B. Object of Contracts (1347 – 1349) 2.
Legal – when the thing or service is contrary to law, morals,
Article 1347. All things which are not outside the commerce
of men, including future things, may be the object of a
contract. All rights which are not intransmissible may also be
the object of contracts.
No contract may be entered into upon future
inheritance except in cases expressly authorized by law.
All services which are not contrary to law, morals,
good customs, public order or public policy may likewise be
the object of a contract. (1271a)
Article 1348. Impossible things or services cannot be the
object of contracts. (1272)
Article 1349. The object of every contract must be
determinate as to its kind. The fact that the quantity is not
determinate shall not be an obstacle to the existence of the
contract, provided it is possible to determine the same,
without the need of a new contract between the parties.
(1273)
 Object is the second essential element of a contract.
* The thing sought to be accomplished: the aim or purpose, the
thing sought to be attained.
 Object of the contract is its subject matter. It may be a thing
(sale), rights (assignment of credit) or service (agency).
 Parties cannot be allowed to enforce a contract that involves
doing something that is illegal. (agreements to perform crime/tort/
illegal activities which have been made illegal by specific statutes).
- Requisites of Valid Object
1. Within the commerce of men (it can legally be subject of
commercial transaction)
2. Transmissible
3. Licit (not contrary to law, morals, good customs, public order, or
public policy)
4. Possible
5. Determinate
- Examples of Things Outside the Commerce of Men
 Personal rights such as the status and capacity of persons,
honorary titles and distinctions
 Public offices
 Political rights of individuals such as the right to vote (suffrage)
 Property pertaining to public dominion, such as sidewalks and
roads, public plazas, public bridges and rivers.
 Sacred or common things, like the air and sea, as long as they
have not been appropriated.
- Examples of Things Impossible, Physically or Legally
 Illicit objects; kill a person (also outside the commerce of men)
 Prohibited drugs
Kinds of Impossibility
1. Physical – when the thing or service in the very nature of
things cannot exist or be performed
o Absolute – when the act cannot be done in any case
so that nobody can perform it (fly like a bird)
o Relative – when it arises from special circumstances
of the case (make payment to a dead person) or the
special conditions or qualifications of the obligor (to
paint a portrait by a blind person)
good customs, public order or public policy.
- Examples of Determinate Things
 All eggs in a basket
 The land with the smallest area
The object of the contract must be determinate as to its kind or at
least determinable without the necessity to a new or further
agreement between parties
- Examples of Future Things or Rights
 Things to be manufactured, raised, or acquired after the
perfection of contract (Ex. Wine that a vineyard is expected to
produce, Rice to be harvested, Eggs that hens may lay)
- Examples of Intransmissible Rights
 Suffrage; family, marital, and parental rights; right to public
office, or to run for public office.
- Future Inheritance
 is any property or right not in existence or not capable of
determination at the time of the contract but which a person may in
the future acquire by succession. Here, the source of property is still
alive.
 Inheritance ceases to be future upon the death of the decedent
or deceased.
 As a rule, future inheritance, cannot be the object of the contract
Exceptions are:
1. In case of donations by reason of marriage between future
spouses with respect to their future property to take effect, only in
the event of death, to the extent laid down by law in testamentary
succession.
2. In case of partition of property by act inter vivos by a person to
take effect upon his death.
- Rules in contract of sale as to future things
1. Under a contract of sale, things having potential existence may be
the object of a contract of sale.
2. Sale of future things (emptio rei speratae) - There may be a sale
of expected things, but subject to the condition that will come into
existence. If the thing will not materialize, the sale is not effective.
3. Sale of hope (emptio spei) – there may be a sale of hope it self,
the hope or expectancy already exists. However, sale of vain hope or
expectancy is void.
C. Cause of Contracts (1350 – 1352)
Article 1350. In onerous contracts the cause is understood to
be, for each contracting party, the prestation or promise of a
thing or service by the other; in remuneratory ones, the service
or benefit which is remunerated; and in contracts of pure
beneficence, the mere liberality of the benefactor. (1274)
Article 1351. The particular motives of the parties in entering
into a contract are different from the cause thereof.
