CE 163

Civil Engineering Laws, Contracts & Ethics

Department of Civil Engineering

UP Los Baños
 Review of Chapter 1

Fundamental principles of a contract

Be a bargain to both parties (avoid unfair
treatment)

Be aware of the consequences in failing to

fulfill ones obligation

Be aware of the consequences in fulfilling

ones obligation but not in accordance with
agreed terms

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 Review of Chapter 1

In construction contracts, the specific

provisions that addresses the concerns
related to the fundamental principles have to
be cited

These provision may come from: Laws,

Codes, Guidelines, etc.

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 Chapter 2
Fundamentals and Elements of
Contracts

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 2.1 Definition of Contracts

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.

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 2.1 Definition of Contracts

Is an agreement between two parties for

certain acts to be performed or refrained from
which has been arrived at in such a manner,
set forth in such form, and is of such content
that it has enforceable legal effect

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 2.1 Definition of Contracts

A contract is essentially an agreement

between two or more capable parties who
genuinely intend to do some lawful acts for
consideration.

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 2.2 Classification of Contracts

1. As to origin
2. As to participation
3. As to obligation status
4. As to completion status
5. As to form
6. As to legal status

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 2.2 Classification of Contracts

2.2.1 As to origin – a contract may be

(a) express,
(b) implied
(c) quasi-contract

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 2.2.1 As to origin

a) Express – is a bilateral or multilateral

contract in which the promises and assent
of each party are expressed in speech or
in writing

Example.
A agrees to grade a building lot belonging to
B, and B agrees to pay A the sum of P
10,000 when the work is completed.

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 2.2.1 As to origin

b) Implied – a unilateral contract where either the act of

acceptance or both the act of acceptance and the promise
are inferred as a matter of fact from the conduct or acts of
the parties.

Example.
A takes his car to a car service center operated by B and
asks B to find out what is wrong with the engine and fix it.
On examination B finds that the car has a cracked cylinder
block and badly worn crankshaft. He replaces the engine
with the new one, and A must pay a reasonable price for the
work. An offer and acceptance have been implied by the
acts of the two parties.
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 2.2.1 As to origin

c) quasi-contract – is not, strictly speaking, a

contract but a legal obligation which is similar to a
contract and which is created by implication of law.

 it is implied by law on the theory that it is unjust to

allow one person to accept the benefits of the
labor or anything of value which belongs to
another without refunding it or paying him for it.

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 2.2.1 As to origin

Remember:

Express contract – A contract expressed in oral or

written words

Implied contract – A contract inferred from the

conduct of the parties

Quasi-contract – A contract implied by law to

prevent unjust enrichment

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 2.2 Classification of Contracts

2.2.2 As to Participants

a) Two-party contract
b) Joint contract
c) Several contract
d) Joint and Several Contract
e) A third-party beneficiary contract

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 2.2.2 As to Participants

a) Two-party contract – is common type of

contract in which only two parties are involved.

b) Joint contract – is one in which two or more

parties merge, to a greater or less extent, their
interest to enter into a contract with another party or
parties. It cannot be sued separately and all parties
are liable for the full amount of the damage.

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 2.2.2 As to Participants

c) Several contract – is one in which two or more persons

enter into a contract as promisors or promisees but keep
their liability more or less separate.

Example.
Three public-minded citizens –A, B, and C—agree that
certain improvements should be made to the village park,
the cost of which is P250,000. They sign a several contract
with D to make these improvements, A to pay P100,000, B
P100,000, and C to pay P50,000. Neither A, B and C would
be liable for more than his stated share if one or both of the
other party refuse or unable to pay his part.

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 2.2.2 As to Participants

d) Joint and Several Contract – has some of the nature of

each of the two preceding types. A plaintiff may sue the
promisors either jointly or severally. If he choose to sue jointly,
however, he must sue all together in the same suit.

e) A third-party beneficiary contract – is one in which two

parties enter into a contract for the protection of the interests
of a third person who is not a party to the contract.

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 2.2 Classification of Contracts

2.2.3 As to Obligation

a) Bilateral
b) Unilateral

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 2.2.2 As to Obligation

a) Bilateral – a bilateral contract is one in

which one party agrees to perform or refrain
from performing some certain acts in return for
which the other party agrees to perform or
refrain from performing certain acts.

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 2.2.3 As to Obligation

b) Unilateral – is one in which there is a promise by one

party to perform certain acts provided the party does certain
things, the acceptance to be accomplished by the act.

Example.
A milling company runs an advertisement in a local
newspaper stating “we will pay $2.75 per bushel for all wheat
delivered to our mill within the next five days.” A farmer
delivers a truckload of wheat to the milling company with the
specified time, and the contract is accepted by the act of
delivering the wheat.

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 2.2.3 As to Obligation

Remember:
Bilateral contract – a promise for a
promise

Unilateral contract – a promise for

an act

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 2.2 Classification of Contracts

2.2.4 As to Completion status

a) Executory
b) Executed

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 2.2.4 As to Completion Status

a) Executory – is one in which an obligation is

assumed by one or both parties to do or refrain from
doing certain acts at some time in the future.

Example. A agrees to sell B a house and B agrees to

pay A when the transfer takes place.

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 2.2.4 As to Completion Status

b) Executed – is one in which everything is done at

the time of making the contract and no obligation for
future acts is assumed by either party.

Example. A goes to an automobile dealer and hand

him a check for a second-hand car. The dealer
accepts the check and delivers the car and title.

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 2.2 Classification of Contracts

2.2.5 As to Form

a) contract under seal

b) contract of record
c) simple or parole contract

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 2.2.5 As to Form

a) contract under seal – is one with a seal

attached.

b) contract of record – are those which exist as a

consequence of court judgments. Unless the
judgment is entered by mutual consent, these are,
strictly speaking, actually quasi contracts.

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 2.2.5 As to Form

c) simple or parole contract – a simple or parole is

one which is less formal than a sealed contract. It
may or may not be in some special form and may in
some cases be written and in others may be oral.

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 2.2.5 As to Form

c) simple or parole contract

c.1 may be required to be in specified form – required in

some jurisdictions for certain contracts, such as negotiable
instruments (bills of exchange, promissory notes, etc.)

c.2 may be required to be in writing but not in any specified

form – contracts in writing are required by statute in many
jurisdictions for contracts such as insurance policies.

c.3 without requirements as to form or writing – unless there

is a legal requirement to the contrary, an oral contract is just
as binding as a written contract.

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 2.2 Classification of Contracts

2.2.6 As to Legal status

a) valid
b) void
c) Voidable
d) unenforceable

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 2.2.6 As to Legal Status

a) A valid contract is one which is in full force

and enforceable by court action.

b) A void contract is one which has no status

at law and is therefore not enforceable by
court action.

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 2.2.6 As to Legal Status

c) A voidable contract is one which is binding on

one party but may be either binding or nonbinding
on the other party at his option. (Contracts with
infants (minors) are usually voidable at the option
of the infant.

d) An unenforceable contract is one which is valid

in all respects except that it is unenforceable
through court action.
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 2.2.6 As to Legal Status

Remember:

1. Valid contract – A contract that meets all of the

essential elements to establish a contract
2. Void contract – No contract exists
3. Voidable contract – A party has the option of
voiding or enforcing the contract
4. Unenforceable contract – A contract that cannot
be enforced because of a legal defense

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