Knowt
Note
Studied by 13 people
COBLAW1 C37A
SESSION 1 (JAN 16)
Substantive vs. Procedural
Substantive Law - obligations and contracts
Procedural or Remedial - prescribes procedure or protecting substantive law
Obligation Common Definition (non-legal)
act or course of action that a person is legally bound to; duty or obligation
Obligation - something done out of a sense of duty regardless willingness.
Example of Obligations: religious, social
Non-compliance will result to consequences or sanctions
Obligation in the New Civil Code (legal)
TWO Kinds of Legal Obligations
Civil obligations - right of action to compel performance
Natural obligations - based on equity and natural law, does not grant a right to an action but rather it is triggered by voluntary fulfillment by the obligator/debtor. They authorize or rendered by reason.
Example: A person saw that the flood was rising up and saw a car that was not moved yet. Even if it is not his obligation, he still asked the guards for help in saving the car that does not belong to him.
Illustration (Example) Civil and Natural Law Obligations
Blue borrowed 1M from Red in the year 2010. Red only demanded payment in the year 2021 which is past the agreed contract of 10 years. Therefore, Red can no longer demand Blue for payment. However, Blue can still pay voluntarily if he/she wants to.
Civil Obligation Defined
An obligation is a juridical necessity to give, to do or not to do.
Juridical Necessity - demandability of the rights and obligations arising from obligations. (Recourse in the courts maybe be made to enforce the obligation)
Through enforcing obligations, the due thing and damages must be accounted for.
If the due thing is not possible anymore, paying for damages only is the next step.
Court can’t compel obligations to do if it’s really past the agreed date in the contract so rather, the court will impose payments for all the damages done.
Civil Obligations Kinds
Real Obligation - to give/deliver
Personal - To do/not to do
Remedy:
If there is non-compliance, go to Court.
Judge will order:
Deliver thing due + damages
Damages only if due is not possible
Essential Requisites of an Obligation
Active Subject - right to demand; CREDITOR/OBLIGEE
Passive Subject - duty to perform; DEBTOR/OBLIGOR
Object or Prestation - to give the car; to do the repair; not to put up a fence
Juridical Tie - the tie that binds the parties to the obligation; the reason why the obligation exist
Essential Requisites
Active Subject - Creditor
Passive Subject - Debtor
Object or Presentation - to give, to do or not to do
Juridical Necessity - cause established by the sources of obligation
Sources
LAW
obligation arising from law is not presumed
you need to prove the existence of the law imposing obligation
CONTRACTS
meeting of minds; bilateral agreement
has the force of law
terms must not be contrary to law, morals, public order, public policy or good customs
Example: even if there is a contract, if it does not go according to the law it is therefore useless. If a customer demands available parking for YXZ' Company because it’s according to the law, but the law only states that the place should provide adequate parking. The customer’s demands are therefore powerless.
QUASI - CONTRACTS
lawful, voluntary and unilateral acts which gives rise to a juridical relation to the end that no person may be unjustly enrich himself at the expense of another
Two Kinds:
Negotiorum Gestio - This is when someone takes care of another person's business or affairs without being asked. It is usually done because they want to help the other person, and it may involve managing their property or making decisions on their behalf.
Solutio Indebiti (debts should be paid back or excecssive money should be given back - obligation)
DELICTS
Acts punishable by law
General rule: a person criminally liable is also civilly liable (if there is a private offended party)
Restitution; reparation; indemnification
QUASI - DELICTS
fault or negligence of a person that causes damage to another person.
SESSION 2 (JAN 23)
Obligation - Irregular Performance
When we have an obligation, we have to performs it.
If you fail to perform = you will be liable
If your performance is incomplete or irregular = you are liable
Irregularity
Fraud (dolo)
Conscious and intentional; deliberate with bad faith
Future fraud can’t be forgiven; contrary to public policy, past fraud can be forgiven
Incidental fraud - fraud performed in the performance of the obligation (will make the debtor liable for damages)
Ex: Someone decided to deliver fake liquor despite the contract of selling genuine liquor
Causal Fraud - committed to get consent in the contract (will make the contract voidable)
Negligence (culpa)
Lack of reasonable care and caution which an ordinary prudent person would have use in the same situation.
Cases to case basis; court looks into:
Nature of the obligation
Circumstances of the person
Circumstances of the place
Circumstances of the time
When negligence show bad faith, the rule on fraud shall govern.
