CONTRACTS AND

SPECIFICATIONS
Extracts from the New Civil Code
Of the
Philippines (RA 386)
• REPUBLIC ACT NO. 386. AN ACT TO
ORDAIN AND INSTITUTE THE CIVIL
CODE OF THE PHILIPPINES
 General Provisions on Contracts
Learning Objectives:
After studying this lesson, you should:
1. know the definition of contract
2. learn the different classifications of contracts;
3. know the elements of contracts;
4. that contracts take effect only between parties and its exceptions;
5. learn to understand and write specifications.

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 The classifications of contracts
summarizes those types of contracts that
may be freely agreed upon as long as they
are not contrary to law, morals, good
customs, public order or public policy.
ART. 1305. 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 service. (1254a)

ART. 1306. The contracting parties may establish such

stipulations, clauses, terms and conditions as they may
deem convenient, provided they are not contrary to law,
morals, good customs, public order, or public policy.
(1255a)

2
ART. 1308. The contract must bind both contracting
parties; its validity or compliance cannot be left to the
will of one of them. (1256a)

3
 CHAPTER II
ESSENTIAL REQUISITES OF CONTRACTS

General Provisions:

ART. 1318. There is no contract unless the following

requisites concur:

1. Consent of the contracting parties.

2. Object certain which is the subject matter of the
contract.
3. Cause of the obligation which is established.

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 CHAPTER II
ESSENTIAL REQUISITES OF CONTRACTS

SECTION 1. CONSENT

ART. 1319. Consent is manifested by the meeting of the

offer and the acceptance upon the thing and the cause
which are to constitute the qualified acceptance
constitutes a counter-offer.

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 CHAPTER II
ESSENTIAL REQUISITES OF CONTRACTS

SECTION 1. CONSENT

ART. 1320. An acceptance may be express or implied.

ART. 1321. The person making the offer may fix the
time, place, and manner or importance, all which must
be complied with.

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 CHAPTER II
ESSENTIAL REQUISITES OF CONTRACTS

SECTION 1. CONSENT

ART. 1322. An offer made through an agent is accepted

from the time acceptance is communicated to him.

ART. 1323. An offer becomes ineffective upon the death,

civil interdiction, insanity or insolvency of either party
before acceptance is conveyed.

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 CHAPTER II
ESSENTIAL REQUISITES OF CONTRACTS

SECTION 1. CONSENT

ART. 1327. The ff. cannot give consent to a contract:

1. Unemancipated minors
2. Insane or demented person, and deaf-mutes
who do not know how to write.

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 CHAPTER II
ESSENTIAL REQUISITES OF CONTRACTS

SECTION 1. CONSENT

ART. 1328.Constracts entered into during a lucid

interval are valid. Contracts agreed to in a state of
drunkenness or during a hypnotic spell are voidable.

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 CHAPTER II
ESSENTIAL REQUISITES OF CONTRACTS

SECTION 1. CONSENT

ART. 1330.A contract where consent is given through

mistake, violence, intimidation, undue influence, or
fraud is voidable.

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 CHAPTER II
ESSENTIAL REQUISITES OF CONTRACTS

SECTION 1. CONSENT

ART. 1332. When one of the parties is unable to read, or

if the contract is in 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. (n)

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 CHAPTER II
ESSENTIAL REQUISITES OF CONTRACTS

SECTION 1. CONSENT

ART. 1333.There is no mistake if the party alleging it

knew the doubt, contingency or risk affecting the object
of the contract. (n)

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 CHAPTER II
ESSENTIAL REQUISITES OF CONTRACTS

SECTION 2. Object of Contracts

ART. 1348. Impossible things or services cannot be the

object of contracts.
ART. 1349. The object of every contract must be
determine as to its kind. The fact that the quantity is
not determine 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.
 CHAPTER III
FORMS OF CONTRACTS

Art. 1356. Contracts shall be obligatory, in whatever

form they may have been entered into, provided all the
essential requisites for their validity are present.
However, when the law requires that a contract be in
some form in order that it may be valid or enforceable,
or that a contract be proved in a certain way, that
requirement is absolute and indispensable. In such
cases, the right of the parties stated in the following
article cannot be exercised. (1278a)
 CHAPTER III
FORMS OF CONTRACTS

