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BM1707

ESSENTIAL REQUISITES OF CONTRACTS

Requisites that must concur for a contract to exist


1. Consent of the contracting parties
2. Object certain which is the subject of the contract
3. Cause of the obligation which is established
Consent
• It is the conformity or concurrence of wills; and with regard to contracts, it is the agreement of the will
of one contracting party with that of another upon the object and terms of the contract.
• There must be a certain and seriously intended offer, that is, a proposal indicating willingness to enter
into a contract, from one of the parties and the other party accepts the said offer, a proposal indicating
willingness to enter into a contract, from one of the parties and the other party accepts the said offer.
• It is present when the acceptance of the other party of the first party’s offer is absolute or until both
parties unconditionally agree on a certain ultimate offer.
• Acceptance must be made before the offer becomes ineffective, that is, before the withdrawal of the
offer by the offeror or before the death, civil interdiction, insanity, or insolvency of either party.
o Option contract - where the offeror gives the offeree for a consideration a certain period within
which to accept the offer.
o Option period - the period within which the offeree must accept the offer.
o Option money - the money paid or promised to be paid in consideration for the option.
• Consent must be given freely and may NOT be given by the following persons due to their propensity
to be victims of fraud as they are not capable of understanding or knowing the nature or import of
their actions:
o unemancipated minors
o insane or demented persons
o deaf-mutes who do not know how to write
• The following persons are likewise incapacitated to give consent:
a. persons suffering the accessory penalty of civil interdiction
b. hospitalized lepers
c. prodigals
d. deaf and dumb who are unable to read and write
e. those who are of unsound mind even though they have lucid intervals
f. those who, by reason of age, disease, weak mind and other similar causes, cannot without outside
aid, take care of themselves and manage their property, becoming thereby an easy prey for deceit
and exploitation
Characteristics of Consent
a. intelligent, which means that there is presence of capacity to act
b. free and voluntary, meaning, there is no vitiation of consent by reason of violence or intimidation
c. conspicuous or spontaneous

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Object Certain
• It is the subject matter of the contract.
• It may be things, rights, or services.
For a thing to be an object certain, the following requisites must be present:
1. The thing must be within the commerce of men.
2. It must not be impossible, legally or physically.
3. It must be in existence or capable of coming into existence.
4. It must be determinate or determinable without the need of a new contract between the
parties.
For a service to be an object certain, the following requisites must be present:
1. The service must be within the commerce of men.
2. It must not be impossible, physically or legally i.e. prostitution, killing a person, etc.
3. It must be determinate or capable of being made determinate.

• Rights are generally transmissible except for some rights that are intransmissible by their nature, by
stipulation, or by the provision of law.
• Future inheritance is not one of those rights that are transmissible; it consists of any property or right,
not in existence or capable of determination at the time of the contract, that a person may inherit.
• Future inheritance may not generally be an object of a contract as it is neither determinate nor
determinable, at the least, since inheritance can only be determined upon the death of the decedent.
However, that the rule does not apply in the following cases:
o In the case of donations by reason of marriage between spouses with respect to their
future property to take effect, only in the event of death, to the extent laid down by law
in testamentary succession
o In the case of partition of property by act inter vivos by a person to take effect upon his
death
Cause of Contracts
• It is the essential reason or purpose which the contracting parties have in view at the time of entering
into the contract. It is something bargained for or given by a party in exchange for a legally enforceable
promise of another.
• In a reciprocal contract, i.e. contract of sale, the cause for one is the object for the other.

Requisites that must be present for a cause to exist


1. It must exist at the time the contract is entered.
2. It must be lawful.
3. It must be true or real.
Classifications of Contracts According to Cause
1. Contracts may be onerous or one the cause of which, for each contracting party is the prestation
or promise of a thing or service by the other. Examples: contracts of sale, lease, and partnership

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2. Contracts may also be remuneratory or remunerative or one the cause of which is the service or
benefit which is remunerated. Example: the services rendered by a surgeon where his patient
agreed to pay P500,000
3. Contracts may be gratuitous or one the cause of which is the liberality of the benefactor or giver.
Examples: commodatum, pure donation, guaranty, and suretyship
Cause vs. Motive
1. The cause refers to the direct reason for the contract while motive refers to its indirect reason.
2. The cause is always known to the other contracting party while motive need not be known to the
other party.
3. Cause is an essential element of the contract, but motive is not.
4. When the cause is illegal, the contract becomes invalid. But when motive is illegal, the validity of
the contract is not affected.
Cause Motive
Immediate or direct reason Remote or indirect reason
Always known to the other contracting party May be unknown to the other party
Essential element of a contract Not an essential element of a contract
Its illegality affects the validity of the contract Its illegality does not render the contract void

Lesion or inadequacy of cause will invalidate a contract when there has been fraud, mistake, or undue
influence and in cases specified by law:
• Article. 1381 (1). Those which are entered into by guardians whenever the wards whom they
represent suffer lesion by more than 1/4 of the value of the things which are the object
thereof.
• Article 1381 (2). Those agreed upon in representation of absentees, if the latter suffer the
lesion stated in the preceding number.
• Article 1398. A partition judicial or extra-judicial, may also be rescinded on account of lesion
when anyone of the co-heirs received things whose value is less, by at least 1/4, than the share
to which he is entitled, considering the value of the things at the time they were adjudicated.
• Article 1470. Gross inadequacy of price does not affect a contract of sale, except as it may
indicate a defect in the consent, or that the parties really intended a donation or some other
act or contract.

Limitations on Contractual Stipulations


• The freedom to enter into a contract is guaranteed by the Constitution. However, the Constitution
does not confer upon us an absolute right to enter into a contract.
• The right to enter into a contract is limited by law since it is a fundamental requirement that the
contract entered into must be in accordance with, and not repugnant to, an applicable statute.
• The right to enter into a contract is limited by police power since the State may exercise of police
power when the contract contravenes the limitation of morals, good customs, public order, or
public policy.

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References
Civil Code of the Philippines
De Leon, H. S. & De Leon Jr., H. M. (2014). The law on obligations and contracts. Philippines: Rex Book
Store.
Paras, E. (2016). Civil code of the Philippines annotated prescription; obligations and contracts article
1106-1457. Philippines: Rex Book Store.
Pineda, E. (2009). Obligations and contracts. Philippines: Central Book Supply, Inc.

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