Week 8: SCP - Topics: Midterm Period Topic S

ST.
JOHN PAUL II COLLEGE OF DAVAO

COLLEGE OF BUSINESS ADMINISTRATION
Physically Detached Yet Academically Attached
SCP - TOPICS: MIDTERM PERIOD TOPIC S
Week 8 Obligations
General Provisions on Essential
Lesson Title
Requisites of Contracts
Learning Outcomes Understanding the concepts of:
Consent, Object, and Cause
At SJPIICD, I Matter!
LEARNING INTENT!
Terms to Ponder
This section will introduce you to the different terminologies
used in Business Law. Take note of the definitions and meanings as
you will be encountering the same throughout the discussion of the
subject. In case you will be confronted with difficulties in
understanding the terms, you may always go back to this simplified
course pack for your better comprehension.
ESSENTIAL REQUISITES OF CONTRACTS
CONSENT OF THE CONTRACTING PARTIES
Consent, meaning
Consent is the manifestation of the meeting of the offer and the

acceptance upon the thing and the cause which are to constitute
the contract. (Art. 1319)
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ST. JOHN PAUL II COLLEGE OF DAVAO
Rules on offer
1. The offer must be certain (Art. 1319) because there could be
no meeting of minds if it is vague or not definite. It must be
“definite, complete and intentional.”
Thus, if S, who has several lots, offers to sell his lot to B

without designating which of the lots he is selling, the offer is
not certain.
Nature of advertisements
a. Business advertisements of things for sale are not

definite offers, but mere invitations to make an offer
unless it appears otherwise. (Art. 1325)
Examples:
(1) An advertisement reads: “For sale: residential
house on a 200 square meter lot at Jade Valley
Village for
P5M. Call 234-0012.”
This is not an offer but a mere invitation to make an

offer.
(2) “For sale: 3-bedroom bungalow on a 200 square

meter lot located at House No. 123 Jade Valley
Village, Davao City, for P5M case.”
This is a definite offer because it contains all the matters

required of a contract.
b. Advertisements for bidders are merely invitations to make

proposals and the advertiser is not bound to accept the
highest or lowest bidder, unless the contrary appears.
(Art. 1326)
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2. An offer becomes ineffective upon the death, civil interdiction,

insanity or insolvency of either party before acceptance is
conveyed. (Art. 1323)
3. When the offerer has allowed the offeree a certain period to

accept, the offer may be withdrawn at any time before
acceptance by communicating such withdrawal, except when
the option is founded upon a consideration as something paid
or promised. (Art. 1324)
Option, concept
Option is a contract whereby the offeror gives the offeree a

certain period within which to buy or not to buy a certain
object for a fixed price. It may or may not be for a valuable
consideration.
Right of the offeror to withdraw the offer
a. If there is no consideration for the option, the offerer may

withdraw the offer at anytime within the option period
provided there has not yet been any acceptance.
b. If there is a consideration, the offerer may not withdraw

the offer before the lapse of the period agreed upon.
Otherwise, he will be liable for damages to the offeree for
breach of contract.
Note: In both cases, the option is extinguished upon the lapse

of the period, unless in the meantime, the offeree has accepted
the offer.
Example: S promised to sell his car to B for P500,000.00 giving

B 30 days to decide. B accepts the promise. S may withdraw
his promise even before the lapse of the 30-day period by
informing B of the withdrawal. However, if B had given to S
option money of say, P10,000.00, S cannot withdraw the offer
before the lapse of the option period because the option given to
B was founded upon a consideration.
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Rules on acceptance
1. The acceptance must be absolute. (Art. 1319). If the

acceptance varies the offer, there is no contract since there is
no meeting of minds.
a. If the acceptance is qualified, it constitutes a counter-

offer; (Art. 1319) and has the effect of rejecting the offer.
Example: S offers to sell his car for P500,000.00 to B. B

accepts the offer but is willing to pay the price of
P350,000.00 only. The acceptance made by B is a
qualified acceptance which constitutes a counter-offer.
Accordingly, no contract is perfected. However, if S
accepts the counteroffer, then there will be a perfected
contract at the price of P350,000.00.
b. If the offer fixes the time, place and manner of

acceptance, all must be complied with. (Art. 1321)
Otherwise, there will be no meeting of minds.
2. 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
the place where the offer was made. (Art. 1319)
The second sentence is important because a contract is

governed by the law of the place where it was entered into.
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3. Acceptance may be express or implied. (Art. 1320)
The acceptance is express if made orally or in writing. It

is implied if it can be inferred from the conduct of the parties.
Thus, if S offers to sell a kilo of his mangoes to B for

