1. S (seller) and B (buyer) entered into a contract of sale.

It was agreed that the price of the

sale shall be determined by T, not a party to the contract.

1.1 Is the contract?

● Yes.

1.2 Can any of the parties refuse to be bound by the determination of the price by T if he
does not agree to the amount thereof?

● The determination of the performance may be left to a third person, whose decision
shall not be binding until it has been made known to both contracting parties. (Art.
1309.) A contracting party is not bound by the determination if it is evidently
inequitable or unjust as when the third person acted in bad faith or by mistake. In such
case, the courts shall decide what is equitable under the circumstances (Art. 1310.)

2. D owes C P 20,000.00 Both are painters. It was agreed that instead of paying C, D will
paint the house of E to which E expressed his conformity to C, whose services was
previously contracted by E. Has E the right to enforce the stipulation between C and D, even
if he is not a party to the contract? Why?

● Yes. If a contract should contain some stipulation in favor of a third person, he may
demand its fulfillment provided he communicated his acceptance to the obligor before
its revocation. A mere incidental benefit or interest of a person is not sufficient. The
contracting parties must have clearly and deliberately conferred a favor upon a third
person. (Art. 1311, par 2.)

3. X made an office desk for Y. X told Y that the latter may pay whatever amount he would
like to pay for it. When the desk was finished Y offered to pay P 2,000.but instead X
demanded P 3,000.00. Is X entitled to paid P 3,000.00?

● No. The contract must bind both contracting parties, its validity or compliance cannot
be left to the will of one of them. (Art. 1308.) A contract is a meeting of minds and,
therefore, there must be mutual consent. (Arts. 1305. 1319.)

4. What is an option contract?

 ● Option Contract ​is one giving a person for a consideration a certain period within
which to accept the offer of the offerer. It is separate and distinct from the contract
which will be perfected upon the acceptance of the offer. ​Option ​may also refer to the
privilege itself given to the offeree to accept an offer within a certain period.

5. In a contract containing an option period, when is the offerer not allowed to withdraw his
offer even before the acceptance of the offer? When is the offerer allowed to withdraw his
offer after the the acceptance?

● When the offerer gives to the offeree a certain period within which to accept the offer,
the general rule is that the offer may be withdrawn as a matter of right at any time
before acceptance. The exception is when the option is founded upon a consideration,
as something paid or promised.