CONTRACTS 5 Basic Principles / Characteristics

(Article 1305-1422 Civil Code) M – Mutuality (1308)

A – Autonomy (1306)
Chapter 1 R – Relativity (1311)
General Provision C – Consensual (1315)
(Video 89) O – Obligatory (1159) – contractual obligation
Article 1305 - CONTRACTS (Obligations arising from contracts have the
“A contract is a meeting of minds between two force of law between the contracting parties
persons whereby one binds himself, with and should be complied with in good faith)
respect to the other, to give something or to
render some service” Example (obligatory)
-meeting of minds A sells his car to B for 100,000, then B buys
-2 parties (there can be more than 2 parties) the car. They have a contract then A cannot
refuse to deliver, and B also cannot refuse to
*there should be no 1 party only (exception: pay, because there is obligatory force
AUTO CONTRACT) (mandatory) of contract. Then the parties must
have to comply. If they refuse to comply, they
Auto contract - a contract in which a person will be liable to pay for damages.
literally contract with himself
Example of auto contract: suppose A Kinds/Classification of Contract
authorized B to sell his car worth 100,000. A is 1. According to name or designation
the principal, B is the agent. B is the one who a. Nominate
will sell the car, but he decided to buy the car. b. Innominate
Then B will be the seller and buyer at the same 2. According to perfection
time. a. Consensual
b. Real
General rule: 2 parties (exception: auto 3. According to cause
contract) a. Onerous
b. Remuneratory or remunerative
Bilateral – two parties c. Gratuitous
Multilateral – more than two parties 4. According to form
a. Informal, common or simple
-Obligation can exist even there is only one b. Formal or solemn
party (example: quasi-contract = negotiorum 5. According to obligatory force
gestio, solution indebiti, because it is unilateral) a. Valid
b. Rescissible
To give – to deliver a car (something) c. Voidable
To do – contract of employment, contract of d. Unenforceable
piece of work e. Void or inexistent
6. According to person obliged
1156 – Juridical necessity to give, to do or not a. Unilateral
to do (more extensive and broader definition) b. Bilateral
7. According to risks
Contract – one of the Obligation – there are a. Commutative – when the
sources of obligation sources of obligation undertaking of one party is considered the
- Contract is the - Broader equivalent of that of the other (sale, lease)
cause, obligation because all b. Aleatory – depends upon an
is the effect contracts have uncertain event or contingency both as to
obligations but benefit or loss (insurance, sale of hope)
not all 8. According to liability
obligations have a. Unilateral – created an obligation
contracts on the part of only one of the parties
Contract – always Agreement – broader (commodatum, gratuitous deposit)
legal because it may be b. Bilateral – when it give rise to
legal or illegal reciprocal obligations for both parties (sale,
Contract - Stipulation – portion / lease)
part of a contract 9. According to status
where you can a. Executory – has not yet been
certainly agree completely performed by both parties
Contract - Pact – incidental part b. Executed – has been fully and
of the contract satisfactorily carried out by both parties
10. According to dependence to another
contract
a. Preparatory – entered into as a
means to an end (agency, partnership)
 b. Accessory – dependent upon
another contract is secures or guarantees for
its existence and validity
c. Principal – does not depends on it
existence and validity upon another contract
but is an indispensable condition for the
existence of an accessory contract
11. According to the dependence of part of
contract to other parts
a. Indivisible (or entire) – each part of
the contract is dependent upon the other parts
for satisfactory performance
b. Divisible – one part of the contract
may be satisfactorily performed independently
to the other parts
(1) Consensual vs. Real
Consensual – contract is created by mere
consent (only need is consent)
Real (1316) – need consent and delivery of the
thing
(2) Commutative vs. Aleatory
Commutative – equivalent consideration must
be given
Example: A sells a car to B for
100,000. B buys the car for 100k, 95k, or 90k,
there is an equivalent consideration
Aleatory – consideration are not the same
(fulfillment of the contract is dependent upon
chance)
Example: A buys from B a lotto ticket.
Lotto ticket: 20 pesos, winning price: 5 million.
Then the consideration is not the same.
