DIFFERENT KINDS OF OBLIGATION

I. Pure and Conditional Obligations

A. Pure Obligation

Pure obligation is one which is not subject to any condition and no specific date
is mentioned for its fulfillment and is, therefore, demandable at once.

B. Conditional Obligation

Conditional obligation is one whose consequences are subject in one way or

another to the fulfillment of a condition.

1. Characteristics of a Condition
a) Future and Uncertain
b) Past but Unknown

A condition is an event which is future and uncertain or a past event

unknown to the parties.

2. Effect of Happening of Condition

In obligations subject to a suspensive condition, the acquisition of rights

by the creditor depends upon the happening of the event which constitutes
the condition.

In obligation subject to a resolutely condition, the happening of the event

which constitutes the condition produces the extinguishment or loss of
rights already acquired.

3. When is an Obligation Demandable at Once

When the obligation is pure.

When the obligation is subject to resolutory condition.
When it is subject to a resolutory period.

4. Classification of Conditions
a) As to Effect
(1)Suspensive

In suspensive condition, the happening of the condition gives rise to

the obligation.

(2)Resolutory
 In resolutory condition, the happening of an event extinguishes the
obligation.

b) As to Form
(1)Express

An express condition is a condition clearly stated.

(2)Implied

An implied condition is a condition merely inferred.

c) As to Possibility
(1)Possible

A possible condition is one which is capable of fulfillment, legally or

impliedly.

(2)Impossible

An impossible condition is one which is not capable of fulfillment,

legally or physically.

d) As to Cause or Origin
(1)Potestative

A potestative condition is one which depends upon the will of one of

the contracting parties.

(2)Casual

A casual condition is one which depends upon chance or upon the

will of a third person.

(3)Mixed

A mixed condition is one which depends partly upon chance and

partly upon the will of a third person.

e) As to Mode
(1)Positive

A positive condition consists in the performance of an act.

(2)Negative
 A negative condition consists in the omission of an act.

f) As to Number
(1)Conjunctive

In conjunctive condition, there are several conditions and all must

be fulfilled.

(2)Disjunctive

In disjunctive condition, there are several conditions and only one

or some of them must be fulfilled.

g) Divisibility
(1)Divisible

A divisible condition is susceptible of partial performance.

(2)Indivisible

An indivisible condition is not susceptible of partial performance.

II. Obligation with a Period

A. Meaning of Obligation with a Period

An obligation with a period is one whose effects or consequences are

subject in one way or another to the expiration or arrival of a period or
term.

B. Meaning of Period or Term

A period is a future and certain event upon the arrival of which the
obligation (or right) subject to either arises or is terminated. It is a day
which must necessarily come, although it may not be known when.

C. Period and Condition Distinguished

1. As to Fulfillment

A period is a certain event which must happen sooner or later at a date

known beforehand, or at a time which cannot be determined, while a
condition is an uncertain event.

2. As to Time

A period refers only to the future, while a condition may refer also to a
past event unknown to the parties.
 3. As to Influence on the Obligation

A period merely fixes the time for the efficaciousness of the obligation. If
suspensive, it cannot prevent the birth of the obligation in due time; if
resolutory, it does not invalidate the fact that the obligation existed. On
the other hand, a condition causes an obligation either to arise or to cease.

4. As to Effect, When Left to the Debtor’s Will

A period which depends upon the will of the debtor empowers the court
to fix the duration thereof, while a condition which depends upon the sole
will of the debtor invalidates the obligation.

5. As to Retroactivity of Effect

Unless there is an agreement to the contrary, the arrival of a period does

not haven retroactive effect, while the happening of a condition has a
retroactive effect.

D. Kinds of Period or Term

1. According to Effect
a) Suspensive period (ex die)

In obligation with a suspensive period, the obligation begins only from a

day certain upon the arrival of the period.

b) Resolutory period (in diem)

In obligation with a resolutory period, the obligation is valid up to a day

certain and terminates upon the arrival of the period.

2. According to Source
a) Legal Period

Legal period is one which is provided by law.

b) Conventional or Voluntary Period

Conventional period is one which is agreed by the parties.

c) Judicial Period

Judicial period is one which is fixed by the court.

3. According to Definiteness
 a) Definite Period

Definite period is one which is fixed or it is now when it will come.

b) Indefinite Period

Indefinite period is one which is not fixed or it is not known when it will
come. When a period is not fixed but a period is intended, the courts are
usually empowered by law to fix the same.

