#5 OBLIGATIONS AND CONTRACTS

Law

Rule of conduct, just, obligatory and laid down by a legitimate power for common observance and benefit

Divine Law

Law based on religion and faith

Natural Law

Law based on morality and equity

Moral Law

Law based on norms of good conduct in a specific community (influences of society)

Physical Law

Law based on the laws of physical science

Private Law

Law which regulates the relations of the members of a community with each other

Public Law

Law that governs the relations of an individual with the State

Substantive Law

Law that establishes rights as well as duties of an individual

Procedural Law

also known as Adjective Law that lays down the procedure by which rights or claims may be enforced

Sources of Law

Constitution, Legislation, Administrative rules and regulations, Judicial decisions (jurisprudence), Custom and other supplementary sources

Ignorantia Legis Neminem Excusat

Ignorance of the law shall excuse no one

Civil Obligations

Gives right of action to compel their performance

Natural Obligations

Based on equity and natural law, does not grant a right of action to enforce performance merges with moral obligations

Active Subject

The one who can compel compliance with the obligation

Passive Subject

The one compelled to comply

Juridical or Legal Tie

Also known as efficient cause; that which binds the parties or connects the parties to the obligation

Prestation

An object or undertaking of the obligation or that which is to be given, to be done or not to be done

Contractual Obligations

Terms and conditions stipulated in the contract shall have the force of law and are binding upon the parties. Any contracting party who violates a valid contract may be sued to comply with the same or may be asked to pay damages to the aggrieved party.

Contract

An agreement that is effective, juridically speaking, to give rise to a civil obligation

Fraud

Dolo; intentional non-performance of obligation; deception. An intent to evade the normal fulfilment of the obligation

Incidental Fraud / Dolo Incidente

Fraud incident to the performance of an obligation. Does not take affect the validity of the contract and renders the guilty party liable for damages.

Causal Fraud / Dolo Causante

Fraud used by one of the parties to a contract in securing the consent of the other party. Renders contracts voidable / subject to annulment.

Negligence or Culpa

Carelessness or lack of diligence. Shows bad faith and considered equivalent to fraud.

Contractual Negligence / Culpa Contractual

There is a pre-existing obligation / contract and there is fault in carrying out such

Civil Negligence / Culpa Aquiliana

Negligence becomes source of obligation in itself without a pre-existing contract

Delay / Mora

Where there is failure in performance of an obligation on time constituting a breach

Mora Solvendi

Delay on the part of the debtor to fulfill his obligation

Mora Accipiendi

Delay on the part of the creditor to accept the performance of the obligation

Compensation Morae

Delay of obligor in reciprocal obligations. The delay of the creditor neutralizes the delay of the debtor and vice versa. Contract is the considered extinguished.

Acts of Man / Fortuitous Event

Where there is human intervention, war, fire, robbery, invasion.

Acts of God / Force Majeure

Totally independent of will of any human being, earthquake, flood, hurricane, lightning strike, volcano eruption.

Payment

Delivery of money and performance of an obligation in a manner other than delivery of money.

Contract

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

Consensuality

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.

Relativity

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

Obligatory Force

Obligations arising from contracts have the force of law between the contracting parties and should be complied with in good faith.

Mutuality

The contract must bind both contracting parties; its validity or compliance cannot be left to the will of one of them

Autonomy

The contracting parties may establish such stipulations, clauses, terms and conditions as they may deem convenient

Preparation or Generation

The negotiations stage of the contract leading to a definite agreement

Perfection or Birth

When there has been a meeting of minds with respect to subject matter and cause of the contract

Consummation or Termination

The extinction of the contract by the performance of the obligation created by it.

Consensual Contract

Consent of the parties / Object certain / Cause of the obligation

Real Contract

Consent of the parties / Object certain / Cause of the obligation / Delivery

Solemn Contract

Consent of the parties / Object certain / Cause of the obligation / Observance of the required formality

Consent

The conformity of wills, and with reference to contracts, it is the agreement of the will of one contracting party with that of another or others, upon the object and terms of the contract.

Offer

A proposal to enter into a contract

Acceptance

The manifestation by the offeree of his agreement to the terms of the offer

Mistake

An unconscious ignorance or forgetfulness of the existence or non-existence of a fact, past or present material to the contract.

Violence

When in order to wrest consent, serious or irresistible for is employed

Intimidation

When one of the contracting parties is compelled by a reasonable and well-grounded fear of an imminent and grace upon his person or property

Undue Influence

When a person takes improper advantage over the will of another, depriving the latter of a reasonable freedom of choice

Fraud

When insidious words or machinations of one of the contracting parties, the other is induced to enter into a contract, which without them, he would not have agreed to

Cause

The essential or more proximate purpose why a party assumes an obligation

Reformation

Remedy by which a written instrument is corrected when it fails to express the actual intent of both parties because of fraud, accident, or mistake

Rescission

A remedy whereby a contract is canceled and the parties are returned to the positions they occupied before the contract was made.

Rescissible Contracts

Those which have caused a particular economic damage either to one of the parties or to a 3rd person and which may be set aside even if valid.

Voidable Contracts

A valid contract but one that can be avoided at the option of one or both of the parties such as, where one of the parties is incapable of giving consent to the contract or where the consent is vitiated by mistake, violence intimidation, undue influence

Unenforceable Contract

A contract in which the essential elements to create a valid contract are met but there is some legal defense to the enforcement of the contract such as, contracts entered into on behalf of another without authority or legal representation, contracts that violates the Statute of Frauds and where both parties are incapable of giving consent.

Void Contracts

A contract having no legal force or binding effect.