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What are the elements of a contract?

Classifications of contracts according to subject

1. Essential Elements
2. Natural Elements 1. contract involving things
3. Accidental Elements 2. contract involving rights
3. contract involving service
Classifications of contracts according to
perfection or formation Classifications of contracts according to
obligations imposed or regarded by law
1. Consensual
2. Real 1. Ordinary
3. Formal or Solemn 2. Institutional

Classifications of contracts according to cause Classifications of contracts according to

or equivalence of prestations evidence required for its proof

1. Onerous 1. requiring merely oral or parol evidence

2. Gratuitous 2. requiring written proof
3. Remunerative
Classifications of contracts according to
Classifications of contracts according to number of persons actually and physically
importance or dependence of one upon entering into contract
1. Ordinary
1. Principal 2. Auto-contracts
2. Accessory
Classifications of contracts according to
3. Preparatory
number of persons who participated in
Classifications of contracts according to name drafting of contract
or designation
1. Ordinary
1. Nominate 2. Contract of Adhesion
2. Innominate
Classifications of contracts according to nature
Classifications of contracts according to parties of contract
1. Personal
1. Unilateral 2. Impersonal
2. Bilateral
Stages of a Contract
Classifications of contracts according to risk of
1. Preparation or Generacion or
1. Commutative 2. Perfection or Birth
2. Aleatory 3. Consummation or Death or Termination

Classifications of contracts according to time of Basic Principles or Characteristics of a Contract

performance or fulfillment
1. Relativity
1. Executed 2. Obligatory Force and compliance in
2. Executory good faith
3. Mutuality Cases when the contract is binding only to
4. Autonomy parties
5. Consensuality
• Rights and obligations arising from the
Limitations of Nature of Stipulations contracts are not transmissible by
1. Nature
1. Law
2. Stipulation
2. Morals
3. Law
3. Good customs
4. Public Order Exception to Principle of Relativity (3rd person
5. Public policy may be affected)
How are innominate contracts regulated? 1. Stipulations Pour Autrui
2. When a 3rd person induces a party to
1. Stipulation of the parties
violate contract 3 Third persons who
2. General provisions of the Civil Code on
come into possession of the object of
Obligations and Contracts
the contract creating real right 4
3. Rules governing the most analogous
Contracts entered into to defraud
nominate contracts
creditors 5 Third persons are adversely
4. Customs of the place
affected by a contract where they did
Kinds of Innominate contracts not participate

1. Do ut des Requisites of Stipulations pour Autrui

2. Do ut facias
1. The stipulation must be a part and not
3. Facio ut des
the whole of a contract
4. Facio ut facias
2. The contracting parties must have
Mutuality states that contract cannot have any clearly and deliberately conferred the
stipulation authorizing one of the parties to: favor upon a 3rd person, not a mere
incidental benefit or interest
1. determine whether or not the contract 3. The 3rd person must have
shall be valid
communicated his acceptance to the
2. determine whether or not the
obligor before its revocation
suspensive condition shall be fulfilled 4. The favorable stipulation should not be
Consequences of mutality conditioned or compensated by any
kind of obligation whatever
1. A party cannot revoke or renounce a 5. Neither of the contracting parties bears
contract without the consent of the the legal representative or
other, nor can it be set aside on the authorization of the third person
ground of bad bargain
2. The conditional obligation is void if the Requisites when a 3rd person is affected by
condition is suspensive potestative inducing a party to violate the contract