(3) Executory vs. Executed
Executory – the parties will be complying with
the obligation
Example: A sells a car to B for
100,000, and B buys the car. The obligation of
A is the deliver; the obligation of B is to pay. If
A has not yet delivered or B has not yet paid,
that is executor.
Executed – both of the parties had already
complied.
Example: A sells a car to B for
100,000, and B buys the car. The obligation of
A is the deliver; the obligation of B is to pay. If
A has already delivered, and B already paid,
that is executed. But if one party had not yet
complied, it is still executed.
Statute of Fraud – the contract must be in
writing covers only executory contract. If one of
the parties performed the obligation, it is not
part of statute of fraud.
Article 1306 – AUTONOMY / LIBERTY /
Freedom to Contract
“The contracting parties may establish such
stipulations, clauses, terms and conditions as
they may deem convenient, provided they are
not contrary to law, morals, good customs,
public order, or public policy”
General rule: Parties can agree to anything
provided it is not contrary to (1)law, (2)moral,
(3)good customs, (4)public order, or (5)public
policy
(If it is contrary to the five, it becomes void)
Example:
A sells a car to B, then B buys the car
(MUTUALITY) but it is autonomy because the
contract is valid (because it is not contrary to
law, morals, good customs, public order, or
public policy)
Autonomy - they can agree…
Exception: if the case is contrary to…
1. Law – Example: Supposed he hired Pedro to
kill Juan, Pedro agrees. Then they do not have
a contract, but they have an AGREEMENT
because agreement may be legal or illegal.
2. Morals – Example: Supposed he hired a
prostitute for sexual services. Then the contract
is void, because that is contrary to moral.
3. Good custom – Example: Supposed he pay
one of my classmates, 5k, provided he slap the
face of his parents. Then that is VOID, which is
contrary to good custom. He supposed to
extend respect and gratitude to his parents.
4. Public order – Example: Supposed he have
a contract to one of his leasee (one renting to
his dorm/house). If they will not pay, he will
physically throw them out of the window. Then
that is VOID which is contrary to public order.
5. Public Policy – Example: Supposed he hired
a person and had an agreement that he cannot
receive the minimum wage. Then the contract
is VOID because that is contrary to public
policy. Because he supposed to protect his
employees and give his minimum wage (under
1987 Constitution – Protection to Labor must
be extended)
Article 1307 – INNOMINATE CONTRACTS
“Innominate contracts shall be regulated by the
stipulations of the parties, by the provisions of
Titles I and II of this Book, by the rules
governing the most analogous nominate
contracts, and by the customs of the place.”
Innominate – no name
Distinction between nominate and
innominate
NOMINATE INNOMINATE
-has a name - no name
Example: contract of -which has no specific
sale, contract of name or designation
lease, commodatum, in law
agency, mutuum,
guaranty
-which has specific
name or designation
in law.
Kinds of innominate contract
1. do ut des - I give that you may give
2. Do ut facias - I give that you may do
3. Facio ut des - I do that you may give
3. Facio ut facias I do that you may do
Hint: If the word is long, the translation is short.
If the word is short, the translation is long
Facio – do
Do – give
Rules Governing Innominate Contract
A – Agreement
C – Provisions of the Civil Code
A – Analogous contracts
C – Customs of the palace
1308 – MUTUALITY
“The contract must bind both contracting
parties; its validity or compliance cannot be left
to the will of one of them.”
Mutuality – both parties must agree
Example: suppose he said to one of my
classmates that he is selling the marker
whether he like it or not. The principle violated
is mutuality because there must be consent on
both parts of the parties.
*In the case of PNB vs. Padilla
-Padilla able to get a contract of loan with PNB.
Unfortunately, during the existence of the
contract, PNB increased the interest without
the consent of Padilla. The Supreme Court
says that the cause if INVALID because it
violated the law of mutuality
Article 1309 – Determination of
Performance by a Third Person
“The determination of the performance may be
left to a third person, whose decision shall not
be binding until it has been made known to
both contracting parties.”
General rule: Third Person cannot decide,
because both parties must agree not the third
person.
Example: Supposed I’m selling something to a
person, a car.
It is necessary to us to get the third person for
us to decide? NO.
