Law on Obligations and Contracts – Contracts

Contracts – meeting of the minds; agreement; covenant – binding oneself.

▪ Legal meaning – In meeting basically promising to give or perform a service except certain
agreements: special law that need written contract unless no binding happened. E.g.:
a. Sales in 300k - Land
b. Register (bounds in terms of contract) – Vehicles

Why’s important?
Note:
A contract has the force of the law of contract.
Interpretation – If there’s a doubt - if there’s
Elements of the Contracts: no room of misinterpretation always knows
Example To Remember: the context of the contract.

▪ Subject Matter – object of the contract E.g. What’s the intention of a refund of
(Employment) contract.
▪ Consideration – reason why you’re entering
Reminder: Judge can enforce the law of
the contract (Salary) contract and rescinded the contract.
(What) Object except:

▪ Outside of Commerce of Men – (the word commerce synonym for the word “kalakalan” which
makes the object be sold). Commercial Transaction.
Therefore, things and services out of commerce of men are inexistent and void from the
beginning in terms of contracts. E.g. Public Roads, Life, and Parts of the Body esp. Internal
organs.
▪ In transmissible of rights – Rights that cannot be transferred. E.g. Future Things & Personal Rights
etc.
▪ Impossible object / service – will never happen or never exist.
▪ Contrary to Law, Moral, Public Order, Public Policy, and Good Customs.
▪ Determinate – identifiable (Quantitative) without the need of new contract.

(Why) Cause or Consideration – according to ACT. 1350 GENERAL RULES

Exceptions:
▪ Gratuitous – Personal reasons, liberality, the kindness of
beneficence. E.g. Donation and Scholarship A. Age
▪ Remuneratory or Remunerative – Service with an B. Diminished Mental
Capability / Demented
exchange of reward. Always in medium of money and
C. Deaf & Mute – Illiterate (No
numerical value. E.g. Employment Sign language)
▪ Onerous – Burden (parties are reciprocally obligated to D. Intoxicated State
each other) E.g. Insurance (Life & Health),
Employment, and Travel Insurance
(Who) Consent – If there’s an acceptance, there’s an agreement of minds. Only the problem if it’s
Valid or Invalid.

Legally Insane – not knowing the right or wrong. Lucid Interval – Legal term for period of sanity.

❖ Grounds of Vitiated / Defected Consent (Voidable)

Ratification – giving formal consent /
A. Error or Mistake
making it officially valid.
B. Force or Violence
C. Intimidation or Threat
Novation – creating new agreement
D. Undue influence – (Undue means ‘di nararapat)
to replace the old one and agreed by
E. Fraud or Deceit
both parties.
Prescription Period – refers to the length of time within
which a party is allowed to bring forth a legal action or claim. It is a right in a certain amount of time. E.g.
Warranty.

Rescissible Voidable Unenforceable Void & Inexistent

Factors Contract Contract Contract Contract
OBJECT Yes Yes Yes
CAUSE Yes Yes Yes Not all are
CONSENT Yes Yes, but vitiated Yes, but by one present.
without or in excess
of authority
Fraud No No No
Mistake No At least one is No No
Force No present. No No
Threat No No No
Undue No No No
intimidation
CAN BE RATIFIED Yes Yes Yes No
If rescinded or Contract is valid Contract is valid, Remains Has no validity
voided, when is from the beginning but once voided, unenforceable from from the start.
the validity of the and loses effect it becomes void the start, unless
contract and when only from the from the start. ratified and then it
does contract lose point when it was becomes a valid
effect? rescinded. contract.
Obligations before Obligations All obligations are No obligations
Effect on rescission remain remain until dormant unless arise because
obligtions demandable. voided, then all ratified, and then there is no
obligations becomes contract.
performed can be demandable.
undone because
NO obligations
SHOULD have
arisen.