Contracts take effect only between the… 1. Existence of a valid contract

2. Knowledge of contract by 3rd person
1. Parties 3. Interference by a 3rd person without
2. their assigns legal justification or excuse
3. Heirs
Consequences or effects of perfection 1. If there is no consent, there's no
contract. Agreement is non-existent or
1. Parties are bound to the fulfillment of
what has been expressly stipulated and
2. If there is vice of consent, contract is
compliance thereof must be in good
not void. It's merely voidable.
2. Parties are bound also to all the Requisites of Consent
consequences which according to their
1. Legal capacity of the contracting parties
nature, may be in keeping with good
2. Manifestation of the conformity of the
faith, usage and law.
contracting parties
Samples of Real Contracts 3. The parties' conformity to the object,
cause, terms and conditions of the
1. Deposit
contract must be intelligent,
2. Pledge
spontaneous and free from all vices of
3. Commodatum
Requisites of a Real Contract 4. The said conformity must be real and
not simulated or fictitious
1. Consent
2. Object or subject matter Requisites for the Meeting of the Minds
3. Cause or consideration
1. An offer that must be certain
4. Delivery
2. An acceptance that must be absolute
Requisites for a Person to contract in the name and unqualified
of another
Forms of acceptance
1. He must be duly authorized
1. Express
2. He must have, by law, a right to
2. Implied
represent him
3. presumed (by law) as when there is
3. The contract must be subsequently
failure to repudiate hereditary rights
within the period fixed by law
II. Essential Requisites of Contracts
Things that may be fixed by the offerer
Essential Requisites of Contracts
1. time
• Consensual: 2. place
1. Consent 3. manner of acceptance
2. Object or subject matter
9 Instances when the offer becomes ineffective
3. Cause or consideration
• Real Contract: 1. Death
1. Delivery Solemn Contract 4 2. Civil Interdiction
Compliance w/ the formalities 3. Insanity
required by law 4. Insolvency
5. Others
Effect of non-consent A. When the offeree expressly or
impliedly rejects the offer
B. When the offer is accepted with a 6. Married minors can validly alienate or
qualification or condition encumber personal property without
C. When before the acceptance is parental consent , but in case of real
communicated, the subject matter property or borrowing money, they
has become illegal or impossible need parental consent; otherwise, it's
D. When the period of time given to voidable.
the offeree within which he must
What is the effect of misrepresentatrion of age
signify his acceptance has already
of minor?
E. When the offer was revoked in due Misrepresentation shall bind them in the sense
time (before offeror learned that they are estopped subsequently from
acceptance) impugning the validity of the contract on the
ground of minority. It is necessary that the
Persons incapacitated to give consent
misrepresentation must be ACTIVE, not merely
1. Unemancipated minors constructive.
2. Insane or demented persons
Contracts entered into by reason of incapacity
3. Deaf-mutes who do not know how to
are entered into by:
read and write
1. Insane or demented persons, unless
2 classes of voidable contract
acted during lucid interval
1. Those where 1 party is uncapacitated to 2. Those in state of drunkeness
give consent 3. Those entered into dujring a hypnotic
2. Those where the consent of one party spell
has been vitiated
Incompetents under the Rules of Court
A minor can be emancipated by
1. Those under Civil interdiction
1. attainment of the age majority (18) Hospitalized lepers Prodigals Deaf-
2. marriage mutes
3. concession recorded in civil register by 2. Those of unsound mind even though
the father or mother they have lucid intervals
3. Those who cannot take care of
Exceptions when minors can give consent
themselves & manage their property
1. Contracts where the minor is estopped without outside aid.
to raise minority as a defense through
Vices of consent
his own misrepresentation
2. Contracts of necessaries 1. Violence
3. Contracts by guardians or legal 2. Intimidation
representatives 3. Mistake
4. Voluntary fulfillment of a natural 4. Fraud
obligation provided that a minor is 5. Undue influence
between 18-21 y/o
Characteristics of consent
5. Contracts of life, health or accident
insurance taken on life of minor 1. It is intelligent
2. It is free and voluntary
3. It is conscious and spontaneous 1. There must be a mutual error
2. The error must refer to the legal effect
Defects of Intelligence
of the agreement
1. Mistake 3. The real purpose of the parties is
2. Fraud frustrated.

