Art. 1317.

No one may contract in the name of another without being authorized by

the latter, or unless he has by law a right to represent him.

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
it is ratified, expressly or impliedly, by the person on whose behalf it has been
executed, before it is revoked by the other contracting party.

UNENFORCEABLE CONTRACTS

To be read in relation to Art. 1403 (full discussion on unenforceable contracts)

General Power of Attorney vs Special Power of Attorney

General Power of Attorney Special Power of Attorney

Acts of Administration Acts of Ownership or Acts of Dominion
(e.g administration of Conjugal or Absolute (e.g. mortgage of the property)
Community Property)

Generally, if one is granted the authority to merely administer a property

(e.g. the guardian administering the property of an unemancipated child
Art. 225 of FC) that will be found as a General Power of Attorney
Specific Power of Attorney - Where the authority granted to an agent is
specific (what is not found is deemed not to be included in the authority) If
the agent exceeds the authority given to him, such as an agent
accepting/receiving the purchase price given to him, the act of receiving is an
ultra vires act

Example:

Suppose X authorized Y to sell the property on cash basis but because Y realized
that if he would sell the property on installment, the principal will be more benefited
because the purchase price will increase by 100%. Even if it were for the benefit of
the principal, but because the authority is limited, this is considered unenforceable.
He went beyond the limits granted to him the Special Power of Attorney.

QUESTION: So what happens to the buyer? What kind of contract Is entered into by
the agent and the buyer?

It is unenforceable. It is not void. It is valid but cannot be enforced through

court action.
If the buyer demands for the delivery of the thing bought, the seller cannot be
compelled by the buyer, through court action to deliver what is incumbent upon the
seller because it was not made in accordance with the authority granted to the
agent.

QUESTION: What if the principal refuses to ratify, what would be the recourse of the
party who entered into a contract with the agent?

The agent can be made liable for damages which would also include the
purchase price plus the interest.

NOTE: An unenforceable contract cannot be cured by prescription. Prescription does

not lie in unenforceable contracts. The only way for removing the unenforceability of
the contract is the ratification of the principal. Once there is ratification it will
retroact to the day of creation of the contract.

Example of ratification which is expressed or implied is when X would demand from

the buyer that balance of the purchase price.

NOTE: Sale is a consensual contract perfected by mere consent. The law does not
require any particular form for its validity. As long as the parties agreed and there
was this consent given then it becomes a perfected contract.

CHAPTER 2

ESSENTIAL REQUISITES OF CONTRACTS

GENERAL PROVISIONS

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

(1) Consent of the contracting parties;

(2) Object certain which is the subject matter of the contract;

(3) Cause of the obligation which is established.

ESSENTIAL REQUISITES OF CONTRACTS

Consent of the contracting parties presupposes legal capacity

o It is the absence of consent that makes the contract void. It is not the
absence of legal capacity. The absence of legal capacity would merely
 render the contract voidable. It is not a ground for declaring the
contract void but only voidable valid until annulled.
Cause of the obligation which is established
o The cause is the why of the contract. The reason why the parties
entered into a contract. The cause is the undertaking that is to be
performed by the other.

SECTION 1. - Consent

Art. 1319. Consent is manifested by the meeting of the offer and the acceptance
upon the thing and the cause 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.

WHERE IS THERE CONSENT

An example of a counter-offer is the lowering of the price.

AMPLIFIED ACCEPTANCE

(Mango Example: buy 1000 kg @ Php 30 and additional 500kg at the same price)

There is a perfected contract in the first because there is no variation in the terms
of the contract and a counter-offer in the second. You call that amplified acceptance

SILENCE

Silence does not authorize any definite conclusion and therefore by itself is
ambiguous

BY TELEPHONE

Deemed that they are present

ACCEPTANCE MADE BY LETTER OR TELEGRAM

The civil law adheres to the Cognition theory that there is no perfection of
the contract even if acceptance is relayed to the employee because the law
requires that it must come to the knowledge of the offerer before the contract
is deemed perfected

THEORIES
 1. Cognition Theory
2. Manifestation theory perfected from the time acceptance is declared even if
it has yet to come to the knowledge of the offeror
3. Expedition Theory from the moment the offeree transmits acceptance likely
must be placed in the mail
4. Reception Theory as soon as the acceptance is in the hands of the offeror
even if he has yet to read the acceptance.

Art. 1320. An acceptance may be express or implied.

NOTE: For a contract to arise, if it is an oral offer, acceptance must be simultaneous

to the offer.