E. When Obligation can be Demanded Before the Lapse of Period

The general rule is that the obligation is not demandable before the lapse
of the period. However, the following the instance where the debtor shall
lose every right to make use of the period, that is, the period is disregarded
and the obligations becomes pure, and there, immediately demandable,
to wit:

When the debtor is insolvent.

When the debtor does not furnish guaranties or securities promised.
When the guaranties or securities given have been impaired or
disappeared.
When debtor violates an undertaking.
When the debtor attempts to abscond.

III. Alternative and Facultative Obligations

A. Kinds of Obligation According to Object
1. Simple Obligation

A simple obligation is one where there is only one (1) prestation.

2. Compound Obligation
a) Conjunctive Obligation

A compound obligation is one where there are two or more prestations

and all of them are due.

b) Distributive Obligation

A distributive obligation obligation is one where two or more

presentations are due.

(1)Alternative Obligation
 An alternative obligation is one where several presentations are due
but the performance of one is sufficient.

(2)Facultative Obligation

A facultative obligation is one where only one presentation is due

but the debtor may substitute another.

B. Meaning of Alternative Obligation

An alternative obligation is one wherein various presentations are due but

the performance of one of them is sufficient as determined by the choice
which, as a general rule, belongs to the debtor.

C. Meaning of Facultative Obligation

A facultative obligation is one where only one presentation has been

agreed upon but the obligor may render another in substitution.

D. Alternative and Facultative Obligations Distinguished

In alternative obligation, several presentations are due but compliance

with one is sufficient, while in facultative obligation, only one presentation
is due although the debtor is allowed to substitute it.

IV. Joint and Solidary Obligation

A. Kinds of Obligations According to the Number of Parties
1. Individual Obligation

Individual obligation is one where there is only one (1) obligor or one (1)
obligee.

2. Collective Obligation

Collective obligation is one where there are two (2) or more debtors
and/or two (2) or more creditors. It may be joint or solidary.

B. Meaning of Joint Obligation

Joint obligation is one where the whole obligation is to be paid or fulfilled

proportionately by the different debtors and/or is to be demanded
proportionately by the different creditors.

1. Words Used to Indicate Joint Liability

Mancomunada, Mancomunadamente, Pro Rata, Proportionately
 C. Meaning of Solidary Obligation

Solidary obligation is one where each one of the debtors is bound to render,
and/or each one of the creditors has a right to demand from any of the debtors,
entire compliance of the presentation.

1. When Obligation is Solidary

When the obligation expressly so states.

When law requires solidarity.
When nature of the obligation requires solidarity.

2. Words Used to Indicate Solidary Liability

Joint and/or severally, solid aria, in solidum, together and/or separately,

individually and/or collectively, juntos o separadamente

3. Solidarity Not Presumed

The presumption where there are two or more person in the same
obligation is that it is joint.

Reason: Solidary obligations are very burdensome for they create unusual
rights and liabilities. Solidarity between debtors increases their
responsibility while solidarity between creditors increases the right of
each creditor. The law tends to favor the debtors in presuming that they
are bound jointly and not solidarily.

V. Divisible and Indivisible Obligations

A. Meaning of Divisible Obligation

Divisible obligation is one the object of which, in its delivery or performance, is

capable of partial fulfillment.

B. Meaning of Indivisible Obligation

Indivisible obligation is one the object of which, in its delivery and performance,
is not capable of partial fulfillment.

C. Test of Distinction

In determining whether an obligation is divisible or not, the controlling

circumstance is not the possibility or impossibility of partial prestation but the
purpose of the obligation. Hence, even though the object or service may be
physically divisible, an obligation is indivisible if so provided by law or intended
by the parties.
 However, if the obligation is not physically divisible or the service is not
susceptible of partial performance, the obligation is always indivisible, the
intention to the contrary notwithstanding. This rule is absolute.

VI. Obligation with a Penal Clause

A. Meaning of Principal Obligation

Principal obligation is one which can stand by itself and does not depend for its
validity and existence upon another obligation.

B. Meaning of Accessory Obligation

Accessory obligation is one which is attached to a principal obligation and,

therefore cannot stand alone.

C. Meaning of Obligation with a Penal Clause

An obligation with a penal clause is one which contains an accessory

undertaking to pay a previously stipulated indemnity in case of breach of the
principal prestation, intended primarily to induce its fulfillment.

