Principles Sources of Law and Law On Agency-1

Legal Aspects in Procurement and Contract Mr. Ramon R. Guevara, C.P.M.
, DSM
Management
Legal Aspects in Procurement and

Contract Management
April 29 – 30, 2021
May 6 – 7, 2021
1:00 PM – 5:00 PM
via AteneoBlueCloud | Zoom
RAMON R. GUEVARA, C.P.M., DSM

• Current President of the Foundation of the Society of Fellows in Supply Management with more than 50 years of experience
in the purchasing and supply management profession. Held various management and executive positions in Filoil Refinery
Corporation (Now Petron Corporation), San Miguel Corporation, General Motors Corporation, U.S. State Department, and
the International Rice Research Institute in the area of Supply Management covering the Purchasing, Inventory
Management, Warehousing, Transportation, and other logistics operations including customer service. Current
lecturer/facilitator and supply management consultant for the Philippine Institute for Supply Management as well as
Facilitator for the School of Professional and Continuing Education of De La Salle College of St. Benilde and the Center for
Continuing Education of the Ateneo Graduate School of Business. Currently an international lecturer on Supply
Management, having lectured in Vietnam, Singapore, Malaysia, and Hongkong.
• Past President of the Purchasing and Materials Management Association of the Philippines (now Philippine Institute for
Supply Management) in 1994-1995.
• Former faculty member of Mapua Institute of Technology.
• Recipient of the 1998 GAWAD SINOP Award for the Most Outstanding Practitioner from the Society of Fellows in Supply
Management and the Philippine Institute for Supply Management.
• Obtained his BSBA and MBA degrees from the Mapua Graduate School and his C.P.M. certification from the National
Association of Purchasing Management in Flint, Michigan, U.S.A. in 1981.
Ateneo Center for Continuing Education 1

Legal Aspects in Procurement and Contract Mr. Ramon R. Guevara, C.P.M., DSM
Management
Introduction of Participants:
1. State your name
2. Your Company’s name
3. Nature of your company’s business
4. Your current position
5. Years of experience in purchasing
6. Reason for taking this seminar
Learning Objectives:
1. Define and understand the various legal systems affecting

local and international procurement;
2. Define and understand the buyer’s and seller’s obligations
and rights under different types of procurement contracts;
3. Have a working knowledge of the provisions in the Law on
Agency and the Law on Contracts which are essential to
contract formation and administration;

Management
4. Understand the issues relating to preparing a contract and

highlight the factors that makes a good contract;
5. Identify and understand the key clauses that relate to the
various types of contracts;
6. Define and comprehend the clauses relating to contractual
default and how to apply the different dispute resolution
methods;
7. Have a working knowledge of international commercial terms
used in the shipping of purchased goods, and commodities in
relation to transfer of cost and transfer of risks;
8. Develop a working knowledge in preparing a formal contract
management plan and the appropriate approaches to contract
implementation and monitoring;
9. Learn how to identify, assess, and mitigate risks in the
implementation and administration of procurement contracts;

Management
10.Define and understand the factors that would avoid contract

mismanagement
Module I
Principles Sources of Law

Management
The daily activities of the purchasing professional are subject to

two major areas of the law – the law of agency and the law of
contracts. The purchasing officer acts as an agent for the firm,
legally, this relationship is defined and governed by the law of
agency.
When a purchasing officer buys materials and services from

suppliers, each purchase involves the formation of a purchase
contract. A purchasing officer’s basic responsibility is to conduct
the firm’s procurement business as efficiently and expeditiously
as possible. Buying policies and practices are therefore
predicated on business requirements and business judgment,
rather than legal considerations.

