
obligation.
ART. 1306
The law is giving freedom to make stipulations
provided it’s not contrary to law/ morals/ good
customs/ public order/ public policy.
Limitations on contractual stipulations.
- Law & Police power
ART. 1307
Classifications of Contracts
According to its Name or Designation:
1. Nominate contract – with specific name
or designation in law.
2. Innominate contract – with no specific
name or designation in law.
Kinds of Innominate contract.
1. Do ut des — I give that you may give;
(Real obligation)
2. Do ut facias — I give that you may do;
(Personal obligation)
3. Facto ut des — I do that you may give;
4. Facto ut facias — I do that you may do.
ART. 1308
Contract binds both contracting parties.
ART. 1309
Determination of performance by a third person.
ART. 1310
Determination is not obligatory if found
inequitable or unjust.
ART. 1311
Persons affected by a contract.
- Assigns and heirs have rights and
obligations under the contract
Third persons affected by a contract.
- Right to demand the fulfillment of
obligation with acceptance of debtor.
(interest rate, not whole part of
obligation.)
Stipulation pour autrui
deliberately conferring a favor upon a
third person who has a right to demand
its fulfillment….
ART. 1312
Third persons are bound by contracts; creating
real rights.
ART. 1313
Right of creditor to challenge contracts intended
to defraud them.
ART. 1314
Liability of third person responsible for breach
of contract.
Tort Interference
- liable for quasi-delict
Elements.
1. Valid contract
2. Knowledge of third person of the contract
3. Illegal interference of third person
ART. 1315 - 1316
Classifications of Contracts
According to its Perfection:
1. Consensual contract – perfected by
mere consent.
2. Real contract – perfected by delivery of
the thing.
3. Solemn contract – perfected by special
form.
Stages of Contract
1. Preparation/ Negotiation – no definite
agreement
2. Perfection/ Birth – there’s definite
agreement
3. Consummation/ Termination – terms of
contract are performed, & contract is fully
executed
ART. 1317
Unauthorized contracts are unenforceable, but
can be cured only by ratification.
Chapter 2: Essential Requisites of Contracts
ART. 1318
3 ELEMENTS OF CONTRACT
1. ESSENTIAL – w/o them, contract cannot exist
a. CONSENT of contracting parties
b. OBJECT CERTAIN – subject matter
c. CAUSE/CONSIDERATION
 3. Option money – money paid/ reservation
fee to be paid in consideration for the
In some contracts, ff are also essential: option. Note: Earnest money is the partial
d. FORM payment of purchase price.
e. DELIVERY Withdrawal is possible before acceptance.
2. NATURAL – found in certain contract,
ART. 1325
presumed to exist unless stipulated
Business advertisements generally not define
3. ACCIDENTAL – various particular stipulations
offers.
that may be agreed upon by contracting parties ART. 1326
Advertisements for bidders generally not define
Section 1. – Consent
ART. 1319
offers.
Consent ART. 1327
- the conformity or concurrence of wills Capacity to give consent presumed.
(offer and acceptance) Those who cannot give consent to a contract:
- offer (certain; made during negotiation) 1. Unemancipated minors
and acceptance (absolute; completion of 2. Insane/ demented persons
perfection) 3. Deaf-mutes (who do not know how to
Offer – a proposal made by one party to another; write)
unilateral preposition (1 to 1) ART. 1328
Acceptance – manifestation by offeree of his Contracts entered into during a lucid interval.
assent to all terms of offer. Lucid interval – temporary period of sanity. IT IS
*Qualified acceptance (counter-offer – bargain) VALID.
ART. 1320 Drunkenness/ Hypnotic spell – IT IS VOIDABLE.
Form of acceptance of offer. ART. 1329
Express acceptance – oral or written The incapacity to give consent is subject to
Implied acceptance – inferred from act or modification.
conduct ART. 1330
ART. 1321 Contract where consent is given through
The person making the offer. mistake, violence, intimidation, undue influence,
or fraud is VOIDABLE.
ART. 1322
Offer made through an agent. Vices of Consent
Communication of acceptance. 1. Error or mistake
1. To offerer – it must be absolute. 2. Violence or force
2. To agent – personality of principal is 3. Intimidation or threat
extended to him. 4. Undue influence
5. Fraud or deceit
ART. 1323
ART. 1331
When offer becomes ineffective.
1. Death Mistake may invalidate consent if it’s substantial
2. Civil interdiction (heavy)
3. Insanity Mistake or error – false notion of a thing or a fact
4. Insolvency material to the contract.
ART. 1332
ART. 1324
Option – privilege given to the offeree to accept Miseducation (when one party is unable to read
an offer within a certain period. or does not understand the contract)
1. Option contract – to accept an offer within ART. 1333
a certain period. Knowledge of risk (Awareness of Mistake/Error)
2. Option period – period/ duration given to ART. 1334
offeree to accept. Mistake of Law does not invalidate consent.