D. Meaning of Penal Clause

A penal clause is an accessory undertaking attached to an obligation to assume

greater liability in case of breach, i.e. the obligation is not fulfilled, or is partly
or irregularly complied with.

E. Purpose of Penal Clause

To insure the performance of an obligation creating an effective deterrent

against breach, making such breach onerous as it may be possible. (Reparation)

To substitute a penalty for the indemnity for damages and the payment of
interest in case of non-compliance; or punish the debtor for the non-fulfillment
or violation of the obligation. (Punishment)

F. When Penalty may be Enforced

Penalty may be enforced only when it is demandable in accordance with the

provisions of the Civil Code. This means that the penalty, as a stipulation in the
contract, is demandable only if there is breach of the obligation and it is not
contrary to law, morals, good customs, public order, or public policy.

Thus, if the obligation cannot be fulfilled due to a fortuitous event, the penalty
is not demandable.
G. Effect of Nullity of the Penal Clause

The nullity of the penal clause does not carry with it the principal obligation.

If the penal clause is void, the principal obligation remains valid and
demandable. The penal clause is just disregarded. The injured party may still
recover indemnity for damages in case of non-performance of the obligation as
is no penalty has been stipulated.

H. Effect of the Nullity of the Principal Obligation

The nullity of the principal obligation carries with it that of the penal clause.

If the principal obligation is void, the penal clause is likewise void. The clause
cannot stand alone without the principal obligation to which it is subordinate.

Basis: The accessory follows the principal and not vice versa.
 EXTINGUISHMENT OF AN OBLIGATION

I. Causes of Extinguishment of an Obligation

Obligations are extinguished by:

Payment or performance;
Loss of the thing due;
Condonation or remission of the debt;
Confusion or merger of the rights of creditor and debtor;
Compensation;
Novation;
Annulment;
Rescission;
Fulfillment of a resolutory condition;
Prescription;
Death of a party is an obligation requiring personal service;
Mutual desistance or withdrawal;
Arrival of a resolutory period;
Compromise;
Impossibility of fulfillment; and
Happening of a fortuitous event.

II. Payment or Performance

A. Meaning of Payment

In ordinary parlance, payment refers to the delivery of money. But as a mode

of extinguishing an obligation, payment consist of not only in the delivery of
money but also the giving of a thing (other than money), the doing of an act, or
not doing of an act. In law, payment or performance are synonymous.

B. When Debt is Considered Paid

A debt may refer to an obligation to deliver money, to deliver a thing (other

than money) to do an act, or not to do an act. A debt is understood to have been
paid when the thing or service in which the obligation consists has been
completely delivered or rendered, as the case may be.

C. Persons from Whom the Creditor Must Accept Payment

The creditor is bound to accept payment or performance from the following:

The debtor;
Any person who has an interest in the obligation (like a guarantor); or
A third person who has no interest in the obligation when there is a
stipulation that he can make payment.
D. Persons to Whom Payment Shall be Made

Payment shall be made to:

The creditor or obligee (person in whose favor obligation has been

constituted);
His successor in interest (like an heir or assignee); or
Any person authorized to receive it.

E. Legal Tender

Legal tender is the currency which if offered by the debtor in the right amount,
the creditor must accept in payment of the debt in money.

Generally, debts in money shall be paid in the currency stipulated. However, if

it is not possible to deliver such currency or in the absence of any stipulation
to make payment in foreign currency, then the payment shall be made in the
currency which is legal tender in the Philippines.

In our jurisdiction, all coins and notes issued by the Bangko Sentral ng
Pilipinas (BSP) constitute legal tender for all debts. However, in the case of
coins in denomination of 1-, 5- and 10-Piso they shall be legal tender in
amounts not exceeding P1,000.00 while coins in denomination of 1-, 5- and
10- and 25-Sentimo shall be legal tender in amounts not exceeding P100.00,
pursuant to BSP Circular No. 537, Series of 2006.

F. Place Where Obligation Shall be Paid

If there is a stipulation, the payment shall be made in the place designated.

If there is a stipulation and the thing to be delivered is specific, the payment

shall be made at the place where the thing was, at the perfection of the contract.

If there is no stipulation and the thing to be delivered is generic, the place of

payment shall be the domicile (place of habitual residence) of the debtor.