Management
A legal knowledge of relevant legal principles is essential to a

purchasing practitioner’s success. Unless a purchasing
practitioner understands the legal implications of the job and
actions, one is indeed likely to stumble into legal entanglements.
Sources of Law in the Philippines

(Origin of Philippine Laws)
• Constitution
• Legislations or statutes
• Regulations issued by the Executive Branch of the government
• Case decisions or judicial decisions made by competent courts
• Presidential Decrees – examples
• PD 651 - Birth Registration within 30 days
• City Ordinances promulgated by Local Governments

Management
Origin of Laws: US context
• The legal system is referred to as the federal system

• The legal system is divided into Civil and Criminal systems of
law
• Criminal offenses are considered as crimes against the state
• Civil law covers disputes between private parties and is applied
to determine the rights of each party.
• The federal government has jurisdiction over disputes involving
interstate commerce
• Laws governing business relationships are derived from state
laws.
Knowing the Various Different Legal

Systems in International Contracts

Management
Different Legal Systems
The Common Law System – is a system that is

derived from judges’ decision rather than statutes or
constitutions. Under this system, the law is essentially
customary and jurisprudent.
Different legal systems
The Common Law countries:

Commonwealth countries in the Caribbean, Africa, Asia and the Pacific
North America (except Quebec in Canada and the state of Louisiana in the USA)
Australia, New Zealand, Israel
The wording of the contract determines:
¨ the contractual obligations

¨ whether there was a breach or not
¨ who is liable
¨ the relief to be granted

Management

The Civil Law System – also referred to as Roman Law, the
law is the work of a legislator and is the principal source of
rights. Under this law, the entire law is set out in a series of
codes (civil code, commercial code, criminal code, etc.)

The Civil Law countries:
¨ Europe except United Kingdom …….
LAW
¨ Francophone and lusophone Africa
¨ Latin America, Quebec and State of Louisiana
¨ Northern Africa, Middle East, Turkey, Iran, Afghanistan
¨ China, Japan and Korea
Background laws and codes of obligations as well as documents other than the
contract itself play an important role

Management

The Muslim Law System – is an autonomous legal
system which is religious in nature and predominantly
based on the Koran.
The Muslim Law countries:

¨ Northern Africa, Middle East, Iran, Afghanistan...
The role of Sharia and non Sharia law varies from country to country
In many cases, Civil or Common law traditions have an influence as well

Management
How Are Contracts Enforced In Different Legal Systems
• A contract is a document that specifies the conditions under which an

exchange is to occur and details the rights and obligations of the parties
involved.
• Contract Law is the body of law that governs contract enforcement.
• Under a common law system, contracts tend to be very detailed with all
contingencies spelled out.
• Under a civil law system, contracts to be much shorter and less specific
because many issues are already covered in the civil code.
How Are Contracts Enforced In Different Legal Systems
• Many countries have ratified the United Nations Convention on

Contracts for the International Sale of Goods (CIGS) which establishes
a uniform set of rules governing certain aspects of the making and
performance of everyday commercial contracts between buyers and sellers
who have their places of business in different nations.

Management
Consequences of different systems
• The parties have to consciously select which law should apply - if

not…
• Neither party may have a full understanding of what is intended

in the contract
• Risk for misinterpretations

§
Applicable Law
• Everyone reads a contract from the perspective of his/her
own experience.
• This may lead to misunderstandings and if a disagreement

arises, there will be a need to determine who is liable, to
whom and for how much.
• This is why you need the common background of an

applicable law.

Management
Selecting the applicable law:

• It is very important that you select one!
• The instinctive selection is one’s own country law - but the other party will want the same...
• Consider your company’s capacity cope with identical contracts under different laws…
• ..as well as the accessibility & depth of the law,
• … and advantages & disadvantages to your company
The best applicable law is the one which favors performance by both sides
Importance of a Contract
In international trade as well as domestic trade, the sales contract

has become the legal basis which binds at least two parties –
seller and buyer. The contract is even more important in
international trade due to the fact that the parties residing in
different countries are subject to various legal rules affecting the
making and performance of the contract. Therefore the careful
negotiation of such document will define the rights and duties of
each party.

Management
What is a Contract?
A contract is a legal agreement between two or more parties
with the intention of creating a legal relationship enforceable
by law.
Art. 1305 Definition of Contract
• A promise or a set of promises for the breach of which the

law gives a remedy, or the performance of which the law in
some way recognizes a duty.
• An agreement, upon sufficient consideration, to do or not to
do a particular thing.
• Simply put, a contract is a promise enforceable by law.

