CONTRACTS
in corporation, corporation in partnership, partnerships in
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.
-a contract is a way in which two persons are involved
wherein there is a meeting of their minds and these two
persons, one of them will obligate and binds himself with
respect to the other person.
What would he bind? He would give something or render
some service.
-Lays emphasis on the meeting of the minds between two
contracting parties or two contracting persons which takes
place. It takes place when there has an offer by one party
or there is the acceptance of the offer by the other party
CONTRACT- the parties must have a legal
assent/mutual understanding/common understanding as to
the fulfillment of the prestation and that prestation now
includes to give, to do, or not to do.
In a contract there is a meeting of minds between two
persons wherein one person would be responsible for
another person in terms of giving something or rendering
some service.
In order that contract can exist, there has to be conformity
of wills between two parties between such two persons
and now it must create obligations that are duly
demandable.
*meeting of the minds between two contracting parties
which takes place when an offer by one party is accepted
by the other*
* there must be at least two persons or parties because it
is impossible for one to contract with himself*
-there could be two or more persons that we could say
that there are contracts which have more than two parties
such as for example tripartite or multipartite contracts.
You see in the different nations, different countries in the
world they enter into a multipartite contracts or tripartite
contracts so then this contracts can have more than two
parties and each party to a contract may also be compose
of more than one person such as when two or more person
are collectively known as one party.
So, in case for example in a contract, it says there that
this contract is entered in to by let’s say A, B, C known as
the first party so as you could see there are two persons
here and they are collectively known as one party in a
contract.
TAKE NOTE: The person we are referring here in article
1305 maybe a natural person or a human being like
anybody else like us that living human beings or it could
be artificial persons
Artificial persons- corporation, partnerships, partnership
partnerships, corporation in corporation and so forth and
so on.
CONTRACT versus OBLIGATION
Contract is one of the sources of obligations while the
obligation is the legal tie or relation itself that exists after
a contract has been entered into. Hence there can be no
contract if there is no obligation. But an obligation may
exist without a contract.
SOURCES OF OBLIGATIONS:
Contract, Law, Quasi-contract, Quasi-delict
Obligation
- a juridical necessity to give, to do or not to do.
-considered as legal tie or juridical tie that binds the
parties after there has been already a contract has been
entered into.
Contract- one of the sources of the obligation
They can’t be no contract if there is no obligation but an
obligation may exist even without a contract.
We could not speak of a contract if that contract does not
express/create any obligation between parties.
However, on the other hand, an obligation may exist
without a contract because juridical necessity may exist
even without the contract.
Example an obligation of parent to support their children
so even it is not reduce into a contract, even if there is no
meeting of the minds between two parties involved that is
considered still an obligation. It exist even there is no
contract because that is also precisely an obligation under
the law.
CONTRACT versus AGREEMENT
Contracts are agreements enforceable through legal
proceedings. Agreements which cannot be enforced by
action in courts are not contracts but merely moral or
social agreements. An agreement is broader than a
contract because the former may not have all the elements
of a contract.
* all contracts are agreements but not all agreements are
contracts*
Contracts are considered agreement and they could be
enforced only through legal proceedings. If there would
be violations of the obligations under the contracts, the
party whose rights have been violated can sue upon the
other through legal proceedings.
On the other hand, Agreements which cannot be enforce
by action in courts, are not considered as contracts but
they are just considered as merely moral or social
agreements.
An agreement is broader than a contract because an
agreement may not have all the elements/requisites of a
contract. In other words, all contracts are agreements but
not all agreements are contracts.
If there is a violation of the contract the other party whose
rights have been violated can go to the courts and sue the
other party. On the other hand, Agreements are not
enforceable by actions in court. Hence, they are not
considered as a contract, they are just considered merely
moral or social agreements.
Agreement is broader in scope, it is a wider scope than a
contract because in agreement it is not necessarily that all
elements or requisites of a contract are present. On the
other hand, In order that a contract would exist there has
to be meeting of the minds of the parties as well as the
important requisites/elements of a contract.
All contracts are considered agreement but not all
agreements are considered as contracts.
Example of what we call social and moral agreement
which are not considered as contracts
Here comes now A who has a best friend, his name is B.