Defects of Will Requisites for Violence to vitiate consent

1. Violence 1. Employment of a serios and irresistible

2. Intimidation force
3. Undue influence 2. It must have been the reason why the
contract was entered into
Requisites for mistake to vitiate consent
Requisites for Intimidation to vitiate consent
• The error must be substantial regarding
the 1 Reasonable and well-grounded fear 2 The evil
1. object of the contract, must be imminent and grave 3 The evil must be
2. the conditions which principally upon his person or propery, or upon the person
moved or induced one of the or property of his spouse, decendants or
parties and ascendants. 4 It is the reason why he enters into
3. identity or qualifications but only if the contract 5 The threat must be of an unjust
such was the principal cause of the act, an actionable wrong.
Circumstances to be considered for undue
• The error must be excusable, not influence to vitiate consent
caused by negligence 3 The error must
be a mistake of fact and not of law 1. the confidential, family, spiritual and
other relations between the parties, or
Mistakes of fact that does not vitiate consent 2. the fact that the person alleged to have
1. Error as regards the incidents of a thing been unduly influenced was suffering
or accidental qualities not taken as from mental weakness, or
principal consideration of contract 3. the person alleged to have been unduly
2. Mistake as to quantity or amount only influenced was ignorant or;
gives rise to correction, unless it’s the 4. the person alleged to have been unduly
essence of the contract influenced was in financial distress.
3. Error as regards the motives unless it's Requisites for undue influence to vitiate
the cause of the contract consent
4. Error as regards the identity or
qualifications of a party, except if it's 1. Improper advantage
the cause of the contract 2. Power over the will of another
5. Error which could have been avoided by 3. Deprivation of the latter's will of
the party alleging it, or which refers to a reasonable freedom of choice.
fact known to him or which should have
kinds of Fraud
1. Dolo Causante / causal fraud
Requisites for mutual error on legal effect to
2. Dolo Incidente / incidental fraud
vitiate consent
Requisites of Dolo Causante A. if the contract prejudices a third
1. Fraud must be material and serious,
B. if the purpose is contrary to law,
that is, it induced consent.
morals, good customs, public policy
2. Fraud must have been employed by
and public order
only one of the parties bec if both
committed fraud, the contract would Rules on Complex Offers
remain valid.
1. If offers are interrelated, contract is
3. There must be a deliberate intent to
perfected if ALL the offers are accepted
deceive or to induce. A
2. If offers are not interrelated, single
misrepresentation in good faith is not
acceptance of each offer results in
perfected contract unless the offeror
4. the other party must have relied on the
has made it clear that one is dependent
untrue statement and must himself not
upon the other and acceptance of both
be guilty of negligence in asserting the
is necessary.
Requisites of a valid object of a contract
Requisites of Opinion to amount to fraud
1. It must be within the commerce of man
1. Opinion was made by an expert
2. It must be licit or not contrary to law,
2. Other party has relied on the expert's
morals, good customs, public policy and
formal knowledge
public order
3. Opinion turned out false or erroneous
3. It must be possible
Fraud or Misrepresentation of 3rd person does 4. It must be determinate as to its kind
not make a contract voidable unless in these 5. It must be transmissible
Things which cannot be the object of the
1. it created a substantial mistake contract
2. the mistake is mutual. Here, contract
1. Things which are outside the commerce
may be annulled on ground of mistake.
of man
Requisites for Simulation 2. Intransmissible rights
3. Future inheritance, except in cases
1. An outward declaration of will different
expressly authorized by law
from the will of the parties
4. Services which are contrary to law,
2. The false appearance must have been
morals, good customs, public policy and
intended by mutual agreement
public order 5 Impossible things or
3. The purpose is to deceive 3rd persons
Kinds of Simulated Contracts and effects 5. Objects which are not possible of
determination as to their kind
