Glyness Relox BSCPE 5-3

FINAL EXAM

1. Why is there a need for students to study contracts and documents?

Because we want is for us to be able to stand up for ourselves and speak. Given the difficult
situation, we should learn to share our ideas and ask questions.

Knowing laws opened my eyes to the good side of law. We need to understand the different
rights we have and the circumstances wherein we could benefit from them. Also, it is a plus
factor when you know your law because you could relate it to the current issues going on in and
out of country. It would also protect us from the scammers and liars who can defraud and take
advantage of us.

2. Discuss the following:

2.1. Kinds and Characteristics of Contracts

A. According to perfection

Consensual contract - perfected by mere consent such as the contract of sale, lease
and agency.

Real contract - perfected by mere consent and the delivery of the object; such as
deposit, pledge and commodatum.

Solemn contract - perfected through compliance with the form required by law; identical
with formal contract

B. According to form

Informal contract - in any form as long as all the requisites or essential elements for its
validity are present.

Formal contract - in a form required by the law.

C. According to nature of vinculum

Valid contract - with such stipulations, clauses, terms and conditions that are not contrary to law,
morals, good customs, public order, or public policy.

Rescissible contract - with legal validity, but may be rescinded or revoked in the cases
established by law.

Voidable/Annullable contract - with legal validity but may be invalidated by a court action on
the grounds of mistake, violence, intimidation, undue influence, fraud, or incapacity of one of
the parties to give consent.

Unenforceable contract - with legal validity but cannot be enforce through court action by reason
of defects, unless it is ratified according to law.

Void contract - with no validity at all because of certain defects, such as illegality; considered
inexistent from the very beginning and cannot be ratified according to law.

D. According to cause

Onerous contract - the purpose is the performance of an obligation by one party as the other
party performs or has performed its own obligation.

Remuneratory contract - the purpose is the remuneration or payment by one party for a service
or benefit previously rendered by the other party.

Gratuitous contract - the purpose is the mere liberality or the feeling by one party that the other
party (which is the benefactor/giver) has been generous; such as in free, pure donation.

E. According to risks involved

Unilateral contract - one party is bound to fulfill an obligation for an act by another party.

Bilateral contract - both parties are bound to fulfill their mutual promises or respective
obligation to each other reciprocally.

F. According to name

Nominate contract - has specific name or designation in law; such as commodatum, lease,
agency, and sale.

Innominate contract - has no specific name or designation in law; shall be regulated by the
stipulations of the parties, by the Civil Code, by the rules governing the most analogous
nominate contracts, and by the customs of the place.

2.2. Essential requisites of contracts

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.

Acceptance made by letter or telegram does not bind the offerer except from the time it came to
his knowledge. The contract, in such a case, is presumed to have been entered into in the place
where the offer was made.

Object - the thing, right, or service to be provided or performed under the contract.

Cause (causa) - the essential purpose or reason for the contract

2.3. Form of Contracts

Forms of contract in business law come in various types and classifications. At the base level, a
contract is a written agreement between two or more parties to provide a service or product.
Contracts are enforceable by law and must meet specific criteria to be valid.

2.4. Reformation of Instruments

The reformation is that remedy to amend or correct the form of a contract as a written instrument
so that it would conform to the real intention of the parties.

It is important to note that reformation does not change the contract, rather it aims to establish its
real purpose as manifested by the real intention of the parties. 

2.5. Interpretation of Contracts

The interpretation of contract is the determination of the meaning of the words/terms used in its
contents that are ambiguous, not understood, and not obvious.

An interpretation involves a question of law since there is a force of law between the contracting
parties.

2.6. Rescissible Contracts

Those which have caused a particular economic damage either to one of the parties or to a third
person and which may be set aside even if valid. It may be set aside in whole or in part, to the
extent of the damage caused.

2.7. Voidable Contracts

A voidable contract, unlike a void contract, is a valid contract which may be either affirmed or

rejected at the option of one of the parties. At most, one party to the contract is bound. The
unbound party may repudiate (reject) the contract, at which time the contract becomes void.
2.8. Unenforceable Contracts

The following contracts are unenforceable unless they are ratified:

1. Those entered into without or in excess of authority;

2. Those that do not comply with the Statute of Frauds i.e., are not in writing nor subscribed by
the party charged or by his agent; or

3. Those where both contracting parties are incapable of giving consent.

2.9. Void or inexistent Contracts

A void contract, also known as a void agreement, is not actually a contract. A void contract
cannot be enforced by law. Void contracts are different from voidable contracts, which are
contracts may be (but not necessarily will be) nullified.