Management
Four Elements of a Contract

1. Offer and acceptance (Genuine assent)
2. Consideration/Obligation
3. Competent parties
4. Legality of purpose
Art. 1305 Definition of Contract
• Philippine law recognizes 3 distinct stages of a contract:

1. Preparation or conception: includes all initial stages up
to the time the parties agree upon the terms of the
contract
2. Perfection or birth: the time when the minds of the
parties meet in agreement upon the object or subject
matter as well as to the price or consideration
3. Consummation or termination.

Management
Classification of Contracts
1. Express or implied contracts:

a. Express if the intent of the parties is shown by words, oral or
written.
b. Implied if the intent of the parties is shown by conduct, where
(without mentioning compensation) A renders and B accepts
valuable services.
2. Executed and executory contracts:
a. An executed contract is one that has been performed
b. An executory contract is one not yet performed
3. Nominate and innominate contracts:

a. A nominate contract is one with special name in the Civil code (eg.
Marriage contract)
b. An innominate contract is one which do not have any special designation
or name
4. Consensual and real contracts:
a. Consensual contract is one perfected by mere consent, such as contract of sale
b. Real contract is one that is perfected by the delivery of the thing or good
which is the object of the contract.

Management
5. Unilateral or bilateral contracts:

a. In a unilateral contract only one party has an obligation such as in a
gratuitous deposit or donation.
b. A bilateral contract creates reciprocal obligation such as in a contract of
sale where the seller is bound to deliver the thing sold and the buyer to pay
the purchase price.
Important Civil Code

provisions on Contracts
• Art 1322 - An offer thru an agent is accepted from the time acceptance is
communicated to him.
• Art 1370 – If the terms of the contract are clear and leave no doubt upon the
intention of the contracting parties, the literal meaning of the stipulations shall
control. If the words appear to be contrary to the intentions of the parties, the latter
shall prevail over the former.
• Art 1370 – The following cannot give consent to a contract:
• Unemancipated minors
• Insane or demented persons, and deaf mutes who do not know how to write

Management
Important Civil Code provisions on Contracts
• Art 1326 – Advertisements for bidders are simply invitations to make proposals and
the advertiser is not bound to accept the highest or lowest bidder, unless the
contrary appears
• Art 1390 – The following contracts are voidable or annullable, even though there
may have been no damage to the contracting parties:
• Those where one of the parties is incapable of giving consent to a contract
• Those where consent is vitiated by mistake, violence, intimidation, undue influence or
fraud.
The meaning of voidable contracts:
It is one that possesses all the essential requisites of a valid contract but has defects in that
consent is vitiated by either mistake, violence, fraud, etc. or that one of the parties is
incapable of giving consent to a contract. A voidable contract is valid unless it is annulled.
Art 1403 – The following contracts are unenforceable, unless they are ratified:
1. Those entered into in the name of another by one who has been given no authority
or who acted beyond his powers
2. Those who do not comply with the statute of frauds.

Management
• Meaning of unenforceable contract: When a contract cannot be sued upon or

enforced in court unless it is ratified.
• Quasi-delicts.
• Article 2176. Whoever by acts or omission causes damage to another, there
being fault or negligence, is obliged to pay for the damage done. Such fault
or negligence if there is no pre-existing contractual relation between the
parties, is a quasi-delict and is governed by the provisions of this chapter.
• Meaning of Quasi-delict: It is a legal wrong, committed through fault or
negligence on a person or property, independent of a contract.
Basic Considerations in Contracting

Basic Steps in Contracting:
1. Definition of requirements
- Setting the specifications of the goods or services
- Determine the quality of the products to be obtained
- Some common types of description:
• Specification
• Statement of work
• Brand or Trade Name
• Drawings
• Market Grade
• Sample

Management
Types of Specifications:
• Commercial standards - developed by industry and trade
associations or by government to meet recurring need for standard
items.
• Design specifications - physical characteristics of the product
require, including dimensions, material compositions, etc.
• Material and method of manufacture - describe the precise
materials and manufacturing processes needed in producing the
products.
• Performance specifications - describe what the product must be
able to do, rather than what it looks like.
Basic Consideration in Contracting
Definition of Requirements
• Statement of work:
- What specifications are to products, statement of work is to the
purchase of services. It describes the work to be performed, the
time, performance standards and other deliverables.

