SAT/SUN - C (QN)

CRITICISMS

• To give something or to render some service

• Where one binds himself

• Two persons

AUTO-CONTRACT

• One person responsible for perfection

• Generally valid if there is at least 2 declaration of wills

ELEMENTS

• Essential: Prescribe by law (COC)

• Natural: Presumed by law

• Accidental: Allowed by law

STAGES

• Negotiation: Preparation/Conception/Generacion

• Perfection: Birth

• Consummation: Death/Termination

FUNDAMENTAL CHARACTERISTICS/PRINCIPLES OF CONTRACTS

[MARCO]

• Mutuality

• Autonomy

• Relativity

• Consensuality

• Obligatory Force

FUNDAMENTAL CHARACTERISTICS/PRINCIPLES OF CONTRACTS: MUTUALITY

• Bind both parties

• Validity/compliance can’t be left to the will of one party

• One party cannot revoke or renounce a contract

• Potestative suspensive condition dependent on sole will of debtor, VOID

• Determination of performance may be left to third person (made known and equitable)

• Escalation clause dependent upon will of one of the parties, VOID

FUNDAMENTAL CHARACTERISTICS/PRINCIPLES OF CONTRACTS: AUTONOMY

• Contrary to law

  • Waiver for future fraud, VOID

  • Partnership (Pactum Leonina): exclude one partner

  • Mortgage/pledge (Pactum Commissorium): creditor appropriates

  • Mortgage/pledge (Pactum de Non Aliendo)

• Contrary to customs

  • Legal separation

  • Refund of tuition fee

  • Prohibition of independent candidacy

  • Noncompete clause

• Contrary to public policy

  • Unconscionable interest rate

  • Promise to live a common law wife

  • Work without pay

FUNDAMENTAL CHARACTERISTICS/PRINCIPLES OF CONTRACTS: RELATIVITY

• Takes affect between parties, assigns, and heirs (transmissible)

• Heirs liable only up to extent of inheritance

• Third parties generally do not have cause of action

FUNDAMENTAL CHARACTERISTICS/PRINCIPLES OF CONTRACTS: CONSENSUALITY

• Consent is necessary for there be a contract

• Entered into by an unauthorized person, UNENFORCEABLE

• Contract of Adhesion: prepared contract

FUNDAMENTAL CHARACTERISTICS/PRINCIPLES OF CONTRACTS: OBLIGATORY FORCE

• Obligation from contract of the force of law

• Must be complied with in good faith

WHEN THIRD PERSON HAVE CAUSE OF ACTION

He may be benefited by contract (Pour Autrui)

• Communicate acceptance to obligor before revocation

• Revocation cannot be done by one party alone

He may be bound by contract

• In contracts creating real rights

• Collective contracts

• Contracts that create a status

Creditor takes action

• Accion Pauliana

  • Creditor rescinds contracts meant to defraud him

• Accion Directa

  • Creditors sues on contract entered into by debtor

May be liable

• Malicious interference by third persons

Void contract affects him

• Declaration of Nullity of Contract

CLASSIFICATION OF CONTRACTS: DEGREE OF DEPENDENCE

• Principal

  • Can stand on its own

• Accessory

  • Cannot stand on its own

• Preparatory

  • Means of achieving an end

CLASSIFICATION OF CONTRACTS: PERFECTION

• Consensual

• Real

  • Deposit

  • Pledge

  • Commodatum

  • Mutuum

• Formal

  • Antichresis

  • Donation

CLASSIFICATION OF CONTRACTS: PURPOSE

• Transfer of ownership

  • Donation

  • Sale

  • Barter

• Conveyance of use

  • Usufruct

  • Lease

  • Loan

• Rendition of service

  • Lease

  • Agency

CLASSIFICATION OF CONTRACTS: PARTIES OBLIGED

• Bilateral

• Unilateral

CLASSIFICATION OF CONTRACTS: CAUSE

• Onerous

  • Sale

  • Barter

  • Lease

  • Simple loan or mutuum

• Gratuitous/Lucrative

  • Donation

  • Commodatum

CLASSIFICATION OF CONTRACTS: EQUIVALENCE OF PRESTATION

• Commutative

  • Real fulfillment

• Aleatory

  • Dependent upon chance

CLASSIFICATION OF CONTRACTS: NAME

• Nominate

  • Sale

  • Commodatum

  • Partnership

  • Agency

  • Deposit

• Innominate

  • Do ut des (I give, you give)

