Chapter 2: Essential Requisites of Contracts

Article 1328-1346

I. Definitions
1. Consent
It is the conformity or concurrence of wills (offer and acceptance) or the mutual assent
between the parties on the subject matter and the cause which are to constitute the
contract.
2. Acceptance
It is the manifestation by the Offeree of his assent or approval/agreement to all the
terms of the offer made by the Offerer, in oral or written form.
3. Natural Elements
Are those derived from the nature of the contract or to be presumed to exist in certain
contracts unless the contrary is expressly stipulated by the parties.
4. Option Contract
Is one giving a person for a consideration a certain period whether to accept the offer of
the offerer.
5. Mistake of Law
Is that of which arises from the ignorance of some provision of law, or from an
erroneous interpretation of its meaning, or from the erroneous interpretation of its
meaning, or from an erroneous conclusion as to the legal effect of an agreement, on the
part of one of the parties.

II. Discussions
1. When is a contract voidable or annullable?

A contract is voidable or annullable when consent is given through [1] error of

mistake; [2] violence of force; [3] intimidation of the lead or threat or to arrest; [4]
undue influence; and [5] fraud or deceit, as these go against the characteristics of valid
consent. Additionally, it is voidable when there is incapacity of a person because they
can be easily victims of fraud, for they lack the necessary legal capacity to give their
consent to a contract.

2. Is it always required that he who alleges fraud or mistake in entering into a contract, must
prove his allegation? Explain.

Yes, because an allegation alone cannot stand without proof or evidence, it is

incumbent upon the person who alleges it to prove it, as a means to void the contract.
Failure to rebut the presumption will sustain the charge of fraud or mistake.

3. Give the requisites in order that intimidation may vitiate or annual consent of a party to a
contract.
 In order for intimidation to vitiate or annual consent of a party to a contract, the
following requisites must be present:

a) It must produce a reasonable and well-grounded fear of an evil;

b) The evil must be imminent and grave;
c) The evil must be upon his person or property, or that of his spouse, descendants, or
ascendants; and
d) It is the reason why he enters into the contract.

4. May fraud be commuted by a party to a contract though there is no misrepresentation on

his part? Explain.

Yes, because the party may have commuted fraud through concealment. By failing or
neglecting to disclose or tell the material facts to the other party who ought to know, the
former is deceiving or misleading the latter into entering a contract, which in by nature is
fraud. Unless fraud was unintentional then action for is annulment is a mistake or
Intentional, but the former is not obligated to make the disclosure then he is not bound by
their contract.

5. Will the acceptance of a business advertisement of a thing for sale produce the perfection
of a contract? Explain.
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Yes, only if the advertisement being accepted has complete particulars necessary in a
contract such as amount determined, specifics of the thing and its location. Consequently,
this leads to the perfection of contract as essential elements of a contract are present
serving as consent is given, subject matter/object is certain, and its cause.

III. Problem
1. In a contract containing an option, when is the offerer not allowed to withdraw his offer
even before acceptance by the offeree? When the offerer allowed to withdraw his offer
even after acceptance?
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An offerer is not allowed to withdraw his offer even before acceptance by the offeree
when the latter is given option money (money paid or promised to be paid) for the option
which was a consideration to the latter. On the other hand, the offerer is allowed to
withdraw his offer even after acceptance when the latter has not paid or promised to pay a
consideration to the former for giving him an option period, allowing the latter to withdraw
his offer any time as he is not bounded, even if accepted.

2. S sold his house to B believing that B is C. Can S legally withdraw from the contract on the
grounds of mistake?
 Yes, Can S legally withdraw from the contract on the grounds of mistake because S
mistook B as C, a mistake regarding identity or qualifications of one party, which was the
principal cause of the contract. Hence, allowing S to legally withdraw under the provisions of
article 1331 par. 2.

3. S agreed to deliver to B 500 cavans of rice at P 600 per cavan. S delivered only 490 cavans
deliberately misrepresenting that the delivery consisted of 500 cavans. Can B ask the court
to annul the contract on the grounds of fraud?

Yes, B can ask the court to annulment of the because the given situation is classified as
casual fraud where the fraud committed is serious, as S acted in bad faith by deliberately
misrepresenting the delivery of 500 cavans.

4. S sold to B a commercial land for P1,000,000. S assured B that it is certain that in two
years’ time, the land would increase in market value by 50% or P 1,500,000. It turned out
that the market value of the land even decreased to about P 800,000. Is S liable to B for
misrepresentation?

Yes, S is liable to B for misrepresentation of a fact claiming that in two years’ time, the
land would increase in market value by 50% or P 1,500,000 but actually decreased to P
800,000. This represents a fraud which makes the sale voidable as B was induced to give
consent because of the representation. Hence, liability arises from the misrepresentation of
fact told by S.

5. Suppose in the same problem, what S sold to B, hardware owner, are 500 bags of cement.
S had every reason to believe that the price of cement would go down. After two weeks, it
did go down. Has B the right to have the sale annulled?

No, because the sale is valid and so is the contract. S is not bound to make a disclosure
of his reason for his belief to S and B cannot have the right to the annulment of sale on the
grounds of fraud by concealment. Therefore, B does not have the right to have the sale
annul as he was not deceived or misled into entering the contract.