Management
Identification of Sources
• The goal in this step is to qualify sources that will result in the
selection of optimum supplier who can offer the best proposal.
• Some basic techniques include:
- pre-qualification
- prior capability/performance evaluation
Basic Consideration in Contracting
Solicitation of Proposals/Bids
• There are four basic types of solicitation:
- Request for Information (RFI) -Least formal, used to obtain
information about the market place, including supplier’s pricing
system
- Invitation for Bid (IFB) - used to obtain quotes with the intention of
awarding to lowest bidder
- Request for Quotation (RFQ) - same as in IFB but makes no
commitment to award to the lowest bidder.
- Request for Proposal (RFP) - used to obtain creative solutions to
meet requirements, often interchanged with RFQ.

Management
Analysis of proposals/bids:
• Compare the responses and evaluate the cost, service capabilities,
technical, quality, financial and creativity
• Also review the supplier’s exceptions to the terms of the solicitation
• Weigh the overall impact of each of the selection criteria
• Suppliers who fail in the basic requirements can now be eliminated
Selecting the types of contracts

• Contract Form and Type:
- There are various forms and types of contract that may be appropriate for specific conditions in
contracting.
- The basic forms of contracts include PO, letter of intent, letters of agreement and formal
contracts.
- Contract type refers to the compensation mechanism:
* Fixed price - pre-determined price which may vary according to pre-determined conditions.
* Cost-based - compensation based on supplier’s cost.
* Incentive - the seller receives an incentive for keeping cost below agreed upon targets.

Management

Basic Factors to consider in selecting form and types
• Length of contract term
• Value and complexity of transactions
• Technological maturity of the product
• Specificity and clarity of user’s requirements
• Extent of competition
• Supplier’s experience
• Nature of product and its industry
• Availability of comparative price data
Forms of Contract:
• PO - the most common
• Letters of Intent - a letter informing a supplier that the buyer intends

to award a contract to the supplier.

Management
• Letter of Agreement - a letter from one party to the other stating the
outline of the agreement between the parties and includes the
signature of acceptance to the terms of agreement.
- It can stand alone as an agreement by itself.
- It has the look of a business letter without the intimidating look of a
legalistic document but contains all terms of agreement.
- Usually for small consulting engagement, short duration and limited
experience.
• Formal Contracts - contains more numerous terms and conditions

for large value and complex agreements, long period of time and
covers broader range of products or considerations.

Management
Contract types:
• Fixed price - pre-determined price at the time of contract.
* Firmed fixed - prices remain fixed during the contract period.
* Fixed with adjustment - price is fixed but includes mechanisms to
adjust for contingencies for long-term agreements.
* Fixed with re-determination - the fixed price is valid only for a
limited time and is subject to adjustment. On top of labor and
materials adjustment, it includes the consumption rates.
• Cost-based contracts - the purchaser agrees to pay for all of the

supplier’s allowable costs incurred under the agreed rates. It allows
a reasonable profit for the supplier.
* Cost plus fixed fee - buyer agrees to pay for a fixed fee on top of
the allowable costs.
* Cost plus percentage of cost - same as fixed fee but the fee is
determined as a percentage of the cost.
* Time and materials - the supplier is paid at a fixed hourly rate plus
the cost of materials used, as in repair jobs.