Article 1352. Contracts without cause, or with unlawful
cause, produce no effect whatever. The cause is unlawful if it is
contrary to law, morals, good customs, public order or public
policy. (1275a)
 RULES: a.) Article 1325 b.) Article 1326 (Ex - S,p233)
iii. Acceptance; Nature; Revocation
 Nature of Acceptance – Acceptance of the offer must be
unqualified and absolute. If acceptance is qualified by a
condition, it merely constitutes a counter-offer. No agreement
or contract is perfected unless the counter-offer is accepted
by the offeror.
- How made (1320)
Article 1320. An acceptance may be express or implied
 Communication of acceptance of an offer may either be
express or implied
1. Expressly – the offeree may choose any method of
acceptance (written or oral) unless the offer states that an
acceptance must be made in a particular manner.
2. Impliedly – conducts/actions/gestures of the offeree may
indicate that he is accepting the offer (willing to enter into a
binding agreement) such as accepting the payment of the
price of the sale/appropriating the price of the sale.
Exceptions: Unilateral Contracts do not require communication of
expressed acceptance because the offer is made to the public.
 When the offeror makes a promise in a unilateral contract,
the offeror expects an action, not another promise in return.
Performance of the action requested within the time allowed
by the offeror and the offeror’s knowledge creates the
contract.
- Time, place, manner (1321)
Article 1321. The person making the offer may fix the time,
place and manner of acceptance, all of which must be
complied with.
 If the offeror fixes the time, place and manner of acceptance,
all must be complied with before the contract is made
effective.
- If offer made thru agent (1322)
Article 1322. An offer made through an agent is accepted
from the time acceptance is communicated to him.
 Principle of Agency – the personality of the agent is an
extension of that of the principal
 When an offer is made through an agent, the contract is
perfected from the time acceptance is communicated to said
agent.
- Effect of death, civil interdiction, insolvency or insanity
(1323)
Article 1323. An offer becomes ineffective upon the death,
civil interdiction, insanity, or insolvency of either party before
acceptance is conveyed.
 Before acceptance is conveyed to offeror, an offer may be
rendered ineffective by the following:
1. Death
2. Civil interdiction – a legal restraint upon a person incapable of
managing his estate because of mental incapacity, from
signing any deed or doing any act to his own prejudice,
without the consent of his curator/interdictor.
3. Insanity – not of sound mind; need of judicial declaration
4. Insolvency – inability exceeds his assets
- Other instances when the offer becomes ineffective
a. Rejection of the offer by the offeree
b. Counter-offer by the offeree.
 Qualification/Qualified – vary the terms
 Condition/Conditional – later payment
c. Objects becomes illegal or unlawful prior to acceptance
d. Period within to accept the offer lapsed.
iv. Perfection; by letter or telegram
 Acceptance made by letter or telegram does not bind the
offeror except from the time it came to his knowledge.
 Letter of withdrawal was “made” prior to the knowledge of
acceptance.
 Manifestation Theory – perfected the moment you mail it.
 Revocation of Acceptance – a letter of acceptance (just like a
letter of offer) may also be withdrawn or revoked. It must be
reach and be learned y the offeror ahead of the acceptance.
v. Cognition –vs- Expedition Theory
a. In Expedition Theory – the contract is perfected from
the moment the acceptance is declared or made even if
not made known to the offeror. (Adopted in
America/U.S)
(Perfected when the letter of acceptance is mailed)
b. In Cognition Theory – the contract is perfected from the
moment the acceptance comes to the knowledge of the
offeror. (Adopted in the Philippines)
vi. Who may give consent
 The civil code does not define who have capacity or legal
ability to give consent to a contract. It defines on the contrary
who have no capacity, by which it can be inferred that
capacity is the general rule, which exists in those, of whom
the law has not denied it. The burden of the proof is on the
party who asserts incapacity.
vii. Persons incapable of giving consent (1327, 1329)
 Legally incapacitated to Consent
1. Unemancipated minors
2. Insane or demented persons
3. Drunk, drug-induced, hypnotized persons and those in a
state of somnambulism (sleepwalking)
4. Deaf-mutes who do not know how to read and write
Article 1327. The following cannot give consent to a contract:
1. Unemancipated minors;
2. Insane or demented persons and deaf-mutes who do
not know how to write.
 Cannot give consent to a contract due to lack of legal capacity
 Minors, persons deprived of mental ability to comprehend &
understand and people under the influence of alcohol or of a
hypnotic spell have the privilege to annul their contracts.