G. Special Forms of Payment

1. Dation in Payment (Dacion en pago)

Dation in payment or adjudication or dacion en pago is the conveyance

of ownership of a thing as an accepted equivalent of performance. An
existing debt in money is satisfied, not by payment of money but by the
alienation of property.

2. Application of Payment
a) Concept of Application of Payment

Application of payments is the designation of the debt to which should

be applied the payment made by a debtor who has various debts of the
same kind in favor of one (1) and the same creditor.

b) Requisites

There must be one (1) debtor and one (1) creditor;

There must be two (2) or more debts;
The debts must be of the same kind;
The debts to which payment made by the debtor has been applied must
be due; and
The payment must not be sufficient to cover all debts.

c) Rules on Application of Payment

The debtor has the first choice; he must indicate at the time of making
payment, and not afterwards, which particular debt is being paid.

The right to make application once exercised is irrevocable unless the

creditor consents to the change.

If the debtor does not apply payment, the creditor may make the
designation by specifying in the receipt which debt is being paid;

If the creditor has not also made the application, or if the application is
not valid, the debt which is most onerous to the debtor among those
due, shall be deemed to have been satisfied.

If the debts are of the same nature and burden, the payment shall be
applied to all of them proportionately.

d) Application of Payment to Most Onerous Debt

In case no application for payment has been made by the debtor and the
creditor, then the payment shall be applied to the most onerous debt,
and if the debts are of the same nature and burden, to all of them
proportionately.

Guidelines in determining a more onerous or burdensome debt:

An interest-bearing debt is more onerous that a non-interest-

bearing debt even if the latter is an older one.

A debt as a sole debtor is more onerous than as a solidary debtor.

 Debts secured by a mortgage or by pledge are more onerous than
unsecured debts.

Of two (2) interest bearing debts, the one with a higher rate is
more onerous.

An obligation with a penalty clause is more burdensome that one

without penalty clause.

3. Payment by Cession
a) Concept of Payment by Cession

Payment by cession is another special form of payment. It is the

assignment or abandonment of all the properties of the debtor for the
benefit of his creditors in order that the latter may sell the same and
apply the proceeds thereof to the satisfaction of their credits.

b) Requisites

There must be two (2) or more creditors;

The debtor must be partially insolvent;
The assignment must involve all the properties of the debtor; and
The cession must be accepted by the creditors.

c) Effect of Payment by Cession

Unless there is a stipulation to the contrary, the assignment does not

make the creditors the owners of the property of the debtor and the
debtor is released from his obligation only up to the net proceeds of the
sale of the property assigned i.e. the debtor is still liable if there is a
balance.

d) Dation in Payment and Cession Distinguished

In dacion, there is usually only one (1) creditor, while in cession, there
are several creditors.

Dacion does not presuppose the insolvency of the debtor, while in

cession, the debtor is insolvent at the time of the assignment.

Dacion does not involve all the properties of the debtor, while cession
extends to all the properties of the debtor subject to execution;
 In dacion, the creditor becomes the owner of the thing given, while in
cession, the creditors only acquire the rights to sell the thing and apply
the proceeds to their credits proportionately; and

Dacion is really an act of novation, while cession is not an act of

novation.

4. Tender of Payment and Consignation

a) Tender of Payment Defined

Tender of payment is the act, on the part of the debtor, of offering to the
creditor the thing or amount due. The debtor must show that he has in
his possession the thing or money to be delivered at the time of the offer.

b) Consignation Defined

Consignation is the act of depositing the thing or amount due with the
proper court when the creditor does not desire or cannot receive it, after
complying with the formalities required by law.

c) Requisites of Valid Consignation

In order to that the debtor may be release from his obligation by

consignation of the thing or sum due, the following requisites must be
observed:

Existence of a valid debt which is due;

Tender of payment by the debtor and the refusal without

justifiable reason by the creditor to accept it;

Previous notice of consignation to persons interested in the

fulfillment of the obligation;

Consignation of the thing or sum due; and

Subsequent notice of consignation made to the interested

parties.

H. Effect of Impossibility of Performance

The debtor in obligation to do shall also be released when the prestation

becomes legally or physically impossible without the fault of the obligor.
Impossibility of performance will result in the extinction of the obligation.
 The impossibility must take place after the constitution of the obligation. If the
obligation is impossible from the very beginning, the obligation is void.

