A. What is a Contract?
It 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.
B. What are the basic principles or characteristics of a Contract?
1. Autonomy. Freedom(or liberty) to Stipulate(provided not contrary to law, morals, good customs, public order, or public policy). Art 1306
No law impairing the obligation of contracts shall be passed. (Art III Sec 10 of 1987 Philippine Constitution)
2. Obligatory Force and Compliance in Good Faith.
a. Obligations arising from contracts have the force of law between the contracting parties and should be complied with in good faith.(Art 1159)
b. Contract 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 the consequences which, according to their nature, may be in keeping with good faith, usage and law.(Art 1315)
3. Mutuality. The contract must bind both contracting parties; its validity or compliance cannot be left to the will of one of them.(Art 1308)
Non-binding as to Third Parties. The determination of the performance may be left to a third person, whose decision SHALL NOT BE BINDING until it has made known to both contracting parties(Art 1309)
The determination shall not be obligatory if it is evidently inequitable. In such case, the courts shall decide what is equitable under the circumstances. (Art 1310)
Enforceability. No one may contract into the name of another without being authorized by the latter, or unless he has by law a right to represent him. Art 1317.(Authorized and unathorized representation)
A contract entered into in the name of another by one who has no authority or legal representation, or who has acted beyond his powers, shall be unenforceable, unless is is ratified expressly or impliedly, by the person on whose behalf it has been executed, before it is revoked by the other contracting party.Art 1317. (when enforceable or not)
4. Relativity(Generally, it is binding only between the parties, their assigns, and heirs)
Privity:Exceptions. Contracts 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 heir is not liable beyond the value of the property he received from the decedent.(Art 1311,1)
Stipulation Pour Autrui. 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 a clearly and deliberately conferred a favor upon a third person.(Art 1311, 2)
Contracts creating real right. 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 the Mortage Law and the Land Registration Laws. (Art 1312)
Contracts in Fraud of Creditors. Creditor are protected are protected in case of contracts intended to defraud them(Art 1313), and those contracts undertaken in fraud of creditors when the latter cannot in any manner collect the claims due them are considered rescissible contracts(Art 1381,3)
Note: Rescission is a remedy granted by law to the contracting parties both to secure reparation of damages caused by them by a contract, even if the contract be valid, by means of the restoration of things to their condition prior to the celebration of said contract.
Tortious Interference. Any person who induces another to violate his contract shall be liable for damages to the other contracting party.(Art 1314)
Collective Contract.
C. What are the stages in the execution of a Contract?
1. Preparation(or Conception of Generacion)- Here the parties are progressing with their negotiations; they have not yet arrived arrived at any definite agreement, although there may have been a preliminary offer and bargaining.
2. Perfection(of birth)- Here the parties have at long last came to a definite agreement, the elements of subject matter and valid cause have been accepted by mutual consent.
3. Consummation(or death or termination)-Here the terms of the contract are performed, and the contract may be said to have been fully executed.
D. What are the elements of contract?
1. Essential elements- ex: consent, subject matter, cause or consideration
- without them a contract cannot exist
2. Natural elements- ex: warranty against eviction, hidden defects in the contract of sale.
- those found in certain contracts, and presumed to exist, unless the contrary has been stipulated.
3. Accidental elemenst- ex: stipulation to pay credit, interest; the designation of the particular place for delivery of payment
- these are the various particular stipulations that may be agreed upon by the contracting parties. They may be present or absent, depending upon whether or not the parties have agreed upon them.
E. How are contracts perfected?
1. By mere consent in consensual contract
2. By delivery in real contracts
3. By putting in writing in formal or solemn contracts
Note: To be a written contract, all its terms must be in writing, so that a contract partly in writing and partly oral is, in legal effect, an oral contract.
It 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.
B. What are the basic principles or characteristics of a Contract?
1. Autonomy. Freedom(or liberty) to Stipulate(provided not contrary to law, morals, good customs, public order, or public policy). Art 1306
No law impairing the obligation of contracts shall be passed. (Art III Sec 10 of 1987 Philippine Constitution)
2. Obligatory Force and Compliance in Good Faith.
a. Obligations arising from contracts have the force of law between the contracting parties and should be complied with in good faith.(Art 1159)
b. Contract 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 the consequences which, according to their nature, may be in keeping with good faith, usage and law.(Art 1315)
3. Mutuality. The contract must bind both contracting parties; its validity or compliance cannot be left to the will of one of them.(Art 1308)
Non-binding as to Third Parties. The determination of the performance may be left to a third person, whose decision SHALL NOT BE BINDING until it has made known to both contracting parties(Art 1309)
The determination shall not be obligatory if it is evidently inequitable. In such case, the courts shall decide what is equitable under the circumstances. (Art 1310)
Enforceability. No one may contract into the name of another without being authorized by the latter, or unless he has by law a right to represent him. Art 1317.(Authorized and unathorized representation)
A contract entered into in the name of another by one who has no authority or legal representation, or who has acted beyond his powers, shall be unenforceable, unless is is ratified expressly or impliedly, by the person on whose behalf it has been executed, before it is revoked by the other contracting party.Art 1317. (when enforceable or not)
4. Relativity(Generally, it is binding only between the parties, their assigns, and heirs)
Privity:Exceptions. Contracts 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 heir is not liable beyond the value of the property he received from the decedent.(Art 1311,1)
Stipulation Pour Autrui. 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 a clearly and deliberately conferred a favor upon a third person.(Art 1311, 2)
Contracts creating real right. 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 the Mortage Law and the Land Registration Laws. (Art 1312)
Contracts in Fraud of Creditors. Creditor are protected are protected in case of contracts intended to defraud them(Art 1313), and those contracts undertaken in fraud of creditors when the latter cannot in any manner collect the claims due them are considered rescissible contracts(Art 1381,3)
Note: Rescission is a remedy granted by law to the contracting parties both to secure reparation of damages caused by them by a contract, even if the contract be valid, by means of the restoration of things to their condition prior to the celebration of said contract.
Tortious Interference. Any person who induces another to violate his contract shall be liable for damages to the other contracting party.(Art 1314)
Collective Contract.
C. What are the stages in the execution of a Contract?
1. Preparation(or Conception of Generacion)- Here the parties are progressing with their negotiations; they have not yet arrived arrived at any definite agreement, although there may have been a preliminary offer and bargaining.
2. Perfection(of birth)- Here the parties have at long last came to a definite agreement, the elements of subject matter and valid cause have been accepted by mutual consent.
3. Consummation(or death or termination)-Here the terms of the contract are performed, and the contract may be said to have been fully executed.
D. What are the elements of contract?
1. Essential elements- ex: consent, subject matter, cause or consideration
- without them a contract cannot exist
2. Natural elements- ex: warranty against eviction, hidden defects in the contract of sale.
- those found in certain contracts, and presumed to exist, unless the contrary has been stipulated.
3. Accidental elemenst- ex: stipulation to pay credit, interest; the designation of the particular place for delivery of payment
- these are the various particular stipulations that may be agreed upon by the contracting parties. They may be present or absent, depending upon whether or not the parties have agreed upon them.
E. How are contracts perfected?
1. By mere consent in consensual contract
2. By delivery in real contracts
3. By putting in writing in formal or solemn contracts
Note: To be a written contract, all its terms must be in writing, so that a contract partly in writing and partly oral is, in legal effect, an oral contract.
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