Negligence - debtor is liable only for the natural and probably consequence of the breach of the obligation
Fraud - debtor shall be responsible for all damages which may be reasonably attributed to the non-performance of the obligation
Types of Negligence
Culpa Contractual - may contract and negligence was committed in the performance of the contract
Culpa Aquiliana - there is negligence and it causes injury (quasi-delict is the source of obligation)
Culpa Criminal - the negligence act is criminal (delict is the source of obligation)
Example:
Delay (mora)
delay in the fulfillment of the obligation; non-fulfillment with respect of time
General rule: No demand; no delay
can be judicial or extra-judicial demand
mere reminder is NOT demand; it must be firm and clear that you are demanding
No demand is needed:
when the law expressly so declares
when the obligation expressly so declares
when time is of the essence of the contract
when the demand would be useless
in the reciprocal obligation
Kinds of Delays
Mora Solvendi - debtor (yung may obligation)
Mora Accipiendi - creditor
Compesatio Morae - both/reciprocal
Contravention of the tenor of the obligation
any illicit act that impairs the strict and faithful fulfillment of the obligation
every kind of defective performance
Contravention of the tenor of the obligation
SESSION 3 (JAN 27)
Joint
so the profit can be shared
Common Mistake
Assigning 1 debtor to 1 creditor
100,000/ = A
X(100,000)/(B) = A(50,000)/B(50,000)
Solidary
Connotes one-ness, unity
Treats solidary creditors as one
Treats solidary debtors as one
Kaya ayaw ng solidary para x2 ang return
If the utang is 30k and solidary, 1k would have to be collected from 30 people
Pag walang sinabi, joint agad
Solidarity can be only on the debtors side and the other can be a joint (mixed)
Solidarity should be stated and not presumed
Solidary = treat them as one
Joint Indivisible Obligation
Solidarity can be one but different due dates
If A demanded payment from X and Y, but X paid first and Y paid late, when A demands from Y, Y would pay the amount due with damages.
Foundation: trust and confidence
A solidarity creditor can’t assign his rights without the consent of others, but if the right is assigned on that creditor consent is not needed
Creditor = babayaran
Debtor = the one who owes; need mag bayad
Forgiveness in solidarity if the other party does not agree on one of the debtors decision, the debtor has to give the share they are supposed to receive.
Consfusion - Ex: Vince paid 50k and the other party has utang also kay Vince so they used his check to pay him back, but Vince has to pay the co-creditors the amount they are due.
The creditor can demand from one of the solidary debtors or some or all of them simultaneously
If you ask for forgiveness, reimbursing cannot be demanded
Solidary lang sya for those who are capable
SESSION 4 (JAN 26)
Pure, Conditional, With a Period
When will the obligation be due or demandable?
Pure
“I will give you a book.”
Conditional
“I will give you a book if you get 100% in the next exam".”
With a period
“I will give you a book on November 30,2023.”
Pure Obligation
The performance is not subject to a future or uncertain event or upon past event
Pure = no condition; no period; immediate demandability
Immediate demandability is not the same as immediate performance
Creditor can immediately demand but the debtor is given a reasonable opportunity to perform
The law intends to give a debtor a reasonable time to perform his/her obligation to deliver
Conditional Obligation
subject to condition
is a future uncertain event or a past event unknown to the parties
Kinds of Conditions
Suspense Condition - obligation will arise upon the happening of the condition and needs to be done “now”.
Acquisition depends in the happening
Suspends effect until condition happens
Resolutory Condition - the obligation will be extinguished upon the happening of the condition. Active from the start.
Extinguishment or loss of those rights already acquired shall depend upon the happening of the event which constitutes the condition
extinguishes the obligations and terminates the rights upon the happening of the condition
REMEMBER: obligation = already demandable BUT when the condition happens or met, the obligation will not be extinguished
EX: “I will allow you to use my car until you pass the bar exam.”
Potestative Condition - the fulfillment of which depends exclusively to the will of one of the parties.
Purely dependent upon the will of the creditor, the obligation is Valid. The creditor is interested in the fulfillment of the condition.
Purely dependent upon the will of the debtor the obligation shall be void if Suspensive but valid if Resolutory
Ex: “I will give you 10k if you sing a song.”
Casual Condition - the fulfillment depends on the chance and/or the will of a third person
An obligation dependent on a casual condition is valid
Mixed Condition - fulfillment depends partly on the will of either of the creditor and debtor and partly on the chance and/or partly on the will of a third person
Ex: “I will give you 1M if you get married this year.”
Marriage is not just dependent on the will of the creditor or debtor but also upon a third person (husband or wife to be)
Impossible Condition - physically impossibility and those that are contrary to morals, law, public order, public policy, and good customs.
Ex: “I will give you 10k if you cause a disturbance during the holy mass.”
This type of condition is disregarded
Positive Condition - condition must happen before a designated time
ex: “I will give you 10M if you get married to Mr. A before you reach 25.”