Management

• Incentive Contracts - Allows the supplier and purchaser to share in
reductions in suppliers’ costs.
* Fixed-price incentive - if the supplier exceeds the target cost, the
excess is shared by buyer and supplier up to maximum price. If the
supplier reduces its cost below, the profit goes to the supplier.
* Cost-plus incentive fee - if the supplier exceeds its target costs, it
will lose its incentive fee. If the costs are below target, the supplier
gets its incentives and the savings are shared by buyer and
supplier.
The Process of Contract Formation

• Before a contract can be formed, there must be a meeting
of minds.
• This is achieved through a process of offer and
acceptance, as will be shown in the succeeding
presentations.

Management
I. Mutual assent:
• The process of offer and acceptance
1. Offer
• To initiate a contract, one party must make an overture or offer to
another. To constitute an offer, the following requirements must be
met:
• There must be an intent to be bound - the offeror must be prepared to
follow through with the deal if the offeree accepts the offer.
• The offer must be communicated from the offeror to a known offeree.
• Inclusion of certain terms - the subject matter and the parties
concerned.
2. Termination of offer:
• An offer cannot be available for acceptance if any of the following occurs:
• Rejection or counter-offer. If the offeree rejects or makes a counter-offer, it
terminates the original offer.
• Operation of law. If the offeror dies or is incapacitated, it terminates the original
offer by operation of law.
• Lapse at the expiry of its duration.
• Revocation. If the offeror may withdraw the offer before it is accepted, provided it
does not fall under an irrevocable offer.

Management
3. Acceptance
• Acceptance of the offer is the second step in the process of mutual assent. There
are limitations in the acceptance of offers.:
• Only the person to whom the offer was made may accept the same.
• Acceptance may be in three ways:
• Direct communications of acceptance - “I accept your offer”
• Promise - “I promise to accept and pay for them”
• Performance - Just simply send the check payment and accept the goods.
• Offeree must demonstrate intention to accept through action.

3. Acceptance
• Mirror image rule ( a common law ) requires a complete match
between the terms of offer and the terms of acceptance.
• Timing of acceptance - under the Mailbox rule (common rule),
acceptance if effective when sent; the offeror’s receipt of it is
inconsequential. Once acceptance is sent, it is generally too late for
the offeror to revoke the offer or for the offeree to reject it.
• Orders and Acknowledgement
• Standard forms may be used in the process of offer and acceptance.

Management

3. Acceptance
• Standard forms:
• A PO may be an offer to buy. The supplier may accept by using a standard
acknowledgement form.
• If the supplier makes an offer, the PO becomes the form of acceptance.
• If the purchaser issued an RFP or RFQ, the proposal or quotation becomes an
offer.
• Where the parties have reached an oral agreement, either the PO or
acknowledgement may be used to confirm the oral agreement.
II. Consideration
• Second to the offer and acceptance process, consideration is the
next step. A promise can only be enforceable if it is made in
exchange for a consideration. Only then can there be a legal
significance to a contract.
• Past consideration - acts or promises occurring in the past - is not
sufficient to support a current contract because there is no bargain
to current benefit.

Management
II. Consideration
• Nor can a pre-existing duty be sufficient to support a current
contract. A party who is duty bound to perform a certain task
cannot make an enforceable promise to do the same thing in
exchange for additional consideration.
• Consideration need not always be financial or other material value.
III. Lawful Purpose

• For a contract to be legal, it is necessary that the subject matter of
the agreement be legal.
• An agreement to force competition out of the market cannot be
enforceable as it violates anti-trust laws.
• Likewise, a contract to dispose wastes with non-DENR approved
company cannot be enforce as it violates environmental rules.

Management

IV. Competent Parties
• There are 3 main areas in which contracting parties must be legally competent:
• Age - 18 years of age
• Mental capacity - sound mind at the time of entering into a contract
• Authority - as determined by Agency Laws, as determined between principal and
agent.
• Lacking in any of the above areas of competency does not render the contract void
but it can be voided by the non-competent party. In other words, that party can choose
whether to perform under the contract or to enforce its non-competence.
Module II
Law on Agency

Management
Law on Agency
One of the key legal concepts the buyer must understand is the
concept of agency. An agent is an individual who is appointed by
another person or legal entity, such as a corporation, to act on the
entity’s behalf in transactions with third parties. In the purchasing
context, an agent is given authority to attend to the business of
purchasing in accordance with the employer’s instructions.
Authority of Agents
1. Actual Authority - the statement from the employer, oral or

written, which tells the buyer what he or she has authority to do.
This could be a job description or peso limit of purchase authority.
2. Implied Authority – besides express authority received from
an employer, the law provides an agent with legal rights and power
to carry out the purposes for that which was appointed.

