Law on Obligations and Contracts
Contracts - Essential Requisites
Civil Code Art. 1318-1355
Essential Elements of Contract
Essential Elements (Art. 1318)
There is no contract unless the following
requisites concur:
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
Requisites:
1. It must be manifested by the
concurrence of the offer and acceptance
(Arts. 1319-1326)
2. The contracting parties must possess
the necessary legal capacity
(Arts. 1327-1329)
3. It must be intelligent, free,
spontaneous, and real (not
vitiated] (Arts. 1330-1346)
Consent
1. It must be manifested by the
concurrence of the offer and acceptance
(Arts. 1319-1326)
⚫ Offer - a specific proposal to enter
into an agreement with another.
⚫ Acceptance - agreeing verbally or in
writing to the terms of a contract,
which is one of the requirements to
show there was a contract.
Offer
Note: an offer must be intentionally
certain [Art. 1319 par. 1)
Example:
When offering to sell something, you
should specify the object being sold.
Offer
Special cases of offers:
1. The person making the offer may fix
the time, place, and manner of
acceptance, all of which must be
complied with (Art. 1321)
2. An offer made through an agent is
accepted from the time acceptance is
communicated to him [Art. 1322)
3. An offer becomes ineffective upon the
death, civil interdiction, insanity, or
insolvency of either party before
acceptance is conveyed (Art. 1323).
4. Advertisements for bidders are simply
invitations to make offers [Art. 1326)
Offer
Advertisement for bidders
S sells at a public auction a specific land.
The starting bid is P1,000,000. A placed
a P1,100,000 bid; B placed P1,150,000;
and C placed P1,300.000.
Acceptance
Note:
1. an acceptance must be absolute (Art.
1319)
2. communicated to the offeror (Art.
1319 par. 2 & 1322)
3. may be express/implied.
Acceptance
Example:
S offers B to sell his specific house and
lot in Quezon City for P1,500,000. B
accepted the offer but is only willing to
buy the land.
COUNTER - OFFER
How acceptance is communicated to
offeror:
1. S, during an "in-person" conversation
with B, offered B to sell his land for
P1,000,000.
2. S, through a letter, offered B to sell
his land for P1,000,000.
✓ S sends a letter of offer on Jan 1
✓ B receives the letter on Jan 15
✓ B sends a letter of acceptance on
Jan 16
✓ S receives the letter of acceptance
on Jan 31

Promises in offer and acceptance
⚫ S offers to sell his land to B for
P1.000.000. B refused. However, S
still insists that he is willing to give
B 30 days to decide. However, B
still refuses. Again, S still stands
with his promise.
POLICITATION
⚫ S offers to sell his land to B for
P1,000,000. B refused. However, S
still insist that he is willing to give
B 30 days to decide. B accepted the
promise.
Unilateral Promise Accepted
⚫ S offers to sell his land to B for
P1,000,000. B refused. However, S
still insist that he is willing to give
B 30 days to decide. B accepted the
promise and gave S P1,000 as
option money.
Unilateral Promise Accepted
⚫ S promised to sell his land to B for
P1,000,000 after 1 month. Likewise,
B promise to buy S's land for
P1,000,000 after 1 month.
Bilateral Promise
Consent
2. The contracting parties must possess
the necessary legal capacity [Arts.
1327-1329)
2 kinds of incapacity:
1. Absolute incapacity
2. Relative incapacity
Consent
Absolutely incapacitated:
1. Unemancipated minors
⚫ Except for contracts involving
necessary
⚫ Where minor misrepresented his age
2. Insane or demented person
⚫ Lucid interval
3. Deaf-mutes who do not know how to
write.
Relatively incapacitated:
1. Those under Civil interdiction for
transactions inter vivos.
[RPC Art. 34)
2. Undischarged insolvents
(Insolvency Law, Sec.24)
3. Husband and wife: cannot donate
[Art. 123 FC] to each other, nor sell
if the marriage is under ACP (Art.
1490)
Consent
3. It must be intelligent, free,
spontaneous, and real (not
vitiated] (Arts. 1330-1346)
Vices of consent:
⚫ Violence
⚫ Intimidation
⚫ Mistake
⚫ Fraud
⚫ Undue Influence
Object Vs. Cause
Contract of sale:
✓ S sells his land to B for P1,000,000.
Contract of lease:
✓ S leases his land to B for P10,000
per year.

Object
1. Lawful: Not contrary to law, morals,
good customs, public order or public
policy.
2. Actual or possible
3. Transmissible: Within the commerce
of man
4. Determinate or determinable

Object
Future Inheritance:
X is the son of Y. While Y is still alive,
X sold his inheritance to Z.

Cause
1. Existing
2. Lawful
3. True

Cause
Cause vs Motive:
✓ X buys a gun from an arms dealer
and procured the necessary permit.