Exception:
- The third person was authorized by both
parties
Example: He said to his buyer that the
agreement is 100k, the reply of the buyer
is 80k, then there is no meeting of minds
because his offer is 100k and the buyer’s
reply is 80k. Supposed he and the buyer
agrees to let Pedro decide for them, then
there is mutuality (they agreed to allow
Pedro to decide)
Effect: The decision of third person is
valid to both parties
Exception to the exception (1310)
Article 1310 – If the decision of the third
person is evidently INQUITABLE
“The determination shall not be obligatory if it is
evidently inequitable. In such case, the courts
shall decide what is equitable under the
circumstances”
Inequitable – unfair to one of the parties
Example: His offer is 100k, the buyer reply is
80k. Supposed the decision of Pedro (third
person) is 50k. Then that is evidently
inequitable.
Effect: The decision of third person is NOT
VALID, then the court is the one who will
decide.
Summary:
1308 – general rule (both parties will decide)
1309 – exception (third person cannot decide
unless he’s authorized)
1310 – exception to the exception (third person
is authorized but his decision is evidently
inequitable)
(video 90)
Article 1311 – RELATIVITY OF CONTRACT
“Contracts take effect only between the parties,
their assigns and heirs, except in case where
the rights and obligations arising from the
contract are not transmissible by their nature,
or by stipulation or by provision of law. The heir
is not liable beyond the value of the property he
received from the decedent.
If a contract should contain some stipulation in
favor of a third person, he may demand its
fulfillment provided he communicated his
acceptance to the obligor before its revocation.
A mere incidental benefit or interest of a person
is not sufficient. The contracting parties must
have clearly and deliberately conferred a favor
upon a third person”
Article 1178 – Obligations are not
transmissible, rights are transmissible
Example: A have 2 heirs, A1 and A2. And B
also have 2 heirs, B1 and B2. Supposed A
dies, A1 and A2 should not pay A’s obligation
(because obligations are not transmissible).
Supposed B dies, B1 and B2 can collect from A
(because rights are transmissible.
Article 1311
Example: A and B – they are the parties/privy.
A have 2 heirs, A1 and A2. B has 2 heirs, B1
and B2. Supposed B assigned his right to C
(assigned/assignee – if the contract is
transferred to another person)
Who are included in the contract/who are
bound in the contract? (parties, heirs, assigns –
relativity)
Supposed there is Pedro, he is not a party, not
an heir, and not an assigned. Pedro is a third
person.
*if you are not part of a contract, you are a third
person or a third party.
General rule: Third person are not bound, not
liable, and not affected by the contract
(because contract take effect only between the
parties, heirs and assigned)
Exception (4): where a third person is bound,
liable and affected.
1. 1311 – Stipulation pour autrui
2.1312 – Contracts creating real rights
3. 1313 – Contracts entered into to defraud
creditors
4. 1314 – Interference in contractual relation (In
contracts which have been violated at the
inducement of a third person)
1311 – STIPULATION POUR AUTRUI
- Stipulation in favor of a third person.
- Clearly and deliberately conferring a favor
upon a third person who has a right to
demand its fulfillment provided he
communicate his acceptance to the
obligor before its revocation by the
obligee or original parties.
Requisites of Stipulation Pour Autrui
1. There is a stipulation in favor of a third
person which is clearly and deliberately
conferred
2. Communication of acceptance before is
revocation to the parties
3. Third person should be part of the contract
4. Stipulation should not be conditioned or
compensated by any kind of obligation
5. Neither bears legal representation or
authorization of the third party
Most important: Communication of acceptance
before is revocation to the parties
Example: Supposed A owes B 9k (principal)
with 2% interest (accessory). One of the
requisites says that it must be part of the
contract. A and B agreed to give the 2% to
Pedro (third person), Pedro is not part of the
contract so he must communicate to both A
and B, and if Pedro communicate then he is
already part of the contract. 2% is the
stipulation pour autrui.
- Third person must communicate his
acceptance before revocation, Pedro is
already part the moment he
communicated. But supposed it was
revoke before the communication to be
made by Pedro, then Pedro is not part of
the contract
Article 1312 – Contracts creating Real Right
“In contracts creating real rights, third persons
who come into possession of the object of the
contract are bound thereby, subject to the
provisions of the Mortgage Law and the Land
Registration Laws.”
