Contracts

Contracts

Under the Civil Code, a meeting of minds between two persons whereby one binds himself with respect to the other to give something or render some service

Meeting of the Minds

The agreement between the parties that establishes the contract

Parties

The persons involved in establishing the contract

Stipulations

The specific agreements made by the parties in a contract

Clauses

Specific provisions or sections contained in a contract

Terms and Conditions

The agreed provisions that govern the contract

Considerations

Matters or conditions that must not be contrary to law, morals, good customs, public order, and public policy

Requisites of Contracts

Consent, object certain, and cause of the obligation

Consent

It is manifested by the meeting of the offer and the acceptance upon the thing and the cost, which constitute a contract

Offer

A proposal that must be certain

Acceptance

The agreement to the offer, which must be absolute

Capacity to Give Consent

The parties must not be incapacitated, such as minors, insane persons, or those disqualified by law

Intelligent and Free Will

Consent must not be vitiated by mistake, violence, intimidation, undue influence, or fraud

Manifestation of Agreement

Consent must be expressed, usually through an offer and acceptance

Vitiated Consent

Consent affected by mistake, violence, intimidation, undue influence, or fraud

Effect of No Consent

If there is no consent, no contract exists

Voidable Contract Due to Vitiated Consent

A contract where consent is defective because it was given due to fraud, intimidation, mistakes, or other vices of consent

Consent as the Heart of a Contract

Without consent, there is no true agreement

Object Certain

The subject matter of the contract

Object of a Contract

Services that are not contrary to law, morals, good customs, public order, and public policy may be the object of a contract

Determinate Object

The object of every contract must be determinate as to its kind

Indeterminate Quantity

A quantity that is not determinate shall not be an obstacle to the existence of the contract

Cause of the Obligation

The promise of a thing or services by the other, including the services or benefits which is remunerated

False Cause

A false statement of the cause in a contract that shall render the contract void

Unstated Cause

If the cause is not stated in the contract, it is presumed that it exists and is lawful

Form of Contracts

Contracts shall be obligatory in whatever form they may have as long as all essential requisites for validity are present

Rescissible Contracts

Contracts validly entered into by the contracting parties but resulting in economic damage or lesion to one party or a third person

A contract involving property under the custody of the law entered into without the knowledge and approval of the judicial authority having custody of the property

Contracts that are rescissible because they are specially declared by law as such

Voidable Contracts

Contracts where the consent of one party is defective because of incapacity to give consent or because consent is vitiated by mistake, violence, intimidation, undue influence, or fraud

Vices of Consent

Mistake, violence, intimidation, undue influence, and fraud

Unenforceable Contracts

Contracts that cannot be enforced in court because of certain legal reasons

Void and Inexistent Contracts

Contracts that produce no legal effect because they do not exist in the eyes of the law

Special Contracts

Specific contracts such as sales, barter, lease, and agency

Contract of Sale

A contract, whether absolute or conditional, where the parties obligate themselves to transfer ownership and deliver a determinate thing while the other pays a price certain in money or its equivalent

Seller

Vendor

Buyer

Vendee

Vendor

The seller in a contract of sale

Vendee

The buyer in a contract of sale

Legal Redemption

The right to be subrogated, upon the same terms and conditions stipulated in the contract, in the place of one who acquires a thing by purchase

Barter Exchange

A contract where one party binds himself to give one thing in consideration of the other party’s promise to give another thing

Lease

A contract where one party binds himself to give another the enjoyment or use of a thing for a price certain and for a period that may be definite or indefinite

Contract of Lease of Work and Service

A contract where one party binds himself to execute a piece of work or render some service to the other for a price certain, without a principal-agent relationship between them

Agency

A relationship between two parties whereby one party, called the principal, authorizes another, called the agent, to act for and on his behalf in transactions with third persons

Principal

The party who authorizes another person to act for and on his behalf

Agent

The party authorized by the principal to act for and on his behalf in transactions with third persons

Essential Elements of Agency

Consent, agent acting within the scope of authority, execution of a juridical act in relation to a third person, and representation by the agent

Torts and Damages

Whoever acts in a way that causes damage to another, when there is fault or negligence, is obliged to pay for the damage done

Fault or Negligence

A basis for liability when a person causes damage to another