HANDOUT NO.

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A. Basic Principles or Characteristics of Contracts

Mutuality of Contracts – Essential equality occupied by both contracting parties
in relation to the contract.
Autonomy of Contracts – Parties are free to enter into a contract and establish such
clauses, terms and conditions as they may deem convenient.
Relativity of Contracts – contract shall take effect only between parties their heirs
and assigns.
Consensual – contracts are perfected by mere consent (general rule)
Obligatory Force of Contracts - once perfected , a contract shall be obligatory to both
parties.

B. Essential Requisites of contract (Art. 1318)

I. Consent II. Object (subject matter)
Requisites Requisites
1) Concurrence of the offer and 1) Within the commerce of man;
acceptance;
2) Contracting parties must possess 2) Real or possible;
the necessary legal capacity; and
3) Consent must be intelligent, free 3) Licit or lawful; and
spontaneous and real. 4) Determinate or at least
possible of determination

Cognition Theory – perfected from the moment the acceptance comes to the
knowledge of the offeror. (Art. 1319, par. 2)

Policitacion – imperfect promise / merely an unaccepted offer and represents the

starting point for the formation of a contract.

III. Cause (causa/consideration) – essential reason which moves the contracting parties
to enter into the contract.
Requisites
1) Must be in existence;
2) Licit; and
3) True

Forms –
General Rule – contracts shall be obligatory provided all the essential elements for its
validity are present regardless of the form in which it was entered into.

Kinds of Formalities prescribed by law (Exceptions) –

1) Those for convenience of the parties or for the purpose of binding
third persons.
2) Those necessary for the validity of the contract.
3) Those necessary for the enforcement of the contract.

Sources: Obligations and Contracts, Desiderio Jurado, 2012 edition

Pointers in Bar Examination, Garcia, 2012 edition

A. Villegas