1164 – There are 2 kinds of rights (personal
and real)
Personal right – demandable from specific
person
Real right – demandable against the whole
world
*The real right in contract is created by the
registration
Where do you register your name? (NSO/Civil
registry)
Where do you register your car? (LTO)
Where do you register your land? (Registry of
Deeds)
Why do you need to register? (to create a real
right)
*the moment you register, it is binding to the
whole world.
*it is necessary to register
Example: A sells his land to B, in writing. The
contract then valid to both parties, but
supposed he want it to be valid to the third
person, that’s the reason why he have to
register it – Registry of Deeds.
Supposed A owes B a loan of 100k,
land is the mortgage. The mortgage must be
registered again; if it is not registered then it did
not create a real right. If it not registered, it is
not binding to third person.
Article 1313 – CONTRACTS TO DEFRAUD
CREDITOR
“Creditors are protected in cases of contracts
intended to defraud them.”
1177 – ACCION PAULIANA (remedies in
monetary obligation – principal: specific
performance, exact fulfillment, collection of
sum of money & subsidiary” exhaust,
subrogation, action pauliana/recession)
Example: Supposed A owes B 100k, A has
only one land. In order for A to pay B, A has to
give his land, or A may sell the land and give
the proceeds to B.
A supposed sold the land to C with the element
of fraud, because A will not tell B. A don’t want
to pay B so he secretly sold the land to C,
because he wants to defraud his creditor.
-A and B have a contract
-B and C have not a contract
-A and C have a contract
But B can go after C because of the element of
Fraud committed by A against B
Article 1314 – INTERFERENCE IN
CONTRACTUAL RELATIONS
“Any third person who induces another to
violate his contract shall be liable for damages
to the other contracting party”
-Is a rule of American Law.
-Is also proper under the general principles of
the Philippine Law; because a contractual right
is property
Example:
1. Film star – there was a famous film star, he
has a contract with regal films. Viva film knows
that the film star has a contract with regal film,
viva film decided to take away the film star from
regal film. Then the viva film is interfering
contractual relation. Regal and Viva have no
contract but regal can hold viva films liable
2. Contractor of a building – supposed in a
school, there is one who is in charge of
repairing all broken things. Pedro tell the owner
of the school to do not hire him because he
uses substandard material or he’s lazy, in short
Pedro is trying to ruin the good reputation of
the contractor. Pedro is interfering a
contractual relation so he is liable
Article 1315 – CONSENSUAL
“Contracts are perfected by mere consent, and
from that moment the parties are bound not
only to the fulfillment of what has been
expressly stipulated but also to all the
consequences which, according to their nature,
may be in keeping with good faith, usage and
law.”
Consensual – mere consent
-In which is perfected by mere consent
General Rule: Contracts are created by mere
consent
Example: A is hiring a person to be his
secretary and the salary will be 10k a month,
then he agreed. They did not put it in writing
but the contract is already created because
they both agreed and give their consent.
Exception:
(1) Real contract (Art. 1316) – need to things,
consent and delivery of the thing
(2) Formal or Solemn contract (Art. 1356) –
need a particular form for it to be valid
Article 1316 – Kinds of Real Contracts
“Real contracts, such as deposit, pledge and
Commodatum, are not perfected until the
delivery of the object of the obligation.”
Real contracts – In which is perfected by the
delivery of the thing subject matter of the
contract
-consent and delivery of the thing is needed.
3 KINDS OF REAL CONTRACTS
1. Pledge
Example: A is borrowing from a person of 10k.
The loan can be oral, but using a collateral like
phone. Both parties agree to pledge the phone,
but the pledge is not already created because
A should deliver physically the phone. If there
is no delivery, there is no pledge.
Physical or actual delivery is required for the
pledge to be created
2. Depositum / Deposit
Example: A told to his classmate to safe keep
the marker and he will get it on their next
meeting. The classmate already agreed but
there is no deposit created because there is no
delivery
3. Loan - has no form
-Mutuum
-Commodatum
Example: (mutuum) A is borrowing from
classmate, 1k (loan/simple loan/mutuum –
consumable thing). The classmate already
agreed but there is no loan created because he
must deliver the 1k first for the loan to be
created. If there is no physical delivery, the
loan is not created.