Art. 1358. The ff. must appear in a public document:

1. Acts and contracts which have for their object the
creation, transmission, modification or extinguishment
of real rights over immovable property, sales of real
property or of an interest therein are governed by
articles 1403, No. 2, and 1405.
 CHAPTER III
FORMS OF CONTRACTS

4. The cession of actions or rights proceeding from an

act appearing in a public document.
 Interpretation Of Contracts

• Art. 1370. If the terms of a contract are clear

and leave no doubt upon the intention of the
contracting parties, the literal meaning of its
stipulations shall control.

• If the words appear to be contrary to the

evident intention of the parties, the latter shall
prevail over the former. (1281)
 PART IV

DEFECTIVE CONTRACTS

There are four kinds of defective contracts:

• 1. Rescissible contracts (Chapter 6);

• 2. Voidable contracts (Chapter 7);

• 3. Unenforceable Contracts (Chapter 8); and

• 4. Void or inexistent contracts (Chapter 9)

 Rescissible contracts

• Contracts are valid because all the essential

requisites of a contract exist but by reason of injury or
damage to one of the parties or to third persons, such as
creditors, the contract may be rescinded.

Art. 1380. Contracts validly agreed upon may be

rescinded in the cases established by law. (1290)
 Voidable Contracts

• Art. 1390. The following contracts are voidable

or annullable, even though there may have been no
damage to the contracting parties:
• (1) Those where one of the parties is incapable
of giving consent to a contract;
• (2) Those where the consent is vitiated by
mistake, violence, intimidation, undue influence or
fraud. These contracts are binding, unless they are
annulled by a proper action in court. They are
susceptible of ratification.
 Unenforceable Contracts
Art. 1403. The following contracts are unenforceable, unless
they are ratified:

(1) Those entered into in the name of another person by one

who has been given no authority or legal representation, or who
has acted beyond his powers;

(2) Those that do not comply with the Statute of Frauds as set
forth in this number. In the following cases an agreement
hereafter made shall be unenforceable by action, unless the
same, or some note or memorandum, thereof, be in writing,
and subscribed by the party charged, or by his agent; evidence,
therefore, of the agreement cannot be received without the
writing, or a secondary evidence of its contents:
 Void or Inexistent Contracts
Art. 1409. The following contracts are inexistent and void
from the beginning:

1) Those whose cause, object or purpose is contrary to law,

morals, good customs, public order or public policy;

2) Those which are absolutely simulated or fictitious;

3) Those whose cause or object did not exist at the time of the
transaction;

4) Those whose object is outside the commerce of men;

5) Those which contemplate an impossible service;

6) Those where the intention of the parties relative to the
principal object of the contract cannot be ascertained;

7) Those expressly prohibited or declared void by law.

These contracts cannot be ratified. Neither can the right

to set up the defense of illegality be waived.

Art. 1410. The action or defense for the declaration of the

inexistence of a contract does not prescribe.
SPECIFICATIONS
 SPECIFICATION

A specification is a detailed description of the

particulars of some projected work in any
scientific, manufacturing process or engineering
discipline by stating the dimensions, material
content, quantities, and performance of the
work.
 TECHNICAL
SPECIFICATIONS

It gives the directions to be followed by

the designer, builder or constructor.
 SPECIFICATIONS
Specifications serve three purposes.

