ESSENTIAL ELEMENTS OF CONTRACTS (1318-1355)

Essential Elements (art. 1318)

There is no contract unless the following requisites occur:

- Consent of the contracting parties;

- Object certain which is the subject matter of the contract;
- Cause of the obligation which is established

Consent

- Requisites of consent
o It must be manifested by the offer and acceptance (art. 1319 – 1326)
 Offer – a specific proposal to enter an agreement with another
 An offer must be intentional and certain (art. 1319 par. 1)
 Special cases of offers:
o The person making the offer may fix the time, place, and
manner of acceptance, all of which must be complied with
(art. 1321)
o An offer made through an agent is accepted from the time
acceptance is communicated to him (art. 1322)
o An offer becomes ineffective upon the death, civil
interdiction, insanity, or insolvency of either party before
acceptance is conveyed (art. 1323)
o Advertisement for bidders are simply invitations to make
offers (art. 1326)
 Acceptance – agreeing verbally or in writing to the terms of a contract,
which is one of the requirements to show there was a contract
 Acceptance must be absolute (full acceptance of offer, not partial)
(art. 1319)
 Must be communicated to the offeror (or its agent) (art. 1319 part 2
and 1322)
 May be express or implied
o In case of counter-offer, a counter offer must be accepted in
order to form a consent

Promises in offer and acceptance

Promise Is it Binding? Was there a Perfected

contract?
Unilateral promise unaccepted No None
(policitacion – mere
unaccepted promise)
Unilateral Promise accepted Binding if promise is supported Option contract only
by consideration (option
money)
Bilateral promise Yes Binding contract of promise to
enter into a contract

o The contracting parties must possess the necessary legal capacity (art. 1327 – 1329)
 Incapacitated party will not be able to enter a contract
 2 kinds of incapacity:
 Absolute incapacity (contract will be voidable)
o Unemancipated minors, except for contracts involving
necessary and where minors misrepresented his age
o insane or demented person, e.g., person in lucid interval
 o deaf-mutes who do not know how to write (and also read)
 Relative incapacity (contract will be void)
o Those under civil interdiction for transactions inter vivos
o Undischarged insolvents
o Husband and wife – cannot donate to each other nor sell if
the marriage is under absolute community property
o It must be intelligent, free, spontaneous, and real (not vitiated) (art. 1330 – 1346)
 Vices of consent
 Violence – physical force done to the other party
 Intimidation – threat
 Mistake – mistake done to secure a consent
 Fraud – dolo causante
 Undue influence – influenced by someone to enter a contract
 Existence of vices of consent will not necessarily hindrance the perfection of
the contract, but the same will be voidable

Object

- All things which are not outside the commerce of men, including future things, may be the
object of a contract. All rights which are not intransmissible may also be the object of
contracts (art. 1347)
- Requisites of an object
o Must be lawful: not contrary to law, morals, good customs, public order or public
policy
o Actual or possible
 Impossible things or services cannot be the object of contracts (art. 1348)
o Transmissible within the commerce of a man
 All rights which are not intransmissible may also be the object of contracts
(art. 1347)
o Determinate or determinable
 The object of every contract must be determinate as to its kind. The fact
that quantity is not determinate shall not be an obstacle to the existence of
the contract, provided it is possible to determine the same, without the
need of a new contract between parties (art. 1349)
- Special case of object:
o A future inheritance cannot be an object of a contract

Cause (art. 1350)

ONEROUS GRATUITOUS REMUNERATORY

For each contracting party, the Mere liberality of the The service or benefit which is
prestation or promise of a benefactor4 remunerated (e.g., salary
thing or service by the other; payment for services rendered
by an employee)

- Requisites of cause
o Existing – actual existence of cause of the contract
o Lawful – not contrary to law, morals, good customs, public order or public policy
 Contracts without cause, or with unlawful cause, produce no effect
whatever. The cause is unlawful if it is contrary to law, morals, good
customs, public policy or public order (art. 1352)
o True – the cause of the contract must be the actual cause of the contract
  The statement of a false cause in contracts shall render them void, if it
should not be proved that they were founded upon another cause which is
true and lawful (art. 1353)
- Although the cause is not stated in the contract, it is presumed that it exists and lawful,
unless the debtor proves the contrary (art. 1354)
- Cause Vs. Motive
o Cause is the reason of existence of the contract, which affects the validity of the
contract
o Motive on the other hand does not affect the validity of the contract