Example: (commodatum) A borrowed from his
classmate a ball pen. The classmate agreed
but the commodatum is not yet created
because ball pen must deliver first. If there is
no physical delivery, the commodatum is not
created.
Stages of Contract
1. Preparation / Negotiation / Conception –
parties are bargaining (nagtatawaran), there is
no contract yet
2. Perfection / Creation / Birth – contract has
been created, there is now meeting of the
minds
3. Termination / Consummation / Death –
parties will perform their respective obligation.
The seller has to deliver, the buyer has to pay
(obligation of parties)
(1) Example: A asks B if he likes to buy his car
for 100k, B reply 80k. There is no contract
because there is no meeting of minds
(preparation).
(2) Example: A asks B if he likes to buy his car
for 90k, B reply 90k. There is already a contract
because there is a meeting of minds.
(3) Example: A and B has already a contract of
sale, A’s obligation is to deliver and B’s
obligation is to pay. When the parties already
performed the respective obligation, there is
termination or consummation
*delivery in consensual contract is in number 3
stage (termination / consummation)
*delivery in real contract is in number 2 stage
(Perfection / Creation / Birth) because real
contract cannot be created unless there is
delivery
When ownership required? Termination
Effect of Perfection of Contract
From the moment the parties come to an
agreement on a definite subject matter and
valid consideration, they are bound not only –
1. To the fulfillment of what has been expressly
stipulated but also;
2. To all the consequences which according to
their nature, may be in keeping with good faith,
usage, and law
(video 91)
Article 1317 – UNAUTHORIZED
CONTRACTS
“No one may contract in the name of another
without being authorized by the latter, or unless
he has by law a right to represent him.
A contract entered into in the name of another
by one who has no authority or legal
representation, or who has acted beyond his
powers, shall be unenforceable, unless it is
ratified, expressly or impliedly, by the person
on whose behalf it has been executed, before it
is revoked by the other contracting party.”
*Unauthorized contracts are unenforceable
Unauthorized / unenforceable
General rule: a person is not bound by the
contract of another of which he has no
knowledge or to which he did not give his
consent
- If a person did not give his consent or if
he is not aware of the contract, then he
cannot be held liable
Exception: Authorization given to the TP
Requisites to be bound by the third person
1. He must be authorized
2. Act within the scope of authority
-If one requisites is missing – unenforceable
Example: A owns a phone, but not anyone can
sell his phone. Also, they cannot sell his phone
because A did not authorize them to sell the
phone. If he sell A’s phone without his
authority, that would be unenforceable
Example: Supposed A already authorize the
classmate to sell his phone, then the classmate
can sell it because he is authorized
Example: Supposed A authorize the classmate
to sell his phone for 10k. Then the classmate
can sell it for the amount of 10k. But supposed
the classmate only sell it for 5k, he is
authorized but he did not follow the scope of
authority, then the contract is unenforceable.
But supposed the classmate sell the phone for
12k, the contract will be valid because it is
more advantageous (one of the principle in
agency). The excess of 2k is belong to A
(principal) not to the classmate (agent). Agent
is just an extension, whatever the agent
benefits is belong to the principal.
Remedy: Ratification – the consent is given
after the contract was created
Example: Supposed A authorize the classmate
to sell his phone for 10k. Then the classmate
can sell it for the amount of 10k. But supposed
the classmate only sell it for 5k, then that is
unenforceable. The remedy is when the
consent is given after the contract is created,
wherein A agreed to 5k right after the
classmate sold his phone. The principal ratify
the contract.
Effect of Ratification: it cleanses the contract
from all its defects.
-Valid but unenforceable (if the
contract is ratified, it is only VALID)
Chapter 2
Essential Requisites of Contracts
Article 1318 – Classes of Elements of
Contracts
“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 contract
1. Essential – (requisites) those without which
no contract can validly exist regardless of the
intentions of the parties.
- if one of them is missing, the
contract is VOID
a. Common – those present in all contracts.
COC (consent , object, cause)
b. Special – those not common to all
contracts, example: form in a formal/solemn
contract, delivery in a real contract
c. Extraordinary – price in a contract of sale
(price – use only in a contract of sale)
2. Natural – presumed to exist in certain
contracts. Already automatic. By the mere fact
that you entered a contract, then it is already
part of a contract. Example: warranty against
eviction, warranty against hidden defects in
sale.