P200.00, and B, without saying anything to S, takes the
mangoes and begins to eat one and offers the rest to others,
then B is deemed to have impliedly accepted the offer of S.
4. An offer made through an agent is accepted from the time it is

communicated to him. (Art. 1322)
Thus, a contract is binding upon the principal although

the agent has not communicated the acceptance to him. This
is so because the agent is merely an extension of the
personality of the principal. Therefore, acceptance by the agent
is deemed on acceptance by the principal.
Rules on consent
1. The parties must have the capacity to enter into a contract.

The following cannot give consent to a contract: a.
Unemancipated minors
Emancipation takes place by the attainment of the

age of majority which is 18 years.
b. Insane or demented persons

However, contracts entered into during lucid
intervals are valid. (Art. 1328) Lucid interval refers to the
period of temporary sanity of an insane person.
c. Deaf-mutes who do not know how to write.

A contract entered into by the above-named incapacitated
persons is voidable. (Art. 1390) However, when both parties
are incapable of giving consent to a contract, the contract is
unenforceable. (Art. 1403)
The incapacity aforementioned is subject to the

modifications determined by law, and is understood to be
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without prejudice to special disqualifications established in the

laws. (Art. 1329)
Thus, an incapacitated person must pay a reasonable

price for food and other necessaries sold to him. The sale here
is valid. (Art. 1409) On the other hand, a person may be
capacitated but is disqualified to enter into some contracts,
such as in the case of the husband and the wife who, as a
general rules, are prohibited to sell to each other or donate to
each other.
2. Contracts agreed to in a state of drunkenness or during a

hypnotic spell are voildable. (Art. 1328) This is so because
consent given in such states is not freely and intelligently
given.
3. A contract where consent is given through mistake, violence,

intimidation, undue influence, or fraud is voidable. (Art. 1330)
These five are referred to as the causes that vitiate consent or
the vices of consent.
a. Mistake
1) When mistake will invalidate consent

a) If the mistake refers to the substance of the
thing which is the object of the contract. (Art.
1331)
Example: If B bought a lot on which he wanted

to construct a factory believing that it was
situated in an industrial area, he can have the
contract annulled if the lot was actually
situated in a residential area.
b) If the mistake refers to those conditions which

have principally moved one or both parties to
enter into the contract. (Art. 1331)
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Example: S sold his car to B for P500,000.00

cash because he needed the money to settle a
debt. The deed of sale signed by him showed,
however, that the price would be paid in 4
equal monthly installments. S can have the sale
annulled because of a mistake as to the
condition of the contract.
c) If the mistake refers to the identity or

qualifications of one of the parties if such
identity or qualifications have been the
principal cause of the contract. (Art. 1331)
Example: D donated a lot to C believing that C

was his illegitimate son. D found out late,
however, that C was not his son. The identity of
C was material to the contract; hence, D can
have the contract annulled on the ground of
mistake as to the identity of the donee.
d) If the mistake refers to the legal effect of an

agreement when the real purpose of the parties
is frustrated and the same is mutual. (Art.
1334)
This refers to mistake of law which does

not generally vitiate consent because of the
rule that ignorance of the law excuses no one
from compliance therewith. However, the
contract shall be voidable if the mistake as to
the legal effect of the agreement is mutual and
frustrates the real purpose of the parties.
Example: S and B entered into a contract of

sale with a right to repurchase believing that
the contract had the same effect as a contract
of loan and mortgage. The mistake here refers
to the legal effect of their agreement. Either
party may annul the contract on such ground.
2) When mistake does not vitiate consent
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a) If the mistake refers to a simple mistake of

