Contracts Review Lecture~ctdi

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  Contracts Concept  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. Classification Consensual contractperfected by mere consent of the partiesReal contractThose that are perfected by the delivery of the object of the contract deposit, pledge and commodatumSolemn contractThis contract requires compliance with certain formalities prescribed by the law as an essential element necessary for its perfection, e.g., donation of real property which must be in a public instrument.real subject matter refers to immovable properties onerousthose where there is an echange of valuable consideration such as sale or barter preparatoryone which serves as a means by which other contracts may be entered into suchas agency and partnershipcommutativewhere equivalent values are given by both parties, such as sale, barter and lease.aleatorywhere fulfillment of the contract is dependent upon chance, such as insurance. Stages in the life of a contract a. !reparation or negotiation b. !erfection or birth c Consummation or termination ElementsEssential Elements without them a contract cannot eist because these are indispensable requirementsCommon refer to those present in all contracts namely consent, object and cause.Special refer to those which are required by the other #ind of contracts to be present in them. Natural Elements these are found in certain contracts and presumed to eist, unless ecluded by stipulation of the parties. Accidental Elements not considered agreed by the parties unless stipulated. Principles or characteristics of contract MARCOAutonomyMutualityRelativityConsensualityObligatoriness The contracting parties may establish such stipulations, clauses, terms and conditions  as they may deem convenient, provided they arenot contrary to the law, morals, good customs, public order or public policy.The contract must bind both the contracting parties, its validity or compliance cannot be left to the will of one of them. After a party has entered into a contract he will not be permitted to renounce it unilaterally.Contracts ta#e effect only beteen the parties, their assigns and heirs,  ecept obligations are not transmissible by la, by stipulation or by nature!Contracts may be enforced by or against a third person $.stipulation pour autrui or where there is a stipulation that clearly confers a favor upon a third person.%.where a third person induces another to violate his contract in which case such third person may be held liable for damages by the other contracting partyContracts are perfected by mere giving of consent E ceptions real such as deposit, pledge and commodatum such as deposit, pledge and commodatumsolemnContracting parties must comply with the terms and conditions of thecontract 1  &.in contracts intended to defraud creditors the law gives them protection. This is true if the third person acted inbad faith. '.(n contracts creating real rights, third personswho come into possession of the objectof the contract are bound thereby, subject to the provisions of the )ortgage *aw and the *aw Registration laws. Consent (t is the meeting of minds between the parties on the subject matter and the cause Re#uisites (t is intelligent, i.e., there is capacity to act.(t is free and voluntary where there is no vitiation of consent by reason of violence or intimidation. (t is conscious or spontaneous where there is no vitiation of consent byreason of mista#e, undue influence, or fraud. Elements of consentOfferAcceptance proposal made by one party to another to enter into a contract. the manifestation by the offeree of his consent to the terms of the offer to create the meeting of minds. Re#uisites a.definite and certain statement upon which the party ma#ing the offer agrees to be boundb.made by the offeror with interest to be bound if the offer is accepted by the must be must be addressed to a definite offeree or to the world at largee. the offerer may fi the time,place and manner of acceptance all of which must be complied with Re#uisites$ a.unqualified and must be identical in all respects with the offer must be communicated to the offeror and learned by him+ption contract one whereby the offeror gives the offeree a certain period within which to buy or not to buy a certain object for a fied price. (tmay or may not be for a valuable consideration+ption )oney +ption money refers to the money paid or promised to be paid in consideration for the giving of the option. Acceptance made by letter or telegram does not bind the offeror ecept from the time it comes to his #nowledge.(n cognition theory, the contract is perfected contract until it has come to the #nowledge of the offeror  %ices of consent consists in circumstances affecting adversely the determination or decision of a party to enter into a contract subject to annulment(t refers to the causes that vitiate consent or render it defective so as to ma#e the contract voidable. 2  %ices of consentCognition &'E%olition %() incapacity error fraudduress or intimidation, violence undue influence incapacity nemancipated minors$. without the consent of his parentsor guardian is voidable.%.-here the contract is entered into by a minor who misrepresents his age is valid , applying the doctrine of estoppel.&.