Contracts

Chapter 1

Article 1305 - Contracts

 In contract, a party binds itself to fulfill obligation

 Number of parties to a contract:
1. At least 2 persons
2. A single person may create a contract by himself where he represents distinct interests (self
or another as an agent)
 There is no contract without obligation, but obligation may exist without contract (e.g., taxes)
 All contracts are agreements, but not all agreements are contracts
 Kind of contract is determined by NATURE, principally the intention of the parties

Article 1306 - Limitations

 Valid contracts
- Contracts that meet legal requisites and contractual stipulations
- Legally binding and enforceable
 Agreement may meet all criteria of valid contract but is still unenforceable if it violates Statutes of
Frauds
 Contracts are constitutional right but may be prohibited under police power
 Limitations on contractual stipulations:
1. Law
o Contracts must follow the law
2. Police power
o If against societal good, police power may be invoked by State
 Contracts must not be contrary to:
1. Law
o Law is superior to a contract
o Law-violating contracts are void unless law itself authorizes
2. Morals
o norms of good and right in community
3. Good customs
o habits and practices followed by society as rules of conduct
4. Public order
o Contracts must not violate public safety
5. Public policy
o Broader than public order
o Refers to considerations for common good
Article 1307 – Innominate Contracts
 A contract is valid even if it has no name in Civil Code if it has all elements of valid contract
 Kinds of contracts by name:
1. Nominate contract
o Has a specific name or designation in law (lease, agency sale)
 2. Innominate contract
o No specific name or designation in law
 Kinds of innominate contracts:
1. Do ut des
o “I give that you may give”
o Is named barter or exchange, hence not innominate any longer
2. Do ut facia
o “I give that you may do”
3. Facto ut des
o “I do that you may give”
4. Facto ut facia
o “I do that you may do”
 Innominate contracts are governed by:
1. Party agreement
2. Civil Code provisions
3. Rules governing most analogous contracts
4. Customs of the place

Article 1308 – Both Parties

 Contract must have mutual consent between parties
 Validity or compliane of contract cannot be let to will of one or the other

Article 1309 – Determination of performance by third person

 Determination of performance may be left to a third person
 Decision of third person shall be binding only if decision is made known to both parties

Article 1310 – Determination not obligatory if unjust

 Courts will decide equitable determination if such determination is evidently inequitable
 Determination is inequitable through third person’s act of bad faith or mistake

Article 1311 – Contract heirs

 As general rule rights and obligations from a contract are transmissible to successors
 If assigned to third party, third party has rights and obligations
 Exceptions to rule:
1. Nature of contract
2. Stipulation
3. Law (agency, partnership, commodatum)
Chapter 2 – Essential Requisites of Contracts
Article 1318 – Requisites
 Requisites of contracts include:
1. Consent
2. Subject matter
3. Cause of the obligation
 Classes of elements:
1. Essential – no contract can validly exist without these
2. Natural – presumed to exist in certain contracts
3. Accidental – stipulations established by parties
Section 1 – Consent
Article 1319 – Consent
 Consent – agreement of one party with the other even without signature
 Offer
- proposal made by one to another to enter into a contract
- not desire but a PROMISE
- must be serious and certain
- offer made in jest or anger is not valid, but if other party takes seemingly serious offer, then
it is VALID
 Acceptance
- manifestation of assent to terms of offer
- Acceptance must be unconditional, if there is condition then it is qualified acceptance, and
the offeree becomes the offeror
Article 1320 – Acceptance may be express or implied
 Express acceptance may be oral or written
 Implied acceptance is inferred from act
 Silence is NOT acceptance

Article 1321 – Offeror may fix time, place, and manner of acceptance
 Acceptance that is not in original terms is a counter-offer
 Counter-offers extinguish original offer
 Offer must be communicated, and it may be express of implied

Article 1322 - Offer made through agent is accepted from time it is communicated to offeror
 Acceptance must be absolute, may be express or implied

Article 1323 – Offer becomes ineffective upon death, civil interdiction, insanity, insolvency of party
before acceptance
 When acceptance is communicated, both parties must be living and capacitated

Article 1324 -