account which shall only be corrected. (Art.
1331)
Thus, if 10 books were sold at P567.80

each but the total price was P5,876.00 instead
of P5,678.00, the mistake in computation will
not render the contract voidable but will only
be corrected.
b) If the party alleging it knew the doubt,

contingency or risk affecting the object of the
contract. (Art. 1333)
Thus, if B buys a brand new car stereo
for P500.00 when he knows that the price of
one is P5,000.00, he cannot allege mistake if
the car stereo later turns out to have been
stolen. The fact that the car stereo was offered
to him at a very low price should have put him
on guard that it might have come from an
illegal source. 3) Rule when one party is
unable to read or does not understand the
language of the contract.
If mistake or fraud is alleged, the person

enforcing the contract must show that the terms
thereof have been fully explained to the former. (Art.
1332)
This is an exception to the rule that he who

alleges fraud or mistake must prove the same.
b. Violence or physical coercion
When violence vitiates consent
There is violence when in order to wrest consent, serious

or irresistible force is employed. (Art. 1335) This is true
although it may have been employed by a third person
who did not take part in the contract. (Art. 1336)
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Example: S signed a deed of sale of his land to B because

B twisted and threatened to break his arm if he refused to
sign. Consent here is given because of violence
c. Intimidation or moral coercion
1) When intimidation vitiates consent
There is intimidation when one of the

contracting parties is compelled by a reasonable
and well-grounded fear of an imminent and grave
evil upon his person or property, or upon the person
or property of his spouse, descendants or
ascendants to give his consent. (Art. 1335) This
intimidation exists although it may have been
employed by a third person who did not take part in
the contract. (Art.
1336)
Example: In the example above, if S signed the

deed of sale because B pointed a gun on his head
and threatened to shoot him if he did not sign the
deed of sale, consent here is given by reason of
intimidation. There is likewise intimidation if B
threatened to burn the house of S, or shoot S’s
spouse, parent or child, if S did not sign the deed of
sale.
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Factors to be considered in determining the degree

of intimidation
a) age;
b) sex, and
c) condition of the person. (Art. 1335)
3) When no intimidation exists
No intimidation exists in case of a threat to

enforce one’s claim through competent authority, if
the claim is just or legal. (Art. 1335)
Example: C threatened to sue D if he did not

pay his debt to him. D afraid of a court action, thus
made a dacion en pago by transferring his lot to C to
settle his debt. Here, the contract (dacion en pago) is
not voidable as there is no intimidation when seeks
the aid of the courts to enforce his rights.
d. Undue influence
1) When undue influence vitiates consent
There is undue influence when a person takes

improper advantage of his power over the will of
another, depriving the latter of a reasonable
freedom of choice. (Art. 1337) For it to be present,
the influence exerted must have so overpowered or
subjugated the mind of a contracting party as to
destroy his free agency, making him express the will
of another rather than his own.
Example: If a church minister improperly takes

advantage of his power over a member of his
congregation who regularly confides in him by
persistently telling the member to sell his property to
him, the contract if entered into will be voidable at
the instance of the member on the ground of undue
influence.
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Factors to be considered in determining the

existence of undue influence
a) Confidential, family, spiritual and other

relations of the parties,
b) Mental weakness,
c) Ignorance, or
d) Financial distress of the person alleged to have
been unduly influenced. (Art. 1337)
e. Fraud
1) When fraud exists (dolo causante)
a) When, through the insidious words or

machinations of one of the contracting parties,
the other is induced to enter into a contract
which, without them, he would not have
agreed to. (Art. 1338) The fraud here is active
fraud.
Examples: S induced B to buy a ring which S

claimed was made of pure gold. However, S
knew all along that the ring was only
goldplated. B can have the contract annulled on
the ground of fraud.
b) When there is a failure to disclose facts when

there is a duty to reveal them, as when the
parties are bound by confidential relations.
The fraud here is passive fraud.
Example: A and B were partners in a real

estate business. During the existence of the
partnership, A met X who told A that he was
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interested in buying a large tract of land. A did

