CHAPTER 3
REQUISITES OF CONTRACT
ELEMENTS OF CONTRACT
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
Consent
-The conformity of wills of the contracting
parties upon the object and cause as well as to
the other terms and conditions of the contract.
The offer must be certain
-Means that no possible doubt could arise on
what the object and the cause is, in the same
manner that acceptance must in every respect
meet and coincide exactly with the object and
the cause offered.
Acceptance made through letters, etc. -
Generally, acceptance should be made right
after the offer has been made or immediately
thereafter.
Rule on offer and acceptance
-The general rule is that the person making the
offer has the inherent right to fix the time, place
and manner of acceptance.
When offer becomes ineffective
-An offer may become ineffective if before its
acceptance by the offeree, the offeror will die
or suffer civil interdiction or becomes insane or
insolvent.
Offer made through agent
- An offer made through an agent is accepted
from the time acceptance is communicated to
him by the offeree.
Published advertisement not an offer
-Business advertisement of things which are for
sale in newspaper ads or media are not definite
offers by mere invitations to make offer, and
the same is true as regards advertisements
calling for bidders to make proposals based on
given specifications.
Persons who cannot give consent
-Consent can only be given by persons who
have the capacity to act.
Vices of consent
The law enumerates five causes by which
consent may be vitiated or rendered defective.
Mistake rendering contract defective
In order for that mistake may invalidate
consent, it should refer to the 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.
mistake in substance
takes place when both parties thought that the
subject matter they are dealing into does not
turn out to be what it exactly is.
mistake of identity or qualification
-on the other hand takes place when one party
enters into the contract primarily because of
such identity or qualification of the other party
which is not actually the case.
Circumstances not indicative of mistake
-There is no mistake if the party, alleging it
knew of the doubt, contingency, or risk
affecting the object of the contract as in the
case of buying a car from a former carnap
convict or purchasing a thing at an extremely
low price.
Mistake of fact and mistake of account
distinguished
-Mistake of account unlike mistake of fact will
not avoid the contract.
Legal protection to the weak party
The law has its protective concern to the no-
read no-write or disadvantaged party to the
contract.
Violence and intimidation explained
Violence is an external act characterized by the
employment of serious and irresistible force by
one party or a third party for his account in
order to secure the consent of the other party
to the contract.
Degree of intimidation
In order to determine the degree of
intimidation the circumstance of age, sex and
condition of the person intimidated shall be
borne in mind.
Undue influence
- Is when a person takes improper advantage of
his power over the will of another, depriving
the latter of a reasonable freedom of choice.
Fraud in contracts
-Is when insidious words or machinations of one
of the contracting parties, and the other is
induced to enter into a contract which, without
them, he would not have agreed to.
Fraud is classified into two kinds, namely: Fraud
at or before the perfection of contract (dolo
causante) which when committed renders the
contract voidable, and fraud after perfection of
the contract (dolo incidente) which does not
cause the invalidity of the contract.
Instances not constituting fraud
1. Usual exaggeration in trade. It is an admitted
fact that dealers or merchants exaggerate their
wares to insure the immediate sale of their
products.
2. Expression of a favorable opinion. A mere
expression of an opinion by a party does not
signify fraud, unless the same is made by an
expert and the other party relied on the
former's special knowledge.
3. Misrepresentation made in good faith. is not
fraudulent but may constitute error. This means
that a misrepresentation based on an
erroneous belief and without intent to take
undue advantage of the other party will not
avoid the contract.
4. Misrepresentation by a third person.
Misrepresentation made by a third person does
not vitiate consent unless the same has created
substantial mistake and the same is mutual.
Duty to disclose material facts
Failure of either party to disclose facts when
there is a duty to reveal them as when the
parties are bound by confidential relations,
constitute fraud (Art. 1339).
Simulated contract
Is when it is fictitious or pretended in order to
defraud the creditor or mislead the general
public.
absolutely simulated contract
-takes place when the parties do not intend to
be bound at all, hence, the contract is void or
inexistent as there is no consent or cause
although the object is certain.
relatively simulated
- contract takes place when the parties
concealed their true agreement.
Object certain.
-An object which must be certain is the second
element of a contract.
Outside the commerce of man.
-It has been held that a municipal council
cannot sell or lease public property, such as
plazas, streets, common lands, rivers, bridges,
etc.
Things having potential existence.
-Things having potential existence are those
which are sure to come barring only unforseen
events although not yet possessed.
Intransmissible rights and services.
-Rights which are intransmissible cannot be the
object of a contract because they are either too
personal to the parties or are not permitted by
law to be the object of contract.
Future inheritance.
- A contract involving a future inheritance is
void as this will likely entice an instituted heir or
legatee to end up the life of the benefactor.
Object must be determinate, exceptions.
-The object of the contract must be
determinate as to leave no doubt as to which is
intended from the kind where it belongs, or
must have definite limits.
Cause.
-Must be in existence at the time of the
contract is the last element of a valid contract.
Cause or consideration is the immediate, direct
and proximate reason why a party enters into
the contract and without which the contract
becomes a nullity.
Motives in entering into a contract.
-The particular motives of the parties in
entering into a contract are different from the
cause. thereof.
Contracts without a cause or with an illegal
cause.

-Produce no effect whatsoever. The cause is

unlawful if it is contrary to law, morals, good
customs, public order, and public policy.

Statement of a false cause in contract.

-The statement of a false cause in contracts

shall render them void, if it should not be
proved that it is founded upon another cause
which is true and lawful.

Presumption of consideration. Although the

cause is not stated in the contract, the same is
presumed to exist and is lawful, unless the
debtor proves the contrary.

Lesion or inadequacy of cause. Except in cases

specified by law, lesion or inadequacy of cause
shall not invalidate a contract, unless there has
been fraud or undue influence.