-you don’t need to agree in the
warranty, because it is already part of the
contract
3. Accidental – particular stipulation, clauses,
terms, or conditions established by the parties
in their contract.
-specific terms, conditions,
stipulations (Art. 1321)
-if the parties do not agree to….time
of delivery, place of delivery, manner of
delivery
-if the party did not agree or agree on
the accidental element, the effect is valid
-it may or may not be present
Essential elements of contracts
C – Consent
O – Object – the subject matter of the contract
C – Cause
Article 1319 – CONSENT
“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.”
CONSENT – Is the conformity or concurrence
of wills and with respect to contracts, it is the
agreement of the one (1) contracting party with
that of another or others, upon the object and
terms of the contract.
2 things required: offer and acceptance
OFFER – Is a proposal made by one (1) party
(offerer) to another (offeree), indicating a
willingness to enter into a contract.
- Offer must be certain or definite
ACCEPTANCE – is the manifestation by the
offeree of his assent to all the terms of the
offer.
- Acceptance must be absolute
Example: A is selling to B his car for 100k
(offer). B accepts the car for 100k (acceptance)
*consent – meeting of the offer and acceptance
with respect to the thing, cause, and subject
matter of the contract
EXCEPTION:
(1) Counter-offer / qualified acceptance
- if the offer changed
Example: A is selling to B his car for 100k. B
accepts the car for 80k (counter offer qualified
acceptance). A change his offer to 90k (counter
offer)
(2) Policitacion – (1st paragraph of 1319)
-imperfect promise
-An accepted unilateral promise to
buy or to sell a thing
-only one party makes an offer, the
other party did not reply
Example: A offers B to buy his car, B did not
reply (policitation). B tells A to buy his car, A
did not reply (policitation)
Cognition Theory (2nd paragraph of 1319)
Can a contract be created electronically (by
sending a text message of email)? YES
Shopee and Lazada – electronic contracts
When is a perfected if sent by letter?
-From the time of the knowledge of
the acceptance
Where is the contract created?
-on the place where the offer was
made
(Video 92)
Article 1319 – 2nd part
“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.”
Cognition Theory – answers the question
“when is the contract perfected if it is sent by
letter or telegram?”, and “Where the contract
created?”.
Example: Supposed A is in Manila, and B
situated in Cebu. Supposed it is October 1 and
A send the letter to B, and it reaches B on
October 5. Letter contains an offer where A
tells B to buy his car for 100k. On October 6, B
opened the letter and on October 7, B decided
that he would like to buy the car. On October 8,
he sent his letter (acceptance) to A. And the
letter reaches B on October 14. Then on
October 15, A has knowledge that B accepted
the offer.
When is contract perfected if it is sent by letter?
- From the time of the knowledge of the
acceptance (according to the 2nd paragraph
Acceptance made by letter or telegram does
not bind the offerer except from the time it
came to his knowledge”). Then A acquire
knowledge on October 15, then it is also when
the contract perfected.
How the contract perfected?
-Mere consent, but in the example is by letter
or telegram
Where is the contract created?
- On the place where the offer was made. In
the example, the contract is created in Manila.
(According to the 2nd sentence of 1st paragraph,
“The contract, in such a case, is presumed to
have been entered into in the place where the
offer was made”
Manifestation Theory –
-when B decided to buy
Expedition Theory –
-when B sent his acceptance to the offer
Reception Theory –
-when A received the acceptance of B
*in the Philippines, we are following Cognition
Theory
*when the problem or situation is face-to-face,
that is mere consent. But when it is sent by
letter/telegram, cognition theory will be applied.
*if it is sent by email, e-commerce law will be
applied. E-commerce law was created during
the year 2000.
Article 1320 – Form of acceptance
“An acceptance may be express or implied.”
1. Express – may be in oral or writing
2. Implied – based on the acts of the parties
Example: A is offering his cellphone to a
person. A person takes a look to a cellphone
without speaking then brings the cellphone at
home, that is implied.
Article 1321 – Matters that may be fixed by
the offerer
“The person making the offer may fix the time,
place, and manner of acceptance, all of which
must be complied with.”