not inform B about X’s proposal. Instead, he
persuaded B to sell his share in the partnership
to him.
After A becomes the sole owner of the business,
he sold real property to X realizing a huge
profit. The contract between A and B for the
sale of B’s interest is voidable on the ground of
fraud. A was duty bound to disclose the
proposal of X to B since as partners, they are
bound by trust and confidence.
Requisites to make a contract voidable by reason of
fraud
a) The fraud should be serious.
Incidental fraud only obliges the person

employing it to pay damages.
b) The fraud should not have been employed

by both contracting parties. (Art. 1344)
If both parties employed fraud, the bad

faith of one will negate the bad faith of the
other. The law will consider both of them in
good faith; hence, the contract will be valid.
3) When no fraud exists
a) In case of the usual exaggerations in

trade, when the other party had an
opportunity to know the facts. (Art. 1340)
This is to give allowance to dealer’s talk

or sales talk such as “The liquid soap that can
wash a thousand plates.” or “The fuel that can
give you the extra mile.”
b) In case of a mere expression of an

opinion, unless made by an expert and
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the other party has relied on the former’s

special knowledge.
(Art. 1341)
Example: S, a farmer, who knows nothing

about gems, tells B that in his (S’s) opinion, his
ring is embellished with diamond and that he is
selling it. B buys the ring believing that the ring
is adorned with diamond. Later, he discovers
that the gemstone is really emerald.
There is no misrepresentation here
because S is not expert in gems. However, B
can have the contract annulled on the ground of
mistake. But if S is a gemologist (an expert in
gems), B can annul the contract on the ground
of fraud.
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c) In case of misrepresentation by a third

person, unless such misrepresentation
has created substantial mistake and the
same is mutual. (Art. 1342)
Consent will likewise be

vitiated if the third person connived
with a party to the contract in
making the misrepresentation.
Example: B wants to buy the

land of S because he is interested in
putting up a factory. However, S
and B do not know the classification
of the area where the land is
located. So they consult T, a third
person, who tells them that the land
is situated in an industrial area. S
and B thus proceed with he sale.
Later, however, B finds out that he
could not put up a factory because
the land is situated in a residential
area. Is the contract between S and
B voidable?
Answer: Although generally,

misrepresentation by a third person
does not affect the validity of the
contract, the contract in this case is
voidable because the
misrepresentation by T, a third
person, has created a substantial
mistake that is mutual.
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d) If the misrepresentation was made in

good faith. However, the same may
constitute error. (Art.
1343)
Example: S has a ring which

he honestly believes is adorned
with diamond. He offers to sell the
ring to B telling B that the gemstone
is diamond. B buys the ring
believing it to be so. Later, he
discovers that the gemstone is
emerald. No fraud exists here
because S was in good faith.
However, B may annul the contract
on the ground of mistake.
4) Kinds of dolo or fraud

a) Fraud in obtaining consent
1) Causal fraud or dolo causante

– Fraud without which
consent would not have been
given. It renders the contract
voidable.
2) Incidental fraud or dolo

incidente – Fraud without
which consent would have
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still been given but the person

giving it would have agreed on
different terms. The contract
is valid but the party
employing it shall be liable for
damages.
Example: S sold his lot for

P1.0Million to B who stated in
the deed of sale that he was
married. The price was fixed
by S at the said amount in
consideration of B’s having a
family to support. In reality,
however, B was single. If S
would have sold the lot to B
whether B was married or
single but that he would have
given a higher price, say
P1.5Million, had he known
that B was single. The fraud
here is only incidental. The
contract is not vitiated by
fraud but S can recover
damages in the amount of at
least P0.5Million.
b) Fraud in the performance of the obligation
This is the deliberate act of

evading fulfillment of an obligation
in a normal manner. This
presupposes an existing obligation;
hence, the fraud ahs no effect on
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the validity of the contract since it

was employed after perfection.
However, the party employing it
shall be liable for damages. (Art.
1170)
Stimulated contract, concept and kinds
A simulated contract is one that does not intend to have

any legal effect on or a change in the juridical situation
of the parties. They are of two kinds:
1. Absolutely simulated contract – One where the

parties do not intend to be bound at all. (Art. 1345)
Being fictitious, it is void. (Art. 1346) The parties
may thus recover from each other what they may
have given under the contract.
The main characteristic of an absolute

simulation is that the apparent contract is not
really desired or intended to produce legal effect or
in any way alter the juridical situation of the
parties. The simulation must be on the part of both
parties. Where only one stimulates, there is deceit
or fraud, and the contract is regarded as voidable,
not void.
Example: B is interested in buying the lot of S.