Negative Condition - the condition must not be fulfilled before a designated time
ex: “I will give you 10M if you’ll not get married to Mr. A before you turn 25.”
Obligation with a Period
Future and certain (sure to arrive)
ex: “I will give you a car on December 31, 2023.”
According to Effect
Suspensive
“I will give you a car on March 1, 2025”
Resolutory
“I will allow you to use my car until March 1, 2025”
According to Definiteness
Indeterminate Period
“When Pedro dies, it is sure to happen but we don't know when”
Definite Period
“Pedro is sure to die”
According to Source
Legal
Laws provides
Voluntary
Parties agree
Judicial
Court supervises
Important Principles
If the debtor voluntarily prevents the fulfillment of the condition, then the condition will be deemed fulfilled.
Constructive fulfillment (up)
Debtor must have no duty to do that act that prevented the non-fulfillment of the condition
Ex: “You’re interested in buying my land and I told you that I will be selling it for 5B, if you pass the bar exam. A year later you did pass the bar exam. Who is now entitled to the fruits of the land (income, rent). According to the law it’ll be in compensated all I have to do is deliver the land to you”.
Ex: If you made a mistake in the payment because you thought that the condition has already arrived you can recover what you paid by mistake.
“In case of resolutory condition the parties upon fulfillment of the conditions, shall return to each other what they have received.”
Check the intention — do they intend to return?
“I will give you P100 per day until you graduate DLSU”
“I will allow you to use my car until I am assigned back to Manila”
The Court has the power to fix the period under the following situations:
If the obligation does not have a fix period, then its indefinite
ex: i promise to construct your house but not specified until when
Performance of the obligation depends on the will of the debtor
ex: debtor will pay little by little; when I have the moneys
In the fixing period the court will determine each period as may and circumstances can be contemplated by the parties. HOWEVER, once the Court fixes it, it can no longer be changed by them (parties).
ex: “I can pay u on or before” creditor/debtor can pay/collect anytime.
SESSION 5 (JAN 30)
Simple, Alternative, Facultative
refers to “what will be delivered/done?”
Simple obligation
only one OBJECT or PRESTATION = simple obligation
ex: “I will give you a condo unit”
Conjunctive obligation
all objects or prestation must be performed
ex: “I will give you Unit 1021 of Green Residences AND Unit 1504 of Torre Lorenzo”
Distributive obligation
when only one among the objects or prestation must be performed (keep in mind that this has other objects involved unlike simple obligation but only needs 1 of it to be performed)
ex: “I will give you Unit 1021 of Sea Residences OR Unit 1504 of Torre Lorenzo
these types of obligations can either be alternative or facultative
Alternative obligation
various thing is due, but the payment of one of them is sufficient, determined by choice which as a general rule belongs to the obligator/debtor
debtor must perform one of the prestation
creditor can’t be compelled to receive part of one and part of the other
alternative is CONVERTABLE to simple!
Choice + Communication = Simple (how to convert to simple)
ex: “I will give you a specific Ford Escape or a specific Hindi CRV or a specific Nissan XTrail”
if debtor chooses the Ford and communicated this to the creditor, then the obligation becomes Simple. “I will give you a specific Ford Escape”
The right of choice belongs to the debtor, unless granted by the creditor
debtor can’t choose prestations that are impossible or unlawful or which could not have been the object of the obligation
debtor will lose the right of choice if among the prestations whereby he is alternatively bound, only one is practicable
ex: “debtor will give creditor a specific Ford Escape or specific Hondo CRV or a specific Nissan XTrail.”
Escape wwas lost due to the fault of the debtor, the effect will be the object due will be the CRV or XTRail. No liability yet. CRV was then lost due to the debtor again, the obligation becomes Simple. No liability yet also. Lastly, XTrail was lost due to the debtor also, which is now liable.
If the lost was not due to the fault of debtor, the obligation is not extinguished.
Facultative obligation
only 1 prestation has been agreed upon, but the debtor may render another in substitution.
ex: “I will five a Unit 1011 of Green Residences. However, I may give substitute Unit 1011 with Unit 1210 Manila Residences.”