A. make sure the client gets the product

or service required;
B. are a means of equating expenditure
with a budget; and
C. specify to the contracting party
precisely what is wanted.
 SPECIFICATIONS

Well-written specifications must:

• Avoid contractual commercial

difficulties
• Meet performance objectives
• Avoid maintenance problems
• Meet budget objectives
 TYPES OF SPECIFICATIONS
CONCEPT SPECIFICATIONS

These are written in general terms to

define a product or major undertaking. They
serve as a foundation for conducting an
investigation, feasibility study, and the
probable life cycle cost of an undertaking.
 TYPES OF SPECIFICATIONS
CONCEPT SPECIFICATIONS

For example, this type of specification might

apply to a manufacturing plant required to
begin production of a commodity at a given
time. The concept specification might, and
often does, state transportation needs, lines of
communication, market requirements, raw
material markets, security, waste disposal
criteria, and required soil conditions.
 TYPES OF SPECIFICATIONS
DESIGN

Design specifications are used to define system or

equipment performance, output capacity, and the
range of design license open to the designer.
 TYPES OF SPECIFICATIONS
DESIGN

For example, a designer may be restricted to

the use of electrical or hydraulic means for a
power-operated mechanism. This rules out the
use of, for instance, pneumatic means. Similarly,
an architect may be limited to concrete in the use
of materials in a building design.
 TYPES OF SPECIFICATIONS
DESIGN DESCRIPTION
Design description specifications are normally
those produced by the designer. They are not the
same as design specifications (see the preceding
item), which govern the designer's work. The
design description defines and specifies a design
solution that meets the design specification.
 TYPES OF SPECIFICATIONS
DESIGN DESCRIPTION
Specifications in this category serve two purposes.

• They are submitted to the organization issuing the design

specification as evidence that the specification has been met.
• They are used by other designers to produce equipment
specifications, construction and manufacturing drawings.
 TYPES OF SPECIFICATIONS
CONSTRUCTION AND
MANUFACTURING

Specifications in this category consist of drawings and

written details that cover the product, system, building,
or service. They include references to regulatory controls,
acceptable national, international and industry
standards; specify criteria that must be met by
contractors or suppliers who wish to submit bids; and
limit products and services bidders may or may not
include in their bids and proposals.
 TYPES OF SPECIFICATIONS
PROCESS

Process specifications describe the technical

processes that will be used in the manufacture of a
product, or construction of a building or system. These
processes include the heat treatment of foundry castings,
rules for pre-stressing concrete beams, bolt torques on
bridge anchors, seismic measurements, and specific
chemical processes to name a few.
 TYPES OF SPECIFICATIONS
STANDARDS
Standards, however, can be one of three types:
1. To provide specific requirements for products such as material,
fasteners and fittings that, among various suppliers, are
interchangeable.
2. Specify product material requirements as in the first type, but
suppliers are permitted some latitude to meet the standards. In
this case, however, the products from different suppliers are not
interchangeable.
3. To cover processes and practices not specific to a product or
item. Standards of this type can be recognized in titles such as
Codes of Practice, General Requirements, Guide, Test Methods,
and Quality Assurance.
 ANATOMY OF A
SPECIFICATION
1. IDENTITY
Assign a number to identify the specification for
use in the commercial contract, or other
specifications.

2. REVISION REFERENCE
Specifications are often revised. Provide a reference
for each revision issued. Use a letter or number
designation and date it so that the user is aware of the
version that applies.
 ANATOMY OF A
SPECIFICATION

3. TITLE
Provide a concise and distinctive title. Avoid using
long titles; they are confusing.

4. INTRODUCTION
Say what the specification is about. This can include
the scope of the specification, its type, form, purpose and
application.
 ANATOMY OF A
SPECIFICATION

5. DESCRIPTION
Describe the product or service covered: dimensions;
materials; tolerances; finish; required spares.
 ANATOMY OF A
SPECIFICATION
6. PERFORMANCE
Describe the performance criteria, operating conditions, expected service,
life expectancy, and service factors. Other performance requirements
depend on the product, structure, or service.
• For electrical, mechanical, hydraulic, aeronautical, and computer
equipment, bio-medical, and chemical processing devices, performance
will include power, speed, movement, pressures, operating temperatures,
primary and stand-by power sources, and ratings.
• For engineering and building structures, performance will include floor
loadings, finish, materials.
• Service factors for all products, structure or services could include
environmental conditions: chemicals, temperature ranges, vibration,
humidity, and dirt.
 ANATOMY OF A
SPECIFICATION
7. CONSTRUCTION
Construction, also meaning manufacture, should
include reference to processes, chemicals, solvents,
product handling, and the use of special tools and
devices.