1. Physical Impossibility - death/incapacity

2. Legal Impossibility - law/issuance of building permit

I. Effect of Difficulty of Performance

When the performance of the service has become so difficult as to be manifestly

beyond the contemplation of both parties, the court is authorized to release the
obligor in whole or in part.

III. Loss of the Thing Due

A. When a Thing is Considered Lost

A thing is lost when it perishes, or goes out of commerce or disappears in such

a way that its existence is unknown or it cannot be recovered.

B. When Loss of Thing Will Extinguish an Obligation to Give

In order that an obligation may be extinguished by loss of the thing, the

following requisites must be present:

The obligation is to deliver a specific or determinate thing;

The loss of the thing occurs without the fault of the debtor; and

The debtor is not guilty of delay.

C. When Loss of Thing Will Not Extinguish Liability

There are cases, however, when the loss of the specific thing even in the
absence of fault and delay will not exempt the debtor from liability. They are:

When the law so provides;

When the stipulation so provides;

When the nature of the obligation requires the assumption of risk; and

When the obligation to deliver a specific thing arises from a crime.

D. Effect of Loss of a Generic Thing

In obligation to deliver a generic thing, the loss or destruction of anything of

the same kind does not extinguish the obligation. It is based on the principle
 that a generic thing never perishes (genus nunquam petit). The debtor can still
be compelled to deliver a thing of the same kind. The creditor, however, cannot
demand a thing of superior quality and neither can the debtor deliver a thing
of inferior quality.

IV. Condonation or Remission of Debt

A. Meaning of Condonation or Remission

It is the gratuitous abandonment by the creditor of his right against the debtor.

B. Requisites of Condonation or Remission

It must be gratuitous;
It must be accepted by the obligor;
The parties must have capacity;
It must be in officious, i.e. no one can give more than that which he can give by
will; and
If made expressly, it must comply with the forms of donations.

C. Kinds of Remission

As to its extent:
Complete - it covers the entire obligation.
Partial - does not cover the entire obligation.

As to its form:
Express - made either verbally or in writing.
Implied - can only be inferred from conduct.

As to its date of effectivity:

Inter vivos - take effect during the lifetime of the donor.
Mortis causa - take effect upon the death of the donor. It must comply
with the formalities of a will.

D. Effect of Renunciation of the Principal Debt on the Accessory Obligation

The renunciation of the principal debt shall extinguish the accessory

obligations; but waiver of the latter shall leave the former in force. This is based
on the legal principle that the accessory follows the principal. Accessory
obligations cannot exist without the principal obligation, the latter may exist
without the former.

V. Confusion or Merger of Right

A. Meaning of Confusion or Merger
 It is the meeting in one (1) person of the qualities of creditor and debtor with
respect to the same obligation.

B. Reason or Basis for Confusion

The law treats confusion or merger as a mode of extinguishing an obligation

because if a debtor is his own creditor, enforcement of the obligation becomes
absurd since the person cannot claim payment from himself.

C. Requisites of Confusion

It must take place between the principal debt and creditor; and

It must be complete;

VI. Compensation
A. Meaning of Compensation

Compensation is the extinguishment to the concurrent amount of the debts of

two or more persons who, in their own rights, are debtors and creditors of each
other.

It involves the simultaneous balancing of two obligations in order to extinguish

them to the extent in which the amount of one is covered by that of the other.

B. Object of Compensation

To prevent unnecessary litigations and payments. This is accomplished

through the mutual extinguishment by operation of law of concurring debts of
two (2) persons.

Compensation provides a more convenient and less expensive effectuation of

payments between two (2) persons who are reciprocally creditors and debtors.

C. Compensation and Confusion Distinguished

In confusion, there is only one person who is a creditor and debtor of himself,
while in compensation, there are two or more persons involved, each of whom
is a debtor and a creditor of the other;

In confusion, there is but one obligation, while in compensation, the are two
(2) obligations;

In confusion, there is impossibility of payment, while in compensation, there

is indirect payment.
 D. Kinds of Compensation
1. By its effect or extent
a) Total - when both obligations are of the same amount and are entirely
extinguished.
b) Partial - when two (2) obligations are of different amounts and a balance
remains. The extinctive effect of compensation will be partial only as
regards the larger debt.

