CONTRACTS

1. When is a real contract deemed perfected?

Article 1316 provides that real contracts, such as deposit, pledge and commodatum,
are not perfected until the delivery of the object of the obligation.

2. When is a consensual contract deemed perfected?

Article 1315 provides that consensual contracts are deemed perfected by mere
consent.

3. Give an example of a consensual contract?

A agreed to buy the car of C at the price of One Million Pesos to be paid in full at the
end of May 2022.

4. Given an example of a real contract?

AA agreed to sell his cellphone to BB. On May 16, AA and BB proceeded to meet for
the delivery of payment and the handing over of the subject cellphone.

5. What is a preparatory contract?

A preparatory contract is one which is entered into as a means to an end, or prior to

the principal contract.

6. Give an example of a preparatory contract?

agency and partnership are examples of a preparatory contracts

7. What is an option contract?

Option contract is a preparatory contract giving a person for a consideration a

certain period and under specified conditions within which to accept the offer of the
offerer.
8. Marvin offered to construct the house of Carlos for a very reasonable price of
P900,000, giving the latter 10 days within which to accept or reject the offer. On
the fifth day, before Carlos could make up his mind, Marvin withdrew his offer.

a) What is the effect of the withdrawal of Marvin’s Offer?

Upon the withdrawal of Marvin’s offer, Carlos may not bind Marvin anymore to the
obligation as stipulated in the contract as it is deemed non-existent already because
of the withdrawal.

b) Will your answer be the same if Carlos paid Marvin P10,000.00 as

consideration for that option? Explain.

No. Article 1324 specifically provides the exception that when the option is founded
upon a consideration, as something paid or promised, as in this this, such option may
not be withdrawn at any time before acceptance.

c) Supposing that Carlos accepted the offer before Marvin could communicate
his withdrawal thereof? Discuss the legal consequences.

The option having been deemed consummated, the parties may now enter into the
principal contract which is also deemed perfected upon the acceptance of the offer.

9. Jo-Ann asked her close friend, Aissa, to buy some groceries for her in the
supermarket. Was there a nominate contract entered into between Jo-Ann and
Aissa? In the affirmative, what was it? Explain.

10.What are the four characteristics of contract, and briefly explain each.

(1) Freedom or autonomy of contracts

(2) Obligatoriness of contracts
(3) Mutuality of contracts
(4) Consensuality of contracts
 (5) Relativity of contracts

11.Roland, a basketball star, was under contract for one year to play-for-play
exclusively for Lady Love, Inc. However, even before the basketball season
could open, he was offered a more attractive pay plus fringes benefits by Sweet
Taste, Inc. Roland accepted the offer and transferred to Sweet Taste. Lady
Love sues Roland and Sweet Taste for breach of contract. Defendants claim
that the restriction to play for Lady Love alone is void, hence, unenforceable,
as it constitutes an undue Interference with the right of Roland to enter into
contracts and the impairment of his freedom to play and enjoy basketball. Can
Roland be bound by the contract he entered Into with Lady Love or can he
disregard the same? Is he liable at all? How about Sweet Taste? Is it liable to
Lady Love?

Roland’s ground for claiming his contract with Lady Love is untenable, hence, he
shall be liable for the breach of contract. On the part of Sweet Taste, yes, they may
be liable to Lady Love. Article 1314 provides that any third person who induces
another to violate his contract shall be liable for damages to the other contracting
party. Hence, Sweet Taste shall be liable for damages to Lady Love.

12.B Bank, a large universal bank, regularly extends revolving credit lines to
business establishments under what it terms as socially responsible banking
and private business partnership relations. All loans that are extended to clients
have a common "Escalation Clause," to wit: "B Bank hereby reserves its right
to make successive increases in interest rates in accordance with the bank’s
adopted policies as approved by the Monetary Board; Provided that each
successive increase shall be with the written assent of the depositor.” X, a
regular client of the bank, contends that the "Escalation Clause" is unfair,
unconscionable and contrary to law, morals, public policy and customs. Rule
on the issue and explain.

X’s claim stands no ground as the Escalation Clause is not contrary to law, morales,
good customers, public order, or public policy. In fact, such clause is in accordance
with the policies of the bank as approved by the Monetary Board and will only be
made with the written assent of the depositor. As such, the Escalation Clause is
deemed to be valid.

13.Newlyweds Sam and Sienna had contracted with Sangria Hotel for their
wedding reception. The couple was so unhappy with the service, claiming,
among other things, that there was an unreasonable delay in the service of
dinner and that certain items promised were unavailable. The hotel claims that,
while there was a delay in the service of the meals, the same was occasioned
by the sudden increase of guests to 450 from the guaranteed expected number
of 350, as stated in the Banquet and Meeting Services Contract. In the action
for damages for breach of contract instituted by the couple, they claimed that
the Banquet and Meeting Services Contract was a contract of adhesion since
they only provided the number of guests and chose the menu. On the other
hand, the hotel's defense was that the proximate cause of the complainant's
injury was the unexpected increase in their guests, and this was what set the
chain of events that resulted in the alleged inconveniences. Was the Banquet
and Meeting Services Contract a contract of adhesion? If yes, is the contract
void?

No, the Contract was not a contract of adhesion. A contract of adhesion is where the
only participation of the party is the affixing of his signature or his “adhesion”
thereto. The complainant claims that they provided the number of guests and even
chose the menu, meaning that their participation is not limited to the mere affixing
of their signature to the contract. Hence, the Contract is not a contract of adhesion.