  • Do ut facias (I give you do)

  • Facio ut des (I do, you give)

  • Facio ut facias (I do, you do)

CLASSIFICATION OF CONTRACTS: DEGREE OF EXECUTION

• Executory

  • Not yet performed

• Executed

  • Performed, not covered Statute of Frauds

CLASSIFICATION OF CONTRACTS: SUBJECT MATTER

• Thing

• Right

• Service

ESSENTIAL ELEMENTS

• Consent

• Object

• Cause/Consideration

Other:

• Delivery of Real Contracts

  • Deposit

  • Pledge

  • Commodatum

• Formality for Formal Contracts

  • Simple loan or mutuum

  • Donation of personal property over ₱5,000

  • Donation and acceptance has to be in writing

  • Donation of real property

  • Donation and acceptance in public instrument

CONSENT: REQUISITES TO BE VALID

[FVICS NV]

• Free or Voluntary

• Intelligent

• Conscious and Spontaneous

• Not Vitiated

CONSENT: OFFER AND ACCEPTANCE

• Offer must be certain

• Acceptance must be absolute

• Qualified acceptance, constitutes counteroffer

• Acceptance may be expressed or implied

• Offeror fixes time, place and manner of acceptance

• Upon communication to agent when it applies

CONSENT: WHEN SILENCE MEANS ACCEPTANCE

• Where parties agreed expressly or impliedly

• Where specific provision of law so declares

• Where silence constitutes estoppel

CONSENT: ACCEPTANCE THROUGH TELEGRAM

• Cognition Theory

  • When offeror has knowledge of acceptance

• Manifestation Theory

  • When offeree made the acceptance

CONSENT: INTERVENING EVENTS (OFFER BECOMES INEFFECTIVE)

• Death

• Civil Interdiction

• Insanity

• Insolvency

CONSENT: OPTION AGREEMENT

• Maybe withdrawn before acceptance

• XPN: There is a separate consideration for the offer

CONSENT: ADVERTISEMENT

• Not define but mere invitation to make an offer

SITUATIONS CONCERNING CONSENT

• Both parties gave consent to COC: VALID

• Absolute simulation: VOID (did not intend to be bound)

• Relative simulation: BOUND BY REAL AGREEMENT

• In capacity of one party: VOIDABLE

• In capacity of both parties to give consent: UNENFORCEABLE

• Vitiation of consent

INCAPACITY: KINDS

• Judicial capacity

• Legal capacity

INCAPACITY: ABSOLUTE INCAPACITY

• Cannot give consent to contract: VOIDABLE

  • Unemancipated minors

  • Insane persons

  • Demented persons

  • Determines who do not know how to read and write

  • Drunk or hypnotized

• Incompetent

  • Suffering civil interdiction

  • Hospitalized lepers

  • Prodigals

  • Unsound mind

INCAPACITY: RELATIVE INCAPACITY

• Alien to acquiring private lands

• Husbands and wives to entering contract of sale

VICE OF CONSENT

[VIMFU]

Nature: VOIDABLE

• Violence

• Intimidation

• Mistake

• Fraud

• Undue influence

VOC: VIOLENCE

Employment of serious, irresistible force

VOC: INTIMIDATION

Fear of imminent and grave will

VOC: MISTAKE

• Pertains to object of contract

• Condition is the principal cause

• Identify or qualification of party’s principal cause

• Mutual errors as to legal effect

• Mistakes that does not vitiate consent

  • As to solvency of the other party

  • As to motive

  • As to estimates

VOC: FRAUD

• Insidious words or machinations

• Dolo Causante (causal)

  • Vitiates consent: VOIDABLE

• Dolo Incendente (incidental)

