Article 1323.

An offer becomes ineffective upon the death, civil interdiction, insanity, or insolvency
of either party before acceptance is conveyed.

Effect of 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
3. Insanity
4. Insolvency

The above circumstances apply to either party.

Other instances when offer becomes ineffective

1. Rejection of the offer by the offeree.

Article 1324. When the offeror has allowed the offeree a certain period to accept, the offer mag be
withdrawn at any time before acceptance by communicating such withdrawal, except when the
option is founded upon a consideration, as something paid or promised.

Rules in case of an offer to sell

When the offeror has allowed the offeree a certain period to accept, the offer may be withdraqn at
any time before acceptance by communicating such withdrawal, except when the option is founded
upon a consideration, as something paid or promised.

Option contract and option money

An option contract is an agreement that binds an offeror to a promise to hold open an offer for a
predetermined or reasonable length of time. The offeror may not receive any consideration for
holding open the offer. But sometimes, in return for this agreement to hold the offer open, the
offeror receives money or something else of value from the offeree. Option money is the money
paid or promised to be paid in consideration for the option.

Illustration: A, interested to buy a car at a showroom, asked B the price. B said “it’s P800 000”. Since
A could not make up his mind, B told him “I’ll give you a week to decide; meanwhile I’ll reserve the
car for you.”

Before the week is over, B can withdraw his offer to sell the car to A provided that the latter has not
signified his acceptance of the same. B must communicate said withdrawal to A.

Illustration: A offered to sell his house and lot to B for P5 million. In his letter to B, he gave B a
month to raise the amount; in return B is to give A P50 00. He further wrote that as soon as B is
ready, they will sign the deed of sale. Very much interested, B gave A P50 000 in consideration of
thee option. After a week, A went to B telling the latter he is no longer willing to sell the property
unless he price is raised to P7 million.
B, here, may compel A to accept P5 million, the price first offered and execute the deed of sale
because the option is founded upon a consideration—the P50 000 option money.

Article 1325. Unless it appears otherwise, business advertisements of things for sale are not
definite offers, but mere invitations to make offer.

Article 1326. Advertisements for bidders are simply invitations to make proposals, and the
advertiser is not bound to accept the highest or lowest bidder, unless the contrary appears.

Business advertisements of things for sale are not definite offers but mere invitations to make an
offer. However, if such advertisements contain very particular promises, the same may be held to be
definite offers.

Advertisements for bidders are simply invitations to make proposals; the advertiser is not bound to
accept the highest nor lowest bidder unless the contrary appears.

Article 1327. The following cannot give consent to contract:

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

Article 1328. Contracts entered into during a lucid interval are valid. Contracts agreed to in a state
of drunkenness or during a hypnotic spell are voidable.

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.

The persons enumerated in Article 1327 cannot give consent to a contract due to a lack of legal
capacity. Article 1327 to 1344 deal with two classes of voidable contracts. It is advisable to read and
analyze these articles together with articles 1390 to 1402.

Capacity is the ability to enter into a contractual relationship.

Minors are generally excused from contractual responsibility. The court allows minors the privilege
to annul their contracts to protect them from adults who might take advantage of young people who
might not fully understand their obligations.

Persons deprived of the mental ability to comprehend and understand contractual obligations also
have the right to annul their contracts. People under the influence of alcohol or of a hypnotic spell
may have this right as well.

Classes of voidable contracts

1. Those where one of the parties is incapable of giving consent to a contract;

Voidable contracts are valid until annulled. But annulment cannot prosper when said contracts have
been ratified because ratification cures the defect of voidable contracts.

Persons incapacitated to consent

1. Unemancipated minora
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

Unemancipated minors

Emancipation shall terminate parental authority over the person and property of the child who shall
then be qualified and responsible for all acts of civil life. ( Article 236, Family Code)

Emancipation takes place by the attainment of majority. Majority commences at the age of eighteen
years. (Article 234, Family Code)

Minority is a term that describes persons who had not yet reached the age of eighteen. Upon
reaching that age, a person is said to gave reached majority.

Examples of valid contracts entered into by unemancipated minors

In general, contracts entered into by unemancipated minors are voidable. There are instances,
however, when contracts entered into by them are considered valid. The following are two examples
of said exceptions to the general rule:

1. Contracts for necessities of the minor but here, the people who are legally bound to give
them support should pay therefor. Necessaries are those goods and services that are
essential to a minor’s health and welfare. Necessaries include food, dwelling, clothing,
medical attendance, education and transportation.
2. Contracts where the minor misrepresented his age and pretended to be one of major age.
Such minor is said to be in estoppel. It is, however, essential that the other party must have
been misled by such misrepresentation.

Principle of estoppel