STAGES OF CONTRACT

1. Preparation or conception
2. Perfection of birth
3. Consummation or death or termination

ART. 1306. The contracting parties may establish such stipulations, clauses,
terms and conditions as they may deem convenient, provided they
are not contrary to law, morals, good customs, public order, or
public policy.
LIMITATIONS ON THE FREEDOM TO CONTRACT
(1) Law. — It is a fundamental requirement that the contract entered into must
be in accordance with, and not repugnant to, an applicable statute.
(2) Morals - relates to the generally accepted standard of rightness of human
conduct.
(3) Public power and — Public welfare is superior to private rights. When there is no law
policy in existence or when the law is silent, the will of the parties prevails
unless their contract contravenes the limitation of morals, good
customs, public order, or public policy.
(4) Good customs - refers to a rule of conduct formed by repetition of acts, uniformly
observed as social rule, legally binding and obligatory.

ART. 1307. Innominate contracts shall be regulated by the stipulations of the

parties, by the provisions of Titles I and II of this Book, by the rules
governing the most analogous nominate contracts, and by the
customs of the place.
(1) Nominate contract or that which has a specific name or designation in law (e.g.,
commodatum, lease, agency, sale, etc.); and