Due: Unit 1011
Unit 1210 is JUST a substitute. Not due, not a part of the obligation unless substitution is made.
the choice whether to make the substitution always belong to the debtor
substitution must be communicated to the creditor in order for it to take effect
it is submitted that, substitution can be made anytime
Divisible Obligation
with object or prestation which is susceptible of partial performance without the essence of the obligation being changes
this is different from divisible of prestation
Do — performance of the prestation which constitutes the object of the obligation; DP is the prestation itself
ex: “I will give you P10,000”
10,000 is the prestation that is divisible
But to give the 10,000 is an obligation that is indivisible
how many times does the prestation have to be performed? if only once, give the 10k in 1 payment, it is therefore indivisible.
controlling factor — determining whether the obligation is divisible or indivisible is the intention of the parties
divisible obligation can be intended as indivisible by the parties resulting to an indivisible obligation
but a divisible prestation can’t result to a divisible obligation
With a Penal Clause
accessory undertaking to the obligation so that in case of non-performance, the penalty to the obligation is known already.
penalty was agreed upon before the breach of the obligation
ex: “If you violate this non-disclosure agreement you will pay a penalty of P10,000,000.00”
Classes of Penal Clause
Subsidiary - only the penalty can be demanded
Joint - both the principal and the penal clause can be enforced
general rule — penalty clause is simply to substitute the indemnity for damages and the payment of interest in case of non-compliance
damages can still be demanded in the following:
if there is contrary stipulation of the parties
if the debtor refuses to pay penalty
if the debtor is guilty of fraud in the fulfillment of the obligation
SESSION 6 (FEB 3) (Day 10 module)
Payment or Performance
Modes of Extinguishing an Obligation
extinguishing = putting an end to an obligation
Payment or aka performance
General rule: payment must be complete, an incomplete payment is not payment at all
ex: debtor owes 500k so the debtor received a demand letter from the creditor that he has to pay within 5 days or else he will sue him. The debtor has no 500k but just to settle the obligation he decided to deposit 200k, after a few days, he received a sue notification from the board. 200k is not 500k, therefore it not payment at all.
2 exceptions: when there is substantial performance, the debtor can recover / when the creditor accepts performance, knowing its incompleteness or irregularity
Guarantor: someone who promises to pay if the debtor can’t (life tip: never be a guarantor)
If there’s no agreement between the parties to who is to pay, a third person can offer to pay (it is only up to the debtor to accept this)
When someone offers to pay (third party) that doesn’t make him the creditor but he has the right to ask for reimbursement
Consignation: when the person who paid for you insisted that they don’t want you to pay, you can pay through court
Who may receive the payment?
the creditor, his successor and his authorized representative (first person to go to)
Payment of Creditor will not be valid:
of creditor is incapacitated to the administrator his property, however it valid if the payment rebound to the benefit of the creditor
if there is judicial order not to pay the creditor, then the debtor must not pay. If there is a notice of garnishment issued by the court, then debtor must respect the same
Any person in possession of the credit
Any person, provided the payment had rebounded to the benefit of the creditor.
ex: payment was made to the house helper but the money was used to pay the bills
Where payment maybe be made?
payment shall be made in the pace designated in the obligation
if there is no express stipulation and if the undertaking is to deliver a determinate thing, the payment shall be made wherever the thing might be at the moment of the obligation was constituted
the place of the payment shall be the domicile of the debtor
How may the debtor properly make the payment?
the payment must be complete
no partial demand; no partial delivery
exception: when the debt is part liquidated and part unliquidated
ex: liquidated (the amount known) and unliquidated (the 5% that still needs to be determined after the surplus has been sold)
Manager/Bank check - more guaranteed check (ex: requests bdo to issue a check)
Loss of the due thing (specific thing)
Condonation or Merger
Confusion or Merger
Compensation
Novation
Other causes: annulment, rescission, fulfillment of resolutory condition, arrival of resolutory, period, prescription, and death.
Death of a party — to give (obligation) does not distinguish even if the person dies.
If the person dies, the heirs will collate all the assets and liabilities before distribution to the heirs.
if the asset is equal liability, there no mana
collate the asset, deduct the liabilities
obligation to do — example: when Micheal Jackson died, all his obligations to sing in concerts got extinguished, his siblings can’t take his place to sing.
SESSION 7 (FEB 10)
Special Forms of Payment
Dacion en Pago or Dation in Payment
The debtor has the capacity to pay but is proposing a way to pay
Cession
Giving the authority to the person kung saan meron siyang utang to sell of his properties to use the proceeds to pay for his debt.
If after the property it exceeds the debt, the extra should rightfully belong to the person who owes.
Major diff with Dacion is that Dacion, yuo (the one who owes) will sell while in Cession, the person who you owe money to will be the one to sell your property and return any excess.
Application of Payments
If the debtor told you to apply it sa Februrary, then that will be followed.
Debtor will make the application
Requisites:
there is one debtor and one creditor
there are several debts
debts are the same kind
debts are all due
Tender of Payment and Consignation
It is the offer to pay made by the debtor and the debtor is really able, capable to pay.
