Stages in the life of a contract

1. Preparation or conception
– Preparatory step
– Bargaining point
– Negotiation stage
2. Perfection
– Meeting of minds regarding the subject matter and the cause of the contract.
3. Consummation
– Parties performed their respective obligations and so the contract is put to an end

According to Cause or equivalent vale of Prestation:

1. Onerous
– each of the parties aspires to procure for himself a benefit through the giving of an equivalent
or compensation (i.e. sale).
2. Gratuitous
– one of the parties proposes to give to the other a benefit without any equivalent or
compensation (i.e. commodatum).
3. Remunerative
– For service previously rendered

According to Degree of dependence:

1. Principal
– A principal contract is one which can subsist independently from other contracts and whose
purpose can be fulfilled by themselves (i.e. sales, lease).
2. Accessory
– An accessory contract is one which can exist only as a consequence of, or in relation with,
another prior contract (i.e. pledge, mortgage)
3. Preparatory
– A preparatory contract is one which has for its object the establishment of a condition in law
which is necessary as a preliminary step towards the celebration of another subsequent
contract (i.e. partnership, agency).

According to Parties Obligated:

1. Unilateral
– A unilateral contract is one which gives rise to an obligation for only 1 of the parties (i.e.
commodatum, gratuitous deposit).
2. Bilateral
– A bilateral contract is one which gives rise to reciprocal
obligations for both parties (i.e. sale, lease).
According to Name or Designation:
1. Nominate
– A nominate contract is one which has a name and is regulated by special provisions of law
(i.e. sale, deposit, agency, lease)
2. Innominate
– No specific name or designation in law

CONTRACTS
! Freedom to stipulate
! Principle of mutuality contracts
! Relativity of Contracts
! Principle of Consensuality of Contracts

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.
– Freedom to Stipulate / Autonomy of Will / Principle of Freedom/ Principle of Autonomy of
Contracts
– Ex. Vote buying (contrary to law and public policy)

Art. 1307
Innominate contracts shall be regulated by the stipulations of the parties, by the provisions of Titles
I and Il of this Book, by the rules governing the most analogous nominate contracts, and by the
customs of the place.
– Provides for the answer kung ano ba mag gogovern sa mga innominate contracts because
this are the things that have no specific designation in law.

4 Kinds of Innominate Contracts

1. Do ut des (I give that you may give)
2. Do ut facias (I give that you may do)
3. Facio ut des (I do that you may give)
4. Facio ut facias (I do that you may do)

Art. 1308
The contracts must bind both contracting parties; its validity or compliance cannot be left to the will
of one of them.
– All the parties are agreed to the contracts which also need their consent.
Art. 1309
The determination of the performance may be left to a third person, whose decision shall not be
binding until it has been made known to both contracting parties.
– compliance of the contract should not be left through the will of one of the contracting
parties only, but in this article may be left to a third person but it will be valid after he/she
gets the consent of the both parties
– Exception to the principle of mutuality of contracts

Art. 1310
The determination shall not be obligatory if it is evidently inequitable. In such case, the courts shall
becide wat is eclitable under the circumstances.
– Decision will not be binding if it’s determination is evidently inequitable (Baka ung third
person nag act in bad faith) so in this case the court will decide.

Art. 1311
Contracts take effect only between the parties, their assigns and heirs, except in case where the
rights and obligations arising from the contract are not transmissible by their nature, or by
stipulation or by provision of law. The heir is not liable beyond the value of the property he received
from the decedent.
If a contract should contain some stipulation in favor of a third person, he may demand its
fulfillment provided he communicated his acceptance to the obligor before its revocation. A mere
incidental benefit or interest of a person is not sufficient. The contracting parties must have clearly
and deliberately conferred a favor upon a third person
– Principle of relativity of contracts - contracts are generally effective only between the parties.
(Sa kanila lang nagttake effect ung contract hindi kasama ung hindi parties(3rd person/
stranger))
– provides for principle of relativity of contract means sila lang ang may rights an obligation
under that contract. Their heirs provided na ung rights of the obligation that arise from the
contract are transmissible.