Art. 1321. The person making the offer may fix the time, place, and manner of
acceptance, all of which must be complied with.

Not essential requisite for the perfection of the contract. This merely refers to
the performance of the object of the contract. Performance as to the time of
the payment, place and manner of acceptance.

Art. 1322. An offer made through an agent is accepted from the time acceptance is
communicated to him.

Perfected from the moment it is relayed to the agent because the agent
represents the offeror

Art. 1323. An offer becomes ineffective upon the death, civil interdiction, insanity,
or insolvency of either party before acceptance is conveyed.

This came out in the bar where there was this property donated to Y
(assuming all formalities have been complied with) This was delivered to the
house of Y but Y was unfortunately out of the country. When Y returned, he
immediately accepted the donation and he sent it back together with the
deed of acceptance. But when it was delivered to the house of the donor, the
donor was sick and then he died
o QUESTION: May the donee now demand for the delivery of the
property?
- Use Article 1323. It becomes ineffective by reason of Article
1319, 2nd paragraph, on the acceptance, must come to the
knowledge of the offeror before the contract shall be considered
as having been perfected
Art. 1324. When the offerer has allowed the offeree a certain period to accept, the
offer may be withdrawn at any time before acceptance by communicating such
withdrawal, except when the option is founded upon a consideration, as something
paid or promised.

CONTRACT OF OPTION

- It is a preparatory contract, whereby one party gives the other

party a fixed period and subject to certain conditions to decide
whether or not to enter into a principal contract
CASE - HEIRS OF BACUS vs CA: There was an option given to the lessee to
be exercised prior to the expiration of the lease. They have been given the
right or the privilege because an option contract is merely a privilege whether
or not to buy the property lease.

EXAMPLE:

(HINDI KO TALAGA MAHANAP YUNG

EXAMPLE)

QUESTION: Can X withdraw the offer at anytime before the expiration of the 10-day
period?

ANSWER: YES, by simply communicating the withdrawal because one will be liable
for damages if he sells it to the other without informing the other party. The law
requires communicating the withdrawal.

QUESTION: When may A oppose the withdrawal?

ANSWER: If the option is founded upon a consideration, as something paid or

promised. It might be money or it might be a promise.

QUESTION: What happens if there is a consideration?

ANSWER: The law provides that the offeror cannot withdraw the offer unless the 10-
day period had expired. He will be liable for damages if he would not wait for the
expiration of the period.

QUESTION: Suppose A immediately accepted the offer but _____ to produce the
money, is it still within the contract of option?
ANSWER: NO. it becomes a perfected contract of a promise to buy and sell which is
now reciprocally demandable because there was already acceptance of the offer to
sell therefore it ceases to be a contract of option.

QUESTION: Suppose A would give 10,000 as option money but this will be as an
earnest one? Is there a difference?

ANSWER: Yes. If it is earnest money, it forms part of the purchase price and there is
already a perfected contract. The option money, regardless of how big it is, does not
form part of the purchase price. It will only be for the benefit of the period or the
offeror not to withdraw it unless the period had lapsed.

NOTE: Without the option money, the offeror has the absolute right to withdraw the
offer.

Art. 1325. Unless it appears otherwise, business advertisements of things for sale
are not definite offers, but mere invitations to make an offer.

Sales in mall you can reject offer but when you buy specific things online, you can
no longer withdraw.

Art. 1326. Advertisements for bidders are simply invitations to make proposals, and
the advertiser is not bound to accept the highest or lowest bidder, unless the
contrary appears.

The bidder would merely make an offer and whether it is the highest or
lowest bidder, the one offering it does not have any obligation to accept the
highest or lowest bid. The exception is in judicial sales, where it is to be
awarded to the highest bidder.

Art. 1327. The following cannot give consent to a contract:

(1) Unemancipated minors;

(2) Insane or demented persons, and deaf-mutes who do not know how to write.

Insanity is different from dementia. Dementia is acquired by those who are

already old.
Dementia per se will not render the contract void.
There is no need prior declaration of insanity. It is sufficient that it is existent
at the time the contract was entered into.
Is a lunatic same as an insane? NO. Lunacy is affected by the phases of the
moon.
Art. 1328. Contracts entered into during a lucid interval are valid. Contracts agreed
to in a state of drunkenness or during a hypnotic spell are voidable.

For a contract to be considered annullable by reason of ones drunkenness, it

must be one that it would obscure the judgment or mental faculty of the
party who entered into the contract.
Hypnotism will render the contract voidable.