1305

CONTRACT - Meeting of minds plus two parties

1156 - Obligation(defined)
1157 - Sources of obligation
Contract vs. Obligation
Contract is the cause
Obligation is the effect
Contract vs. Agreement
Contract vs. Stipulations
5 Characteristics/principles of contract
1. M - Mutuality(1308)
2. A - Autonomy(1306)
3. R - Relativity(1311)
4. C - Consensual(1315)
5. O - Obligatory force of contract(1159)

1306
AUTONOMY / LIBERTY - Freedom to contract
G. R. - Can agree on anything
Limitations - Not valid if -
1. Law - fundamental requirement
2. Morals - norms of good and right conduct
3. Good Customs - Habits and practices
4. Public Order - public safety
5. Public Policy - considerations which are moved by the common good
If contrary - VOID

1307
INNOMINATE CONTRACT
Nominate - It has a name
Innominate - no name
1. DO UT DES ( I give that you may give )
2. DO UT FACIAS ( I give that you may do )
3. FACIO UT DES ( I do that you may give )
4. FACIO UT FACIAS ( I do that you may do)
Rules to govern / Innominate Contract
1. Agreement of parties
2. Provision on civil code
3. Rules governing analogous contracts
4. Custom of the place
1308
MUTUALITY OF CONTRACT - Both parties must agree
Third Person cannot decide / One of the parties cannot decide
G. R. - TP cannot decide

1309
Exception - If delegated by the parties
Effect - Decision of TP is valid

1310
Exception - Decision of TP is INEQUITABLE
Effect - Decision is not valid

1311
RELATIVITY Contract take effect only between the parties, their assigns and heirs
G. R. TPs are not bound / not liable / not affected
Exception TPs are bound / liable / affected
(1) 1131 (2) Stipulation POUR AUTRUI
*Stipulation in favor of a TP - Acceptance
(2) 1312
Contracts creating real right
How affected? REGISTRATION
(3) 1313
Contracts to defend creditors
1177 - ACCION PAULIANA
(4) Interference in contractual relations

1314
Liability of TP responsible for breach of contract
a) Film star
b) Contractor of a building

1315
CONSENSUAL - Contract is created by mere consent
Exception -
1316 - Real Contract - Consent + Delivery
1156 - Formal / Solemn - A form is required

1316
KINDS OF REAL CONTRACT
1. Loan - Commodatum and Mutuum
2. Deposit
3. Pledge
Stages in the life of a contract
1. Preparation / Conception - Bargaining
2. Perfection / Birth - Creation / meeting of the minds
3. Termination / Consummation - Performance of their respective obligations

1317
UNAUTHORIZED CONTRACT
G. R. - A person is not bound by the contract of another of which he has no knowledge of to
which he has not given his consent
Requisites to be bound by contract of another
1. Duly authorized
2. Act within the scope of authority
If one is missing - UNAUTHORIZED / UNENFORCEABLE
Remedy - RATIFICATION
Effect - it becomes VALID

1318
ELEMENTS OF A CONTRACT
1. Essential
*Common - COC
*Special
*Extraordinary - Price sale; real
2. Accidental - particular stipulations
3. Natural - assumed to exist in certain contracts
3 Essential Elements
1. C - Consent
2. O - Object
3. C - Cause
If one is missing - VOID

1319
CONSENT - Offer + Acceptance
*Offer - must be certain / definite
*Acceptance - must be absolute
Qualified acceptance / Counter-offer
POLICITACION - Imperfect promise
Cognition Theory

1320
FORM OF ACCEPTANCE
Express - Oral or Writing
Implied - Acts of parties
1321
ACCIDENTAL - Matters that may be freed by the offerer

1322
EXTENSION - Communication of acceptance to agent

1323
INEFFECTIVE OFFER
Rule - Both parties must be LIVING and Capacitated at the time of the knowledge of acceptance
Instances of Ineffective offer
1. Death
2. Insanity (VOIDABLE)
3. Civil Interdiction
4. Insolvency
*Other Grounds

1324
OPTION CONTRACT
Option money -
Option period
Option contract
G. R. - Before acceptance offer may be ?
Option Money
- No sale
- Distinct
- Not required to buy
Earnest Money
- There is a sale
- Part of the purchase price
- Required to pay

1325
Business advertisements are not definite offers
Exception - If complete in all material particulars

1326
Advertisement for bidders are not definite offers

1327
Persons who cannot give consent
1. Minors
2. Demented / Insane persons
 3. Deaf mute who do not know how to read and write
4. Incompetents under guardianship
5. Persons suffering from civil interdiction

1 is incapacitated - VOIDABLE
Both are incapacitated - UNENFORCEABLE
1 or both are prohibited - VOID

1328
LUCID INTERVAL - VALID
State of drunkeness - VOIDABLE
Hypnotic spell - VOIDABLE

1329
Other instances of incapacity
*Active misrepresentation
*Passive misrepresentation

1330
CHARACTERISTICS OF CONSENT
1. Intelligent
2. Free and voluntary
3. Conscious and spontaneous
Vices of consent
M - Mistake
I - Intimidation
V - Violence
U - Undue Influence
F - Fraud
If one is present - VOIDABLE

1331
MISTAKE
Fact - VOIDABLE
Law - VALID
3 Instances of mistake of fact
1. Substance of thing
2. Identity or qualifications of one or both parties
3. Conditions which move one or both parties

1332
Burden of proof in case of mistake
G. R. - Party mistaken
Exception - the other party
1. Of one of the parties is unable to read
2. Contract is in the language not understood by the parties

1333
Effect of knowledge of rich - NO MISTAKE (VALID)

1334
Mistake of law - (VALID)
Exception - VOIDABLE if
1. Error must be mutual
2. Legal effect of an agreement
3. Frustrates the real purpose of the parties

1335
VIOLENCE - Physical / External
INTIMIDATION - Moral / Internal
Threat to enforce ones claim

1336
Violence or intimidation by a TP - POSSIBLE

1337
UNDUE INFLUENCE

1338
DOLO CAUSANTE - Start
Remedy - ANNULMENT
How is it committed?
1. Insidious words or machinations
2. Concealment

1339
Fraud by concealment

1340
USUAL EXAGGERATIONS in trade / sales talk - VALID
Causal Emptor - Buyer Beware

1341
G. R. - Mere expression of an opinion by an ordinary person - V
ALID
Exception - If made by an expert
1342
Fraud by a TP
G. R. - Not possible
Exception - Voidable
1. If it has created a substantial mistake
2. Mutual

1343
Misrepresentation made in good faith - ERROR VALID

1344
Fraud must be serious and unilateral
If employed by both -
If in connivance with one of the parties -

1345
SIMULATION - act of deliberately deceiving others

1346
KINDS OF SIMULATION
1. Absolute / fictitious - contract does not really exist
2. Relative - different from true agreement