STIPULATION POUR AUTRUI REQUISITES:

1. There must be a stipulation in favor of a third person;
2. The contracting parties must have clearly and deliberately conferred a favor to the third
person;
3. The stipulation should be a part and not the whole of the contract or the contract itself;
4. The third person must have communicated his acceptance to the obligor before its revocation
by the oblige or the original parties;
5. Neither of the contracting parties bears the legal representation or authorization of the third
 5.
party for otherwise the rules on agency will apply.

Exception to the Principle of Relativity of Contracts

– STIPULATION POUR AUTRUI (Article 1311, 2nd par)
– Third persons ig bound by contract creating real rights (Article 1312)
– Right of defrauded creditors under (Article 1313)
– Contract is violated trough inducement by third person (Article 1314)

Art. 1312
In contracts creating real rights, third persons who come into possession of the object of the
contract are bound thereby, subject to the provisions of the Mortgage Law and the Land
Registration Laws
– third person is bound by contracts creating real rights.

Art. 1313
Creditors are protected in cases of contracts intended to defraud them
– refers to the rights of creditor to impugn the contracts of his debtor to defraud him.

Art. 1314
Any third person who induces another to violate his contract shall be liable for damages to the other
contracting party.
– contracting party have the right to claim the damages against to that person who induces.

Art. 1315
Contracts are perfected by mere consent, and from that moment the parties are bound not only to
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.
– Principle of Consensuality of Contracts
– *COC – Consent as to the object and to the Cause of the contract

How contracts are perfected?

General Rule: Principle of Consensuality of contracts
Exceptions:
Real Contracts – heto yung
kailangan ng delivery
Formal Contracts – heto yung nagrerequired ng specific form or specific documents

Art. 1316
Real contracts, such as deposit, pledge and commodatum /aren’t perfected until the delivery of the
object of the obligation
 – same consent but it has requirements that is delivery where in in real contracts delivery are
required for the perfection of the contract.

Art. 1317
No one may contract in the name of another without being authorized by the latter, or unless he has
by law a right to represent him.
A contract entered into in the name of another by one who has no authority or legal representation,
or who has acted beyond his powers, shall be unenforceable, unless it is ratified, expressly or
impliedly, by the person on whose behalf it has been executed, before it is revoked by the other
contracting party.
– unforceable contract

Unenforceable Contracts
– This article stated that an authorized contracts entered into without the authority of the
principal.
Requisites for a person to contract in the name of another
1. He must be authorized (expressly or impliedly).
2. He must have by law, a right to represent him.
3. The contract must be subsequently RATIFIED (express or implied).
4. He must act within his power.

Art. 1318.
"There is no contract unless the following requisites concur:
1. Consent of the contracting parties;
2. Object certain which is the subject matter of the contract;
3. Cause of the obligation which is established"

Classes of Elements of Contracts

1. Common
2. Special
– Real contracts
– Solemn or Formal Contracts

Consent

Art. 1319.
"Consent is manifested by the meeting of the offer and the acceptance upon the thing and the
cause which are to constitute the contract. The offer must be certain and the acceptance absolute.
A qualified acceptance constitutes a counter-offer. Acceptance made by letter or telegram does not
bind the offerer except from the time
it came to his knowledge. The con- tract, in such a case, is presumed to have been entered into in
the place where the offer was made.

Requisites of CONSENT:
1. There must be two or more parties;
2. The parties must be CAPABLE or CAPACITATED;
3. There must be NO VITIATION of consent;
4. There must be NO CONFLICT between what was expressly declared and what was really
intended;
5. Intent must be declared PROPERLY.

Art. 1320.
"An acceptance may be express or
implied"
– either written or sinabi mo talaga

Art. 1321.
"The person making the offer may fix the time, place, and manner of acceptance, all of which must
be complied with.
– Offer will fix the time, place, manner of acceptance.

Art. 1322.
"An offer made through an agent is accepted from the time acceptance is communicated to him.”
– three parties
– Offerer, offeree,agent
– Agent by legal fiction is considered an expansion of the personality of his principal (if sya
gumawa ng offer pwedi sa kaniya na rin ipasabi sa kasama ang kaniyang acceptance)

Art. 1323.
"An offer becomes ineffective upon the death, civil interdiction, insanity, or insolvency of either
party before acceptance is conveyed"
– mawawalan ng bisa ang offer pag may death,civil imterdiction and etc.

