CONTRACT

The meeting of minds between two persons

whereby one binds himself with respect to the
other, to give something or to render some
services. (Art. 1305)
 ELEMENTS OF CONTRACT

• CONSENT (Art. 1319)

• Acceptance (Art. 1319)
• Legal Capacity (Art. 1327)
• Vices of Consent (Art. 1330)

• OBJECT (Art. 1347, 1348, 1349)

• CAUSE/CONSIDERATION
(Art. 1350,1351, 1352, 1353, 1354, 1355)
 CHARACTERISTICS OF CONTRACT:

• OBLIGATORY (Art. 1308)

• MUTUALITY (Art. 1308, 1309, 1310, 1473)
• E.g. Contract of Adhesion – one party prepared the contract desired by him and he
simply ask the other party to sign the contract and agreed with the terms and
condition.

• RELATIVITY (Art. 1311 par 1, Art. 1317)

• CONSENSUALITY (Art. 1319)
• FREEDOM (Art. 1306)
 CLASSIFICATION OF CONTRACTS
A.As to subject matter:
1. Things 2. Principal
2. Services 3. Accessory

B.As to name: F.As to purpose:

1. Nominate 1. Transfer of Ownership
2. Innominate (Art. 1307) 2. Conveyance of Use
3. Rendition of Service
C.As to perfection:
1. Consensual (Art. 1315) G.As to nature of obligation produced:
2. Real (Art. 1316) 1. Unilateral
2. Bilateral
D.As to form:
1. Informal H.As to cause:
2. Formal 1. Onerous
2. Gratuitous
E.As to degree of dependence:
1. Preparatory
 FORMS OF CONTRACT:

• Art. 1356 – (Whatever Form) but with exception – when the law requires that a certain
contract be in some form.
Examples: Art. 748 – Donation of Movable worth 5,000php
Art. 749 – Donation of Immovable
Art. 1817 – Sale of Piece of Land through Agent
Art. 2134 – Contract of Antichresis
Art. 1772 – Partnership (money or property worth 3k is contributed)
Art. 1773 - Partnership (inventory of immovable property)
Art. 1956 - Interest
 REFORMATION OF INSTRUMENT

• Art. 1359
Requisites:
1.Meeting of minds upon the contract
2.The true intention of the parties is not expressed in the instrument
3.The failure of the instrument to express the true agreement is due to mistake,
fraud, inequitable conduct, or accident.
 DEFECTIVE CONTRACTS:

• RESCISSIBLE CONTRACTS – contracts that has caused a particular damage to

one of the parties or to a third person and which for a equitable reasons may be set
aside even if valid.
• VOIDABLE OR ANNULLABLE CONTRACTS – contracts in which consent
of one of the parties is defective, either because of want of capacity or because it is
vitiated, but which contract is valid until judicially set aside.
• UNENFORCEABLE CONTRACTS – contracts that for some reason cannot be
enforced or produced no legal effect, unless ratified in the manner provided by law.
• VOID OR NON-EXISTENT CONTRACTS – contracts which is an absolute
nullity and produces no effect as if it had never been executed or entered into.
 RESCISSIBLE CONTRACTS

• Art. 1381 (by wards or absentees)

• In fraud of creditors
• Object is under litigation, without knowledge and approval of the litigant creditor.
• Specially declared by law(Art. 1380) (e.g. Art. 1098, 1539, 1542)
REQUISITES:
1. There must be a contract (Art. 1381)
2. There must be no other means to obtain reparation (Art. 1383)
3. Parties must be able to return whatever he may be obliged to restore (Art. 1385)
4. The object must not passed legally to third person (Art. 1385 par. 3)
5. Must be within the prescriptive period of 4 years (Art. 1389)
 VOIDABLE OR ANNULLABLE CONTRACTS

• Art. 1390 – Voidable even no damage to contracting parties:

1. Want of Capacity (Art. 1327)
2. Vitiated Consent (Art. 1330)
(Voidable means valid or binding until annulled by competent court. It is susceptible of convalidation by
ratification or prescription.)
PRESCRIPTION – within 4 years which period shall begin:
1. From the time consensual defect ceases: Intimidation, violence, undue influence
2. From the time of the discovery of mistake or fraud
3. From the time incapacity ceases
 UNENFORCEABLE CONTRACTS
KINDS:
1. Entered into in the name of another person: a) by one who has no authority or no legal representation or; b) acted beyond the
power given to him (ultra vires).
2. Both parties are incapable of giving consent.
3. Contracts do not comply with the Statute of Frauds.
STATUTE OF FRAUDS (Art. 1403) – The following agreements are unenforceable unless in written memorandum and
subscribed by the parties.
1. Agreements not to be performed within 1 year.
2. Special promise to answer for a debt.
3. Agreements made in consideration of marriage.
4. Sales of good with price of Php500
5. Leasing period longer than 1 year or sale of real property
6. Representation to the credit of a 3rd person.
 VOID OR INEXISTENT CONTRACTS
• Void from the beginning. Produces no effect whatsoever (judgment of nullity is merely declaration).
Cannot be confirmed, ratified or validated.
1. Art. 1409 par. 1 – those whose cause, object or purpose is contrary to law, morals, good customs, public
order, or public policy.
2. Those whose objects are outside the commerce of man.
3. Those which contemplate an impossible service.
4. Those which the intention of the parties cannot be ascertain.
5. Those which are absolutely simulated or fictitious.
6. Those whose object or cause did not exist at the time of the transaction.