ICT-ED INSTITUTE OF SCIENCE AND TECHNOLOGY LIPA

2/F Mercedes Bldg. P. Torres St. Lipa City, Batangas 4217

(043) 757-4445 / (043) 757-5944

COLLEGE DEPARTMENT

Learning Module
In
BUSINESS LAWS AND REGULATIONS
(SY. 2021-2022)

Prepared by:
PAULYN MARIE R. BATHAN
 ICT-ED INSTITUTE OF SCIENCE AND TECHNOLOGY LIPA
2/F Mercedes Bldg. P. Torres St. Lipa City, Batangas 4217
(043) 757-4445 / (043) 757-5944

I. Lesson Objectives

At the end of this module, you will be able to:

1. Define contract.

2. Enumerate the elements of a valid contract.

3. Know how to interpret contracts.

II. Read and Learn

WHAT IS A CONTRACT?

A contract is a meeting of minds between two persons whereby one binds himself, with respect to
the other, to give something or to render some service. (Art. 1305.) It is the formal expression by
the parties of their rights and obligations they have agreed upon with respect to each other.

WHAT ARE THE ELEMENTS THAT MUST BE PRESENT TO CONSTITUTE A VALID

CONTRACT?

(1) Consent of the contracting parties;

(2) Object certain which is the subject matter of the contract;

(3) Cause of the obligation which is established

INTERPRETATION OF CONTRACTS

1. Literal Meaning

If the terms of a contract are clear and leave no doubt upon the intention of the contracting
parties, the literal meaning of its stipulations shall control. (Article 1370, Civil Code)

2. Intention over words/ term

 ICT-ED INSTITUTE OF SCIENCE AND TECHNOLOGY LIPA
2/F Mercedes Bldg. P. Torres St. Lipa City, Batangas 4217
(043) 757-4445 / (043) 757-5944

If the words appear to be contrary to the evident intention of the parties, the latter shall
prevail over the former. (Article 1370)

a. Contemporaneous and subsequent acts

In order to judge the intention of the contracting parties, their contemporaneous and
subsequent acts shall be principally considered. (Article 1371)

b. Limitations on general contracts

However general the terms of a contract may be, they shall not be understood to
comprehend things that are distinct and cases that are different from those upon which the parties
intended to agree.

3. Several meanings

a. That which is most adequate to render the contract effectual

4. Various stipulations

a. Interpreted together

b. Attribute to doubtful ones that sense may result.

5. Different significations

a. That which is in most keeping with nature and object of the contract.

6. Usage of custom of the place

7. Obscure words or stipulations

a. Interpreted against one who made the ambiguity

The interpretation of obscure words or stipulations in a contract shall not favor the party
who caused the obscurity. (Article 1377)
 ICT-ED INSTITUTE OF SCIENCE AND TECHNOLOGY LIPA
2/F Mercedes Bldg. P. Torres St. Lipa City, Batangas 4217
(043) 757-4445 / (043) 757-5944

b. Application: Contract of adhesion