1. Absolutely simulated (simulados)
fictitious contracts - void Exceptions when future inheritance can be the
2. Relatively simulated (disimulados) object of contract
disguised contracts - binds the parties
1. In cases of marriage settlements
to their real or true agreement except --
2. In case of partitions of property inter
vivos by the deceased
Kinds of impossibility 1. Together with lesion, there's fraud,
mistake or undue influence
1. Physical
2. Cases expressly provided by law:
2. Legal For services,
A. Entered into by guardians whenever
A. Absolute or Objectively Impossible
the wards they represent suffer
(act cannot be done)
lesion by more than 1/4 of the
B. Relative or Subjectively Impossible
value of the thing which is the
(arises from special circumstances)
Motive distinguished from Cause B. Agreed in representation of
absentees if the latter suffer lesion
1. The motive of a person may vary by more than 1/4 of the value of
although he enters into the same kind the thing which is the object
of contract, the cause is always the C. Partition among co-heirs, when
same anyone of them received things
2. The motive may be unknown to the with a value less by at least 1/4
other; the cause is always known than the share to which he is
3. Presence of motive cannot cure entitled
absence of cause. Cause is essential.
4. Cause is the immediate or direct Effect of absence of cause
reason; motive is the remote or indirect
• the contract confers no right and
produces no legal effect
5. illegal cause makes a contract void, an
illegal motive does not necessarily Effect of failure of cause
render the transaction void (though if
the motive in selling is to defraud a • does not render the contract void
creditor,the creditor may rescind) Effect of Illegality of cause
Requisites of Cause • The contract is null and void
1. It must be present at the time the Effect of falsity of cause
contract was entered into
2. It must be true • the contract is void, unless the parties
3. It must be lawful or licit show that there is another cause which
is true and lawful
Effects if the cause is illegal
Effect of lesion
1. If one party is innocent, he cannot be
compelled to perform his obligation and • does not invalidate the contract, unless
he may recover what he has already (a) there is fraud, mistake or undue
given influence; or (b) when the parties
2. If both parties are guilty, in general, intended a donation or some other
neither can sue the other, the law contract
leaving them as they are. Certain
III. Form of Contracts
exemptions exists.
When Form is important
Exceptions to general rule in lesion
1. For validity
2. For enforceability (under Statute of those of the conjugal partnership of
Frauds) gains;
3. For convenience 3. The power to administer property, or
any other power which has for its object
Samples of Formal Contracts
an act appearing or which should
1. Donations of Real Property req. public appear in a public document, or should
instrument prejudice a third person;
2. Donations of Personal Property req. 4. The cession of actions or rights
written contract or document if proceeding from an act appearing in a
donation exceeds Php5,000 public document.
3. Stipulations to pay interests on loans
All other contracts where the amount involved
must be in writing
exceeds five hundred pesos must appear in
4. Transfer of large cattle req. transfer of
writing, even a private one. But sales of goods,
cert. of registration
chattels or things in action are governed by
5. Sale of Land thru an agent. The
Articles 1403, No. 2 and 1405.
authority of the agent must be in
writing. IV. Reformation of Instruments
6. Contracts of Antichresis (principal loan
Requisites of Reformation of Instruments
and interest must be in writing,
otherwise, contract of antichresis is 1. meeting of the minds to the contract
void) 2. true intention is not expressed in the
instrument by reason of mistake,
Exception to general rule of Form of Contract
accident, relative simulation, fraud, or
1. When the law requires that a contract inequitable conduct
be in some form in order that it may be 3. clear and convincing proof of mistake,
valid (solemn) accident, relative simulation, fraud, or
2. When the law requires that a contract inequitable conduct
be in some form in order that it may be 4. It must be brought within the proper
enforceable (SoF) prescriptive period

