I. Definition, in your own understanding and words.

1. Contract of Adhesion

 It is a contract drafted by just one party without input from the signee.

2. Principle of Free Stipulation of Contracts

 This is a principle where in parties are free to contract in their own terms. Parties are allowed to demand that
something to be part of an agreement.

3. Principle of Relativity of Contracts

 Contracts can only bind the parties who had entered into it and it cannot favor or prejudice third persons.

4. Stipulation Pour Autrui

 Also known as Third-party beneficiary. A contract or provision in a contract that confers a benefit on a third-party
beneficiary. There should be a legal or factual relationship between the stipulator and the beneficiary in order for
a third party to be a third-party beneficiary.

5. Earnest Money

 Is an amount of money that you deposit to show that you are serious about/confirms the contract.

6. Caveat Emptor

 Also known as “As is where is”. Caveat Emptor is Latin for “Buyer beware”, buyers are to reasonably examine
property before making a purchase.
 It is a clause in any agreement which implies that the thing so contracted is transferred, by one person to
another in its existing condition and the transferee has accepted it with all its faults and defects, whether or not
immediately apparent.

II. Identify whether valid or not, with legal basis.

1. A and B entered into a contract whereby for the amount of 1 million pesos they will live together as husband and wife
for a period of 1 year.

 Not Valid. Marriage is a special contract and as an object/condition of the contract, it is contrary to law and
morals.

2. A contract of loan with a stipulation that the debtor will render his services without remuneration until full payment of
the amount loaned.

 Not Valid. The debtor should be compensated for his given services and should be in a separate contract from
the contract of loan.

3. A lease contract with a stipulation that the lessor will retain 1 month of rental for the purpose of attending to the
repairs of the leased property.

 Valid. It is also stated on R.A. 9653 Section 7: Rent and Requirement of Bank Deposit. However, to avoid
misunderstandings, you have to make it clear and specific in your agreement how the deposit will be used and
returned. Security deposits are usually used to cover repair costs to damages caused by the tenant to your
property. The remaining amount, should there be any left, is then returned to the tenant.

4. A bought a licensed 45 caliber for P 50, 000 from B. A intended to use the gun to kill C who owed him 1 million pesos.