 Unemancipated minors – persons who have not yet reached
the age of majority and are still subject to parental authority.
 Emancipation – takes place by the attainment of majority
(18yrs). It shall terminate parental authority over the person
and property of the child who shall be qualified and
responsible for all acts of civil life (Art. 236, Family Code)
 Voidable Contracts – are binding / valid until annulment thru
court action. However, cannot be annulled when ratified
because ratification cures the defect of voidable contracts.
 Classes of Voidable Contracts
1. Those where one parties is incapable of giving consent to a
contract;
2. Those where the consent of one of the parties is vitiated by
mistake, violence, intimidation, undue influence or fraud (Art.
1390) .
 In general, contracts entered by minors are voidable.
- Exceptions to the rule that contracts entered into by
minor without parents’ or guardians’ consent is voidable
(valid contracts entered by minors)
a. Where the contract is entered into by a minor who
misrepresents his age, applying the doctrine/principle of
estoppel.
b. When the contract involves the sale and delivery of
necessities to a minor.
 Some persons specially disqualified by Law to Enter into
Certain Contracts.
a. Husband and wife, even both at the age of majority, cannot
sell property to one another; and donate each other.
Exceptions:
1. When there has been a judicial separation of property.
2. When a separation of property was agreed upon in
the marriage settlement.
b. Fiduciary relationship
1. A guardian not allowed to purchase property of his ward;
2. Nor are judges allowed to purchase property under
litigation
Article 1328. Contracts entered into a lucid interval are valid.
Contracts agreed to in a state of drunkenness or during a
hypnotic spell are voidable
 Concept (contracts w/c are voidable by reason of incapacity)
a. Contracts entered by insane or demented persons, under
lucid interval.
 Lucid Interval – temporary restoration to sanity.
b. Contracts agreed to in a state of drunkenness if there is
complete loss of understanding.
c. Contracts entered during hypnotic spell, those induced by
drugs, or state of somnambulism (sleepwalking)
 B & C may either annul or ratify the agreement at a later time.
Article 1329. The incapacity declared in Article 1327 is
subject to the modifications determined by law, and is
understood to be without prejudice to special disqualifications
established in the laws.
viii. Five causes vitiating consent; Effect (1330)
Article 1330. A contract where consent is given through
mistake, violence, intimidation, undue influence, or fraud is
voidable.
 Five causes vitiating consent
1. Error or mistake (Arts. 1331 – 1334)
2. Violence or force (Arts. 1335 – 1336)
3. Intimidation or threat (Arts. 1335 – 1336)
4. Undue influence (Art. 1337)
5. Fraud or deceit (Arts. 1338 – 1344)
 Effects if consent is vitiated
- The moment consent is vitiated or tainted with any of the
five causes; the contract is voidable under Article 1390.
Article 1331. In order that mistake may invalidate consent, it
should refer to the substance of the thing which is the object of
the contract, or to those conditions which have principally
moved one or both parties to enter into the contract
Mistake as to the identity or qualifications of one of
the parties will vitiate the consent only when such identity or
qualifications have been the principal cause of the contract.
A simple mistake of account shall give rise to its
correction.
 Requisites for Mistake to Vitiate Consent
1. It must be substantial regarding:
a. Object of contract
b. Conditions w/c principally moved one or both parties to
enter into the contract.
c. Identity or qualification of persons
2. Error must be excusable, not caused by negligence.
3. Error must be a mistake of fact, not of law.
 Mistake if Fact consists of:
1. An unconscious ignorance or forgetfulness of a fact, past, or
present, material to the contract; or
2. Belief in the present existence of a thing material to the
contract which does not exist, or in the past existence of such
a thing w/c has not existed.
 Mistake of law happens when a party, having full knowledge
of the facts, comes to an erroneous conclusion as to their legal
effect.
Article 1332. When one of the parties is unable to read, or if
the contract is in a language 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 to
the former.
Article 1333. There is no mistake if the party alleging it knew
the doubt, contingency or risk affecting the object of the
contract.
 Ex. (S, p.241)
Article 1334. Mutual error as to the legal effect of an
agreement when the real purpose of the parties is frustrated
may vitiate consent.
 Requisites for Mutual Error to Vitiate Consent:
(mistakes of law can vitiate consent if:)
1. There must be mutual error
2. The error must refer to the legal effect of the agreement.
3. The real purpose of the parties is frustrated.
 Ex. (S,p.242) – (B,p.228)

