Legal Reviewer as they may deem convenient, provided

Law on Contracts they are not contrary to law, morals, good

General Provisions (main definition of customs, public order, or public policy.
contract) Contrary to Law- contracts that will violate
Article 1305 Civil Code of the Philippines the law
• A contract is a meeting of minds between Ex. - Mam theresa asked Mr.Tan, na
two persons whereby one binds himself, kukunin nila ang car ni Vanessa ng walang
with respect to the other, to give something bayad(nanakawin) and Mr. Tan agreed,so
or to render some service. may agreement sa kanilang dalawa about a
certain thing
Definition of Contract - Also killers for hire
A contract is defined as a meeting of minds - Vote buying
between two parties whereby one binds Contrary to Morals
himself with respect to the other to give Ex. - The cult of Senior Agila in Socorro,
something or to render some service. surigao delSur, where they have their own
(Contact can also be not on written it all laws, and allow children to get married from
depends on the nature of the contract, but 12-16 yrs.old. Even though it is accepted in
there should be a meeting of minds) other countries, the law here states that the
contracting parties in marriage should be 18
In a contract of sale, one of the contracting and above, even though may parents
parties obligates himself to transfer consent.
ownership of, and to deliver, a determinate - Another example is when husband
thing, and the other to pay therefor a price and wife broke up, and they agreed
certain in money or its equivalent. (Dantis v. to split up the properties they have
Maghinang, Jr., GR. No. 191696, 10 April and can have lovers of their own, but
2013) (this is said by the SC in this case) is invalid and not allowed by law/
-both have reciprocal obligation to be valid, constitution, because the law
to deliver the and to pay protects the family life and reason
Hence, the seller delivers the thing and why annulment is hard to do.
transfers its ownership while the buyer pays Contrary to public policy and order
the price agreed upon. Ex. When you are an employer and you put
Ex. Mam Francisco ask Vanessa the she up a business, like a store of okay okay and
will buy her car (Toyota altis, model 2017 you hire 10 people to look over the store,
with plate no. Ncy 2559) at 100,000 pesos, and you make them sign an employment
and then Vanessa agreed, so may meeting contract stating that they will 2000 as
of minds, then after mag agree ni Vanessa sweldo in a month with free lodging and
she said that the car will be delivered on food, but the employment contract will be
Sunday, now may reciprocal obligation na invalid because there is a minimum wage
sila, then the car is the determinate thing law and a 13th month pay.
and object of contract to be delivered
Characteristics of Contracts
Article 1306 CC - AUTONOMY OF CONTRACT (Art.
The contracting parties may establish such 1306)
stipulations, clauses, terms and conditions
Under the autonomy of contracts or the Mutuality is one of the characteristics of a
freedom to contract, the contracting parties contract. It requires that the validity,
are free to enter into agreements and performance, or compliance of a contract
stipulate the terms and conditions of their cannot be left to the will of only one of the
contract. parties.
However, such freedom is not absolute, i.e. Any stipulation regarding the validity or
(that is) the stipulations should not be compliance of the contract left solely to the
contrary to law, morals, good customs, will of one of the contracting parties is
public policy or public order in order to be invalid
considered valid. - RELATIVITY (Art. 1311)
- •LAW IS WRITTEN INTO THE Under the basic principle of relativity of
CONTRACT contracts, contracts are binding only
Counter-balancing the principle of the between the parties to an agreement. They
autonomy of contract is the general rule that take effect only among the parties, their
the provisions of the application laws, assigns, and their heirs, except in cases
especially those relating to matters imbued where the rights and obligations are not
with public policy, are deemed written into transmissible by their nature, stipulation, or
the contract. provision of law
Example: Ex. When Mam theresa ask her driver or
The relation between labor and capital are her son to give the 100,000 pesos to
not merely contractual. They are impressed Vanessa and get the keys and the car to
with public interest that labor contracts must her.
yield to the common good. *Except are not transmissible by nature
Hence, an employer and employee cannot - Like when you are contracted to do
stipulate in an employment contract that the a mural painting but you died, and
latter agrees to waive his 13th month , as cannot do it anymore your assigns
such would be contrary to law (13th Month or heir cannot take over because
Pay Law) and public policy. skills cannot be transmitted
The employee cannot also agree to a daily
wage that is lower that the minimum wage Exceptions to Relativity
as such would violate various wage orders. 1. Transmissible Rights
- OBLIGATORY FORCE OF A good test in determining whether or not a
CONTACT (Art. 1159; 1315) contract terminates upon the death of one of
Once the parties make valid stipulations, the parties is to check if it is of such
terms and conditions, the same are binding character that it may be performed by the
as the law between them. promisor's personal representative.
Obligations arising from contracts have 2. Contracts Pour Autrui (Art. 1311, 2nd
force of law between parties and should be par)
complied with in good faith. One who is not a party to a contract, and for
(once there are changes from the original whose benefit it was not expressly made,
terms and conditions of the contract, it can cannot use it to maintain an action. One
be invalid) cannot do so, even if the contract performed
- MUTUALITY OF CONTRACTS (Art. by the contracting incidentally inures to
1308) one's benefit.
Ex. Ms. Ubay is an agent of a life insurance, 4. Contracts intended to defraud
and mam theresa plan to get an insurance creditors (Art. 1313)
for his son, so Ms.ubay and mam theresa - A creditor can rescind a contract to
are the contracting parties but the contract which he is not a party if the said
will go to his son which is not part of the contract is executed with the