S tells B to show his capacity to buy the lot by
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asking B to present his bank records. B, however,

does not have any bank account. So he asks XYZ
Bank through the manager who is his friend to
certify that B is a depositor of the bank, XYZ Bank
issues the certification when the truth is that B has
never opened an account and made a deposit in the
bank. The contract of bank deposit is absolutely
simulated.
2. Relatively simulated contract – One where the

parties conceal their true agreement. (Art. 1345)
The parties here are bound by their real agreement
provided it does not prejudice a third person and is
not intended for any purpose contrary to law,
morals, good customs, public order or public
policy. (Art. 1346)
If the parties state a false cause in the

contract to conceal their real agreement, the
contract is only relatively simulated and the parties
are still bound by their real agreement. Hence,
where the essential requisites of a contract are
present and the simulation refers only to the
content or terms of the contract, the agreement is
absolutely binding and enforceable between the
parties and their successors in interest.
Example: S and B made it appear that S sold

his car to B for P500,000.00. In reality, however, S
donated the car to B. The sale is relatively
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simulated. S and B will be bound by the contract of

donation. However, they will be bound by the sale if
B is a public official since donation to a public
official is void for being contrary to public policy.
(See Art. 789); or if as a result of the donation, the
compulsory heirs of S could not receive their
legitime, in which case, the heirs can demand the
price from B.
OBJECT OF CONTRACTS
What may be the object of contracts
1. All things which are not outside the commerce of

men, including future things. (Art. 1347)
Thus, public plazas, streets, sidewalks may
not be the object of contracts. Future things such
as the crops that may thereafter be harvested, or
eggs that may be produced by a poultry farm, may
be the object of contracts, but not future
inheritance except in cases provided by law (Art.
1347) such as in the marriage settlements or in
partition of the estate by the testator.
Contract is generally void when object is future

inheritance
The contract involving future inheritance is

void when the following requisites concur:
a. The succession has not been opened.

b. The object of the contract forms part of the
inheritance; and
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c. The promisor has, with respect to the object,

an expectancy or right which is purely
hereditary in nature.
2. All rights are not intransmissible. (Art. 1347)
Thus, a credit right may be the object of deed

of assignment; so also are leasehold rights to a
certain building. However, strictly personal rights,
such as parental authority, or political rights such
as the right to vote or to run for public office, may
not be the object of contracts, as they are
intransmissible.
3. All services which are not contrary to law, morals,

good customs, public order or public policy. (Art.
1347)
Thus, contracting the service of person for the

slaughter of a dog contrary to Animal Welfare Act of
1998, is void.
Requisite of object of a contract
1. It must be within the commerce of men. (Art.1347)

2. It must be transmissible. (Art.1347)
3. It must not be contrary to law, morals, good
customs, public order or public policy. (Art.1347)
4. It must not be impossible. (Art.1348)
5. It must be determinate as to its kind or if its
quantity is not determinate, it must be possible to
determine the same without the need of a new
contract between the parties. (Art.1349)
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Thus, if S sells to B a “car stereo,” the object

is determinate as to its kind although it has not
been particularized. If the object stated in the
contract is “all the pigs in the piggery,” the fact that
the quantity is not determinate shall not be an
obstacle to the existence of a contract because
such quantity can be determined by the parties
without the need of entering into another contract.
Human internal organs as objects of a contract
R.A. No. 9208 penalizes human trafficking for the

