CONTRACTS

DEFINITION

• Art. 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.
 ELEMENTS OF A CONTRACT
• 1. Essential – Those without which there will be
no contract. (COC)
-Consent; Object; Consideration
• 2. Natural – Those found in certain contracts
unless set aside or suppressed by the parties.
(Warranty against eviction or WAHD)
• 3. Accidental – Those that refer to particular
stipulations of the parties. (terms of payment,
interest rates, place of payment.)
CLASSIFICATION OF CONTRACTS
 PERFECTION OR FORMATION
• A. Consensual – Those that are perfected by
mere consent. (sale, lease)
• B. Real – Those that are perfected by the
delivery of the object of the contract.
(deposit, pledge, commodatum.)
• C. Formal or Solemn – Those which must be in
the form provided by law for their perfection.
(donation.)
 CAUSE

• A. Onerous – Those where the cause for each

contracting party is the prestation or promise
of a thing or service to another.(sale, barter)
• B. Gratuitous or Lucrative – Those where one
party receives no equivalent consideration.
(donation, commodatum)
• C. Remunatory – Those where the cause is
the service or benefit remunerated (art. 1350)
 IMPORTANCE OR DEPENDENCE

• A. Principal – One that can stand by itself.

(sale, loan)
• B. Accessory – One whose existence
depends upon another contract. (pledge,
mortgage)
• C. Preparatory – One which serves as a
means by which other contracts may be
entered into. (agency, partnership.)
 NAME OR DESIGNATION
A. Nominate – those which have a name
under the law.
B. Innominate – those without any name under
the law:
• Do ut Des
• Do ut Facias
• Facio ut Des
• Facio ut Facias
• Governed by 1. Stipulations; 2. ObliCon; 3.
Analogous; 4. Customs (1307)
 RISK OR FULFILLMENT

•Commutative – Those where the

parties give equivalent values;
hence there is real fulfillment.
•Aleatory – Those whose fulfillment
depends upon chance.
(insurance)
 PARTIES OBLIGATED

•A. Unilateral – those where only one of

the parties is obligated to give or do
something. (commodatum)
•B. Bilateral or Synalagmatic – Those
where both parties are required to
give or do something.
 TIME OF FULFILLMENT

•A. Executed – One which has

been performed.
•B. Executory – One that has not
yet been performed.
 OBLIGATORY FORCE

•A. Valid
•B. Rescissible
•C. Unenforceable
•D. Voidable
•E. Void or inexistent
 OTHER CLASSIFICATIONS

•1. Auto-contract – Where only

one person represents the two
opposite parties to the contract.
•2. Contract of Adhesion – Where
only one party drafted the
contract.
 STAGES OF A CONTRACT

•1. Preparation or Conception or

Negotiation
•2. Perfection or Birth
•3. Consumation or Death or
Termination
 1. PREPARATION OR CONCEPTION OR
NEGOTIATION

This involves preliminary

negotiations and bargaining,
discussion of terms or conditions,
with no arrival yet of a definite
agreement.
 2.PERFECTION OR BIRTH
This is the point when there
is meeting of the minds
between the parties on a
definite subject matter and
a valid cause.
 CONSUMATION OR DEATH OR
TERMINATION
This occurs when the parties
fulfill or perform the terms
agreed upon in the contract,
culminating in the
extinguishment thereof.
 BASIC PRINCIPLES OF CONTRACT

•1. Liberty of Contract or Freedom to

Stipulate.
•2. Mutuality of Contracts.
•3. Relativity of Contracts.
•4. Consensuality of Contracts.
•5. Obligatoriness of Contracts.
 1. LIBERTY OF CONTRACT

•The Contracting parties may establish

such SCTC as they deem convenient,
provided they are not contrary to
LaMoGcPoP. (E.G. Pactum
commissorium, Tipo, Unconscionable
interest, Work without pay, Suppress
crimes.)
 2. MUTUALITY OF CONTRACTS

The contract must bind both

contracting parties; its validity or
compliance cannot be left to the will
of one of them. (unilateral changes)
 3. RELATIVITY OF CONTRACTS
Contracts take effect only between the parties, their assigns
and heirs.
Except: Where the rights and obligations are not transmissible:
a. by law
b. by stipulation
c. by nature (1311)

Stipulation pour atrui

Inducement to violate contract
 4. CONSENSUALITY OF
CONTRACTS.
Contracts are perfected by mere consent
Except – Real and Formal contracts.
 5. OBLIGATORINESS OF
CONTRACTS.
•A contract is the law between the
parties, both of them must comply to
its provisions, otherwise there will be
legal consequences.