Contract is a meeting of

minds between two persons

whereby one binds himself,
with respect to the other, to
give something or to render
some service.
Obligations arise from:Law,
Contracts, Quasi-contracts ,
Acts or omission punished by
law, Quasi-delicts
CHARACTERISTICS
OF CONTRACT
Autonomy of Contract
Mutuality of Contract
Relativity of Contract
Obligatory Force of Contract
AUTONOMY OF CONTRACT
- This is called the principle of
freedom, because one can
enter into a contract without
restraints.
Limitations
on
contractual
stipulations
Law. It is a fundamental
requirement that the contract
entered into must be in
accordance with, and not
repugnant to, an applicable
statute.
Police power. When there
is no law in existence or when
the law is silent, the will of the
parties prevails unless their
contract
contravenes
the
limitation of morals, good
customs, public order, or
public policy. In short, all
contractual obligations are
subject as an implied
reservation therein to the
possible exercise of the police
power of the state.
Nominate contract or that
which has a specific name of
designation
in
law
and
Innominate contract or that
which has no specific or
designation in law.
Kinds
of
innominate
contract
do ut des (I give that you
may give);do ut facias (I give
that you may do);facto ut
des (I do that you may
give);facto ut facias (I do
that you may do.
MUTUALITY OF CONTRACT This refers to the principle of
essential equality that is
occupied by both contracting
parties in relation to the
contract.
RELATIVITY OF CONTRACTContracts take effect only
between the parties, their
assigns
and
heirs;
consequently it cannot as a
general rule produce any
effect upon third persons.
Stipulation pour autriu it
is a stipulation in a contract
clearly
and
deliberately
conferring s favor upon a third
person who has a right to
demand
its
fulfillment
provided he communicates his
acceptance to the obligor
before its revocation.
Classification of contracts
according to perfection
Consensual contract or that
which is perfected by mere
consent
Real contract or that which is
perfected by the delivery of
the thing subject matter of the
contract
Solemn contract or that which
requires
compliance
with
certain formalities prescribed
by law, such prescribed from

being thereby an essential

element thereof
OBLIGATORY
FORCE OF
CONTRACT - This refers to
the rule so fundamental in all
contracts
that
once
the
contract is perfected, it shall
be of obligatory force upon
both
contracting
parties.
Contracting parties are bound
not only to the fulfillment of
what has been expressly
stipulated but also to the
consequences thereof.
Phases or Stages in the life
of a contract
Preparation or negotiation or
conception - This includes all
the steps taken by the parties
leading to the perfection of
the contract. At this stage, the
parties have not yet arrived at
any
definite
agreement;
negotiation stage
Perfection or birth This is
when the parties have come
to a definite agreement or
meeting
of
the
minds
regarding the subject matter
and cause of the contract;
Consummation or termination
or death This is when the
parties have performed their
respective obligations and the
contract may be said to have
been fully accomplished or
executed, resulting in the
extinguishment or termination
thereof.
How
contracts
are
perfected
Consensual contracts
Real contracts
Solemn contracts
Classes of elements of
contract
1.Essential elements- those
without which no contract can
validly exist. They are also
known as requisites of a
contract.
They
may
be
subdivided into:
(a) common those present in
all contracts, namely, consent,
object and cause(Art. 1318)
(b) special- those are not
common to all contracts or
those which must be present
only in, or peculiar to, certain
specified contracts.
(2) Natural elements those
that are presumed to exist in a
certain contracts unless the
contrary
is
expressly
stipulated by the parties, like
warranty against eviction or
warranty
against
hidden
defect in sale.
(3) Accidental elements-the
particular
stipulations,
clauses, term, or conditions
established by the parties in
their contract, like contracts,
period, interest, penalty, ect. ,
and therefore, they exist only
when they are expressly
provided by the parties.
Consent - Is the conformity or
concurrence of wills and with
respect to contracts, it is the
agreement of the will of one
contracting party with that of
an other or others, upon the
object and terms of the
contract.
Acceptance
Is
the
manifestation by the offeree
of his assent to the terms of
the offer.
Persons who cannot give
consent

