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Contracts for Paralegals
[PTP32]
A guide to contracts without the legalese

ATTY. MIA G. GENTUGAYA

Questions, questions

Is an oral contract valid? May pinirmahan ka ba? My brother Jude is

We have a gentleman’s Notarized ba? abroad. Can he sign the
agreement! contract?
Our approach
1. Simplified legal concepts
1. Selective reference to the law
1. We use a “script” to anchor the concepts. Meet our leading
character Ruel, an entrepreneur.
1. We refer to specific provisions of contracts to illustrate the
legal points.
1. Caveat: Our sample contracts have been super simplified. The
real world contracts are more complicated than these
samples.
Episode I
INTRODUCTION OBJECT
Why are we here? What

OUR APPROACH CONSIDERATION

Meet Ruel, our leading What one is prepared to
man “pay” or “receive”

CONSENT
PARTIES
The yes!, defective
Kinds, capacity to contract consents, options
What is a contract?
 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 some service.
Article 1305, New Civil Code
Meet our leading man
RUEL DANTES

Smart entrepreneur

Operates 1887 Garden Cafe, a

farm-to-table restaurant and
events place in Pampanga
A valid contract has

PARTIES

CONSENT

OBJECT

CONSIDERATION
 PARTIES

OBLIGOR OBLIGEE
Also known as debtor Also known as creditor
The person with the obligation to The person to whom the object of
deliver the object of the contract the contract is to be delivered or
or to perform the recipient of the performance

Liable in the event of breach of the Has the right to enforce the
obligation, e.g. non-performance or contract in case of breach
delay
 PARTIES
May be a natural person, May be a juridical person,
e.g. you, me, Ruel a corporation
a partnership

A sole proprietorship is a “hybrid” person: It is a

business entity registered with the DTI and the
proprietor [a natural person] is liable for the obligations
of the business.
 PARTIES
Knowing who you are dealing with

(1) (2)
Check the capacity of Determine what
the party to enter into authorization is needed
the contract for the contract

Remember: An incapacitated party renders a contract invalid or unenforceable

Incapacity: various forms
• Unemancipated minors, insane or demented
persons, deaf mutes who do not know how to
write. Article 1327, NCC
• Insolvency, civil interdiction
• Because of a relationship: spouses
• Because the law says so: against public policy,
morals
 OBJECT OF THE CONTRACT

Must NOT be
The object must be determined or
determinable [without another • outside the commerce of man
contract]
• impossible things or service
It must exist now or capable of • contrary to law, morals, good
existing in the future
customs, public policy
Right must be transmissible

Article 1347, 1348, 1349

 OBJECT OF THE CONTRACT

a thing service to be rendered a transmissible right

10 orders of organic maintenance of the an option to buy
Caesar Salad greenhouse the leased premises
What is the object of the contract?
What is the object of the contract?
 CAUSE OR CONSIDERATION

Remuneratory Contracts of pure

Onerous contracts beneficence
contracts

the promise of the the “reward” -

service or benefit liberality of the
thing or service benefactor
remunerated
For example: For example:
fertilizer for plants/ For example:
renovated kitchen area/ gift of furniture
price of the fertilizer
renovation fee
 Consideration:
For the Lessor: the rental
For the Lessee: the rented space
 Some reminders on consideration

Contracts without cause, or with unlawful or false cause are

invalid. Article 1352, 1353

Inadequacy of cause – by itself – does not invalidate a contract.

Exception: unless the law says so, or
unless there has been fraud, mistake or undue influence

Cause is presumed to exist and is lawful, even if not stated.

Exception: unless the debtor proves the contrary. Article 1354
 What is CONSENT?

ARTICLE 1319.
The offer must be certain and the
Consent is manifested by the acceptance absolute. A qualified
meeting of the offer and the acceptance constitutes a counter-
acceptance upon the thing [subject] offer.
and the cause [consideration] which
are to constitute the contract.
 Reminders on offer & consent

OFFEROR A COUNTER-OFFER OFFER

may fix time, place, ineffective upon death,
is not an acceptance
condition for offer insanity, insolvency,
atbp.

ACCEPTANCE ACCEPTANCE ACCEPTANCE

binding only upon must be certain, on same may be express or
knowledge of offeror thing & terms implied
 The signature block
indicates consent of the parties
Options
A quick detour
When the offerer has allowed the offeree a certain period
to accept, the offer may 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.
Article 1324, New Civil Code
With option money

Ruel is unsure about the

lease
To buy more time, he
enters into an option
contract with the Option money Period ends
Lessor for 30 days “payment” for Lessor cannot Lessor can
the privilege to walk-away offer to others,
decide while waiting if Ruel does not
for period to decide to lease
lapse

Option period
Without option money

Ruel is unsure about the

lease
To buy more time, he
enters into an option
contract with the No option money Period ends
Lessor for 30 days “payment” for But Lessor can
the privilege to Ruel can offer to others
decide within
decide & walk-away
the period
before Ruel
decides

Option period
Defective consents
Consent must be intelligent, free,
spontaneous & real
 Defective Consent

MISTAKE INTIMIDATION

VIOLENCE UNDUE INFLUENCE

FRAUD
Mistake: in the substance of the thing which is the object of the contract, or to
those conditions which have principally moved one or both parties to enter
into the contract.

Violence: when in order to wrest consent, serious or irresistible force is

employed.

Intimidation: when compelled by a reasonable and well-grounded fear of an

imminent and grave evil upon his person or property, or upon the person or
property of his spouse, descendants or ascendants, to give his consent.

Undue influence: when a person takes improper advantage of his power

over the will of another, depriving the latter of a reasonable freedom of choice.
End of Episode 1
Questions?