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What Is A Contract?: Article 1305. A Contract Is The Meeting of Minds Between Two Persons Whereby One Binds

1. A contract is an agreement between two or more parties where one party binds themselves to give or do something for the other party. It creates legal obligations between the parties. 2. For a contract to be valid, it requires consent, an object, and cause. Consent must be free from error, violence, intimidation, undue influence or fraud. The object must be possible and lawful. Cause must exist and be lawful and real. 3. Contracts can be oral, written, or partly oral and partly written. They are generally binding regardless of form unless the law requires a specific form. Written contracts can be reformed if they fail to reflect the true agreement due to mistake, fraud or

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58 views

What Is A Contract?: Article 1305. A Contract Is The Meeting of Minds Between Two Persons Whereby One Binds

1. A contract is an agreement between two or more parties where one party binds themselves to give or do something for the other party. It creates legal obligations between the parties. 2. For a contract to be valid, it requires consent, an object, and cause. Consent must be free from error, violence, intimidation, undue influence or fraud. The object must be possible and lawful. Cause must exist and be lawful and real. 3. Contracts can be oral, written, or partly oral and partly written. They are generally binding regardless of form unless the law requires a specific form. Written contracts can be reformed if they fail to reflect the true agreement due to mistake, fraud or

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jen
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© © All Rights Reserved
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Topic 3.

1 General provisions on Contracts

What is a contract?
Article 1305. A contract is the meeting of minds between two persons whereby one binds
himself, with respect to the other, to give something or to render some service. 
Contract vs. Obligation
Contract is one of the sources of obligations.
Obligation is the legal tie or relation itself that exists after a contract has been entered into.
While the contracting parties may establish such stipulations, clauses, terms, and conditions as
they may deem convenient (under the principle of freedom of contract), the same must not be
contrary to law, morals, good customs, public order, or public policy. 
A contract is binding between the contracting parties.  (Article 1308)
As a general rule, it takes effect only between the parties, their assigns and heirs. (Article
1311) Meaning, a third person who has not taken part in a contract and is, therefore, a stranger
to a contract, is not affected by it.
Instances when third persons may be affected by a contract:
  1.] In contracts containing a stipulation in favor of a third person (stipulation pour autrui) (Article
1311, paragraph 2)
  2.] In contracts creating real rights (Article 1312)
  3.] In contracts entered into to defraud creditors (Article 1313)
  4.] In contracts which have been violated at the inducement of a third person (Article 1314)
 
Classification of contracts according to perfection:
  1.] Consensual contract -- that which is perfected by mere consent.
  2.] Real contract -- that which is perfected by the delivery of the thing subject matter of the
contract.
  3.] Solemn contract -- that which requires compliance with certain formalities prescribed by
law, such prescribed form being thereby an essential element thereof. 
 
Stages of a contract:
  1.] Preparation or negotiation
  2.] Perfection or birth
  3.] Consummation or termination
 
Topic 3.2 Essential Requisites of a Contract

ESSENTIAL REQUISITES OF CONTRACTS:


1. CONSENT  -- is the conformity or concurrence of wills (offer and acceptance) and with
respect to contracts, it is the agreement of the will of one contracting party with that of another
or others, upon the object and terms of the contract. (4 Sanchez Roman 191)
    The following cannot give consent to a contract:
         1.]  Unemancipated minors
         2.]  Insane or demented persons, and deaf-mutes who do not know how to write. 
      Factors that vitiate consent: (Vices of Consent)
        1.] Error or mistake
        2.] Violence or force 
        3.] Intimidation or threat or duress
        4.] Undue influence
        5.] Fraud or deceit
 
2. OBJECT -- is the subject matter of the contract.
    All things or services may be the object of a contract. 
    Exceptions:  
     1.] outside the commerce of men
     2.] legally or physically impossible objects
     3.] determinable things
     4.] future things or rights
     5.] intransmissible rights
 
3. CAUSE -- is the essential reason or purpose which the contracting parties have in view  at
the time of entering into the contract.
   Requisites of cause:
    1.] It must exist at the time the contract is entered into.
    2.] It must be lawful.
    3. It must be true or real.

Topic 3.3 Form and Interpretation of contracts; Reformation of instruments


FORM OF CONTRACTS
--   A contract may be oral, or in writing, or partly oral and partly written. It may also be express 
or implied. If the contract is in writing, it may be in a public or private instrument. 
As a general rule, contracts are binding and therefore, enforceable by the contracting parties
whatever may be the form in which the contract has been entered into, provided that all the
essential requisites (consent, object and cause) are present.
Exceptions:
  1.] when the law requires that a contract be in some form to be valid.
  2.] when the law requires that a contract be in some form to be enforceable
  3.] when the law requires that a contract be in some form for the convenience of the parties or
for the the purpose of affecting third persons.
 
REFORMATION OF INSTRUMENTS
  -- is that remedy allowed by law by means of which a written instrument is amended or rectified
so as to express or conform to the real agreement or intention of the parties when by reason of
mistake, fraud, inequitable conduct, or accident, the instrument fails to express such agreement
or intention.
Reformation vs. Annulment
 In reformation, there has been meeting of the minds of the parties; hence a contract exists but
the written instrument does not express the true intention of the parties.
 In annulment, there has been no meeting of the minds, the consent of one of the parties being
vitiated by mistake fraud, inequitable conduct or accident. 
 
INTERPRETATION OF CONTRACTS
  -- it is the determination of the meaning  of the terms or words used by the parties in their
written contract. It is the process of ascertaining the intention of the parties from the written
words contained in the contract. 
General rule:  if the terms of a contract is clear, its literal meaning is controlling.
 However, when the words and clauses of a written contract are in conflict with the manifest
intention of the parties, the latter shall prevail over the former. 

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