  • Does not vitiate consent: VALID

• Fraud that does not vitiate consent

  • Failure to discuss facts, no duty to reveal

  • Usual exaggerations in trade

  • Mere expression of opinion

  • Misrepresentation of third person

  • Misrepresentation made in good faith

VOC: UNDUE INFLUENCE

Deprivation of reasonable freedom of choice

OBJECT: REQUISITES

• Within the commerce of men

• Transmissible

• Not contrary to LAMOCPOPS

• Not impossible

• Determinate as to its kind

• Determinable without need of new contract

OBJECT: FUTURE THINGS

Allowed to be object of contract

OBJECT: FUTURE INHERITANCE

Not allowed to be object of contract

CAUSE: TYPES

• Onerous

• Gratuitous

• Remuneratory

CAUSE: ACCESSORY CONTRACTS

The cause is that of the principal contract

CAUSE: RULES

• Without cause or unlawful cause: NO EFFECT

• False cause: VOID

• Although not stated, existence is presumed

• Inadequacy of price: NO EFFECT

FORMS OF CONTRACT: GR AND XPN

• GR: No form required

• XPN:

  • Those required for validity

  • Those required for enforceability (Statute of Frauds)

  • Those required for convenience

FORMS OF CONTRACT: FORMAL REQUIREMENTS FOR VALIDITY

• Donation of personal property over ₱5,000

  • Public Instrument

• Donation of real property

  • In writing

• Stipulation to pay interest

  • In writing

• Sale/transfer of large cattle

  • In public instrument, registered, Certificate of Transfer

• Contribution of real property in partnership

  • Inventory attached to public instrument

FORMS OF CONTRACT: STATUTE OF FRAUDS

Unenforceable unless in writing

• 1 year

  • Agreement not to perform within a year

  • Leasing for more than a year

• Sale

  • Personal property of more than ₱500

  • Real property, or interest therein

• Representation or Promise

  • Credit to third person

  • Answer debt, default or miscarriage

  • Of marriage (xpn: mutual promise)

FORMS OF CONTRACT: FORMAL REQUIREMENTS FOR CONVENIENCE (TO BIND THIRD PERSON)

• Public Instrument

  • Real Rights

  • Hereditary Rights

  • Act appearing or should appear in public document

FORMS OF CONTRACT: SPECIFIC FORM REMEDY

Contracting parties may compel each other to observe from perfection

REFORMATION OF INSTRUMENTS: REQUISITES

• Meeting of mind

• Written Instrument

• Written instrument does not reflect true intention of parties

REFORMATION OF INSTRUMENTS: WHEN AVAILED

• Mutual mistake of parties

• One party acted fraudulently/inequitable

• One party was mistaken, and the other believed

REFORMATION OF INSTRUMENTS: WHO CAN ASK

• Mistake is mutual

  • Either of them

• Mistake of one party

  • Injured party, or his heirs and assigns

REFORMATION OF INSTRUMENTS: WHEN NOT ALLOWED

• Simple donations inter vivos (no conditions imposed)

• Wills

• When real agreement is void

• When one party brought action to enforce instrument

INTERPRETATIONS OF CONTRACTS: NO AMBIGUITY

Literal meaning of stipulation shall control

INTERPRETATIONS OF CONTRACTS: PRIMARY CONSIDERATION

Intention of the parties (May be reformed)

INTERPRETATIONS OF CONTRACTS: CONTEMPORARY AND SUBSEQUENT ACTS

To determine if intention are different from stipulation

INTERPRETATIONS OF CONTRACTS: SPECIFIC RULES

• Distinct/different things from intention are distinguished in the terms

• For with several meanings, most likely to render it effectual

• Various stipulations are interpreted together

• For different significations, most keeping of nature and object

• Usage or custom of place shall be born in mind

• Obscurity shall not favor party who cause it

INTERPRETATIONS OF CONTRACTS: DOUBTS REFER TO INCIDENTAL CIRCUMSTANCES OF

• Gratuitous Contracts

  • Lease transmission of rights and interest

• Onerous Contracts

  • Greatest reciprocity of interests

• Principal Object

  • Contract is NULL AND VOID

DEFECTIVE CONTRACTS

Least to most effective

1. Rescissible (FLAGS)

2. Voidable (VOI)

3. Unenforceable (USB)

4. Void (FILLON) What are those in these admiration?

RESCISSIBLE CONTRACTS

Nature

• Suffered economic damages or lesion (more than ¼ of value)

RESCISSIBLE CONTRACTS

[FLAGS]