Gusto nya talaga mag bayad; willingness
Consignation happens due to
2. The debtor will initiate an action before the court wherein he will prove that:
there is indebtedness
there is an offer to pay
refusal to accept payment
there is a demand to accept but it was refused
consignation procedure / process
Upon approval of consignation, Carol will be informed again that her money is already deposited with the court.
SESSION 8 (FEB 17)
Condonation + Confusion + Compensation
Condonation or Remission of the Debt
Pledge is a separate contract (Collateral basically)
Dan borrows P100,000 from Carol. As security, he pledged his rolex watch and delivered the same to Carol. Before due date, Carol returned it.
Is there condonation? No. (Kasi nung binalik yung watch nawala na ung pledge. Carol is an unsecured creditor na, but Dan still owe her P100,000)
Confusion
The personality of the debtor and creditor merged into one and the same person.
Ikaw and debtor, ikaw rin creditor
It happens through promissory notes.
Example: X has utang kay A ng P8,000. Nagbigay ng promissory note si X kay A, B, C, and D. X used G to be a guarantor. Si C, may transaction with the guarantor, however the contract of guarantee is extinguished.
Compensation
When two persons, in their own right, are creditors and debtors of each other.
May utang ka sakin, may utang rin ako sayo.
Legal Compensation
Once all legal requisites of Legal Compensation are present, then the obligation is automatically extinguished, then the obligation is automatically extinguished by compensation. There is so more need for parties to agree or to sign anything.
Legal Compensation is Automatic
Requisites:
That each one of the obligors be bound principally, and the he be at the same time a principal creditor of the other.
That both debts consist in sum of money, or if the thing due are consumable, they be of the same kind, and also the same quality if the latter has been stated.
That the two debts are due.
That they be liquidated and demandable.
That over neither of them there be any retention or controversy, commenced by third persons and communicated in due time to the debtor.
Voluntary / Conventional Compensation
Compensation may also be voluntary. There is a voluntary compensation when the parties agree to cancel / compensate there obligation to each other.
Example: Walter owes Hank P100,000. Hank owes Walter 1,000 sacks of rice. Not the same thing, but they can agree to compensate this.
Judicial Compensation
Effect of Consent
Effect of Lack of Consent
Effect of No Knowledge
If the assignment is made without the knowledge or consent of the debtor, he may set up the compensation of all credits prior to the same and also later ones until he has knowledge of the assignment.
No Knowledge of Assignment
Debts that Cannot be Compensated
Those arising from DEPOSITUM. This is contract of safekeeping. Not the deposit a customer makes in his bank. The contract between customer and bank loan (bank is the debtor).
Thise arising from SUPPORT. Like in child support.
Those arising from PENAL OFFENSES.
Those arising from NON-PAYMENT OF TAXES.
SESSION 9 (FEB 24)
Contracts
a meeting of minds between two persons whereby one binds himself, with respect to the other to give something or to render some service
one of he sources of obligations; most common source
“two persons” actually refers to “two parties”
“auto-contract” there is only on person acting in two different capacities
Element of a Contract
Essential - those which must be present in order for the contract to exist
consent of the contracting parties
object certain which is the subject matter of the contract
cause of the obligation which is established
Natural Elements - those existing of which is presumed to exist with the contract itself unless there is an agreement to the contrary
warranties is against eviction and hidden defects are inherent in contracts of sale
Accidental Elements - those the existing of which depends upon the stipulation of the parties
the parties are free to stipulate or agree on any terms and conditions provided it is not contrary to law, morals, public order, public policy, and good customs.
Stages of a Contract
preparation / negotiation - the time when the parties negotiate the terms and conditions of contracts
perfection - the time when parties have agreed to the terms and conditions
consummation - the time when the parties fulfilled the terms and conditions
Example: umutang ka ng 10k sakin, when I give the 10k that’s the time the contract is perfected and when you give your first installment to me, that’s already consummation.
Classification of Contracts
According to their relation to other contracts:
principal - can stand along independently of another contract
accessory - the existence and/or validity is dependent upon another contract
preparatory - contract the purpose of which is to enter into further contracts
ex: when you enter into a partnership contract, it does not just end there; it is a preparation for other contracts.
