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Contract – meeting of the mind between two persons where by one binds
himself, with respect to the other, to give something or to render some service.


1. Autonomy of wills – parties may stipulate anything as long as not

illegal, immoral, etc.
2. Mutuality – performance or validity binds both parties; not left to will
of one of parties
3. Obligatory Force – parties are bound from perfection of contract:

a. fulfill what has been expressly stipulated

b. all consequences w/c may be in keeping with good faith, usage & law

4. Relativity – binding only between the parties, their assigns, heirs;

strangers cannot demand enforcement

*Essential Requisites of contract

ART1318 There is no contract unless the following requisites concur:

(1) Consent of the contracting parties;

a. Plurality of subject
b. Capacity
c. Intelligence and free will
d. Manifestation of intent of parties
e. Cognition by the other party
f. Conformity of manifestation and cognition
(2) Object certain which is the subject mater of the contract

a) Within the commerce of man - either existing or in potency
b) Licit or not contrary to law, good customs
c) Possible
d) Determinate as to its kind or determinable w/o need to enter into a new


(3) Cause of the obligation which is established (1261)

a) It must exist
b) It must be true
c) It must be licit


As to perfection or formation:
1. consensual – perfected by agreement of parties
2. real – perfected by delivery ( commodatum, pledge, deposit )
3. formal/solemn – perfected by conformity to essential formalities ( donation )
As to cause
1. Onerous – with valuable consideration
2. Gratuitous – founded on liberality
3. Remunerative – prestation is given for service previously rendered not as obligation

As to importance or dependence of one upon another

1. principal – contract may stand alone
2. accessory – depends on another contract for its existence; may not exist on its own
3. Preparatory – not an end by itself; a means through which future contracts may be

As to parties obliged:
1. Unilateral – only one of the parties has an obligation
2. Bilateral – both parties are required to render reciprocal prestations

As to name or designation:
1. Nominate
2. Innominate
a) Do ut des – I give that you may give
b) Do ut facias – I give that you may do
c) Facio ut des – I do that you may give
d) Facio ut facias – I do that you may do

1. Preparation - negotiation
2. perfection/birth
3. consummation – performance


A fixed price or lump sum contract is an agreed price for the performance of
work, supply of labor, or supply or goods at a designated time. The scope of the
contract defines the expectations of both parties. This type of contract provides
a degree of certainty for both parties because the contract scope clearly spells
out what is involved. They can be short term or ongoing in duration.

Unit rate contract types are an agreed to rate for the performance of specified
work. Monetary exchange takes place when
work is performed and is directly proportional to
the volume and range of work. These types of
contract are most prevalent in the building
industry. An example of a unit rate contract
would be the supply of timber where the
monetary amount would be defined by the
volume of units supplied. The terms of this type
of contract often accommodates flexibility for price adjustment. The agreed to
value may be subject to amendment if the volume is reduced or exceeds the
original negotiated terms and price.

A reimbursable contract type (cost plus) is an upfront payment by the client

party to the contractor. These types of contracts are used when the scope of the
work is difficult to define. An example of this type of contract is the procurement
of specialized services to solve a problem that may take an indefinite period of
time. The upfront payment covers the contractor's commitments to the project.
Renegotiation for increased tenure or reimbursement may take place if the
contract comes to an abrupt end. These types of contract sometimes contain a
fixed cost component.

Financing contracts are a type of contract that involves the raising of debt and
equity during the project duration by the contracted party. The financing
contractor ultimately bares the risk of profitability in this type of agreement.
Financing contracts are used in the mining, building, oil and gas, transportation
and infrastructure projects.

Project management contracts are a supply type of contract where the

contractor agrees to manage the contract, as defined by the scope of the
agreement, for a specified duration of time for monetary consideration. This
type of contract can be short term or long term.