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A contract arises when the parties agree that there is an agreement. Formation of a
contract generally requires an offer, acceptance, consideration, and a mutual intent to
be bound. Each party to a contract must have capacity to enter the agreement. Minors,
intoxicated persons, and those under a mental affliction may have insufficient capacity
to enter a contract. Some types of contracts may require formalities, such as a
memorialization in writing.
A contract is a legally binding or valid agreement between two parties. The law will
consider a contract to be valid if the agreement contains all of the following elements:
An agreement that lacks one or more of the elements listed above is not a valid
contract.
Contracts
See also: Contract
Quasi-contracts
Subject matter
6. Article 1322.An offer made through an agent isaccepted from the time acceptanceis
communicated to him. (n)
7. Article 1323.An offer becomes ineffective upon thedeath, civil interdiction, insanity,
orinsolvency of either party beforeacceptance is conveyed. (n)
8. Article 1324.When the offerer has allowed the offereea certain period to accept, the
offer maybe withdrawn at any time beforeacceptance by communicating
suchwithdrawal, except when the option isfounded upon a consideration, assomething
paid or promised. (n)
12. Article 1328.Contracts entered into during alucid interval are valid. Contractsagreed
to in a state ofdrunkenness or during a hypnoticspell are voidable. (n)
15. Article 1331.In order that mistake may invalidateconsent, it should refer to the
substance ofthe thing which is the object of the contract,or to those conditions which
have principallymoved one or both parties to enter into thecontract.Mistake as to the
identity or qualifications ofone of the parties will vitiate consent onlywhen such identity
or qualifications havebeen the principal cause of the contract.A simple mistake of
account shall give rise toits correction. (1266a)
16. Article 1332.When one of the parties is unable toread, or if the contract is in
alanguage not understood by him, andmistake or fraud is alleged, the personenforcing
the contract must show thatthe terms thereof have been fullyexplained to the former. (n)
17. Article 1333.There is no mistake if the partyalleging it knew the doubt,contingency or
risk affecting the objectof the contract. (n)
18. Article 1334.Mutual error as to the legal effect ofan agreement when the real
purposeof the parties is frustrated, may vitiateconsent. (n)
23. Article 1339.Failure to disclose facts, whenthere is a duty to reveal them, aswhen
the parties are bound byconfidential relations, constitutesfraud. (n)
24. Article 1340.The usual exaggerations in trade,when the other party had
anopportunity to know the facts, arenot in themselves fraudulent. (n)
25. Article 1341.A mere expression of an opinion doesnot signify fraud, unless made by
anexpert and the other party has relied onthe formers special knowledge. (n)
27. Article 1343.Misrepresentation made in good faith isnot fraudulent but may
constituteerror. (n)
28. Article 1344.In order that fraud may make acontract voidable, it should be
seriousand should not have been employed byboth contracting parties.Incidental fraud
only obliges theperson employing it to pay damages.(1270)
29. Article 1345.Simulation of a contract may beabsolute or relative. The former
takesplace when the parties do not intend tobe bound at all; the latter, when theparties
conceal their true agreement. (n)
The law of obligations is one branch of private law under the civil law legal system and
so-called "mixed" legal systems. It is the body of rules that organizes and regulates the
rights and duties arising between individuals. The specific rights and duties are referred
to as obligations, and this area of law deals with their creation, effects, and extinction.
An obligation is a legal bond (vinculum iuris) by which one or more parties (obligants)
are bound to act or refrain from acting. An obligation thus imposes on the obligor a duty
to perform, and simultaneously creates a corresponding right to demand performance
by the obligee to whom performance is to be tendered. Obligations may be civil, which
are enforceable by action in a court of law, or natural, which imply moral duties but are
unenforceable unless the obligor consents.
Sources of obligation
Obligations arising out of the will of the parties are called voluntary, and those imposed
by operation of law are called involuntary. Sometimes these are called conventional and
obediential. The events giving rise to obligations may be further distinguished into
specified categories.
voluntary:
contract
quasi-contract
negotiorum gestio - duty to repay someone (gestor) who has
managed the affairs or property of another who was unable
involuntary:
.5. Document must not refer to a simple unconditional donation inter vivos or to wills
or to a contract where real agreement is void.
These defective contracts are arranged, presented, and regulated (Articles 1380
to 1422) in ascending order of defectiveness.
The classification has been done with a not inconsiderable amount of effort and an
attempt at thoroughness. Thus, each of these defective contracts has its own requisites
and consequences. Ideally, one would suppose, the distinctions should serve as water-
tight compartments. For the most part but not always they have functioned well in
the jurisprudence that has been laid down in the six-and-a-half decades since the
effectivity of the Code.
A rescissible contract is one, which, though possessing all the essential
requisites of contracts, has caused a particular economic damage either to one of the
contracting parties or to a third person.
A voidable contract is one in which the consent of one party is defective, either
because of want of capacity, or because consent is vitiated.
A void contract is one which suffers from absence of object or cause and is
therefore an absolute nullity and produces no effect.
A party can rescind a contract when the other party fails to comply with his legal
obligation. This is done through judicial rescission (in court).
Applicable provision:
Art. 1191 of the Civil Code. The power to rescind obligations is implied in reciprocal
ones, in case one of the obligors should not comply with what is incumbent upon him.
The injured party may choose between the fulfillment and the rescission of the
obligation, with the payment of damages in either case. He may also seek rescission,
even after he has chosen fulfillment, if the latter should become impossible.
The court shall decree the rescission claimed, unless there be just cause authorizing
the fixing of a period.
This is understood to be without prejudice to the rights of third persons who have
acquired the thing, in accordance with articles 1385 and 1388 and the Mortgage Law.
The Supreme Court had the occasion to decide that judicial rescission was proper in a
case where the owner of a construction project sought to rescind its construction
contract plus damages.
The Supreme Court explained: Article 1191, is not predicated on economic prejudice to
one of the, parties but on breach of faith by one of them that violates the reciprocity
between them. and affirmed the lower courts decision in favor of the respondents.
2. The person who falsely represented has no basis in fact for believing in its truth
3. The false representation was intentionally made to convince another of its "truth"
5. The other party who relied on the misrepresentation suffered harm as a result
CASES OF FRAUD
When it comes to fraudulent activity, it can happen through a variety of mediums and
affect a wide range of individuals and corporations. It may come through mail, phone or
wire, but perhaps the most common is internet fraud. Due to the accessibility of the
internet and all of its facets, deceptive users can much more easily discover ways to
steal people's credit card information, take over identities or divert innocent people to
misleading websites. They can do all of this with clicks of a button, all while keeping
their own identity a secret.
Other instances may occur where fraud is much more blatant, especially in relation to
business contracts. When a business partner performs a breach of contract, they are
breaking a binding agreement that was set forth by both partners before entering into
business with one another. If certain actions were promised that resulted in causing
another business or individual to join into contract and then they never followed through,
it could be a matter of fraudulent inducement. In such cases, it may be difficult to prove
that the other had set forth certain promises unless they were in formal writing. A
qualified business law attorney may be able to help create a solid case to defend
businesses that has been wronged by dishonest businesses breaching their formal
contracts.
M.E LAWS
(RESEARCH)
LAW ON OBLIGATION AND
CONTRACTS
Submitted to:
Submitted by: Tesara,Thadeo D.