According to their name:
nominate - those with special names provided for by law
innominate - those with no name or designations
when we draft a contract of sale we call it Deed of Sale. Sometimes, when the contract has no name, we simply call it Memorandum of Agreement
the nomenclature is not important; the body or agreement is controlling
According to their perfection:
consensual - perfected by mere consent
real - contracts perfected by the delivery of the thing which is the object of the contract
formal or solemn - those where special formalities are essential before the contract may be perfected
ex: donation
Consensual Real Formal
there are only 3 real contract; pledge, LOA and deposit
Deposit - safekeeping
example: contract of donation eg; if you will donate a real property, it must be in a public instrument
According to the nature of obligation:
unilateral - only one party has an obligation
bilateral - both parties have an obligation
According to the risk of fullfilment:
commutative - there is real fulfillment resulting in exchange of values
aleatory - the fulfillment is dependent upon chance. Aleatory contract is an agreement concerned with uncertain event that provides for unequal transfer of value between the parties. Insurance policies are aleatory contracts because an insured can pay premiums for many years without sustaining a covered loss.
According to the time of performance:
executed - there is already performance (can be completed or to be completed)
executory - there is no performance yet
According to Manifestations:
express - one in which the parties express their intentions definitely, whether in writing or orally, at the time they make the agreement
implied - one in which the intent of the parties is shown by conduct
CONTRACTS
Obligatory Force
Contracts have the force of law between the parties involved. This means that once a contract is duly executed, it binds the parties to fulfill their obligations as stipulated therein. Failure to comply with the terms can lead to legal consequences, including liability for damages or enforcement through courts.
Autonomy of Contracts
This principle grants parties the freedom to bind themselves through their agreements. They have the liberty to dictate the terms, conditions, and provisions of their contracts as long as they align with legal norms and public policy. This autonomy allows for a wide variety of contractual relationships tailored to the specific needs and desires of the parties.
Mutuality of Contracts
Contracts are mutually binding; this means that both parties must fulfill their obligations to one another. The performance of one party’s obligations is typically conditioned on the other party’s performance, ensuring that each party receives benefits based on the contract’s terms. The failure of one party to perform can result in the other party's entitlement to claim damages or to rescind the contract.
Relativity of Contracts
This characteristic implies that contracts generally only affect the parties involved. Third parties typically do not have rights or obligations under the contract, which means that only those who have entered into the agreement are bound by it and entitled to its benefits.
Exceptions to the Rule of Relativity
Some notable exceptions to the relativity of contracts include:
Rights of Third Parties: In some jurisdictions, laws allow third parties to benefit from contracts if explicitly stated or intended by the original parties (e.g., insurance contracts where the beneficiary is a third party).
Agency Relationships: An agent can enter into a contract on behalf of a principal, creating obligations for the principal arising from the agent's actions.
Assignments: A party may assign their rights and obligations under a contract to another party, effectively allowing that third party to be involved in the contractual relationship.
Legal Provisions: Certain laws establish rights for non-parties, which may provide them with a means of enforcement or claim, despite not being direct participants in the contract.
Understanding these characteristics and exceptions is crucial for interpreting contracts and determining the rights and obligations of the parties involved.
REVIEW
Loss of the Thing Due
Requisites for Loss to Extinguish an Obligation
Loss (perishable) must be real, absolute, and pertains to the object of the obligation.
The loss must not be due to the fault of the debtor.
The obligation is extinguished only if the object is lost without the debtor's fault.
If the debtor contributes to the loss, the obligation remains.
Some Important Principles
The loss of the thing due eliminates the obligation to perform.
However, if the thing becomes lost while the debtor has not performed the obligation, the debtor may still be liable for damages unless it can be proven they were not at fault.
The principle of liability for damages may depend on the circumstances surrounding the loss and the nature of the obligation.
Novation
Novation refers to the act of replacing an existing obligation with a new one, either by changing the object or the parties involved.
Kinds of Novation
Changing their objects or principal conditions:
An existing obligation can be replaced with a new obligation where the object or the conditions are significantly altered. For example, if a person originally obligated to deliver a car now must deliver a motorcycle instead, this constitutes a novation due to change in object.
Substituting the persons of the debtor:
This involves replacing the original debtor with a new one, maintaining the same obligation and creditor. For instance, if A owes money to B but C agrees to take over A's debt to B, a novation occurs.
Expromision:
A specific type of novation in which the new debtor (C) directly assumes the obligation towards the creditor (B), relieving the original debtor (A) of their obligations. In essence, the original debtor is discharged entirely from the obligation.
Delegacion:
This occurs when the debtor appoints another party to fulfill their obligation to the creditor. In this scenario, the original debtor does not get fully discharged unless expressly agreed upon by all parties involved.
Subrogating a third person in the rights of the creditors:
This is a novation where a third party takes on the role of the creditor, assuming rights over the obligation, while the original debtor’s obligations remain intact. This could occur if a guarantor fulfills the obligation on behalf of the debtor, effectively becoming a creditor.
Overall, novation allows for flexibility in obligations and can facilitate transactions when circumstances change significantly.