- Violence or force (1335 – 1336)
Article 1335. There is violence when in order to wrest consent,
serious or irresistible force is employed.
There is intimidation when one of the contracting
parties is compelled by a reasonable and well-grounded fear of
an imminent and grave evil upon his person or property, or
upon the person or property of his spouse, descendants, or
ascendants, to give his consent.
To determine the degree of his intimidation, the age,
sex and condition of the person shall be borne in mind
A threat to enforce one’s claim through competent
authority, if the claim is just or legal, does not vitiate consent.
Article 1336. Violence or intimidation shall annul the
obligation, although it may have been employed by a third
person who did not take part in the contract.
 Violence – refers to physical coercion
 Requisites for violence to vitiate consent
a. Employment of serious or irresistible force.
b. The very reason why the contract is entered into
 Intimidation – refers to mental / moral coercion
 Requisites for Intimidation to vitiate consent
a. Reasonable and well-grounded fear
b. Of an imminent and grave evil
c. Upon his person, property, or upon the person or
property of his spouse, descendants or ascendants
d. The very reason why the contract is entered into
e. The threat must be of an unjust act, or actionable
wrong.
* To determine the degree of intimidation, the age, sex and
condition of the person shall be considered.
* A threat to enforce one’s claim thru competent authority, if the
claim is just and legal does not vitiate consent
* Violence or intimidation shall annul the obligation although it may
have been employed by a third person who did not take part in the
contract
- Undue Influence (1337)
Article 1337. There is 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. The
following circumstances shall be considered: the confidential,
family, spiritual, and other relations between parties, or the
fact that the person alleged to have been unduly influenced
was suffering from mental weakness, or was ignorant or in
financial distress.
 Requisites of Undue Influence to Vitiate Consent
1. Taking improper advantage of one’s power,
2. Over the will of another,
3. Depriving the latter of a reasonable freedom of choice
 Circumstances to Consider
1. Confidential, family, spiritual, and other relations between
the parties
2. Mental weakness
3. Ignorance
4. Financial distress
 NOTE: Undue influence exercised by a third person vitiates
consent as in the case of violence and intimidation.
- Fraud or deceit (1338-1341, 1344)
Article 1338. There is fraud when, though 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.
 Causal fraud or dolo causante – the fraud that is
committed before or at the time of perfection of the
contract. (serious, cause)
 Kinds of Fraud (Dolo) at the Time of Perfection
1. Causal fraud (dolo causante) – a vice of consent that
makes the contract voidable; before the perfection of
contract; the right of the party is to ask for annulment of
contract
2. Incidental Fraud (Dolo incidente) – committed after the
perfection of contract, the right of the party is to ask for
damages
 Requisites of Fraud to vitiate consent
a. The fraud must be serious
b. The fraud must have been employed by only one of the
contracting parties (in pari delicto)
c. There must be a deliberate intent to deceive or induce
d. The other party must have relied on the untrue statement
Article 1339. Failure to disclose facts, when there is a duty to
reveal them, as when the parties are bound by confidential
relations, constitutes fraud.
 The party who is under obligation to disclose facts must
state all the facts, otherwise he will be guilty of fraud or
concealment.
Article 1340. The usual exaggerations in trade, when the
other party had an opportunity to know the facts, are not in
themselves fraudulent.
 Rule of caveat emptor – “let the buyer beware”
 In contract of sale, the buyer must check the title of the
seller so that he is ensured that the thing has clean title. A
buyer must be on his own guard for he is buying at his own
risk.
Article 1341. A mere expression of an opinion does not signify
fraud, unless made by an expert and the other party has relied
on the former’s special knowledge.
- Misrepresentation (1342 – 1343)
Article 1342. Misrepresentation by a third person does not
vitiate a consent, unless such misrepresentation has created
substantial mistake and the same is mutual.
 Misrepresentation of a third person does not constitute
error that will make the contract voidable except:
1. The misrepresentation has created substantial mistake
2. The mistake is mutual
 Ex. (S. p.249)
Article 1343. Misrepresentation made in good faith is not
fraudulent but may constitute error.
Article 1344. In order that fraud may make a contract
voidable, it should be serious and should not have been
employed by contracting parties.

Incidental fraud only obliges the person employing it

to pay damages.

- Simulation (1345 – 1346)

Article 1345. Simulation of a contract may be absolute or

relative. The former takes place when the parties do not intend
to be bound at all; the latter, when the parties conceal their
true agreement.

Article 1346. An absolutely simulated or fictitious contract is

void. A relative simulation, when it does not prejudice a third
person and is not intended for any purpose contrary to law,
morals, good customs, public order or public policy binds the
parties to their real agreement.

 Simulation – the process of intentionally deceiving others

by producing the appearance of a contract that really does
not exist (absolute simulation) or w/c is different from the
true agreement (relative simulation).

 Kinds and Effects of Simulation

1. Absolutely simulated – The contract is fictitious and void.

The parties do not intend to be bound
2. Relatively simulated – the contract is disguised. The parties
conceal their true agreement. The parties are bound to
their real agreement when it does not prejudice a third
person, and when its purpose is not contrary to law,
morals, good customs, public order and public policy.