• In Fraud of creditors (Accion Pauliana); DAMAGES

• Things under Litigation; DAMAGES

• Representation of Absentees; LESION

• Entered into by Guardians; LESION

• Specifically declared by law

RESCISSIBLE CONTRACTS

Rights of unpaid seller

RESCISSIBLE CONTRACTS

Specific thing deteriorates with fault of debtor

RESCISSIBLE CONTRACTS

Lesion of ¼ of partition

RESCISSIBLE CONTRACTS

Deficiency of 1/10 in sale of real estate

RESCISSIBLE CONTRACTS

Payments made in state of solvency

RESCISSIBLE CONTRACTS

As a Remedy

• Subsidiary action

• Up to extent of damages cause

• Requires capacity to return the object

• Not allowed if third-party in possession did not act in bad faith

• Not available if object is approved by courts

RESCISSIBLE CONTRACTS

Alienation by Gratuitous

• Presumed entered into in fraud of creditors

RESCISSIBLE CONTRACTS

Alienation by Onerous

• Presumed in fraud if judgment has been passed

RESCISSIBLE CONTRACTS

Prescriptive Period

• Within 4 years

Under Guardianship

• Start upon termination of wards capacity

Absentees

• Start when absentee’s domicile is known

Fraud

• Start a knowledge/discovery of contract

VOIDABLE CONTRACTS

Effect

• Valid until annulled

VOIDABLE CONTRACTS

[VOI]

• Vitiates consent (VIMFU)

• One party is Incapacitated

VOIDABLE CONTRACTS

Prescriptive Period

• Within 4 years

VIU of VIMFU

• Start an defect of consent ceases

MF of VIMFU

• Start on discovery

Minority/Incapacity

• Start when guardianship ceases

VOIDABLE CONTRACTS

Ratification

• Extinguished the action to annul

• May be effected by guardian or incapacitated

• Cleanses the contract from all defects

• Expressly or tacitly (impliedly)

VOIDABLE CONTRACTS

Annulment

• Render the contract non-existing

• May be effected by injured party

• If minor misrepresents his age, constitutes ESTOPPEL

• Capacitated cannot allege incapacity of other party

• Restore to each other the subject matter

• For service, the value thereof

• Lost through fault, FRUITS + VALUE WITH INTEREST

• Incapacitated’s restitution is limited to benefits enjoyed

VOIDABLE CONTRACTS

Annulment

• Render the contract non-existing

• May be effected by injured party

• If minor misrepresents his age, constitutes ESTOPPEL

• Capacitated cannot allege incapacity of other party

• Restore to each other the subject matter

• For service, the value thereof

• Lost through fault, FRUITS + VALUE WITH INTEREST

• Incapacitated’s restitution is limited to benefits enjoyed

UNENFORCEABLE CONTRACTS

Effect

• No effect until ratified

UNENFORCEABLE CONTRACTS

[USB]

• Unauthorized contracts

• Does not comply with Statute of Frauds

• Both parties incapable of giving consent

UNENFORCEABLE CONTRACTS

Statute of Fraud

• Wholly executory contracts

• List is exclusive

• A personal defense

UNENFORCEABLE CONTRACTS

When SoF may be Enforced

• Partial/complete performance

• Defense is waived

• Oral evidence is waived, implied waiver

VOID CONTRACTS

Effect

• No effect at all

VOID CONTRACTS

[FILLION]

• Fictitious, Absolute Simulation

• Intention cannot be ascertained

• Contrary to LAMOCPOPS

• Expressly prohibited by Law

• Impossible service

• Object is outside commerce of men

• Non-existent

VOID CONTRACTS

Rules

• Action or defense does not prescribe

• Cannot be ratified

• Defense of illegality is not available to third persons

VOID CONTRACTS

Exception to Non-Effect

• Illegal purpose, may ne REPUDIATED + RECOVER MONEY/PROPERTY

• Incapable of giving consent in illegal contract, RECOVER MONEY/PROPERTY

• Agreement not illegal, merely prohibited, RECOVER MONEY/PROPERTY

• Divisible contract, legal portion may be enforced

VOID CONTRACTS

Illegal Contracts

• Criminal offense of both parties (in pari delicto)

• No criminal offense, no prosecution