CONTRACTS

Civil Code of the Philippines

(R.A. 386)
•Article 1305
A 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. (1254a)
STAGES OF CONTRACT (PPC):
 Preparation (Generation)
Birth of the contract, or commencement
of the contract’s juridical life.
Perfection
Life of the contract, where its terms are
being complied with or implemented.
 Consummation
Extinction of the contract by the performance
of the obligation.
•Article 1317
No one may contract in
the name of another
without being authorized
by the latter, or unless he
has by law a right to
represent him.
•Article 1318
There is no contract unless the following
requisites concur:
(1) Consent of the contracting
parties;
(2) Object certain which is the subject
matter of the contract;
(3) Cause of the obligation which is
established.
•Article 1319
Consent is manifested by the meeting
of the offer and the acceptance upon
the thing and the cause which are to
constitute the contract. The offer
must be certain and the acceptance
absolute. A qualified acceptance
constitutes a counter-offer.
•Article 1320
An acceptance may be express or
implied.

•Article 1321
The person making the offer may fix
the time, place, and manner of
acceptance, all of which must be
complied with.
•Article 1327
The following cannot give consent to a
contract:

(1) Unemancipated minors;

(2) Insane or demented persons,
(3) Deaf-mutes who do not know
how to write.
•Article 1332
When one of the parties is unable to
read, or if the contract is in a language
not understood by him, and mistake or
fraud is alleged, the person enforcing the
contract must show that the terms
thereof have been fully explained to the
former. (n)
•Article 1337
There is undue influence when a person
takes improper advantage of his power
over the will of another, depriving the
latter of a reasonable freedom of choice.
The following circumstances shall be
considered: the confidential, family,
spiritual and other relations between the
parties, or the fact that the person
alleged to have been unduly influenced
was suffering from mental weakness, or
was ignorant or in financial distress. (n)
•Article 1347
All things which are not outside the
commerce of men, including future
things, may be the object of a contract.
All rights which are not intransmissible
may also be the object of contracts.
No contract may be entered into upon
future inheritance except in cases
expressly authorized by law.
All services which are not contrary
to law, morals, good customs, public
order or public policy may likewise
be the object of a contract.

•Article 1348
Impossible things or services cannot
be the object of contracts.
•Article 1363
When one party was mistaken and
the other knew or believed that the
instrument did not state their real
agreement, but concealed that fact
from the former, the instrument may
be reformed.
•Article 1364
When through the ignorance, lack of
skill, negligence or bad faith on the
part of the person drafting the
instrument or of the clerk or typist,
the instrument does not express the
true intention of the parties, the
courts may order that the
instrument be reformed.
•Article 1366
There shall be no reformation in the
following cases:

(1) Simple donations inter vivos

wherein no condition is imposed;
(2) Wills;
(3) When the real agreement is void.
•Article 1369
The procedure for the reformation of
instrument shall be governed by rules of
court to be promulgated by the Supreme
Court.
•Article 1370
If the terms of a contract are clear and
leave no doubt upon the intention of the
contracting parties, the literal meaning of
its stipulations shall control.

If the words appear to be contrary to the

evident intention of the parties, the latter
shall prevail over the former.
Contracts which may be invalidated:

• RESCISSIBLE CONTRACTS
• VOIDABLE CONTRACTS
• UNENFORCEABLE CONTRACTS
• VOID / INEXISTENT CONTRACTS
• RESCISSIBLE CONTRACT
All the essential elements or requisites of
a contract exist and the contract is valid,
but by reason of injury or damage to third
persons, such as creditors, the contract
may be rescinded.

The rescissible contract is, therefore,

valid until rescinded by a competent
court.
• RESCISSIBLE CONTRACT
“A” is the guardian of “B”, a minor. “A”
sells to “C” the property of “B” worth 2M
for only 1M.
By virtue of the contact of sale, “B”
suffered damages by more than ¼ the
value of his property. “B’s” remedy is to
rescind the sale made by “A” to “C” before
a court of competent jurisdiction upon
reaching the age of majority.
• VOIDABLE CONTRACT
Voidable contract is valid until annulled.
It cannot however, be annulled if there
has been ratification.

“A”, a minor sold his land to “B” for

P1,000,000.00.

The sale is voidable, because at the time the

contract was entered into, “A” was incappable of
giving consent.The contract however, remains
valid until it is annuled.
• UNENFORCEABLE CONTRACT
Unenforceable contract cannot be used upon or
enforced unless ratified, hence they have in a sense
the effect of a valid contract. It may be called
validable contract.

“A”, a minor sold his land to “B” for P1,000,000.00.

The sale is voidable, because at the time the

contract was entered into, “A” was incappable of
giving consent.The contract however, remains valid
until it is annuled.
• VOID / INEXISTENT CONTRACT
Void or inexistent contract has no
effect at all. It cannot be ratified or
validated. Its effect is as if it had
never been executed at all. (void ab
initio)
SPECIFICATIONS
•Written instructions concerning project
requirements
•Bidding and contract documents with
technical specifications
•Often master specifications are used – be
careful
•Residential and Building – use CSI 16
Division format
•Engineering – use AASHTO
CSI 16 Divisions – General
Requirements, Site Work, Concrete,
Masonry, Metals, Wood and Plastics,
Thermal and Moisture Protection,
Doors and Windows, Finishes,
Specialties, Equipment, Furnishings,
Special Construction, Conveying
Systems, Mechanical and Electrical
• General Conditions
General Provisions – set forth the manner and
procedures whereby the provisions of the
contract are to implemented -- time, insurance
and bonds, termination of contract, disputes
• Supplementary (Special) Conditions
* Project specific Requirements
* “MUST” Read for Bidding and Building
• Technical Specifications
* Most combine Performance and
Design requirements
• Performance
• Design
• One brand ONLY – Proprietary product
• Very non-competitive, therefore higher costs
• Not allowed in public projects
• Not recommended for any project, although
allowed by private owners
•Allow competition between manufacturers
•Sets standards for material quality
•MAY list several manufacturers and their
brand name of product
•Allow “OR APPROVED EQUAL” substitutions
•Substitutions are at the contractor’s risk,
subject to the architect’s review and
approval
• Most common for roads, utilities
• Not issued as part of the specifications book for
the specific project
• Issued as a separate specifications book by many
state Departments of Transportation, Cities and
Towns
• Cover standard materials used in most projects
*Concrete mix designs
*Fire Hydrants
*Manhole structures
• It must be worded in plain language
• It must be concise
• It must include all the legal
requirements
• The prologue or the opening
clause
• The contracting parties
• The subject matter
• The term of contract
• The contract price
• The attestation clause
• Scope of contract
• Terms of contract
• Plans and Specifications
• Workmanship
• Materials
• Conduct of work
• Contractual changes
• Payments
• Extra-work
• Contractors risks and obligations
• Rights of way
• Inspection of the work
• Engineer’s authority