What is the “Principle of Relativity” or “Principle of Limited Effectivity Contracts”?

GR: Contracts take effect only between the parties or their assigns and heirs.

Res inter alios acta aliis neque nocet prodest - a thing done between others does not harm or
benefit others

A contract can only obligate the parties who entered into it, or their successors who assumed
their personalities, and that, concomitantly, a contract can neither favor nor prejudice third
persons.

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Q: The husband assumed sole administration of the

family’s mango plantation since his wife worked
abroad. Subsequently, without his wife’s knowledge,
the husband entered into an antichretic transaction
with a company, giving it possession and
management of the plantation with power to harvest
and sell the fruits and to apply the proceeds to the
payment of a loan he got. What is the standing of the
contract? (2011 BAR)
A: It is considered a continuing offer by the parties;
perfected only upon the wife’s acceptance or the court’s
authorization.

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NOTE: The person making the offer may fix the time, place
and manner of acceptance, all of which must be complied
with (NCC, Art. 1321).