-here the contract involves the sale and delivery of necessities to the minor is valid '.A minor may contract for life, health and accident insurance, provided the insurance is ta#en on his life and the beneficiary appointedare the minors parents, spouse, child or siblings./.A contract is valid where a minor voluntarily pays a sum of money or delivers a fungible thing in fulfillment of his obligation thereunder and the obligee has spent or consumed it in good faith. duress or intimidation, threat should be serious or irresistible so as to compel a party to give consent$.create a reasonable and well grounded fear %.evil must be imminent and grave&.evil must be upon the person or property or that of his spouse, descendants or ascendants'.it is the reason why the party enters into a contract. A threat to enforce one0s claim thru competent authority, if the claim is just and legal does not vitiate consent Reverential fear   the fear of displeasing a person to whom respect and obedience are due is not considered as volition of consent unless because of the fear so deprives one of reasonable freedom.(nsane during a lucid interval are valid. %iolence There is violence when in order to wrest consent, serious or irresistible force is employed.violence requires the employment of physical force which is serious or irresistible.1eaf mutes who do not #now to write.refers to the influence of a #ind that so overpowers themind of the party as to destroy his free will and ma#e him epress the will of another 1run#enness and 2ypnotic Spell and drugs )ndue influence when a person ta#es improper advantage of his power over the will of another, depriving the latter of a reasonable freedom of choice. ErrorError mista*e of la is that which arises from an ignorance of some provisions of the law mista*e of fact  is false notion of a thing or a fact material to the contract or one or both parties believe that a fact eists when in reality it does not. As a rule, mista#e of law does not invalidate consent because 3ignorance of the law ecuses no one from compliance therewith.3 +inds of mista*e of fact mista#e as to objectmista#e as to identitymista#e as to condition and quality Cases hen a mista*e of la vitiates consent The error must be mutual.(t must be to the legal effect of the agreement. (t must frustrate the real purpose of the parties. Mista*e of 'act hich does not %itiate Consent 4rror as regards the incidents of a thing or accidental qualities)ista#e as to quantity or amount4rror as regards to the motives of the contract)ista#e as regards the identity or qualifications of a partyThe eception is that if these have been the principal cause of the contract. Causal fraud Consists of insidious words or machinations on the part of one of the contracting parties whereby the other is induced to eecute a contract without which he would not have 'raud by Concealment  A neglect or failure to communicate that which a party to a contract #nows and ought to communicate constitutes concealment. (n this case, concealment is equivalent to misinterpretation. 3  agreed. Also *non dolo Causante  it is committed before perfection or at the time of perfection (t gives the party the right is to as#for annulment of contract.$.there must be misrepresentation or must be serious&.it must be employed by only one of the contracting parties'.it must be made in bad faith or with deliberate intent to deceive./.it must have induced the consent of the other contracting must be alleged and proved by clear and convincing evidence. 6.the party must not be in pari delicto or that it should not have been employed by both contracting parties.7. the other party relied on this untrue statement (ealer-s tal* The usual eaggerations in trade, when the other partyhad an opportunity to #now the facts, are not in themselves fraudulent. E pression of Opinion  A mere epression of opinion does not signify fraud, unless made by an epert and the other party has relied on the former0s special #nowledge. Ob.ect of a Contract/hingsServicesRights The object is the subject matter of the contract 0icit (t must not be impossible, legally or physically.(t must be in e istence or capable of coming into e istence!  (t must be determinate or determinable without the need of a new contract between the parties. /ransmissiblesale of future things1emptio rei speratae2 is alloedprovided it comes into e istence otherise it ill not be effective&n sale of 3ope  itself, the hope or epectancy already eists. This is called sale of hope 1emptio spei2! 3oever, sale of vain hope or e pectancy is void! The service must be withinthe commerce of men.(t must not be impossible, physically or legally.(t must be determinate or capable of being made determinate. As a general rule, all rights may be the object of a contract. The e ceptions  are when they are transmissible bytheir nature, or by stipulation, or by provision of law. Cause of contractRe#uisites of causeMotiveEffectsEffects the essential reason which impels the contracting parties to enter into the contract.(t must e ist . at the time the contract is entered into.(t must be real , that is, true .(t must be laful! immediate or direct reasonmotive may be un#nown.The illegality of the cause affects the validity of a contract while the illegality of Absence of Cause there is a total lac# of any valid consideration for the contract. produce no legal effect hatever 'alsity of cause&llegality of Cause  contracts with unlawful cause are also null and void! &nade#uacy of Cause inadequacy of cause shall not invalidate a contract,   unless there has been fraud, mista*e or undue 4
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