CONTRACTS AND OBLIGATIONS CONTRACTS 1. Contracts - in Art.

1305 of the Civil Code, it is defined as the meeting of minds between two persons whereby one binds himself with respect to the other, to give something or to render service. 2. Difference between contracts and obligations. - a contract is one of the sources of obligations, while obligation is the legal tie or relationship itself that exist after a contract has been entered into. - There can be no contract if there is no obligation but an obligation may exist without a contract. 3. Difference between agreements and contracts. - contracts are agreements enforceable through legal proceedings while agreements cannot be enforced by action in the courts of justice - All contracts are agreements by but not all agreements are contracts. 4. Contracts must not be contrary to a. law b. morals c. good customs d. public order e. public policy 5. Classification of Contracts a. according to its name/designation 1. nominate- it has specific name or designation in law 2. innominate- no specific name or designation in law b. According to perfection 1. consensual- are perfected by mere consent ex. sale, lease 2. real contract- perfected by delivery of the thing subject matter of the contract ex. Pledge 3. solemn- requires compliance with certain formalities prescribed by law. Ex. Donation of real property c. According to who will perform the obligation 1. unilateral- only one is performing the obligation 2. bilateral- both performs the obligation d. According to validity 1. valid- a contract is valid if there is a complete consent between the two parties. 2. void- are those which, because of certain defects, generally produce no effect at all. 3. voidable- are those posses all the essentials requisites of contracts but one of the parties is incapable of giving consent, 4. unenforceable- contracts entered into without authority, with fraud and both parties are incapable of giving consent. e. According to how it was done 1. express- when the ratification is manifested in words or in writing 2. implied when it shows an act that approves or accepts something f. According to time of implementation 1. executed 2. executable 6. Elements of Contracts

a. essential elements are those which no contract can validly exist. They are also known as requisites of the contracts. b. natural elements- are those that are presumed to exist in certain contracts unless the contract is expressly stipulated by the parties like warranty against hidden defects in sale. c. accidental elements or particular stipulations, clauses or terms established by the parties in their contract. 7. Essential Elements a. Consent- is conformity or concurrence of wills and with respect to contracts, it is the agreement of the will and contracting party with that of the other. Persons who cannot give consent: 1. unemancipated minors 2. insane 3. lucid interval 4. effect of drunkenness 5. state of being under hypnotic spell 6. violence 7. intimidation 8. convicts 9. deaf-mutes b. Object- refers to the subject matter of the contract. It must be within the commerce of man, it must not be impossible and it must be determinate. c. Cause-is the purpose which the contracting parties have in view at the time of entering into the contract. 7. Characteristics of Contracts: a. Obligatory force of contracts b. The freedom to contract c. Mutuality of contracts d. Relativity of contracts e. Consensuality of contracts 8. Other important terms in contracts a. form of contract- refers to the manner in which a contract is executed or manifested. b. Reformation- is that remedy by means of which a written instrument is amended so as to express to the real agreement when by reason of mistake the instrument fails to express such agreement. c. Rescissible contracts- is a valid contract but subject to rescission in the cases authorized by law by reason or damage or lesion. Once the damage is repaired, the contract ceases to be rescissible. OBLIGATIONS 1. Obligations derived from the latin word OBLIGATIO which means tying or binding. - Art. 1156 of the civil code, obligation is defined as a juridical necessity to give, to do or not to do. 2. Essential requisites of obligations a) passive subject ( obligor or debtor)- the person who has to perform the duty b) active subject ( creditor or oblige ) the person who is entitled to demand the fulfillment of the obligation c) object ( subject matter ) d) juridical or legal tie the cause that which binds or connects the parties.

3. Classification of Obligations a. primary classifications 1. pure and conditional 2. obligation with period 3. alternative and facultative 4. joint and solidary 5. divisible and indivisible 6. obligations with penal clause b. secondary classifications 1. unilateral and bilateral 2. real and personal 3. determinate and generic 4. civil and natural 5. legal, conventional and penal obligations pure- one which is not subject to any condition and no specific date is mentioned. Obligation with period- is one whose consequences are subjected in one way or another to the expiration of said period or term Alternative- is one where several prestations are due but the performance of one is sufficient (only one is needed but with many options) Facultative- one where only one pre station is due but the debtor may substitute another. Conjunctive obligation- a debtor has to perform all of the several prestations. Joint- one where the whole obligation is to be paid by the different debtors Solidary- one where each one of the debtors is bound to render individually Divisible- is one the object of which, in its delivery or performance is capable of partial fulfillment. Obligation with penal clause- is one which contains an accessory undertaking to pay previously stipulated indemnity in case of breach. The penalty substitute for the damages. Real- obligation to give Personal obligation to do or not to do Determinate- when it is particularly designated or physically segregated from all others of the same class Generic-refers only to a class to which it pertains. Civil- obliged under the law Natural- not based on positive law but based on equity, not enforceable in court 4. Extinguishment of obligations a. by payment or performance b. by the loss of the thing due c. by condonation or remission of the debt ( refuses to accept the payment ) d. by confusion or merger of the rights of creditor and debtor ( when the personalities of debtor and creditor are found in one person ) e. by compensation( opposite of item d) f. by novation ( change, substitution or renewal of an obligation with the intention of essentially modifying the same )

5. Sources of Obligations a. b. c. d. e. law contracts quasi contracts- lawful, voluntary, unilateral contracts acts of omissions- civil liability quasi-delicts- arise from damaged cause to another through an act of negligence or fault

-------Dr. Romano Q. Neyra, PECE