8. RELIABILITY
The specification should include information on
service and maintenance factors that affect reliability. It
should state limits on down-time to effect repairs, the
availability of specialists for servicing, and replacement
parts.
 ANATOMY OF A
SPECIFICATION
9. QUALITY ASSURANCE

The purpose of imposing quality assurance

standards, as opposed to standards in general, is to
provide an organizing framework within which the
contract is carried out. The specifications define the
quality of the service. Inspection and test requirements,
forming part of the quality assurance programme, do not
improve the quality of product or service, but provide
objective evidence of the quality of goods or services
provided.
 ANATOMY OF A
SPECIFICATION
10. PACKAGING AND STORAGE
The specification should describe the packaging,
handling, shipping and storage requirements of the
product.

11. STANDARDS AND SPECIFICATIONS

Throughout the specification other specifications and
standards will be referenced. A separate listing of all
specifications and standards cited should be summarized
in this section.
 ANATOMY OF A
SPECIFICATION
12. RECORDS

The retention of accounting records is required by

law. The retention of manufacturing, inspection and
performance test records is what any manufacturing or
service contractor observes for self-protection. Clients
who issue specifications frequently have to meet national
and industry regulatory controls by maintaining
manufacturing as well as operating records.
 ANATOMY OF A
SPECIFICATION
12. RECORDS

Specifications should include:

1. Direction to the contractor of exactly what

construction records are needed and what drawings,
spare parts information, operating manuals,
installation information, and performance test records
are required.
2. Direction to the contractor of what records are to be
kept by the contractor and for how long.
 SPECIFICATION WRITING

The objectives for which specifications are

written were dealt with in the introduction to this
session. Specification writing as used here includes
the text, drawings, illustrations and sketches.
The basis for development of a specification is
the same as that described for writing a technical
report or procedure. To reiterate the advice given
throughout these articles, the steps are:
Plan; research; outline; write; edit; review; and obtain approval.
 SPECIFICATION WRITING
It is not necessary to dwell on each of these steps in
detail. Advice, however, that applies in particular to
specifications is:

1. Be positive. Omit statements that indicate lack of knowledge

or uncertainty.
2. Exclude requirements that cannot be enforced.
3. Give direction, not suggestions.
4. Give specific numerical data: values, maximum and
minimum tolerances.
5. Don't be vague with the use of such phrases as 'Good
workmanship', 'easily cleaned', 'readily accessible' .
 SPECIFICATION WRITING
It is not necessary to dwell on each of these steps in
detail. Advice, however, that applies in particular to
specifications is:

6. Specify the contractor's responsibilities to subcontractors

and third parties.
7. Check and re-check alpha-numeric references to
specifications and standards quoted.
8. Be realistic and do not specify the unattainable.
9. Write in the imperative style: 'Conduct the following tests
... etc.' in preference to the passive 'The following tests
shall be conducted ... etc.'
 SPECIFICATION WRITING
It is not necessary to dwell on each of these steps in
detail. Advice, however, that applies in particular to
specifications is:

10. Be precise in the use of language and avoid:

• Vague adjectives: good, fine, smooth, rough, high, low,

large, small.
• Adjectival strings: 'main circuit control switch', which
could mean 'Control switch in the main circuit'; 'Main
switch in the control circuit'; or 'A switch in the main
control circuit.'
 REVIEW AND APPROVAL

Anyone who reviews a specification should do so from

the viewpoint of the contractor. Here is a checklist for
anyone who has to review and approve a specification.

• Is it grammatically correct?
• Are any necessary requirements omitted?
• Are any unnecessary requirements included?
• Is the specification concise and unambiguous?
• Is it clear as to the what, when, where, how and why?
 SOURCES:

PICE: Code of Ethics

Plaintiff-Appellant v Paddock Pool Builders, Inc., Journal
Writing Specifications by George R. Whitten, Jr.
QUOTE OF THE DAY

“Until the contract is signed,

nothing is real.”

By: Glenn Danzig