John Christian I.

Largo
BSA 1 Group 8
LOC Activity No. 8
I. Definitions
Define or give the meaning of the following.
1. Contract
- 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 as stated in Article 1305.
2. Stipulation pour autrui
- 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 oblige or the original parties.
3. Real Contract
- Real contract is a contract perfected by the delivery of the thing subject matter of the contract.
4. Perfection of Contract
- Perfection of contract is a contract when the parties have come to a definite agreement or
meeting of the minds regarding the subject matter and cause of the contract, upon concurrence of
the essential elements.

II. Discussions
1. May a third person acquire rights under a contract to which he is a stranger or be bound
thereby? Explain.
- According to Article 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 properly 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.
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 which is stated in Article 1312.
Article 1313 stated that Creditors are protected in cases of contracts intended to defraud them.
And as stated in Article 1314, Any third person who induces another to violate his contract shall
be liable for damages to the other contracting party.
2. How are contracts perfected?
- In Article 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 stipulation but also to all the
consequences which, according to their nature, may be keeping with good faith, usage and law.
Article 1316 states that Real Contracts, such as deposit, pledge and common datum, are not
perfected until the delivery of the object of the obligation.
According to Article 1356, Contracts shall be obligatory, in whatever form they may have been
entered into, provided all the essential requisites for their validity are present. However, when
the law requires that a contract be in some form in order that it may be valid or enforceable, or
that a contract be proved in a certain way, that requirement is absolute and indispensable. In such
cases, the right of the parties stated in the following article cannot be exercised.
3. When will a person be bound by a contract entered into by another?
- 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 as stated in Article 1317.
4. Give the effect of the perfection of a contract.
- Real Contracts, such as deposit, pledge and common datum, are not perfected until the delivery
of the object of the obligation, stated in Article 1316.

III. Problems
Explain or state. briefly the rule or reason for your answer.
1. A and B entered into a contract not specifically provided in the Civil Code. Is the
contract valid and binding?
- As what is stated in Article 1307, Innominate contracts shall be regulated by the stipulations of
the parties, by the provisions of Titles I and II of this Book, by the rules governing the most
analogous nominate contracts and by the customs of the place.
2. S (seller) and B (buyer) entered into a contract of sale. It was agreed that the price shall
be determined by T, a third person. Can S or B refuse to be bound by T's determination of
the price if he does not agree with the amount thereof?
- According to Article 1309 to 1310, 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. Also, The determination shall not be obligatory if it is evidently inequitable. In such
case, the courts shall decide what is equitable under the circumstances.
3. D owes C P20,000. Both are house painters. It was agreed that D instead of paying C, will
paint the house of E to which E expressed his conformity to C whose service as painter was
previously contracted by E. Has B the right to enforce the stipulation between C and D?
- Article 1311, par. 2 states that 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.
4. X made an office desk for Y. X told Y that the latter may pay whatever amount he would
like to pay for it. When the desk was finished Y offered to pay P2,000 but X instead
demanded P3,000, its fair value. Is X entitled to P3,000?
- In Article 1308, The contract must bind both contracting parties; its validity or compliance
cannot be left to the will of one of them.