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CONTRACTS 1305.

A contract is the meeting of thr minds between persons whereby one binds himself, with respect to the other, to give something or to render some service. Elements >Essential elements (1318)(without which the contract cannot exist; indespensible): Consent, Subject matter, Cause or consideration >Natural elements (those found in certain contracts, and presumed to exist, unless the contrary has been stipulated) >Accidental elements (these are the various particular stipulations that may be agreed upon by the contracting parties) Classification >Accdg to perfection: consensual (1315)(perfected by mere consent), real (1316)(perfected by delivery), formal or solemn (those where special formalities are essential before the contract may be perfected) >Accdg to importance: principal (here, the contract may stand alone by itself), accessory (this depends for its existence upon another contract) >Accdg to parties obliged: unilateral, bilateral >Accdg to name or designation: nominate (here, the contract is given a particular or special name), innominate (those not given any special name) Characteristics 1315>Obligatory force, contracting parties are bound by their contract not only of the fulfillment or their agreement but also of its consequences. 1308>Mutuality of contracts, parties are bound by the contract but its validity and effectivity cannot be left to the will of one of the parties. 1306>Autonomy of the will, parties are free to stipulate in the contract as long as it is not comtrary to law, morals, good customs, public policy, and public order. 1311>Relativity of contracts, contracts are binding not only between the parties thereto but it extends to their heirs, assignee, successor-in-interest unless the

contract involves intransmissible rights. Stipulation pour atrui, is when a contract should contain some stipulation in favor of a third person deliberately conferred upon the same. 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. 1327>Who may not give consent: (1) minors (no more 'unemacipated', because of law on emacipation, RA6809); (2) insane or demented persons; (3) deaf mute who does not know how to write; (4) under hypnotic spell (voidable); (5) drunkeness (voidable); (6) those specially disqualified by law; and (7) alienage. 1330>Vices of consent (vitiated consent) makes the contract only voidable: (1) mistake or error; (2) fraud or deceit; (3) violence; (4) intimidation; (5) undue influence. *first two affects the 'intellect', last three affects the 'will' Voidable contract, is binding and valid, unless annulled by a proper action in court. It is, however, susceptible of ratification before annulment. 1331>MISTAKE, it is a false belief about something; should refer to the substance of the thing which is the object of the contract. 1335>VIOLENCE, when in order to wrest consent, serious or irresistible force is employed; refers to physical coercion. INTIMIDATION, when one of the contracting parties is compelled by a reasonable and well-grounded fear of an imminent and grave evil upon his person or property, or upon the person or property of his spouse, descendants, or ascendants, to give his consent; refers to moral coercion. 1337>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. 1338>FRAUD, when through insidious words or machinations of one of the contracting parties, the other is induced to enter into a contract which, without them, he would not have agreed to. *Causal fraud (voidable), here, were it not for the fraud, thhe pther party would not have consented. *Incidental fraud (valid, but damages are possible), here, even without the fraud the parties would have agreed just the same, hence the fraud was only incidental in causing consent. *Tolerated fraud, the usual exaggerations in trade, when the other party had an opportunity to know the facts, are not in themselves fraudulent. 1341>A mere expression of an opinion does nit signify fraud, unless made by an expert and the other party has relied on the former's special knowledge. Simulation of Contract, it is the process of intentionally deceiving others by producing the appearnce of a contract that really does not exist or which is different from the true agreement. *Absolute simulation (fictitious contract) (void), when the parties do not intend to be bound at all; a contract that really does not exist. *Relative simulation, when the parties conceal their true agreement; what has been agreed upon is differemt from their true agreement. 1347>Objects of contracts: (1) things or services must be within he commerce of man, (2) must be transmissible, (3) must not be contrary to law, morals, good customs, public policy, and public order, (4) must not be impossible. Cause, it is the essential and impelling reason why a party assumes an obligation.

Cause v subject matter, the difference is only a matter of viewpoint in some way, because what may be the subject matter for one party will be the cause or consideration for the other party. Classifications as to Cause: (1) onerous, here the cause is, fir each contracting party, the prestation or promise of a thing or service by the other. (2) remuneratory, the past service or benefit which by itself is a recoverable debt. (3) gratuitous, here, the cayse is the mere liberality of the benefactor. Reformation, is hat remedy in equity by means of which a written instrument is made or construed so as to express or conform to the real intention of the parties when some error or mistake has been committed. Instances when instrument may be reformed: 1361.When a mutual mistake of the parties causes the failure of the instrument to disclose their true agreement. 1362. If one party was mistaken and the other acted fraudulently or inequitably in such a way that the instrument does not show their true intention. 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. 1364. When through the ignnorance, 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. 1365. If two parties agree upon the mortgage or pledge of real or personal property, but the instrument states that the property is sold absolutely or with a right of repurchase. 1366>No reformation in: (1) simple donations inter vivos wherein no condition is imposed; (2) will; (3) when the real agreement is void.

4 Defective Contracts: (1) rescissible - is valid until rescinded; there is a sort of extrinsic defect consisting of an economic damage or lesion. (2) voidable - is valid until annulled. It cannot be annulled, however, if there has been ratification. The defect is more or less intrinsic, as in the case of vitiated consent. (3) unenforceable - cannot be sued upon or enforced unless it is ratified. In a way, it may be considered as a validable transaction, that is, it has no effect now, but it may be effective upon ratification. (4) void - is one that has no effect at all; it cannot be ratified or validated. Rescission, is a process designated to render inefficacious a contract validly entered into and normally binding, by reason of external conditions, causing an economic prejudice to a party or to his creditors. 1381. The ff contracts are rescissible: (within 4yrs) (1) those which are entered into by the guardians whenever the wards whom they represent suffer lesion by more than 1/4 of the value of the things which are the object thereof; (2) those agreed upon in representation of absentees, if the latter suffer the lesion stated in the preceding number; (3) thise undertaken in fraud of creditors when the latter cannot in any other manner collect the claims due them; (4) those which refer to things under litigation if they have been entered into by the defendant without the knowledge and approval of the litigants or of comoetent judicial authority; (5) all other contracts specially declared by law to be subject to rescission. (6) payments made in a state of insolvency for obligations to whose fulfillment the debtor could not be compelled at the time they were effected. 1390. The ff contracts are voidable: (within 4yrs) (1) those where one of the parties are incapable of giving consent to a contract;

(2) those where the consent is vitiated by mistake, violence, intimidation, undue influence or fraud. 1403. The ff contracts are unenforceable: (1) those entered into in the name of another person by one who has been given no authority or legal representation, or who has acted beyond his powers; (2) those that do not comply with the Statute of Frauds. (3) thise where both parties are incapable of giving consent to a contract. 6 Statute of Frauds: (1) An agreement that by its terms is not to be performed within a year from the making thereof (2) A special promise to answer for the debt, default, or miscsrriage of another (3) An agreement made in consideration of marriage, other than a mutual promise to marry (4) An agreement for the sale of goods at a price not less than five hundred pesos (5) An agreement for the leasing for a longer period than one year, or for the sale of real property or of an interest therein; (6) A representation as to the credit of a third person. 1409. The ff contracts are void: (1) those whose cause, object, or purpose is contrary to law, morals, good customs, public policy, or public order; (2) those which are absolutely simulated or fictitious (3) those whose cause or object did not exist at the time of the transaction (4) those whose object is outside the commerce of man (5) thise which contemplates an impossible service (6) those where the intention of the parties relative to the principal object of the contract cannot be ascertained (7) those expressly prohibited or declared void by law