CONTRACT
A contract is a meeting of minds between two persons whereby one
binds himself, with respect to the other, to give something or to render
some service. (Art. 1305)
One or more persons bind himself or themselves with respect to another
or others, or reciprocally, to the fulfillment of a prestation to give, to do,
or not to do.
MEETING OF THE MINDS
• Speaks of the intention of the parties in entering into the contract
respecting the subject matter and the consideration thereof.
• A contract is perfected by mere consent.
• Meeting of the minds between the parties rise to the binding contract
although they have not affixed their signature to its written form.
(Rabuya, 2017)
STAGES OF CONTRACT
1. Negotiation
2. Perfection
3. Consummation
NEGOTIATION
• Covers the period from the time the prospective contracting parties
indicate interest in the contract to the time the contract is concluded.
PERFECTION
• The contract is perfected (birth of contract) in consensual contracts at
the moment there is meeting of minds upon the object and the cause
thereof.
• In real contracts, it is perfected upon delivery of thing which is the
object thereof.
• In solemn contracts, required formality is an essential element for
validity, hence, the same must be observed.
• Acceptance of the offer must be absolute.
• A qualified acceptance constitutes a counter-offer, and has the effect of
rejecting the offer.
CONSUMMATION
• Stage of consummation of contract begins when the parties perform
their respective commitments under the contract culminating in the
death of extinguishment of the contract.
CLASSIFICATION OF CONTRACTS
According to perfection
1. Consensual– perfected by mere consent, such as sale and barter.
2. Real– perfected by the delivery of the object of the contract, such as
pledge, loan and deposit.
According to degree of importance
1. Principal- can stand alone, such as sale, barter, deposit and loan.
2. Accessory– its existence and validity is dependent upon another
contract, such as pledge , mortgage and guaranty.
According to name
1. Nominate- with a special name, such as pledge, barter and lease.
2. Innominate- without any name.
According to cause
1. Onerous- there is an exchange of consideration, such sale, barter and
lease.
2. Gratuitous- there is no consideration, received in exchange for what
has been given, such as donation, remission and commodatum.
ELEMENTS OF A CONTRACTS
1. Consent or meeting of the minds as to the subject matter;
2. Determinate subject matter; and
3. Cause or consideration
CONSENT
Consent is manifested by the meeting of the offer and the acceptance
upon the thing and the cause which are to constitute the contract. The
offer must be certain and the acceptance absolute. A qualified
acceptance constitutes a counter-offer.
A and B are best friends. A said to B “Milk tea o Ako?”
B replied “Milk tea”
A said “Okay, I’ll deliver it to you later”
Is there a meeting of the minds between A and B?
DETERMINATE SUBJECT MATTER
[Link] the commerce of men
[Link] be licit
[Link], Future, Contingent
[Link] or Determinable
[Link]
Carlos and Chloe are lovers. Carlos learned that Chloe’s favorite song is
Sun and Moon. Since Carlos, loved Chloe very very much, he wanted to
give Chloe the sun, moon, and even the stars.
Carlos consulted you if he can enter to a contract of sale involving the
sun, moon, and stars. What would be your answer to Carlos?
Benito and Benita are best friends. Out of curiosity and considering they
wanted to explore life, they went to Maxie Andersen, their friend, and
told her that they wanted to try marijuana. They also asked Maxie if
they can validly buy marijuana in the Philippines because they know
someone who is well-known in selling marijuana. If you were Maxie,
what would be your response?
A, who owns various parcels of land, offered B to buy some of his
parcels of land. Under their notarized written agreement, it was stated
“The property involved in this Deed of Sale refers only to two lots”. B
agreed to buy the said property for the amount of P5,000,000.00. A
accepted the said amount.
Is the contract of sale between A and B void?
CAUSE OR CONSIDERATION
• Cause is the essential or more proximate purpose reason which
moves the contracting parties to enter into the contract. It is the
immediate and direct which justifies the creation of an obligation
through the will of the contracting parties.
FORMALITIES REQUIRED IN
DONATION
a. Personal property- If the value is Php 5,000.00, the donation and
acceptance must both be written.
b. Real Property- The donation must be made in a public instrument,
specificying the property. Acceptance must be written, either in the
same deed of donation. If in a separate document, the donor shall be
notified thereof in an authentic form, and this step shall be noted in
both instruments.
OBLIGATORY FORCE OF A CONTRACT
Article 1159. Obligations arising from contracts have the force of law
between the contracting parties and should be complied with in good
faith.
FREEDOM TO STIPULATE (AUTONOMY
OF THE WILL) AND ITS LIMITATIONS
• Contracting parties may establish such stipulations, clauses, terms,
conditions as they may deem convenient, provided they are not contrary
to law, morals, good customs, public order or public policy. [Article
1306]
• 2 aspects: (1) freedom to decide whether or not one should enter into
contractual relationship at all; (2) freedom to stipulate upon whatever
terms the parties wish and agree.
BINDING EFFECT OF A CONTRACT
Principle of Mutuality
Article 1308. The contract must bind both contracting parties; its validity or
compliance cannot be left to the will of one of them.
This binding effect of a contract on both parties is based on the principle that
the obligations arising from the contracts have the force of law between the
contracting parties, and there must be mutuality between them based
essentially on their equality under which it is repugnant to have one party
bound by the contract while leaving the other free therefrom. The ultimate
purpose is to render void a contract containing a condition which makes its
fulfillment dependent solely upon the uncontrolled will of one of the
contracting parties (G.R. No. 124290).
Contract of Adhesion
A contract of adhesion is one wherein one party imposes a ready-made
form of contract on the other in which almost all of the provisions are
drafted by one party, thereby reducing the participation of the other to
affixing its signature or to adhering to the contract. However, the
contract of adhesion is not invalid per se but is as binding as any other
contract. The Court only struck down contracts of adhesion as void
when the weaker party has been imposed upon in dealing with the
dominant bargaining party as to be reduced to the alternative of taking it
or leaving it, being completely deprived of the opportunity to bargain on
equal footing. (G.R. No. 208336)
Newlyweds Sam and Sienna had contracted with Sangria Hotel for their
wedding reception. The couple was so unhappy with the service,
claiming, among other things, that there was an unreasonable delay in
the service of dinner and that certain items promised were unavailable.
The hotel claims that, while there was a delay in the service of the
meals, the same was occasioned by the sudden increase of guests to 450
from the guaranteed expected number of 350, as stated in the Banquet
and Meeting Services Contract.
In the action for damages for breach of contract instituted by the couple,
they claimed that the Banquet and Meeting Services Contract was a
contract of adhesion since they only provided the number of guests and
chose the menu. On the other hand, the hotel's defense was that the
proximate cause of the complainant's injury was the unexpected increase
in their guests, and this was what set the chain of events that resulted in
the alleged inconveniences.
Was the Banquet and Meeting Services Contract a contract of adhesion?
If yes, is the contract void?
RIVITY OF CONTRACT
General Rule: Contracts take effect only between parties, their assigns
and heirs. (Transmissible/ transferrable)
Exceptions to rule of transferability of obligations to heirs and assigns
Not transmissible by:
1. law,
2. by stipulation, or
3. by nature (purely personal).