*Accidental Elements
Example: A offer his car to B for 100k, B replies
100k. There is an offer and there is an
acceptance. If there is an offer and
acceptance, there is consent. And if there is
consent, the contract is created or perfected.
Accidental – the parties may or may not
stipulated on time, manner, or place.
The question is supposed they did not
stipulate?
*Can B pay it partially? NO because that is
covered by 1233,1248,1199 (there must be
complete payment or complete performance)
so B has to pay in full. Also, A cannot deliver
the car partially.
*Can B pay through promissory note? NO, that
is covered under 1249 (it must be legal tender)
Where A supposed to deliver the thing?
1251(general rule: stipulation, if there is no
stipulation, generic – domicile of the debtor. If
there is no stipulation, specific place where the
thing was at the time of the perfection of the
contract.
*When A supposed to deliver?
When B supposed to pay?
-if there is no period, the obligation is pure, and
when it is pure, the obligation is immediately
demandable.
*accidental – the parties can stipulate. But
supposed the parties did not agree on it, the
law will provide the details on it.
Article 1322 – Offer made by an agent
“An offer made through an agent is accepted
from the time acceptance is communicated to
him.”
Example: Supposed A offers B to buy his car
for 100k. A is the one who makes the offer (it is
possible that another person is making the
offer). A offers to B to sell his car for 100k and
give him 10% commission. A is the principal, B
is the agent, and B was able to sell it to a third
person. Initially, third person should give his
acceptance to B (agent), but he can also give
his acceptance to A (principal) because both A
and B is considered one and the same person.
B considered as extension of A and B also
serving as representative capacity.
Article 1323 – INEFFECTIVE OFFER
“An offer becomes ineffective upon the death,
civil interdiction, insanity, or insolvency of either
party before acceptance is conveyed”
-both parties must be living and capacitated
at the time of the knowledge of acceptance
(following the cognition theory)
Instances in ineffective offer (1170, 1330)
1. Death
2. Insanity
3. Civil interdiction – when a person commits a
crime (there two liabilities — criminal and civil
— one of the aspect of civil liability is a person
cannot enter into a contract), he cannot enter
into a contract and he is prohibited in doing so.
4. Insolvency – more liabilities than assets, so
a person cannot enter into a contract.
Example in 1319: October 1 when A made his
offer and October 15 when A has knowledge of
acceptance.
(1) Death – Supposed on October 8, A dies,
then there is no contract on October 15
because both parties must be living on October
15.
(2) Insanity – Supposed on October 9, B
becomes insane, then there is no contract on
October 15 because both parties must be
capacitated.
(3) Civil interdiction – supposed on October 10,
B was imprisoned. Then there is no contract on
October 15 because both parties must be
capacitated.
(4) Insolvency – supposed on October 12, B
became insolvent. Then there is no contract on
October 15.
*if any of the following is present, there will be
ineffective offer, there is no contract
Voidable effect – only happen in Insanity and
Civil Interdiction
Other instances in ineffective offer
- Failure to perform a condition
- Arrival of the period
- The party rejected the offer
Article 1324 – Option Money vs. Earnest
Money
“When the offerer 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, as
something paid or promised.”
Option Money Earnest Money
One giving a person
for consideration a
certain period within
which to accept the
offer of the offerer.
Example:
A offer B his car for 100k, then B buys the car
for 100k. There is an offer and consent, and
then there is a contract.
A offer B his car for 100k, then B want to buy
the car for 80k. There is no contract because it
is counter offer or qualified acceptance.
A offer B his car for 100k, and B did not reply.
There is no contract because that case is
policitation. (Policitation – only one party is
interests).
A offer B his car for 100k, but A can still sell his
car to another person if B has not given his
acceptance. But supposed A gives B one week
to decide if he will buy the car, but before one
week expire A can still sell his car to another
person because B has not yet given his
acceptance. But if before one week expire, B
given his acceptance to A then A cannot sell
his car to another person.

1323 – Before acceptance, the offer can be

withdraw. But after acceptance, the offer
cannot be withdraw because the contract
already created.

A offer B his car for 100k, B reply to give him

one week
(18:52)