Art. 1324.
"When the offerer has allowed the offeree certain period to accept, the offer may be withdrawn at
any time before acceptance by communicating such withdrawal

Exception: when the option is founded upon a consideration, as something paid or promised.
– Ung offer pwedi nmn I withdraw anytime before acceptance ni offeree
– How to withdraw? Simple as communicating to withdrawal (just make sure you are no longer
 –
willing to sell about ur offer)
Option contract - usapan ng binigyan ng offer ng due time to accept the offer.
Option Money - ito ung pinagako na ibabayad

Art. 1325.
"Unless it appears otherwise, business advertisements of things for sale are not definite offers, but
mere invitations to make an offer."
– Unless it appears, definite offers is containing all specific particulars needed in a contract.
(Detailed)
– It doesn’t appear to a definite offers it is just a mere invitation to make an offer.

Art. 1326.
"Advertisements for bidders are simply invitations to make proposals, and the advertiser is not
bound to accept the highest or lowest bidder, unless the contrary appears."
– adv. for bidders are not indefinite offers. (Free to reject or accept)

Art. 1327.
"The following cannot give consent to a contract:
(1) Unemancipated minors;
(2) Insane or demented persons, and
(3) deaf-mutes who do not know how to write.

Art. 1328.
"Contracts entered into during a lucid interval are valid. Contracts agreed to in a state of
drunkenness or during a hypnotic spell are voidable."
– Yung mga insane are capable of giving consent during lucid intervals are valid.

Art. 1329.
"The incapacity declared in Article 1327 is subject to the modifications determined by law, and is
understood to be without prejudice to special disqualifications established in the laws."
– Those who are incapacitated can enter or proceed to have a valid contract

Art. 1330.
"A contract where consent is given through mistake, violence, intimidation, undue influence, or
fraud is voidable

Classes of voidable contracts

– pag ung person is incapacitated to give consent
– Ung mga may mga vitiated consent “vises of consent “ in order that consent may be valid for
purposes of a contract kailangan hindi lang siya basta nag exists.
Requisites of consent
– Consent must be intelligently given
– Consent must be free and voluntary
– Consent must be conscious and spontaneous

Art. 1331.
"In order that mistake may invalidate consent:
When does error or mistake vitiates consent?
Requisites: substance of the thing
– which is the object of the contract, or
– to those conditions which have principally moved one or both parties to enter into the
contract.
– identity or qualifications of one of the parties will vitiate consent only when such identity or
qualifications have been the principal cause of the contract.
*A simple mistake of account shall give rise to its correction ."

Art. 1332.
"When one of the parties is
– unable to read, or
– if the contract is in a language not understood by him, and
– mistake or fraud is alleged, the person enforcing the contract must show that the terms
thereof have been fully explained to the former."

General rule: natural presumption is that one always is acts with due care and so signs with full
knowledge of all the contents of a documents (this presumption is not applicable to art. 1332 if one
parties is not able to understand if ever na alleged sya ng mistake or fraud the other person who is
enforcing the contract must have proved that fully explained )

Art. 1333.
"There is no mistake if the party alleging
– it knew the doubt, contingency or risk affecting the object of the contract." (No vitiated of
consent wherein it can assume that the parties is willingly to sell that thins but it cannot
claiming a mistake)

Art. 1334.
"Mutual error as to the legal effect of an agreement
when the real purpose of the parties is frustrated,
may vitiate consent.
 – kung kelan ba ung mutual error ay magkakavitiate ng consent.

