Contracts

-meeting of minds between two persons

 Elements
1. Essential elements – without this where will be no contract
a. consent
b. object certain
c. cause of obligation
2. Natural elements – found in certain contracts unless set aside or suppressed by the
parties
3. Accidental elements – refer to particular stipulations of the parties

 Classification of contracts
1. According to perfection or formation
a. Consensual – those that are perfected by mere consent
b. Real – those that are perfected by the delivery of the object of the contract
c. Formal or solemn – those which must be in the form provided by law for their
perfection
2. According to cause
a. Onerous – exchange of valuable considerations
b. Gratuitous – one party receives no equivalent consideration
c. Remuneratory – where the cause is the service or benefit remunerated
3. According to name or designation
a. Principal – one that can stand by itself
b. Accessory – one whose existence depends upon another contract
c. Preparatory – serves as a means by which other contacts may be entered into
4. According to name or designation
a. Nominate – have a name under the law
b. Innominate – those without any name under the law
5. According to risk or fulfillment
a. Commutative – where the parties give equivalent values
b. Aleatory – whose fulfillment depends upon chance
6. According to the parties obligated
a. Unilateral – where only one of the parties is obligated to give or do something
b. Bilateral – where both parties are required to give or do something
7. According to subject matter
a. Contracts involving things
b. Contracts involving rights or credits
c. Contracts involving services
8. According to the time of fulfillment
a. Executed – one which has been performed
b. Executory – one that has not yet been performed
9. Other classification
a. Auto-contract – only one person represents the two opposite parties
b. Contract of adhesion – only one party drafted the contract
 Stages of contract
1. Preparation or conception – negotiations and bargaining
2. Perfection or birth – when there is a meeting of minds between parties
3. Consummation or death or termination – occurs upon fulfillment of cause

 Basic principle of contract

1. Liberty of contract or freedom to stipulate
- 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
2. Mutuality of contracts
- the contract must bind both contracting parties; its validity or compliance cannot
be left to the will of one of them
3. Relativity of contracts
- contract take effects only between the parties, their assigns and heirs, except
where the rights and obligations are not transmissible
4. Consensuality of contract
- contracts are perfected by mere consent

 Deffective Contracts
1. Rescissible contract – damage
2. Voidable contract – consent of one party through violence, intimidation, etc.
3. Unenforceable contract – unauthorized third party represents a party
4. Void contract – impossible cause, unlawful, criminal