2. By its Cause or Origin

a) Legal - it takes place by operation of law even without the knowledge of
the parties.
b) Voluntary - it takes place by agreement of the parties.
c) Judicial - it takes place by order from a court in a litigation.
d) Facultative - when it can be set up only by one of the parties.

E. Requisites of Legal Compensation

The parties are principal creditors and principal debtors of each other.

Both debts consist in a sum of money, or of consumable things of the same kind
and quality.

The two debts are due and demandable.

The two debts are liquidated i.e ascertained.

No retention (credit of one on the parties is subject to satisfaction of the claims

of a third person) or controversy (third person claims he is the creditor of one
of the parties) commenced by a third person.

VII. Novation
A. Meaning of Novation

It is the total or partial extinction of an obligation through the creation of a new

one which substitute it.

It is the substitution or change of an obligation by another, which extinguishes

or modifies the first, either by:

Changing the object of principal conditions;

Substituting the person of the debtor; or
Subrogating a third person in the rights of the creditor.

B. Dual Function of Novation

It extinguishes or modifies an existing obligation.

 It substitutes a previous obligation with a new one.

C. Kinds of Novation

According to origin:
Legal - it takes place by operation of law.

Conventional - it takes place by agreement of the parties.

According to how it is constituted:

Express - it is so declared in unequivocal terms.

Implied - when the old and the new obligations are essentially
incompatible with each other.

According to extent or effect:

Total or extinctive - when the old obligation is completely extinguished.

Partial or modificatory - when old obligation is merely modified.

According to the subject:

Real or objective - when the object (or cause) or principal conditions of
the obligation are changed.

Personal or subjective - when the person of the debtor is substituted

and/or when a third person is subrogated in the rights of the creditor.

Mixed - when the object and/or principal conditions of the obligation

and the debtor or the creditor, or both the parties , are changed.

D. Requisites of Novation

A previous valid contract;

Capacity and intention of the parties to modify or extinguish the obligation;

The modification or extinguishment of the obligation; and

The creation of a new valid obligation.

CONTRACTS

I. General Provisions
A. Meaning of Contract

A contract a meeting of minds between two persons whereby one binds

himself, with respect to the other, to give something or to render some service.

The definition lays emphasis on the meeting of minds between two contracting
parties which take place when an offer by one is accepted by the other.

In contract, there must be at least two person or parties, because it is

impossible for one to contract with himself.

B. Contract and Obligation Distinguished

Contract is one of the sources of obligation. On the other hand, obligation is

the legal tie or relation itself that exists after a contract has been entered into.

There can be no contract if there is no obligation accepted in return for some

benefit to be enjoyed. But an obligation may exist without a contract.

C. Meaning of a Valid Contract

Valid contracts are those which meet all the legal requirements (i.e. elements
of contract) and limitations (i.e. not contrary to law, morals, good customs,
public order, or public policy) for the type of agreement involved and are,
therefore, legally binding and enforceable.

D. Freedom to Contract Guaranteed

The right to enter into contract is a guaranteed right by the Constitution (Art.
III, Sec. 10). However, it is not an absolute right. The constitutional prohibition
against impairment of contractual obligations refers only to legally valid
contracts and cannot be invoked as against the right of the state to exercise its
police power.

E. Limitations on Contractual Stipulations

Law - It is a fundamental requirement that the contract entered into must be

in accordance with, and not repugnant to, an applicable statute. Its terms are
embodies in every contract. The law, thus sets limits.

Police Power - When there is no law in existence or when law is silent, the will
of the parties prevails unless their contract contravenes the limitations of
morals, good customs, public order, or public policy.

F. Contract Must Not Be Contrary to Law, Morals, Good Customs, Public Order
and Public Policy
 A contract cannot be given effect if it is contrary to law because law is superior
to a contract. Acts executed are void, except when law itself authorizes their
validity. The contracting parties must respect the law which is deemed to be an
integral part of every contract.

Morals deal with norms of good and right conduct evolved in a community.

Customs consist of habits and practices which though long usage have been
followed and enforced by society or some part of it is binding rules of conduct.

Public order refers principally to public safety although it has been considered
to mean also the public weal.

Public policy are broader that public order, as the former may refer not only to
public safety but also to considerations which are moved by common good.

G. Classification of Contract According to Its Name or Designation

1. Nominate Contracts

Nominate contract or that which has a specific name or designation in

law.

