Chapter 2

ESSENTIAL REQUISITES OF
CONTRACTS
 ELEMENTS OF CONTRACTS
ELEMENTS OF CONTRACTS

A. Essential

1. Common

2. Special

B. Natural

C. Accidental
 COMMON ESSENTIAL ELEMENTS
COMMON ESSENTIAL ELEMENTS

A. Consent

B. Object

C. Cause
 CONSENT
CONSENT (Article 1319)
– The conformity or concurrence of wills (offer and
acceptance) and with respect to contracts, 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.

GENERAL RULE
– Capacity to give consent is presumed.
 CONSENT
OFFER ACCEPTANCE
• Article 1319 – Offer must be certain. • Article 1319 – Acceptance
• Article 1321 – Offer may fix time, place, and manner
must be absolute.
of acceptance.
• Article 1320 – Acceptance may
• Article 1322 – Offer may be made through an agent.
be express or implied.
• Article 1323 – Offer becomes ineffective upon the
death, civil interdiction, insanity, or insolvency. • Article 1321 – Acceptance
• Article 1324 – Offer may be withdrawn at any time must comply with the terms of
before acceptance. the offer.
• Article 1325 – Business advertisements of things for
sale are not definite offers. • Article 1322 – Acceptance
must be communicated to the
• Article 1326 – Advertisements for bidders are not
definite offers.
agent who made the offer.
 CONSENT
PERSONS WHO CANNOT GIVE CONSENT (Article 1327)

A. Minors.

B. Insane or demented.

C. Deaf-mutes who do not know how to write.

 CONSENT
MODIFICATIONS ON INCAPACITY DISCUSSED UNDER
ARTICLE 1327 (Article 1329)

A. When necessaries such as food, are sold and delivered to a minor

or other person without capacity to act, he must pay a reasonable
price therefor (Articles 1489 and 290).

B. A contract is valid if entered into through a guardian or legal

representative (Article 1381 (1) and (2)).

C. A contract is valid where the minor misrepresented his age and

convincingly led the other party to believe his age his legal
capacity.
 CONSENT
LUCID INTERVAL
– A temporary period of sanity.

EFFECT OF LUCID INTERVAL (Article 1328)

– A contract entered into by an insane or demented person
during a lucid interval is valid. It must be shown
however, that there is a full return of the mind to sanity as
to enable him to understand the contract he is entering
into.
 CONSENT
EFFECT OF DRUNKENNESS AND HYPNOTIC SPELL
(Article 1328)
– Drunkenness and hypnotic spell impair the capacity of a
person to give intelligent consent.
– These conditions are equivalent to temporary insanity.
Hence the contract entered into during such state is
voidable and it is not required that such state was
procured by the circumvention of the other party.
 CONSENT
VICES OF CONSENT (VIMFU)

A. Error or mistake. (Articles 1331 to 1334)

B. Violence or force. (Articles 1335 to 1336)

C. Intimidation or threat or duress. (Articles 1335 to 1336)

D. Undue influence. (Article 1337)

E. Fraud or deceit. (Articles 1338 to 1344)

 CONSENT
MISTAKE (Article 1331)
– The false notion or belief about a thing or a fact material
to the contract.
– The mistake contemplated by law is substantial mistake
of fact, that is, the party would not have given his consent
had he known of the mistake. Hence not every mistake
will vitiate consent and make a contract voidable.
 CONSENT
VIOLENCE (Article 1335)
– Requires the employment of physical force which must
be either serious or irresistible.
 CONSENT
INTIMIDATION or THREAT (Article 1335)
– The action of intimidating someone, or the state of being
intimidated. There is no physical force but moral
coercion.
– Whether or not the fear is reasonable and well-grounded
or the evil imminent and grave depends upon the
circumstances, including the age, sex, and condition of
the person.
 CONSENT
UNDUE INFLUENCE (Article 1337)
– Influence of a kind that so overpowers the mind of a
party as to destroy his free will and make him express the
will of another, rather than his own.
 CONSENT
TWO KINDS OF FRAUD or DOLO (Articles 1338 and 1344)