Management
Authority of Agents
3. Apparent Authority – If an individual acts in such a way as to

lead a reasonable outsider to believe that the individual has
agency authority, an organization may be bound by the individual’s
contract, even if it exceeds the individual’s express authority
because the supplier will not normally be aware of the agent’s
limits of authority.
Duties of an Agent
1. Loyalty
2. Obedience to the instruction of the employer
3. Perform with reasonable care
4. Provide an accounting to the employer
5. Informs the employer
6. Confidentiality

Management
Authority of the Purchasing Officer
The Law of Agency

• Having established this agency relationship by virtue of the position of the
Purchasing officer, he has to know that the law accords certain obligations.
Chapter 2 of the Law on Agency deals with Obligations of an Agent. Some of
the provisions are:
• Art 1884 - The agent is bound by his acceptance to carry out and is liable for
the damage which, through his non-performance, the principal may suffer.
• This also reminds the Purchasing officer that dealing with unauthorized sales
representatives poses a certain risk to the efficacy of the purchasing
contracts he has entered into.
Authority of the Purchasing Officer
The Law of Agency

• Dealing with suppliers:
1. Chances are, purchasing officers will also be dealing with agents known as
representatives of the supplier.
2. He who deals with agents has the responsibility of ascertaining the scope of the
authority of the agent
3. Regardless of the actual extent of his authority, the law has taken the position
that the average sales representative has very limited authority to enter into any
binding contract.
4. There are 2 ways of dealing with this:
• Obtain an authorization letter from suppliers’ top management stating the full authority
to negotiate contracts
• Obtain written proposals to you to do business with them

Management
Other Laws affecting Purchasing
• Aside from Agency Laws and Contract Laws, other laws affecting
purchasing function include those from Intellectual Property rights,
Anti-trust and Environmental laws.
Intellectual Property:
• This refers to intangible personal property such as, copy rights,
patents, trademarks, etc. Each of these have commercial value that
the government seeks to protect in various ways. The purpose in
protecting is to encourage authors and inventors with economic
incentives.
Patents - In the US, there are four types of patents:

* Utility - for machines and manufacture goods
* Design - for new and original and ornamental features
* Plant - for asexually reproduced new and distinct variety of plants

Management
Patents in the Philippines

• Patent Law (RA 165) has a different purpose: to give knowledge to
the government of what will become public when the terms expires
(17 years of ordinary and 25 years if it is considered as useful in
converting native produce for dollar earning business); to give
instructions to licensee on how to make use of the invention and to
give in information to other inventors as to what part of field of
invention is vacant. Patented item must be new and must be useful.
• Copyrights - provides protection for original works of authorship that have

been fixed in tangible form such as writing on paper, computer programs, etc.
• Trademarks and service marks - works, names, and symbols that are adopted
and used to identify goods or services and to distinguish them from others.
• Trade secrets and other proprietary information - valuable information that
when disclosed to competition, can damage its owner. These are protected by
signing non-disclosure agreements. When suppliers are asked to perform
design works involving trade secrets, it may be appropriate to pay for the
proposal itself (as distinguished from the final product) so the buyer will own
the design itself and be free to use it.

Management
Validity of Intellectual Property Rights (under U.S. Law)
• Patent – life of patent is 20 years from registration.