minors those persons who

have not yet reached the age
of majority (18 years) are still
subject to parental authority.
Insane or demented persons
the insanity must exist at the
time of contracting. Unless
proved otherwise, a person is
presumed sane;
Deaf-mutes who do not know
how to write persons who
are deaf, dumb and does know
how to write.
Vices of consent
Aside from incapacity and
simulation of contract, the
following are the causes that
vitiate consent or render it
defective so as to make the
contract voidable:
Error or mistake
Violence or force
Intimidation or threat or
duress
Undue influence
Fraud or deceit
Mistake of error- it is the
false notion of a thing or a fact
material to the contract.
Nature of mistake
Mistake may be of fact or of
law.
Contemplated
by
law
is
substantial mistake of fact.
Mistake of law - is that
which
arises
from
an
ignorance of provision of law,
or
from
erroneous
interpretation of its meaning ,
or
from
an
erroneous
conclusion as to the legal
effect of an agreement, on the
part of one of the parties.
Causal fraud- is the fraud
committed by one party
before or at the time of the
celebrate of the contract to
secure the consent of the
other.
Simulation of contract- is
the
act
of
deliberately
deceiving others, by feigning
or pretending by agreement,
the appearance of a contract
which is either non-existent or
concealed.
Kinds of simulation:
Absolute simulation- when
the contracts does not really
exist and the parties do not
intend to be bound at all.
Relative simulation- when
the contracts entered into by
the parties is different from
their true agreement.
Kinds of object of contact:
Requisites of things as
object of contract
Requisites of services as
object of contract
Rights
as
object
of
contract
ex.
Outside the commerce of
menclings
of
public
ownership such as sidewalk,
publics
places,
bridges,
streets, etc., things that are
common to everybody such as
air, sun-light, rain, etc.
Impossible, physically or
legally- prohibited drugs and
all illicit objects; to kill a
person etc. to get soil from
Jupiter; to construct a building
in one day.
Determinate things-all the
cavans of rice in the bodega,
all the egs in the basket; my
land with the smallest area.

Future things or rightsthings to be manufactured,

raised, or acquired after the
perfection of the contract such
as wine that a vineyard is
expected to produced; wool
that shall thereafter grow
upon a sheep; milk that a cow
may yield.
Instranmissible
rightspolitical rights such as the
right to vote; family, marital
and parental rights; right to
public office, or to run for
public office.
Future inheritance- is any
property o right, not in
existence
or
capable
of
determination at the time of
the contract, that a person
may inherit in the future.
Kinds of impossibility
Physical- when the thing or
service in the very nature of
things cannot exist or be
perfomed.
(a). Absolute
(b). Relative
(2) Legal- when the thing or
service is contrary to law,
morals, good customs, public
order, or public policy.
Cause- is the essential or
more
proximate
purpose
which the contracting parties
have in view at the time of
entering into contract.
Classification of contracts
according to cause:
Onerous- or one cause of
which, for each contracting
party is the presentation or
promise of a thing of service
by the others
Remuneratory
o
remunerative- or one the
cause of which is the service
or
benefit
which
is
remunerated.
Gratuitous-or one cause of
which is the liberality of the
benefactor or giver.
Motive- is the purely persona;
or private reason which a
party has in entering into
contract. It is different from
the cause of contract.
Lesion is any damage
caused by the fact that the
price is unjust or inadequate.
Classification of Contracts
According to Form
Informal or common contract
or that which may be entered
into in whatever form provided
all the essential requisites for
their validity are present. This
refers only to consensual
contracts, such as the contract
of sale. An informal contract
may be oral or written.
Formal or solemn contract or
that which is required by law
for its efficacy to be in a
certain specified form.
WRITTEN CONTRACT - Like
business letter, a written
contract has different parts
which may refer to as
essential or mandatory and
optional.
PARTS
OF
A
WRITTEN
CONTRACT
Title,
Salutation,
Body,
Signature of the parties,
Notarial Acknowledgment
Reformation - is that remedy
in equity by means of which a
written instrument is amended
or rectified so as to express or
conform to the real agreement

or intention of the parties

when by reason of mistake,
fraud, inequitable conduct, or
accident, the instrument fails
to express such agreement or
intention.
DEFECTIVE CONTRACTS
Rescissible
Voidable
Unenforceable
Void
Rescissible
Contracts

validly agreed upon because

all the essential elements
exist and, therefore, legally
effective, but in the cases
established
by
law,
the
remedy of recession is granted
in the interest of equity.
Rescission remedy granted
by law to the contracting
parties and sometimes even
to the third persons in order to
secure reparation of damages
caused them by a valid
contract.
Ward a person under
guardianship by reason of
some incapacity.
Absentee a person who
disappears from his domicile
his
whereabouts
being
unknown, and without leaving
an agent to administer his
property.
Voidable
or
annullable
contracts are those which
possess all the essential
requisites of a valid contract
but one of the parties is
incapable of giving consent, or
consent is vitiated by mistake,
violence, intimidation, undue
influence or fraud.
Annulment is a remedy
provided by law, for reasons of
public
interest,
for
the
declaration of the inefficacy of
the contract based on a defect
or vice in the consent of the
one of the contracting parties
in order to restore them to
their original position in which
they were before the contract
was executed
Kinds of Ratification
Express

when
the
ratification is manifested in
words or in writing
Implied or tacit it may take
diverse forms, such as by
silence or acquiescence; by
acts showing adoption or
approval of the contract; or by
acceptance and retention of
benefits flowing therefrom
Unenforceable Contracts These are contracts that
cannot be enforced in court or
sued upon by reason of
defects provided by law until
and unless they are ratified
according to the law
Unauthorized Contracts
Those entered into the name
of another person by one who
has been given no authority or
legal representation, or who
has acted beyond his power.
Void - Absolutely null, without
legal force and legal effect,
such as an agreement for an
immoral consideration
Inexistent contracts - refer
to agreements which lack one
or some or all of the elements
or do not comply with
formalities which are essential
for existence of a contract.