1. Define Contract.

According to Article 1305. 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.

2. Discuss three stages of Contracts.

Answer: A contract has three distinct stages: preparation, perfection, and consummation.
Preparation or negotiation begins when the prospective contracting parties manifest their
interest in the contract and ends at the moment of their agreement. Perfection or birth of the
contract occurs when they agree upon the essential elements thereof. Consummation, the
last stage, occurs when the parties "fulfill or perform the terms agreed upon in the contract,
culminating in the extinguishment thereof

3. What are the different classes of contracts?

According to name or designation:

(a) Nominate; and
(b) Innominate. (see Art. 1307.)

According to perfection:
(a) Consensual; and
(b) Real. (see Arts. 1315, 1316.) (3)

According to cause:
(a) Onerous;
(b) Remuneratory or remunerative; and
(c) Gratuitous. (see Art. 1350.)

According to form:
(a) Informal or common; and
(b) Formal or solemn. (see Art. 1356.)
According to obligatory force:
(a) Valid (see Art. 1306.);
(b) Rescissible (Chapter 6.);
(c) Voidable (Chapter 7.);
(d) Unenforceable (Chapter 8.); and
(e) Void or inexistent. (Chapter 9.)

According to person obliged:

(a) Unilateral; and
(b) Bilateral. (see Art. 1191.)

(7) According to dependence to another contract:

(a) Preparatory (e.g., agency, partnership), when it is entered into as a means to an end;
(b) Accessory (e.g., mortgage, guaranty), when it is dependent upon another contract it secures
or guarantees for its existence and validity; and
(c) Principal (e.g., sale, lease), when it does not depend for its existence and validity upon
another contract but is an indispensable condition for the existence of an accessory contract.
(8) According to risks:
(a) Commutative (e.g., sale, lease), when the undertaking of one party is considered the
equivalent of that of the other; and
(b) Aleatory (e.g., insurance, sale of a hope6), when it depends upon an uncertain event or
contingency both as to benefit or loss.7
(9) According to liability:
(a) Unilateral (e.g., commodatum, gratuitous deposit), when it creates an obligation on the part
of only one of the parties; and
(b) Bilateral (e.g., sale, lease), when it gives rise to reciprocal obligations for both parties.
The kind of contract entered into is not determined, however, by the name or title given to it by
the parties but by its nature or character as determined by principles of law. (see Art. 1371.)

4. Discuss basic characteristics of Contracts.

Answer: Characteristics of contracts.
(1) Freedom or autonomy of contracts. — The 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, and public policy (Art. 1306.);
(2) Obligatoriness of contracts. — Obligations arising from contracts have the force of law
between the contracting parties and should be complied with in good faith (Arts. 1159, 1315.);
(3) Mutuality of contracts. — Contracts must bind both and not one of the contracting parties;
their validity or compliance cannot be left to the will of one of them (Art. 1308.);
(4) Consensuality of contracts. — Contracts are perfected, as a general rule, by mere
consent,4 and from that moment the parties are bound not only by the fulfillment of what has
been expressly stipulated but also to all the consequences which, according to their nature, may
be in keeping with good faith, usage and law (Art. 1315.); and
(5) Relativity of contracts. — Contracts take effect only between the parties, their assigns and
heirs, except in cases where the rights and obligations arising from the contract are not
transmissible by their nature, or by stipulation, or by provision of law. (Art. 1311.)

5. What is meant by a stipulation pour autrui?

Answer: Stipulation pour autrui is a stipulation in a contract clearly and deliberately

conferring a favor upon a third person who has a right to demand its fulfillment, provided, he
communicates his acceptance to the obligor before its revocation by the obligee or the
original parties.

A. What requisites must concur in order that such stipulation may be enforced?

Answer:

Requisites of stipulation pour autrui.

They are the following:
(1) The contracting parties by their stipulation must have clearly and deliberately conferred a
favor upon a third person;
(2) The third person must have communicated his acceptance to the obligor before its
revocation by the obligee or the original parties;
(3) The stipulation in favor of the third person should be a part and not the whole of the
contract or the contract itself;
(4) The favorable stipulation should not be conditioned or compensated by any kind of
obligation whatever; and
(5) Neither of the contracting parties bears the legal representation or authorization of the
third party for otherwise the rules on agency will apply

B. What is the form of acceptance by the third person or beneficiary?

Answer: The “acceptance does not have to be in any particular form, even when the
stipulation is for the third person an act of liberality or generosity on the part of the promissor
or promisee.” It may be implied from the demand for the performance of the stipulation. “It
need not be made expressly and formally. Notification of acceptance, other than such as is
involved in the making of demand, is unnecessary.”. A stipulation pour autrui may be
accepted any time before it is revoked, unless a definite period for acceptance has been
fixed.