contract intention of prejudicing his rights.
Exception: Ex. Mam theresa borrowed money from Mr.
Parties who do not take part in the contract Tan, ( 500,000) , now for sure that Mam
may nevertheless show that they have real there's will pay him back she put her car as
interest in its performance or annulment. collateral if she cannot pay on the due date
In other words, those who are not principally on Nov. 15. Now Mam theresa sell her car
or subsidiary obligated in a contract, in to Mr. Ompad for 3 million and Mr. Ompad
which they had no participation, may show agreed and they had a contract of sale but
how it could be detrimental to them. with Mr. Tan they had a contract of loan. It
(Meaning whenever the son can get it and was a successful transaction between Mr.
talk to Ms. Ubay because some insurance Ompad and Mam theresa but Mr. Tan knew
has cash surrender value, like if you pay for about it and confronted Mam. Theresa, now
5 years of the insurance, now the cash has Mam theresa has no intention to pay Mr.
accumulate and they can have the cash Tan. Me. Tan can file a rescission to rescind
surrender value) the contract between Mr. Ompad and Mam
3.Contracts creating real rights (Art. theresa.
1312) 5. Tortuous interference with contractual
- 3rd parties are bound by real rights relations (Art. 1314)
once they are registered. - A 3rd person interferes with a valid
(real rights are real properties like land, contract without a legal justification
house, building that we are paying as real
property tax, and named after you where Essential Requisites of a Valid Contract
you have rights of) Art. 1318
Ex. Ms. Tablizo has property in Laguna There is no contract unless the following
Belair and mam theresa asked to buy it for 5 requisites concur:
million and then Ms. Tablizo agreed, now 1. Consent of the contracting parties;
They should have a written agreement, 2. Object certain which is the subject matter
since they are talking about a real property of the contract;
and for the transfer of ownership to be done 3. Cause of the obligation which is
in writing, even though you have a contract established.
upon agreeing to both terms, but it has to be (if one is missing, it will be invalid)
inwritting, and now we need to make a deed Generally, contracts need not be in writing
of absolute sale and then register it for the in order to be valid. They are obligatory in
title of property be under Mam Theresa whatever form they are entered into
-Now the 3rd parties are those for example provided all the essential requisites for their
the boyfriend of Ms. Tablizo or siblings, and validity are present
Mam theresa husband and children are the
3rd party. STAGES OF CONTRACT
1. NEGOTIATION which begins from the Upon death, civil interdiction(he us being
time the prospective contracting parties punished or not allowed to enter by law),
indicate their interest in the contract and insanity, or insolvency(Hindi na kaya
ends at the moment of their agreement. magbayad) before acceptance
2. PERFECTION or BIRTH which takes
place when the parties agree on all of the (Art. 1327 of the Civil Code) The following
essentials. elements of a contract. cannot give consent to a contract:
3. CONSUMMATION which occurs when 1. Unemancipated minor
the parties fulfill or perform the terms (like marriage between minors are not valid
agreed upon, culminating in the even with parents consent)
extinguishment thereof. 2. Insane or demented persons(person with
insanity), and deaf-mutes who do not know
CONSENT how to write.
Art. 1319 (Art. 1328 of the Civil Code) Contracts
• Consent is manifested by the meeting of entered into during the lucid interval(time
the offer and the acceptance upon the thing with temporary sanity of an insane person)
and the cause which are to constitute the are valid. Contracts agreed to in a state of
contract. drunkenness or during a hypnotic spell are
Acceptance made by letter or telegram does voidable.
not bind the offeror except from the time it (Art. 1330 of the Civil Code) A contract
came to his knowledge. The contract, in where consent is given through mistake,
such a case, is presumed to have been violence, intimidation, undue influence, or
entered into in the place where the offer fraud is voidable.
was made. VOIDABLE Contracts means it COULD be
void, and it also means one of the parties
Consensual contracts are perfected by has the option to void it or keep it as it is
mere consent which is manifested by the (valid until it is annulled and set aside by a
meeting of the offer and the acceptance court of law)
upon the thing and the cause which are to
constitute the contract. Classes of voidable contracts
Consent must be free, voluntary, willful and Incapacitated parties
with a reasonable understanding of the ● Minors
various obligations which the parties ● Insane or demented persons
assumed for themselves. ● Deaf-mute who do not know how to
write
CONSENT ● Persons in state of drunkenness
-Manifestation of consent ● Persons under a hypnotic spell
Concurrence of an offer that is certain and Consent is vitiated
an acceptance that is absolute. ● Mistake
-Form of acceptance ● Violence
Express or implied (by letter or telegram or ● Undue influence
through an agent) ● Fraud
-When offer becomes ineffective
Objects of Contracts
Art. 1347 of the Civil Code. All things which
are not outside the commerce of men,
including future things, may be the object of
contract. All rights which are not
intransmissible may also be the object of
contracts.
All services which are not contrary to law,
morals, good customs, public order or public
policy may likewise be the object of a
contract.
Art. 1348 of the Civil Code. Impossible
things cannot be the object of contracts.
● Things outside the commerce of
man; (ex.government property)
● Future things;
● Transmissible rights;
● Lawful things and services

Art. 1349 of the Civil Code. The object must

be determinate as to its kind. The fact that
the quantity is not determinate shall be an
obstacle to the existence of the contract,
provided it is possible to determine the
same, without need of a new contract
between the parties

Cause of Contracts
Art. 1350 of the Civil Code. In onerous
contract, 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.

If the contract has no cause or

consideration, it is void for lacking an
essential requisite of a contract.
A contract with no cause or with an unlawful
cause is void.