• Copyright – life of author plus 75 years or if work for hire – 95
years from publication and 120 years from creation whichever is
shorter
• Trademark – 10 years renewable every 10 years.
Other Laws affecting Contracting

Environmental Law
• Various legislations are in force.
• Concerns with the minimization and management of waste, handling transport
and disposal of hazardous wastes, toxic materials.
• Aside from the above, Purchasing’s responsibility includes applying their skills
in selecting products and services that comply with environmental regulations;
identification of substitutes or alternatives to toxic and hazardous materials.
• Under the impracticability rule, there is no breach of contract when contract
cannot be performed if non-performance is due to new environmental rules.

Management
Environmental Laws and Regulations
a. Republic Act 9003 – Ecological Solid Waste

Management Act of 2000 – an act providing for an
ecological solid waste management program, creating the
necessary institutional mechanisms and incentives declaring
certain acts prohibited and providing penalties, appropriating
funds and for other purposes.
b. Republic Act 8749 – The Philippine Clean Air Act of 1999

– an act formulating a holistic national program of air
pollution management that shall be implemented by the
government through proper delegation and effective
coordination of function and activities.

Management
c. Republic Act 6969 – Toxic and Hazardous and Nuclear

Waste Control Act of 1990 – an act to control toxic
substances and hazardous and nuclear wastes providing
penalties for violations thereof, and for other purposes.
d. Republic Act 3931 – National Water and Air Pollution

Commission Act – an act creating the national water and
air pollution control commission.

Management
Case Exercises
on
The Law on Agency

Principles Sources of Law and Law On Agency-1

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Principles Sources of Law and Law On Agency-1

Uploaded by

Copyright:

Available Formats

Legal Aspects in Procurement and Contract Mr. Ramon R. Guevara, C.P.M.

Legal Aspects in Procurement and

RAMON R. GUEVARA, C.P.M., DSM

• Former faculty member of Mapua Institute of Technology.

Ateneo Center for Continuing Education 1

1. Define and understand the various legal systems affecting

Ateneo Center for Continuing Education 2

4. Understand the issues relating to preparing a contract and

Ateneo Center for Continuing Education 3

10.Define and understand the factors that would avoid contract

Ateneo Center for Continuing Education 4

The daily activities of the purchasing professional are subject to

When a purchasing officer buys materials and services from

Ateneo Center for Continuing Education 5

A legal knowledge of relevant legal principles is essential to a

Sources of Law in the Philippines

Ateneo Center for Continuing Education 6

Origin of Laws: US context

• The legal system is referred to as the federal system

Knowing the Various Different Legal

Ateneo Center for Continuing Education 7

Different Legal Systems

The Common Law System – is a system that is

Different legal systems

The Common Law countries:

Australia, New Zealand, Israel

The wording of the contract determines:

¨ the contractual obligations

Ateneo Center for Continuing Education 8

Different Legal Systems

Different legal systems

¨ Latin America, Quebec and State of Louisiana

¨ Northern Africa, Middle East, Turkey, Iran, Afghanistan

¨ China, Japan and Korea

Ateneo Center for Continuing Education 9

Different Legal Systems

Different legal systems

The Muslim Law countries:

In many cases, Civil or Common law traditions have an influence as well

Ateneo Center for Continuing Education 10

How Are Contracts Enforced In Different Legal Systems

• A contract is a document that specifies the conditions under which an

How Are Contracts Enforced In Different Legal Systems

• Many countries have ratified the United Nations Convention on

Ateneo Center for Continuing Education 11

Consequences of different systems

• The parties have to consciously select which law should apply - if

• Neither party may have a full understanding of what is intended

• Risk for misinterpretations

• This may lead to misunderstandings and if a disagreement

• This is why you need the common background of an

Ateneo Center for Continuing Education 12

Selecting the applicable law:

In international trade as well as domestic trade, the sales contract

Ateneo Center for Continuing Education 13

Art. 1305 Definition of Contract

• A promise or a set of promises for the breach of which the

Ateneo Center for Continuing Education 14

Four Elements of a Contract

Art. 1305 Definition of Contract

• Philippine law recognizes 3 distinct stages of a contract:

Ateneo Center for Continuing Education 15

1. Express or implied contracts: