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CONTRACTS

I.

Definition

Art. 1305
A contract is a meeting of minds between two persons whereby one binds himself,
with respect to the other, to give something or to render some service.

Meeting of minds

If a contract is called an adhesive contract- it means only one party prepares the
same; you do not participate in the creation of the contract
Aleatory contracts
Remunatory contracts remuneration of service
Auto contracts - self contract
II.
Principles:
Freedom to stipulate
Art 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.

Mutuality of contract
Art 1309 The determination of the performance may be left to a third
person, whose decision shall not be binding until it has been made known to
both contracting parties.

Relativity/Privity of contract
Art 1311 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.
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.
-

Stipulation por atrui

Art 1314 Any third person who induces another to violate his contract shall
be liable for damages to the other contracting party.

Consensuality of contract
Art 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 the consequences which, according to their nature,
may be in keeping with good faith, usage and law.
Exceptions:
Real contracts Art. 1316 Real contracts, such as deposit, pledge and
commodatum, are not perfected until the delivery of the object of the obligation.
III.

So what if the contract is not perfected?


Once the contract is deemed perfected, rights and obligations are thereby
created.
What happen to consummation stage?
Requisites of Contract

Art. 1318 There is no contract unless the following requisites concur:


1) Consent of the contracting parties;
2) Object certain witch is the subject matter of the contract;
3) Cause of the obligation which is established.
A. Consent
Art. 1319 Consent is manifested by the meeting of the offer and the acceptance
upon the thing and the cause of which are to constitute the contract. The offer must
be certain and the acceptance absolute. A qualified acceptance constitutes a
counter-offer.
Acceptance made by letter or telegram does not bind the offerer except from
the time it came to his knowledge. The contract, in such a case, is presumed to
have been entered into in the place where the offer was made.
Art. 1327
Art. 1328
Art. 1330
Vices of consent:
-

Makes the contract voidable.

Art. 1331 In order that mistake may invalidate consent, it should refer to the
substance of the thing which is the object of the contract, or to those conditions
which have principally moved one or both parties to enter into the contract.
Mistake as to the identity or qualification of one of the parties will vitiate
consent only when such identity or qualifications have been the principal cause of
the contract.
A simple mistake of account shall give rise to its correction.

Art. 1335 There is violence when in order to wrest consent, serious or irresistible
force employed.
There is intimidation when one of the contracting parties is compelled by a
reasonable and well-grounded fear of an imminent and grave evil upon his person
or property, or upon the person or property of his spouse, descendants or
ascendants, to give his consent.
To determine the degree of the intimidation, the age, sex and condition of the
person shall be borne in mind.
A threat to enforce ones claim through competent authority, if the claim is
just or legal, does not vitiate consent.
Art. 1336 Violence or intimidation shall annul the obligation, although it may have
been employed by a third person who did not take part on the contract.
Art. 1337
Art. 1338
Absence of consent, makes the contract void.
B. Objects
Art. 1347
C. Causes
Art. 1350
Art. 1956
IV.

Forms

Art. 1356
V.

Reformation

Art. 1359
VI.
Defective Contracts
A. Rescisible Contracts
Art. 1380
B. Voidable Contracts
Art. 1390
C. Unenforceable Contracts absence of authority; cured by waiver
Art. 1403
D. Void Contracts
Art. 1409
-Difference of a void and non-existent contract:
Void contract has all the requisites of a contract but is contrary to law, morals,
customs, public order or public policy.

Non-existent contract lacks or has no requisites of a contract.


-What is the effect of ratification?
-Simulated contract is void.
-Partially simulated contract is not necessarily a void contract as long as it does not
affect third person and is not contra bones mores.
-inadequacy of price does not automatically makes the contract void.
Art. 1433
Art. 1424
-natural obligation
Art. 1425
Art. 1426
Art. 1431
TRUST
Art. 1440