A. CAUSAL FRAUD or DOLO CAUSANTE

– This is the kind of fraud which vitiates consent and the
law refers to this when it speaks of vices of consent.
– It is the fraud used by a party to induce the other to enter
into a contract without which the latter would not have
agreed to.
– It may be committed through insidious words or
machinations or by concealment.
 CONSENT
B. INCIDENTAL FRAUD or DOLO INCIDENTE
– Renders the party who employs it liable for damages
because the fraud was not the principal inducement that
led the other to give his consent.
 CONSENT
SIMULATION OF A CONTRACT (Article 1345 to 1346)
– It is the process of intentionally deceiving others by
producing the appearance of a contract that really does
not exist or which is different from the true agreement.
 CONSENT
KINDS OF SIMULATION

A. ABSOLUTE SIMULATION (FICTITIOUS CONTRACTS)

– Takes place when the contract does not really exist and the parties do not
intend to be bound at all. The contract is inexistent or void.

B. RELATIVE SIMULATION (DISGUISED CONTRACTS)

– When the parties conceal their true agreement and the contract entered
into by the parties is different from their true agreement.
– GENERAL RULE: The parties are bound to the real or true agreement.
– EXCEPTIONS: 1) If the contract should prejudice a third person; and 2)
If the purpose is contrary to law, morals, good customs, public order or
public policy.
 OBJECT
OBJECT (Articles 1347 to 1349)
– It is the subject matter. In reality the object of every
contract is the obligation created but since a contract
cannot exist without an obligation, the thing, service, or
right which is the object of the obligation is also the
object of the contract.
 OBJECT
REQUISITES OF THINGS AS OBJECT OF CONTRACT

A. The thing must be within the commerce of men, that is, it can
legally be the subject of commercial transaction.

B. It must not be impossible, legally or physically.

C. It must be in existence or capable of coming into existence (future

things) including future rights.

D. It must be determinate or determinable without the need of a new

contract between the parties.
 OBJECT
REQUISITES OF SERVICES AS OBJECT OF CONTRACT

A. The service must be within the commerce of men.

B. It must not be impossible, legally or physically.

C. It must be determinate or capable of being made

determinate.
 OBJECT
RIGHTS AS OBJECT OF CONTRACT
– GENERAL RULE: All rights may be object of a contract.
– EXCEPTION: When the rights are intransmissible by
their nature, or by stipulation, or by provision of law.
 CAUSE
CAUSE or CAUSA or CONSIDERATION
– The essential reason or purpose which the contracting parties
have in view at the time of entering into the contract.

KINDS OF CONTRACTS ACCORDING TO CAUSE (Article 1350)

A. Onerous.

B. Remuneratory or remunerative.

C. Gratuitous or contracts of pure beneficence.

 CAUSE
MOTIVE (Article 1351)
– The purely personal or private reason which a party has
in entering into a contract. The motive may be regarded
as the cause in a contract if it is founded upon a
fraudulent purpose to prejudice a third person.

CAUSE
• Immediate or direct reason.
• Always known.
• Essential element of a
contract.
• Illegality affects the
validity of a contract.
• Must be present for a
contract to be valid.
CAUSE
MOTIVE
• Remote or indirect reason.
• May be unknown to the
other party.
• Not an element of a
contract.
• Illegality does not render
the contract void.
• The presence of motive
cannot cure the absence of
cause.
 CAUSE
LESION (Article 1355)
– Any damage or injury caused by the fact that the price is
unjust or cause is inadequate. One party does not receive
the full equivalent for what he gives in a commutative
contract.
 CAUSE
EFFECT OF LESION

A. GENERAL RULE
– Lesion or inadequacy of price does not invalidate a
contract.

B. EXCEPTIONS

1. When, together with lesion, there has been fraud, mistake

or undue influence.

2. In cases expressly provided by law.