Art. 1335.
"There is violence when in order to wrest consent, serious or
irresistible force is employed.
There is intimidation when one of the contracting parties is
compelled by a reasonable and well-grounded fear of an
imminent and grave evil upon his person or property, or upon the person or property of his spouse,
descendants or ascendants, to give his consent.
– To determine the degree of the intimidation, the age, sex and condition of the person shall be
borne in mind.
– A threat to enforce one's claim through competent authority, if the claim is just or legal, does
not vitiate consent"

VIOLENCE - IS MORE ON PHYSICAL COERCION

Requisites for VIOLENCE to vitiate consent:

1. Employment of serious or irresistible force;
2. It must have been the reason why the contract was
entered into.

Intimidation - is more on moral or mental coercion

Requisites for INTIMIDATION to vitiate consent:

1. Reasonable and well-grounded fear
2. Of an imminent and grave evil
3. Upon his person, property or upon the person or property of his spouse, descendants, or
ascendants
4. It must have been the reason why the contract was entered into.
5. The threat must be of unjust act, an actionable
wrong

Art. 1336.
"Violence or intimidation shall annul the obligation, although it may have been employed by a third
person who did not take part in the contract "
– Kahit pa ung problem o yung nag apply ng violence or intimidation a third person hindi nmn
ung ka contarct mo and yet un ung reason kung bakit ka nagenter into that contract which
means that contract is voidable

Art. 1337.
There is undue influence
Requisites:
– when a person takes improper advantage of his power over the will of another,
– depriving the latter of a reasonable freedom of choice.
The following circumstances shall be considered:
– the confidential,
– family,
– spiritual and
– other relations between the parties,
– or the fact that the person alleged to have been unduly influenced was suffering from mental
weakness,
– or was ignorant
– or in financial distress.

Art. 1338.
"There is fraud
Requisites:
– when, through insidious words or
– machinations of one of the contracting parties,
– the other is induced to enter into a contract which, without them, he would not have agreed
to.

Kinds of Fraud:
1. In the Celebration of the Contract
● Dolo causante / Causal Fraud - ito yung fraud kung saan vitiated content talaga na kung
walang fraud na yan yung isang party ay hindi pa naeenter (Art.1338)

Requisites for Dolo Causante:

1. The Fraud must be material and serious
2. The Fraud must be employed by only one party
3. Deliberate intent to deceived
4. The other party must have rely on that untrue statement, and must not be negligent.

Ex: concealment of illness for an insurance

● Dolo incidente/ Incidental Fraud - dito kahit mayroon o wala yung faud the parties could have
agreed just the same

2. In the performance of the contract

– pandaraya
Art. 1339.
"Failure to disclose facts, when there is a duty to reveal them, as when the parties are bound by
confidential relations, constitutes fraud"
– concealment when there is duty to reveal them, wherein the parties are bound by confidential
relations, constitutes fraud.
– Provides kung kailan mo masasabi a duty to reveal

Art. 1340.
"The usual exaggerations in trade, when the other party had an opportunity to know the facts, are
not in themselves fraudulent

General rule: Caveat Emptor = let the buyer beware

Art. 1341.
"A mere expression of an opinion does not signify fraud,

General rule: pag yung mga expression ng opinion mo hindi nmn siya fraudulent ,

under this provision ano ba ang mga kailangan o hahanapin mo in order for that opinion to be
fraudulent.
– made by an expert and
– the other party has relied on the former's special knowledge."
– Opinion turn out to be false

Art. 1342.
"Misrepresentation
GR: by a third person does not vitiate consent,
Exception: unless such misrepresentation has created substantial mistake and the same is mutual"

Remedy in this article is damages only.

Art. 1343.
"Misrepresentation made in good faith is not fraudulent but may constitute error."
Ex: your boyfriend buy a ring and your expecting a diamond but it turns out that ring is just made of
glass. (Parang akala niya gawa doon pero hindi pala)

Art. 1344.
"In order that fraud may make a contract voidable,
Counsel Fraud:
– it should be serious and
– should not have been employed by both contracting parties.
( they should be in pari delicto)

Incidental fraud only obliges the person employing it to pay damages."

Art. 1345.
'Simulation of a contract
– may be absolute or relative.
– Mutual agreement by parties but hindi siya nageexpress totoong intention ng parties.

Its is absolute when ..

– The former takes place when the parties do not intend to be bound at all;

It is relative when..
– the latter, when the parties conceal their true agreement."

Art. 1346.
"An absolutely simulated or fictitious contract is void.
A relative simulation - the effect of this is that the parties will be bound by real and true agreement
Exception:
– when it does not prejudice a third person and is not intended for any purpose contrary to law,
morals, good customs, public order
– or public policy binds the parties to their real agreement"