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    4 Fundamental Characteristics of Contracts

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    rai barrameda
    The document discusses 4 fundamental characteristics of contracts: 1. The principle of obligatory force establishes that contracts create binding obligations for parties to comply beyond just the written terms. 2. Autonomy of contracts means that parties have freedom to establish terms, unless they violate law or morals. 3. The principle of mutuality requires contracts to bind both parties, not just one. 4. Relativity means the obligations are limited to the contracting parties, heirs, and assigns, and do not affect third parties who did not participate in the contract.

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    4 Fundamental Characteristics of Contracts

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    rai barrameda
    14K views2 pages
    The document discusses 4 fundamental characteristics of contracts: 1. The principle of obligatory force establishes that contracts create binding obligations for parties to comply beyond just the written terms. 2. Autonomy of contracts means that parties have freedom to establish terms, unless they violate law or morals. 3. The principle of mutuality requires contracts to bind both parties, not just one. 4. Relativity means the obligations are limited to the contracting parties, heirs, and assigns, and do not affect third parties who did not participate in the contract.

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    civil law

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    4 fundamental characteristics of contracts

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    The document discusses 4 fundamental characteristics of contracts: 1. The principle of obligatory force establishes that contracts create binding obligations for parties to comply beyond just the written terms. 2. Autonomy of contracts means that parties have freedom to establish terms, unless they violate law or morals. 3. The principle of mutuality requires contracts to bind both parties, not just one. 4. Relativity means the obligations are limited to the contracting parties, heirs, and assigns, and do not affect third parties who did not participate in the contract.

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    © All Rights Reserved
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    Download as docx, pdf, or txt
    14K views2 pages

    4 Fundamental Characteristics of Contracts

    Uploaded by

    rai barrameda
    The document discusses 4 fundamental characteristics of contracts: 1. The principle of obligatory force establishes that contracts create binding obligations for parties to comply beyond just the written terms. 2. Autonomy of contracts means that parties have freedom to establish terms, unless they violate law or morals. 3. The principle of mutuality requires contracts to bind both parties, not just one. 4. Relativity means the obligations are limited to the contracting parties, heirs, and assigns, and do not affect third parties who did not participate in the contract.

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    4 fundamental characteristics

    1. principle of obligatory force

    2. autonomy of contracts

    3. mutuality

    4. relativity

    1. Principle of obligatory force – reason why a contract is a source of obligation. Embodied in Art 1159.

    - not only in compliance with the letter of the contract, parties are required to comply

    - obligatory force – presupposes that contract has been perfected, it is valid and enforceable

    - obligatory – whether binding; much broader in scope than validity and perfection

    2. Autonomy of contracts – aka party autonomy; aka freedom to contract 1306

    - parties are free to establish any stipulations or clauses provided not contrary to law, morals,

    - Constitution is not source of freedom to contract

    - property right – non-impairment clause

    - state may interfere – pursuant to valid exercise of police power of the state

    3. Mutuality – contract must bind both contracting parties

    - no situation where only one is bound; if there is such, it is a violation of this principle; hence, void

    Theory of cognition

    4. Relativity of contracts

    - obligatoriness limited to CP as well as their heirs and assigns

    - GR – contract does not affect third person who does not have participation, whether in favor or against

    - art 1311 – rights and obligtaions are transmissible to heirs, unless intransmissible by law,

    - Exceptions:

    1. art 1311 stipulation por autrui – stipulation in a contract in favor of a third person; purpose
    of benefiting the interest of 3rd p who has no participation in contract;

    Following elements must be present:


    o Provision must extend benefit to 3rd person
    o Conferment of benefit must be intentionally done – if incidental – not por autrui
    o Provision must only be a part, must not be the whole contract; because if it comprises the
    entire contract, the 3rd person must be party
    o Neither of the CP must bear the legal representation of the third person; otherwise, third
    person is a party to the contract
    o Conferment of benefit must have been accepted prior to withdrawal

    2. Art 1312 in contracts creating real rights, any third person who come into possession of the
    object of the contract is likewise bound by the contract which created real right (right binding
    against the whole world)

    Ex. REM (contract whereby the debtor secures to the creditor the fulfillment of a principal
    obligation, specially subjecting to such security immovable property or real rights over
    immovable property in case the principal obligation is not complied with at the time stipulated.)

    If registered in registry of property; mortgagee cannot prohibit the mortgagor from selling the
    mortgaged property, any agreement to that effect is void

    3. Art 1313. Contracts in fraud of creditors

    Art 1381 – one of the rescissible contracts are those contracts which have been entered for the
    purpose of defrauding the creditor

    Action for rescission has a special name – Action pauliana

    4. Art 1314. Tort interference - ordinarily, only a contracting party can breach the contract, so
    an action for breach of contract can ordinarily be against a contracting party; but as exception
    under art 1314, even third person may breach a contract and that third person can be held liable
    for damages if maliciously interfered in a contract between the parties;

    For action to prosper, the ff requisites must be present

    o There must be an existing valid contract


    o Third person who interfered must have knowledge of existence of valid contract, no need to
    know who are the CPs
    o Interference must be malicious, done in bad faith, solely for purpose on injuring any of the
    CPs.

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