Contracts that must appear in a public Instances when there can be no reformation:
document (for convenience. Oral agreement is
1. Simple unconditional donations inter vivos; 2.
still valid and binding between parties, not not
Wills; 3. When the agreement is void 4. When
against 3rd persons until registered. Formal
one of the parties has brought an action to
req. benefit third parties)
enforce the instrument, no subsequent
1. Acts and contracts which have for their reformation can be asked. (on basis of estoppel,
object the creation, transmission, waiver or ratification)
modification or extinguishment of real
Necessary to justify reformation of written
rights over immovable property; sales
instruments on ground of mistake
of real property or of an interest therein
are governed by Articles 1403 (SoF), No. 1. Mistake should be of fact
2, and 1405; 2. Proved by clear and convincing
2. The cession, repudiation or evidence
renunciation of hereditary rights or of 3. Common to both parties
4. Must cause failure to express true 8. The interpretation of obscure words or
intentions stipulations in a contract shall not favor
the party who caused the obscurity.
V. Interpretation of Contracts
9. When it is absolutely impossible to
Rules on Interpretation of Contracts settle doubts by the rules established in
the preceding articles, and the doubts
1. If the terms of a contract are clear and refer to incidental circumstances of a
leave no doubt upon the intention of gratuitous contract, the least
the contracting parties, the literal transmission of rights and interests shall
meaning of its stipulations shall control. prevail. If the contract is onerous, the
If the words appear to be contrary to doubt shall be settled in favor of the
the evident intention of the parties, the greatest reciprocity of interests. If the
latter shall prevail over the former. doubts are cast upon the principal
2. In order to judge the intention of the object of the contract in such a way that
contracting parties, their it cannot be known what may have
contemporaneous and subsequent acts been the intention or will of the parties,
shall be principally considered. the contract shall be null and void.
3. However general the terms of a 10. The principles of interpretation stated
contract may be, they shall NOT be in Rule 130 of the Rules of Court shall
understood to comprehend things that likewise be observed in the construction
are distinct and cases that are different of contracts.
from those upon which the parties
intended to agree. VI. REFER TO NOTES p129-152
4. If some stipulation of any contract
Defective Contracts
should admit of several meanings, it
shall be understood as bearing that 1. Void
import which is most adequate to 2. Voidable
render it effectual. 3. Rescissible
5. The various stipulations of a contract 4. Unenforceable
shall be interpreted together,
Compare Void, Voidable, Rescissible and
attributing to the doubtful ones that
Unenforceable Contract
sense which may result from all of them
taken jointly. 1. Cause of defect
6. Words which may have different 2. Legal effect
significations shall be understood in 3. Presciption
that which is most in keeping with the 4. Cure by prescription
nature and object of the contract. (if 5. Ratification
can't be determined, use primary and 6. Who can assail
general acceptation) 7. Method of assailment
7. The usage or custom of the place shall
be borne in mind in the interpretation What contracts are rescissible
of the ambiguities of a contract, and 1. those entered into by guardians where
shall fill the omission of stipulations the ward suffers lesion of more than ¼
which are ordinarily established.
of the value of the things which are 3. Sale upon credit by an insolvent debtor;
objects thereof; 4. Evidence of indebtedness or complete
2. those agreed upon in representation of insolvency
absentees, if the latter suffer lesion by 5. Transfer of all his property by a debtor
more than ¼ of the value of the things when he is financially embarrassed or
which are subject thereof; insolvent;
3. those undertaken in fraud of creditors 6. Transfer made between father & son,
when the latter cannot in any manner where there is present any of the above
claim what are due them; circumstances
4. those which refer to things under 7. Failure of the vendee to take exclusive
litigation if they have been entered into possession of all the property
by the defendant without the
Rescission in Article 1191
knowledge and approval of the litigants
and the court; 1. It is a principal action retaliatory in
5. all other contracts especially declared character.
by law to be subject to rescission; and 2. The only ground is non-performance of
6. payments made in a state of one’s obligation/s or what is incumbent
insolvency on account of obligations not upon him.
yet enforceable 3. It applies only to reciprocal obligation
4. Only a party to the contract may
Requisites of Rescission
demand fulfillment or seek the
1. the contract must be rescissible rescission of the contract.
2. the party asking for rescission must 5. Court may fix a period or grant
have no other legal meansb to obtain extension of time for the fulfillment of
reparation for the damages suffered by the obligation.
him 6. Its purpose is to cancel the contract.
3. the person demanding rescission must
Rescission Proper in Article 1381
be able to return whatever he may be
obliged to restore if rescission is 1. It is a subsidiary remedy.
granted 2. There are 5 grounds to rescind. Non-
4. the things w/c are the object ofthe performance by the other party is not
contract must not have passed legally important.
to the possession of a 3rd person acting 3. It applies to both unilateral and
in good faith reciprocal obligations.
5. the action for rescission must be 4. Even a 3rd person who is prejudiced by
brought w/in the prescriptive period of the contract may demand the rescission
4 years of the contract.
5. Court cannot grant extension of time
Badges of Fraud
for fulfillment of the obligation.