purpose of the removal or sale of internal organs. The
law provides that the human body and its parts cannot
be the subject of commercial transactions. Giving or
receiving payment including any other compensation or
reward for organs is prohibited along with advertising
the need for or availability of organs, with a view to
offering or seeking payment.
Under the law, however, a living and related voluntary

donor or a living and non-related voluntary donor may
be allowed to donate organs, but no living minor is
allowed to donate any organ for the purpose of
transplant. Organ donations under the said law are
subject to the World Health Organization’s Guiding
Principles on Human Organ Transplantation which was
forged by member countries in 1981. Under the
international agreement, organs for transplant should
be removed preferably from the bodies of deceased
persons, and that adult living persons may also donate
organs but such donors should be genetically related to
the recipients.
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CAUSES OF CONTRACTS
Cause, concept
It is the essential reason why a party enters into a contract.
Cause of contracts
1. Onerous contract – here, the cause for each

contracting party is the prestation or promise of a
thing or service by the other. (Art. 1350) Examples:
(1) S sold his car to B for P500,000.00. The cause
for S is the payment of, or the promise to pay,
P500,000.00, by B; while the cause for B is the
deliver, or the promise to deliver, the car by S.
(2) C, a CPA, entered into a contract with B, a

businessman, to audit the books of the latter,
for a professional fee of P10,000.00. The cause
for C is the payment of the professional fee of
P10,000.00, while the cause for B, is the audit
of his books by C.
2. Remuneratory contract – Here, the cause is the

service or benefit which is remunerated. (Art. 1350)
Example: C saves D from drowning, and as a

reward, D gives C P5,000.00. The saving of D from
drowning is the service remunerated. The service
here is not a recoverable debt to distinguish it from
an onerous contract where there is a promise of
service by a party.
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3. Gratuitous, lucrative or contract of pure

beneficence – The cause is the liberality of the
benefactor. (Art. 1350). An example is donation
whose cause is the liberality of the donor; or
commodatum whose cause is the liberality of the
lender.
Requisites of cause
1. It must exist.
a. It is presumed that the cause exists and it is

lawful, even if not stated in the contract,
unless the debtor proves the contrary. (Art.
1354)
b. Contracts without cause produce no effect
whatsoever.
(Art. 1352)
2. It must be lawful.
Contracts with unlawful cause produce no

effect whatsoever. The cause is unlawful it is
contrary to law, morals, good customs, public order
or public policy. (Art. 1352)
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3. It must be true.
The statement of a false cause in a contract

shall render them void, if it should not be proved
that they were founded upon another cause which
is true and lawful. (Art. 1353)
Example: A contract stated that S sold his car
to B for P500,000.00. The fact, however, is that B
did not give S P500,000.00 but a diamond ring. The
cause of the contract is false. However, the contract
is not rendered void because the false cause, the
giving of P500,000.00 is founded upon another
cause; the giving of a diamond ring, that is true and
lawful.
However, if what B actually gave to S was
several grams of “shabu,” the contract will be
rendered void.
Cause and motive distinguished
1. Cause is the essential reason of the contract; while

motive is the private or secret reason or intention of
a contracting party.
2. The contract is void if the cause is illegal; the

validity of the contract is not affected by the
illegality of the motive.
Example: S sold his car to B for P500,000.00
because he wanted to have funds for the purchase of a
dangerous drug. The motive of S is illegal. However, its
illegality does not affect the validity of the contract
which has a lawful cause, i.e., the payment of
P500,000.00
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3. The cause of a contract is always known to the

contracting parties, while the motive of one party
may not known to the other.
Lesion, concept and effect on contract
Lesion is the inadequacy of a cause. As general rule,

lesion shall not invalidate a contract except in the
following:
1. Where there was fraud, mistake and undue
influence. (Art. 1355)
2. In cases provided by law, such as when the ward or
absentee suffer lesion by more than one-fourth of
the value of the object of the contract. (Art. 1381)
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Fidelito R. Soriano (2016 Edition). Notes in Business Law (For

