1305 – Contract is a meeting of the mind between two parties whereby one binds

himself, with respect to the other, to give something or to render some service.
Concept of contract - In its derivative sense, the word contract (cum traho) simply
means an agreement or convention.
Convention – is broad enough to include any kind of agreement which may create,
modify or extinguish patrimonial or even family relations.
Agreement – limited exclusively to those agreements which produce patrimonial
obligations.
Convention is genus while contract is specie
Distinguished from other terms (essential differences)
In the first place, the principal source of the rights and obligations of the parties in
contracts is their agreement while in the other juridical conventions, it is the law itself.
In the second place, rights and obligations arising from contracts are concrete, limited
and transitory, while those arising from juridical conventions are more or less elastic,
absolute and permanent.
Distinction of Ordinary contract and contract of marriage
As to the parties
Ordinary contract – the parties may be two or more persons of the same or of different
sexes
Contract of marriage – parties must be one man and one woman
As to the nature
Ordinary contract – consequences and incidents of the contract are governed primarily
by agreement of the parties.
Contract of marriage – consequences and incidents of the marriage are governed by
law.
As to the execution
Once the contract is executes the result is a contract, once marriage is celebrated, the
result is a status.
Contract can be terminated or dissolved by mere agreement of the parties while
marriage cannot
In case of breach
The remedy in contract is for the injured party to institute an action against the other
party for damages, while in marriage the remedy for the injured party is to institute a civil
action against the other party for legal separation or criminal action for adultery or
concubinage.
Elements of Contracts
1. Essential – the essential elements are those without which there can be no
contract.

a. Consent of the contracting parties,

b. Object certain which is the subject of the contract, and
c. Cause of the obligation which is established.

2. Natural – the natural elements are those which are derived from the nature of the
contract and ordinarily accompany the same. (contract of sale)

3. Accidental – the accidental elements are those which exist only when the parties
expressly provide for them for the purpose of limiting or modifying the normal
effect of the contract. (Ex. Conditions, terms, and modes)

Parties to a contract
1. when a person, in his capacity as a representative of another, contracts with
himself, and
2. when as a representative of two different persons, he brings about the contract
between his principals by contracting with himself, unless there is a conflict of
interests or when the law expressly prohibits it in specific cases.
Characteristics of Contracts
Four most fundamental characteristics:
a. The obligatory force or character of contracts (1159)
b. The autonomy of contracts (1306)
c. The mutuality of contracts (1308)
d. The relativity of contracts (1311)
The principle of the obligatory force of contracts refers to the rule so fundamental in all
contracts, that once the contract is perfected, it shall be of obligatory force upon both of
the contracting parties.
The principle of the mutuality of contracts, this principle refers to the position of
essential equality that is occupied by both contracting parties in relation to the contract.
The contract must be binding upon both parties its validity or compliance cannot be left
to the will of one of them.
The principle of autonomy of contracts, the contracting parties may establish such
agreement as may deem convenient, provided they are not contrary to law, morals,
good customs, public policy or public order.
The relativity contracts is expressly declared in first para. of Art. 1311. Contracts takes
effects only between the parties, their assign heirs.
Breach of contract – is defined as the failure, without legal reason, to comply with the
terms of the contract.
Life of Contracts has three phases of stage
a. Preliminary of preparation stage (negotiation /bargaining)
b. Perfection stage (birth of the contract)
c. Consummation stage (fulfillment or performance)

Classification of Contracts
According to their relation to other contracts
a. Preparatory
b. Principal
c. Accessory

According to their perfection

a. Consensual
b. Real

According to their form

a. Common or informal
b. Special or formal
According to their purpose
a. Transfer of ownership
b. Conveyance of use
c. Rendition of services
According to their subject matter
a. Things
b. Services
According to the nature of the vinculum which they produced
a. Unilateral
 b. Bilateral
According to their cause
a. Onerous
b. Gratuitous
According to the risks involved
a. Commutative
b. Aleatory
According to their names or norms regulating them
a. Nominate
b. Innominate

1306 – 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.

1307 – innominate contracts shall be regulated by stipulations of the parties

I give that you give – Do ut des
I give that you do – Do ut facias
I do what you give – facio ut des
I give what you do – facio ut facias

1308 – The contract must bind both contracting parties, its validity or compliance cannot
be left to the will of one of them.
1309 – the determination of the performance may be left to a third person, whose
decision shall not be binding until he has been made known to both contracting parties.
1310 – the determination shall not be obligatory if it is evidently inequitable. In such
case, the courts shall decide what is equitable under the circumstances.
1311 – contract take effect only between the parties, their assigns and heirs, except in
case where the rights and obligations arising from the contract are not transmissible by
their nature, or by stipulation or by provision of law. The heirs is not liable beyond the
value of the property he received from the decedent.
If a contract should contain some stipulation in favor of a third person, he may demand
its fulfillment provided he communicated his acceptance to the obligor before its
revocation. A mere incidental benefit or interest of a person is not sufficient. The
contracting parties must have clearly and deliberately conferred a favor upon a third
person.
1312 – In contracts creating real rights, third persons who come into possession of the
object of the contract are bound thereby, subject to the provisions of mortgage law and
the land registration laws.
A real right is a right belonging to a person over a specific thing, without a passive
subject individually determined, against whom such right may be personally enforced.
1313 – creditors are protected in cases of contracts intended to defraud them.
1314 – any third person who induces another to violate his contract shall be liable for
damages to the other contracting party.
1315 – Contracts are perfected by mere consent, and from that moment the parties are
bound not only to the fulfillment of what has been expressly stipulated but also to all
consequences whichm according to their nature, may be in keeping with good faith,
usage and law.
1316 – Real contracts, such as deposit, pledge and commodatum, are not perfected
until the delivery of the object of the obligation.