 2. Relative simulation – contract entered
into by parties is different from their true
ART. 1335 agreement
Violence & Intimidation 2 Acts involved in Relative simulation
Violence – there’s physical force. (external) Ostensible act(apparent) & hidden act (true
Intimidation – the act creates fear in your mind. agreement
(internal)
Section 2. – Object of Contracts
ART. 1336 ART. 1347
Violence or intimidation by a third person. Object of a contract
ART. 1337 - subject matter
Undue Influence Future Inheritance
- Taking advantage of someone’s power or - property or right, not in existence or
authority. capable of determination at the time of
ART. 1338 contract that a person may inherit in the
Causal Fraud (fraud in obtaining consent) future.
ART. 1339 ART. 1348
Fraud by concealment. Impossible things or services cannot be object of
- Misrepresentation or false contracts. IT IS VOID.
representation.
Kinds of Impossibility
ART. 1340 1. Physical – the things or service in the very
Usual exaggerations in trade. (not fraudulent) nature of things cannot exist.
ART. 1341 2. Legal – the things or service is contrary to
Expression of opinion. law, morals, good customs, public
ART. 1342 order/policy.
Fraud by a third person. (it doesn’t vitiate ART. 1349
consent except if it’s in connivance…) Quantity of object of contract need not be
ART. 1343 determinate.
Misrepresentation made in good faith. (not
fraudulent) Section 3. – Cause of Contracts
ART. 1350
ART. 1344
Cause (causa)
2 Kinds of Fraud in the making of contract. - the essential reason or purpose which the
1. Causal fraud – ground for annulment of contracting parties have in view at the
contract. time of entering into the contract.
2. Incidental fraud – does not vitiate - term for consideration
consent.
Classifications of Contracts
DOLO CAUSANTE DOLO INCIDENTE
Serious Not serious According to its Cause:
cause induces party to ENTER NOT the cause to enter into 1. Onerous - the cause of which is the
into contract contract contracting party is the prestation or
make contract voidable contract is valid; liable
promise of a thing/ service by the other.
for damages
2. Remuneratory – the cause of which is
ART. 1345 - 1346 the service or benefit is promise which is
Simulation of contract may be absolute or remunerated.
relative. 3. Gratuitous - the cause of which is the
Simulation of contract – the act of deliberately liberality of the benefactor or giver.
deceiving others… ART. 1351
Kinds of Simulation Motive - purely personal or private reason which
1. Absolute simulation – no contract exists. a party has in entering into a contract. NOT A
IT IS VOID. CAUSE of the contract.
 - Fixes the contract because the true
intention is not stated.
Cause distinguished from motive.
ART. 1361
CAUSE MOTIVE
immediate or direct reason remote or indirect reason Mutual mistake as basis for reformation
Exception: If the mutual mistake is of law, it is annulment.
known to the other party unknown
ART. 1362
essential element of not
contract Innocent party can ask for reformation.
ART. 1352 ART. 1363
Contract without cause. IT IS VOID. Concealment of mistake by the other. (It
constitutes FRAUD.)
ART. 1353
False cause in contracts. IT IS VOID. ART. 1364
Ignorance, etc. on the part of third person.
ART. 1354
(Either party can ask for reformation.)
Cause presumed to exist and lawful.
ART. 1365
ART. 1355
Mortgage or pledge stated as a sale.
Lesion or Inadequacy of Cause
(Reformation of the instrument is proper.)
Lesion – damage caused by the fact that the price
is unjust. GENERAL RULE: It doesn’t invalidate a ART. 1366
contract. Cases when reformation is not allowed.
1. Simple donations (inter vivos)
Exception: Lesion will invalidate a contract,
2. Wills
unless there has been fraud, mistake or undue
3. Real agreement is void.
influence.
ART. 1367
Chapter 3: Form of Contracts When one party has brought an action to enforce
ART. 1356 - 1358 the instrument. (It is inconsistent with
Form of a contract reformation. IT IS VOID.)
- The manner in which a contract is ART. 1368
executed or manifested. Party entitled to reformation.
When contract considered in written form. IT ART. 1369
MUST BE IN WRITING. Procedure for reformation.
Classifications of Contracts
Chapter 5: Interpretation of Contracts
According to its Form: ART. 1370 - 1379
1. Informal or common contract – may be Interpretation of Contracts
entered in any form provided all essential - The determination of the meaning of the
requisites for validity are present. terms or words used by the parties in
2. Formal or solemn contract – required their written contract.
by law for its efficacy to be in certain
specified form. Chapters 6, 7, 8 & 9
Chapter 4: Reformation of Instruments Kinds of Defective Contracts
ART. 1359 - 1360 1. RESCISSIBLE – valid until rescinded; has ALL essential
requisites but because of injury/damage to one of the
Reformation
parties, the contract may be rescinded.
- Remedy allowed by law by means of 2. VOIDABLE – valid until annulled; has ALL essential
which a written instrument is amended or requisites but because of defect in consent, contract may
rectified so as to express or conform to be annulled.
the real agreement or intention of the 3. UNENFORCEABLE – cannot be sued/enforced unless
ratified; no effect NOW but may take effect upon
parties when by reason of mistake, fraud,
ratification.
inequitable conduct, or accident, the 4. VOID – NO effect at all; cannot be ratified/validated.
instrument fails to express such
agreement or intention.
END