Accountancy Students and CPA Reviewees)
SCP-BACC106 | 25
LET’S INITIATE!
Activity 1. Now let us see how you understand the above-
mentioned topics. Kindly write your answers to the space
SCP-BACC106 | 26
provided below the questions. Please be reminded that your

answers will be subjected to a plagiarism checker.
1. What is the meaning of “definite” in the rules of
offer?
___________________________________________________
__________
___________________________________________________
__________ 2. When can the offerer withdraw the offer?
___________________________________________________
__________
___________________________________________________
__________ 3. When can a counter-offer happen?
___________________________________________________
__________
___________________________________________________
__________
LET’S INQUIRE!
Activity 1. Expound your answers on the following
questions below.
1. Why do you think public plazas, streets, sidewalks

are not the object of contracts? Explain.
_____________________________________________________________
_____________________________________________________________
2. What are the future things that can be an object of

contract? What is the reason behind?
___________________________________________________
__________
SCP-BACC106 | 27
___________________________________________________
__________
LET’S INFER!
Activity 1. Answer briefly and concisely. Explain your legal
basis.
Can a living minor donate an organ? Kindly back

your judgement with legal explanations.
_____________________________________________________________
_____________________________________________________________
SCP-BACC106 | 28

Week 8: SCP - Topics: Midterm Period Topic S

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Week 8: SCP - Topics: Midterm Period Topic S

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ST.

JOHN PAUL II COLLEGE OF DAVAO

SCP - TOPICS: MIDTERM PERIOD TOPIC S

ESSENTIAL REQUISITES OF CONTRACTS

CONSENT OF THE CONTRACTING PARTIES

Consent is the manifestation of the meeting of the offer and the

Thus, if S, who has several lots, offers to sell his lot to B

a. Business advertisements of things for sale are not

This is not an offer but a mere invitation to make an

(2) “For sale: 3-bedroom bungalow on a 200 square

This is a definite offer because it contains all the matters

b. Advertisements for bidders are merely invitations to make

2. An offer becomes ineffective upon the death, civil interdiction,

3. When the offerer has allowed the offeree a certain period to

Option is a contract whereby the offeror gives the offeree a

Right of the offeror to withdraw the offer

a. If there is no consideration for the option, the offerer may

b. If there is a consideration, the offerer may not withdraw

Note: In both cases, the option is extinguished upon the lapse

Example: S promised to sell his car to B for P500,000.00 giving

1. The acceptance must be absolute. (Art. 1319). If the

a. If the acceptance is qualified, it constitutes a counter-

Example: S offers to sell his car for P500,000.00 to B. B

b. If the offer fixes the time, place and manner of

The second sentence is important because a contract is

3. Acceptance may be express or implied. (Art. 1320)

The acceptance is express if made orally or in writing. It

Thus, if S offers to sell a kilo of his mangoes to B for

4. An offer made through an agent is accepted from the time it is

Thus, a contract is binding upon the principal although

1. The parties must have the capacity to enter into a contract.

Emancipation takes place by the attainment of the

b. Insane or demented persons

c. Deaf-mutes who do not know how to write.

The incapacity aforementioned is subject to the

without prejudice to special disqualifications established in the

Thus, an incapacitated person must pay a reasonable

2. Contracts agreed to in a state of drunkenness or during a

3. A contract where consent is given through mistake, violence,

1) When mistake will invalidate consent

Example: If B bought a lot on which he wanted

b) If the mistake refers to those conditions which

Example: S sold his car to B for P500,000.00

c) If the mistake refers to the identity or

Example: D donated a lot to C believing that C

d) If the mistake refers to the legal effect of an

This refers to mistake of law which does

Example: S and B entered into a contract of

2) When mistake does not vitiate consent

a) If the mistake refers to a simple mistake of

Thus, if 10 books were sold at P567.80

b) If the party alleging it knew the doubt,

If mistake or fraud is alleged, the person

This is an exception to the rule that he who

b. Violence or physical coercion

When violence vitiates consent

There is violence when in order to wrest consent, serious

Example: S signed a deed of sale of his land to B because

c. Intimidation or moral coercion

1) When intimidation vitiates consent

There is intimidation when one of the

Example: In the example above, if S signed the