Characteristics of Contracts
Obligatory Force
Contracts have the force of law between the parties involved. This means that once a contract is duly executed, it binds the parties to fulfill their obligations as stipulated therein. Failure to comply with the terms can lead to legal consequences, including liability for damages or enforcement through courts.
Autonomy of Contracts
This principle grants parties the freedom to bind themselves through their agreements. They have the liberty to dictate the terms, conditions, and provisions of their contracts as long as they align with legal norms and public policy. This autonomy allows for a wide variety of contractual relationships tailored to the specific needs and desires of the parties.
Mutuality of Contracts
Contracts are mutually binding; this means that both parties must fulfill their obligations to one another. The performance of one party’s obligations is typically conditioned on the other party’s performance, ensuring that each party receives benefits based on the contract’s terms. The failure of one party to perform can result in the other party's entitlement to claim damages or to rescind the contract.
Relativity of Contracts
This characteristic implies that contracts generally only affect the parties involved. Third parties typically do not have rights or obligations under the contract, which means that only those who have entered into the agreement are bound by it and entitled to its benefits.
Exceptions to the Rule of Relativity
Some notable exceptions to the relativity of contracts include:
Rights of Third Parties: In some jurisdictions, laws allow third parties to benefit from contracts if explicitly stated or intended by the original parties (e.g., insurance contracts where the beneficiary is a third party).
Agency Relationships: An agent can enter into a contract on behalf of a principal, creating obligations for the principal arising from the agent's actions.
Assignments: A party may assign their rights and obligations under a contract to another party, effectively allowing that third party to be involved in the contractual relationship.
Legal Provisions: Certain laws establish rights for non-parties, which may provide them with a means of enforcement or claim, despite not being direct participants in the contract.
Understanding these characteristics and exceptions is crucial for interpreting contracts and determining the rights and obligations of the parties involved.
Characteristics of Contracts
Obligatory Force
Contracts have the force of law between the parties involved. This means that once a contract is duly executed, it binds the parties to fulfill their obligations as stipulated therein. Failure to comply with the terms can lead to legal consequences, including liability for damages or enforcement through courts.
Autonomy of Contracts
This principle grants parties the freedom to bind themselves through their agreements. They have the liberty to dictate the terms, conditions, and provisions of their contracts as long as they align with legal norms and public policy. This autonomy allows for a wide variety of contractual relationships tailored to the specific needs and desires of the parties.
Mutuality of Contracts
Contracts are mutually binding; this means that both parties must fulfill their obligations to one another. The performance of one party’s obligations is typically conditioned on the other party’s performance, ensuring that each party receives benefits based on the contract’s terms. The failure of one party to perform can result in the other party's entitlement to claim damages or to rescind the contract.
Relativity of Contracts
This characteristic implies that contracts generally only affect the parties involved. Third parties typically do not have rights or obligations under the contract, which means that only those who have entered into the agreement are bound by it and entitled to its benefits.
Exceptions to the Rule of Relativity
Some notable exceptions to the relativity of contracts include:
Rights of Third Parties: In some jurisdictions, laws allow third parties to benefit from contracts if explicitly stated or intended by the original parties (e.g., insurance contracts where the beneficiary is a third party).
Agency Relationships: An agent can enter into a contract on behalf of a principal, creating obligations for the principal arising from the agent's actions.
Assignments: A party may assign their rights and obligations under a contract to another party, effectively allowing that third party to be involved in the contractual relationship.
Legal Provisions: Certain laws establish rights for non-parties, which may provide them with a means of enforcement or claim, despite not being direct participants in the contract.
Understanding these characteristics and exceptions is crucial for interpreting contracts and determining the rights and obligations of the parties involved.
Characteristics of Contracts
Obligatory Force
Contracts have the force of law between the parties involved. This means that once a contract is duly executed, it binds the parties to fulfill their obligations as stipulated therein. Failure to comply with the terms can lead to legal consequences, including liability for damages or enforcement through courts.
Autonomy of Contracts
This principle grants parties the freedom to bind themselves through their agreements. They have the liberty to dictate the terms, conditions, and provisions of their contracts as long as they align with legal norms and public policy. This autonomy allows for a wide variety of contractual relationships tailored to the specific needs and desires of the parties.
Mutuality of Contracts
Contracts are mutually binding; this means that both parties must fulfill their obligations to one another. The performance of one party’s obligations is typically conditioned on the other party’s performance, ensuring that each party receives benefits based on the contract’s terms. The failure of one party to perform can result in the other party's entitlement to claim damages or to rescind the contract.
Relativity of Contracts
This characteristic implies that contracts generally only affect the parties involved. Third parties typically do not have rights or obligations under the contract, which means that only those who have entered into the agreement are bound by it and entitled to its benefits.