1. Consideration of the conveyance is 6. Its purpose is to seek reparation for the
inadequate or fictitious; damage or injury caused, thus allowing
2. Transfer was made by a debtor after a partial rescission of the contract.
suit has been begun and while it is
What are voidable contracts
pending against him;
1. Those where one of the parties is 1. Agreements not to be performed within
incapable of giving consent to a one year from the making thereof;
contract 2. Special promise to answer for the debt,
2. Those where the consent is vitiated by default or miscarriage of another;
mistake, violence, intimidation, undue NOTE: This does not refer to the original
influence or fraud or independent promise of the debtor
to his own creditor. It refers rather to a
Causes of extinction of action to annul
collateral promise.
1. Prescription 3. Agreement in consideration of marriage
2. Ratification other than a mutual promise to marry;
3. By loss of the thing which is the object 4. Agreement for the sale of goods, etc. at
of the contract through fraud or fault of a price not less than P500.00;
the person who is entitled to annul the 5. Contracts of lease for a period longer
contract. than one year;
6. Agreements for the sale of real property
Requisites to avoid Presciption or interest therein; and
• the action must be commenced within 4 7. Representation as to the credit of a
years from: a. the time the incapacity third person.
ends; b. the time the violence, Ratification of contracts in violation of the
intimidation or undue influence ends; Statute of Frauds
or c. the time the mistake or fraud is
discovered. 1. Failure to object to the presentation of
oral evidence to prove such contracts
Requisites of Ratification to extinct action for 2. Acceptance of benefits under these
annulment contracts
1. there must be knowledge of the reason What contracts are void
which renders the contract voidable
2. such reason must have ceased and 1. Those whose cause, object or purpose
3. the injured party must have executed is contrary to law, morals good
an act which expressly or impliedly customs, public order or public policy;
conveys an intention to waive his right 2. Those whose object is outside the
commerce of men;
What contracts are unenforceable 3. Those which contemplate an impossible
1. those entered into in the name of service;
another by one without or acting in 4. Those where the intention of the
excess of authority; parties relative to the principal object of
2. those where both parties are incapable the contract cannot be ascertained; and
of giving consent; and 5. Those expressly prohibited or declared
3. those which do not comply with the void by law.
Statute of Frauds What contracts are inexistent
Agreements within the scope of the Statute of 1. Those which are absolutely simulated or
Frauds fictitious; and
2. Those whose cause or object did not 2. Executory Contracts - Neither of the
exist at the time of the transaction. contracting parties can demand for the
fulfillment of any obligation from the
Exceptions to Principle of Pari Delicto
contract nor may be compelled to
1. Payment of usurious interest comply with such obligation
2. Payment of money or delivery of
VII. Natural Obligations
property for an illegal purpose, where
the party who paid or delivered Examples of natural obligations enumerated
repudiates the contract before the under the Civil Code:
purpose has been accomplished, or
1. Performance after the civil obligation
before any damage has been caused to
has prescribed;
a 3rd person.
2. Reimbursement of a third person for a
3. Payment of money or delivery of
debt that has prescribed;
property made by an incapacitated
3. Restitution by minor after annulment of
4. Agreement or contract which is not
4. Delivery by minor of money or fungible
illegal per se & the prohibition is
thing in fulfillment of obligation;
designed for the protection of the
5. Performance after action to enforce
civil obligation has failed;
5. Payment of any amount in excess of the
6. Payment by heir of debt exceeding
maximum price of any article or
value of property inherited; and
commodity fixed by law or regulation by
7. Payment of legacy after will have been
competent authority.
declared void.
6. Contract whereby a laborer undertakes
to work longer than the maximum # of VIII. Estoppel
hours fixed by law.
7. Contract whereby a laborer accepts a Kinds of Estoppel
wage lower than the minimum wage 1. Estoppel in Pais (by conduct)
fixed by law. A. Estoppel by silence
8. One who lost in gambling because of B. Estoppel by acceptance of benefits
fraudulent schemes practiced on him is 2. Technical Estoppel (impedimento
allowed to recover his losses [(Art. 315, técnico)
3 (b), RPC] even if gambling is a A. Estoppel by deed
prohibited one. B. Estoppel by record
Rules when only one of the parties is at fault: C. Estoppel by judgment
D. Estoppel by laches
1. Executed Contracts:
A. Guilty party is barred from Elements of Laches
recovering what he has given to the 1. Conduct on part of the defendant, or of
other party by reason of the one under whom he claims, giving rise
contract. to the situation of which complaint is
B. Innocent party may demand for the made and for which the complaint
return for the return of what he has seeks a remedy
2. Delay in asserting the complainant’s
rights, the complainant having
knowledge or notice, of the defendant’s
conduct and having been afforded the
opportunity to institute a suit
3. Lack of knowledge or notice on the part
of the defendant that the complainant
would assert the right on which he
bases his suit
4. Injury to the defendant in the event
relief is accorded to the complainant, or
the suit in not held to be barred

Differentiate Laches and Prescription

1. concerned with effect of delay
2. question of inequity of permitting
the claim to be enforced
3. not statutory
4. applies in equity
5. not based on a fixed time
1. concerned with fact of delay
2. question or matter of time
3. statutory
4. applies at law
5. based on a fixed