They are together from their first year until fourth-year
college taking up accountancy. They are inseparable so
they are best friends. One day, while they are studying the
provisions in law on contracts, one of them let’s say for
example A approach B and said that can we make an
agreement whereby we have to attend the novena masses
for nine consecutive Wednesdays of the month at a
cathedral of San Fernando City, La Union. They both
agreed that they will do that thing every Wednesday of
the month and that is their promise to each other that they
will attend the mas at 5-6 pm in Saint William church of
cathedral of San Fernando City, La Union. On the third
day of the month which is the third Wednesday of the
month, A wasn’t able to attend the novena mass.
Can be now sued/go to the court and file a case for
damages or specific performance against A who didn’t
make through to their promise that they will attend the
novena every Wednesday of the month?
Of course not, because that is not considered a contract. It
is not considered a contract and it is not enforceable
through legal precedings. This what they have done is just
what we call agreement a moral agreement.
In case that there would be non-fulfillment of the
agreement or the pact that they have agreed upon between
the two parties A and B. One of them or the person who
didn’t perform or did not comply of what they agreed
upon cannot be sued in court because what do they have,
they only have what you call social or moral agreement.
CLASSIFICATIONS OF CONTRACTS:
1. According to name or designation
a. Nominate- a contract that has a name under the law
b. Innominate- a contract that does not have a special
name under the law.
2. According to perfection
a. Consensual- a contract that is perfected by mere
consent of the parties
b. Real- a contract that is perfected by the delivery of the
object of the contract
3. According to cause
a. Onerous- one where there is an exchange of valuable
consideration
b. Remuneratory or remunerative- one where one
prestation is given for a benefit /service previously
rendered.
c. Gratuitous- one where one party receives no equivalent
consideration.
4. According to form
a. Informal or common- does not have any form
b. Formal or solemn- are those that must be in the form as
provided by the law
5. According to obligatory force
a. Valid- are those contracts that has the essential
element/requisites of a contracts
b. Rescissible'
c. Voidable
d. Unenforceable
e. Void or inexistent
6. According to person obliged
a. Unilateral- one which is entered into by only one party
is obligated to give or to do something
b. Bilateral- are those contracts were both parties are
required to give or to do something
7. According to dependence to another contract
a. Preparatory - when it is entered into as a means to an
end
example: contract of agency and partnership
b. Accessory - when it is dependent upon another contract
it secures or guarantees for its existence and validity
example: contract of pledge and mortgage
c. Principal - when it does not depend for its existence 2. Provisions of the Civil Code on obligations and
and validity upon another contract but it is an contracts
indispensable condition for the existence of accessory 3. The rules governing the most analogous contracts
contract 4. Customs of the place

8. According to risk
a. Commutative - when the undertaking of one party is
considered the equivalent of that of the other
example: contract of sale, contract of barter
b. Aleatory - when it depends upon an uncertain event or
contingency both as to benefit or loss
example: insurance contract
9. According to liability
a. Unilateral - when it creates an obligation on the part of
only one of the parties
b. Bilateral - when it gives rise to reciprocal obligations
for both parties
* the kind of contract entered into is not determined by
the name or title given to it by the parties but by its nature
or character as determines by principle of law*
ARTICLE 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.
*Principle of Autonomy of contracts - right of everyone
to enter into contract as one of those freedom or liberties
enshrined in the Constitution*
LIMITATIONS:
Freedom is not absolute since such stipulations and
conditions must not be contrary to law, morals, good
customs, public order or public policy and in some
instances the police power of the state to enact laws or
regulations in relations to persons and property as may
promote public health, morals, public safety and the
general welfare and convenience of the people.
CLASSIFICATIONS OF CONTRACTS
ACCORDING TO ITS NAME OR DESIGNATION:
(ARTICLE 1307)
1. Nominate - has specific name or designation
2. Innominate - no specific name or designation
KINDS:
1. DO UT DES (I give that you may give) - no longer an
innominate contract since it has already been given a
name of its own - EXCHANGE OR BARTER
2. DO UT FACIAS (I give that you may do)
3. FACTO UT DES (I do that you may give)
4. FACTO UT FACIAS (I do that you may do)
REASON FOR INNOMINATE
CONTRACTS - the impossibility of anticipating all forms
of agreement on one hand and the progress of man's
sociological and economical relationships on the other,
justify this provision.
RULES GOVERNING INNOMINATE
CONTRACTS:
1. Agreement of the parties