Title II.

CONTRACTS2

Chapter I. Introduction
I. Concept and Definition (Art. 1305)

II. Classification of Contracts

A. According to subject matter: things or services
B. According to name: nominate and innominate contracts (Art. 1307)
C. According to perfection: by mere consent (Art. 1315) or by delivery of object (Art. 1316)
D. According to its relation to other contracts: preparatory, principal, or accessory
E. According to form: formal or informal
F. According to purpose
G. According to nature of legal tie created: unilateral, bilateral, reciprocal
H. According to cause: onerous or gratuitous
I. According to risk: commutative or aleatory
III. Characteristics
A. Obligatory Force between the parties (Art. 1308)
a. General Rule: Freedom to contract (Art. 1306)
b. Exceptions:
ii. When it is inequitable (Art. 1310)
iii. Special disqualifications
a. Art. 87, Family Code
b. Art. 1490 and 1491
c. Art. 1782
iv. What may not be stipulated
a. Contrary to Law
i. Pactum commisorium (Art. 2088)
ii. Pactum leonina (Art. 1799)
iii. Pactum de non alieanado (Art. 2130)
b. Contrary to morals
c. Contrary to good customs
d. Contrary to public order
e. Contrary to public policy
b. Effect of contract as to third parties
i. Performance may be determined by third parties (Art. 1309)
ii. When possession of the object of the contract is with a third person (Art.
1312)
iii. Creditors of contracting parties (Art. 1313, 1177, 1381)
iv. Interference by third parties
B. Mutuality (Art. 1308 to 1310; 1473)
C. Relativity or Privity of contracts (Art. 1311)
c. Contracts take effect only between their parties, their assigns, and heirs
d. No one may contract in the name of another (Art. 1317)
e. Stipulations in favor of third persons (Art. 1311, par. 2)

Chapter II. Essential Requisites of Contracts

I. Consent: Requisites (Art. 1319)
A. Perfection of contract: offer and acceptance
a. Offer
i. Must be certain (Art. 1319)
ii. What may be fixed by the offeror (Art. 1321)
iii. When made through an agent (Art. 1322)
iv. When offer becomes ineffective (Art. 1323)

2 Title II is based on Atty. Mary Rose Tan’s outline.

 v. Business advertisements of things for sale (Art. 1325)
vi. Advertisements for bidders (Art. 1326)
b. Acceptance
i. Must be absolute (Art. 1319)
ii. Kinds: express (Art. 1320), implied (Art. 1320), qualified (Art. 1319)
iii. Period of acceptance (Art. 1324)
iv. Option contract (Art. 1324)
c. Termination of Offer
d. Perfection of contract
i. Manifestation theory
ii. Expedition theory
iii. Reception theory
iv. Cognition theory (Art. 1319 [2])
B. Legal Capacity of the Parties
a. Minors, insane or demented persons, and deaf-mutes who do not know how to
write (Art. 1327)
b. When offer or acceptance is made during a lucid interval, intoxication, during
hypnotic spell (Art. 1328)
c. Corporations (Sec. 23 and 36, Corporation Code)
C. Vices of Consent: Consent must be intelligent, free, spontaneous, and real (Art. 1330-
1346)
a. Mistake or error
i. Mistake of fact
a. As to substance of the object
b. As to principal conditions
c. As to identity or qualifications of the parties
d. As to quantity, as distinguished from simple mistake of account
ii. Mistake of error or law
a. General Rule: Ignorance of the law excuses no one (Art. 3)
b. Exception: Mutual error of law (Art. 1334)
iii. Mistake when one party is unable to read (Art. 1332)
iv. Inexcusable mistake (Art. 1333)
b. Violence or intimidation (Art. 1335)
c. Undue influence (Art. 1337)
d. Fraud or dolo (Art. 1338)
i. Kinds:
a. Dolo causante (Art. 1338) and
b. Dolo incidente (Art. 1344 [2])
ii. Failure to disclose facts when there is a duty to reveal them (Art. 1339)
iii. Usual exaggerations in trade: opportunity to know the facts (Art. 1340)
iv. Mere expression of opinion (Art. 1341); Effects (Art. 1344)
a. As to identity or qualifications of the parties
b. As to quantity, as distinguished from simple mistake of account
e. Misrepresentation
i. By a third person (Art. 1342)
ii. Made in good faith (Art. 1343)
iii. Active or passive
D. Simulation of contracts
a. Kinds: Absolute and relative (Art. 1345)
b. Effects (Art. 1346)

II. Object
A. Must be determinate as to its kind (Art. 1379)
B. What may NOT be objects of contracts (Art. 1347
III. Cause
A. Meaning of Cause (Art. 1350)
a. In onerous contracts
b. In remuneratory contracts
c. In contracts of pure beneficence
B. Distinguished from motive (Art. 1351)
C. Presumption: Existence and Lawfulness of Cause (Art. 1354)
D. Defective Causes and Effects:
a. Absence of cause or unlawful cause (Art. 1352)
b. Statement of false cause
c. In onerous contracts
 All things outside the commerce of man
a. All intransmissible rights
b. Those services which are contrary to law, morals, good customs, public order, or public policy
c. Future inheritance, except when authorized by law
d. Impossible things or services (Art. 1348)
A. Meaning of Cause (Art. 1350)
a. In onerous contracts
b. In remuneratory contracts
c. In contracts of pure beneficence
B. Distinguished from motive (Art. 1351)
C. Presumption: Existence and Lawfulness of Cause (Art. 1354)
D. Defective Causes and Effects:
a. Absence of cause or unlawful cause (Art. 1352)
b. Statement of false cause
c. In onerous contracts