Exceptions to the Rule of Relativity
Some notable exceptions to the relativity of contracts include:
Rights of Third Parties: In some jurisdictions, laws allow third parties to benefit from contracts if explicitly stated or intended by the original parties (e.g., insurance contracts where the beneficiary is a third party).
Agency Relationships: An agent can enter into a contract on behalf of a principal, creating obligations for the principal arising from the agent's actions.
Assignments: A party may assign their rights and obligations under a contract to another party, effectively allowing that third party to be involved in the contractual relationship.
Legal Provisions: Certain laws establish rights for non-parties, which may provide them with a means of enforcement or claim, despite not being direct participants in the contract.
Understanding these characteristics and exceptions is crucial for interpreting contracts and determining the rights and obligations of the parties involved.
SESSION 10 (MARCH 10)
Vices of Consent
Mistake
Both parties made a mistake
Ex: seller sold land located in cavite, but the buyer mistook it to be located din caloocan, seller’s mistake also is he did not clarify properly
A simple mistake of account shall give rise to its correction
When one of the parties is unable to read, or if the contract is in a language that is not understood by him, and mistake or fraud is alleged, the person enforcing the contract must show that the terms thereof have been fully explained.
There is no mistake if the party alleging it knew the doubt, contingency or risk affecting the object of the contract
Violence
serious or irresistible force is employed
force should be physical or external and it should be serious and irresistible
violence shall annul the obligation, although it may have been employed by a third person who did not take part in the contract
Intimidation
“well-grounded fear of an imminent and grave peril upon his person or property, or upon the person of property of his spouse, descendants or ascendants”
It can annul the obligation although it may have been employed by a third person who did not take part in the contract
This can be applied to violence also
Fraud
There is fraud, when, through 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
Remember: casual fraud and incidental fraud
In order that fraud may make a contract voidable, it should be serious and should not have been employed by both contracting parties
When is there fraud?
failure to disclose facts, when there is duty to reveal them
opinion made by an expert and the other party has relied on the special knowledge of the expert
misrepresentation by a third person in connivance with one of the party
When is there no fraud?
innocent non-disclosure of a fact, when there is no duty to so
the usual exaggeration in trade, when the other party had an opportunity to know the facts
a mere expression of an opinion by an ordinary (not an expert) person (dealer’s talk)
Innocent misrepresentation by a third person (might be a mistake; but not fraid)
Undue Influence
when a person takes improper advantage of his power over the will of another, depriving the latter of a reasonable freedom of choice
influences under this is not inferred by age, sickness, or debility of body, if sufficient intelligence remains
he who alleges any defect of lack of consent by reason of udue influence, must establish by full, clear and convincing evidence, such specific acts that vitalized the party’s consent
Simulated Contracts
a contract is simulated if it is fictitious, feigned, pretended or make-believe
ex: pedro told his friend kunyari they bought his property just so that other will think it was already bought
Absolutely Simulated Contracts
it’s absolute when the parties do not intend to be bound at all
void (no effect at all)
Relative Simulated Contract
Object
the object of contract may be defined as the thing, right or service which is the subject matter of the obligation which is created or established
Things
Must not be outside the commerce of men. There is the possibility of appropriation and transmission. Public plaza and roads cannot be
the object of a contract.
Things must be existing or at least can exist subsequently (future things). This is conditional. (Note: future inheritance cannot be the object of a contract.)
The thing must be licit
he thing must be determinate as to its kind (determinable). Car? NO. Toyota Vios? YES. What is the difference?
The thing must not be impossible. Not legally and physically impossible.
Rights
must be transmissible
Services
Cause
The essential or more proximate purpose which the contracting parties have in view at the time of entering into the contract.
Cause or consideration is the “WHY” of the contract, the essential reason which moves the contracting parties to enter into the contract.
Kinds of Contracts as to its Cause
1. Onerous Contract – cause is value for value
2. Remuneratory Contract
3. Gratuitous Contract – cause is mere liberality
Requisites of Cause
1. The cause must be in existence.
2. The cause must be lawful.
3. The cause must be true.
Requisites of Cause
If there is no cause, there is no contract.
The statement of a false cause shall render them void, if it should not be proved that they were founded upon another cause which is true and lawful
Motive vs. Cause
The particular motive of the parties in entering into a contract are different from the cause thereof.
Motive consists of the special reason which a party may have in entering into a contract without affecting the existence of a true and distinct consideration.
The illegality of the motive will not affect the validity of the contract.
Peter purchased some insect poison in order to kill the professor. The cause is valid even if the motive is contrary to law.