2. Innominate Contracts

Innominate contract or that which has no specific name or designation

in law.

a) Kinds of Innominate Contract

Do ut des (I give that you may give), now Barter;

Do ut facias (I give that you may do);
Facto ut des (I do that you may give);
Facto ut facias (I do that you may do).

b) Rules Governing Innominate Contracts

Innominate contracts are governed by:

The agreement of the parties;

The provision of the Civil Code;
The rules governing the most analogous contracts; and
The customs of the place.

H. Contract Binds Both Contracting Parties

 Mutuality of Contract

A contract is an agreement which gives rise to obligations. It must bind both

parties in order that it can be enforced against either. Without this equality
between the parties, it cannot be said that the contract has force of law between
them. Its validity or compliance cannot be left to the will of one of the
contracting parties.

I. Person Affected by a Contract

1. General Rule

A party’s rights and obligations derived from contract are transmissible

to the successors. Contracts takes effect only between the parties, their
assigns, and heirs.

2. Exception

A contract is effective only between the parties when:

By the nature (like a contract involving personal qualifications);

By stipulation; and
By provision of law (as in agency, partnership and commodatum).

3. Cases when Strangers or Third Persons Affected by a Contract

A third person is one who has not taken part in a contract and is,
therefore, a stranger to the contract. As a general rule, a third person is
has no right and obligations under a contract to which he is a stranger.
He has no standing in law to demand the enforcement of a contract or
question its validity.

However, a third person may be affected by a contract in the following

instances:

In contracts containing a stipulation in favor of a third person

(stipulation pour autrui);
In contracts creating real rights;
In contracts entered into to defraud creditors; or
In contracts which have been violated at the inducement of a
third person.

4. Meaning of Stipulation Pour Autrui

It is a stipulation in a contract which clearly and deliberately confers a

favor upon a third person who has a right to demand its fulfillment
 provided he communicates his acceptance to the obligor before its
revocation by the obligee or the original parties.

5. Requisites of Stipulation Pour Autrui

The contracting parties by their stipulation must have clearly and

deliberately conferred for upon a third person;

The third person must have communicated his acceptance to the obligor
before its revocation by the obligee or the original parties;

The stipulation in favor of the third person should be a part, not the
whole, of the contract;

The favorable stipulation should not be conditioned or compensated by

any kind of obligation whatever; and

Neither of the contracting parties bears the legal representation or

authorization of the third party for otherwise, the rules on agency apply.

J. Classification of Contracts According to Perfection

1. Consensual Contract

One that is perfected by mere consent. (sale, lease, agency)

2. Real Contract

One that is perfected by the delivery of thing subject matter of the

contract. (depositum, commodatum, pledge)

3. Solemn Contract

One which requires compliance with certain formalities prescribed by

law, such prescribed form being thereby an essential element thereof
(donation of real property must be in a public instrument).

K. Stages in the Life of a Contract

1. Preparation or Negotiation

It includes all the steps taken by the parties leading to the perfection of
the contract. At this stage, parties have not yet arrived at any definite
agreement.

2. Perfection or Birth
 This is when the parties have come to a definite agreement or meeting
of the minds regarding the subject matter and cause of the contract i.e.
upon concurrence of the essential elements of a contract.

3. Consummation or Termination

This is when the parties have performed their respective obligations and
the contract may be said to have been fully accomplished or executed,
resulting to the extinguishment or termination thereof.

L. How Contracts are Perfected

1. In Consensual Contracts

As a general rule, contract are perfected by mere consent of the parties

regarding the subject matter and cause of the contract. They come into
existence upon their perfection by mutual consent, even if the subject
matter or the consideration has not been delivered.

2. In Real Contracts

Exceptions are the so-called real contracts which are perfected not
merely by consent but by the delivery, actual or constructive, of the
object of the obligation.

II. Elements of a Contract

A. Consent
1. Meaning of 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 (1)
contracting party with that of another or others, upon the object and
terms of the contract. (4Sanchez Roman 19;8 Manresa 648.)

2. Meaning of Offer

Is a proposal made by one (1) party (offerer) to another (offeree),

indicating a willingness to enter into a contract. It is more than an
expression of desire of hope. It is really a promise to act or to refrain
from acting on condition that the terms thereof are accepted by the
person to whom it is made.

3. Meaning of Acceptance

Is the manifestation by the offeree of his assent to all the terms of the
offer. Without acceptance, there can be no meeting of the minds
between the parties. (Art. 1305.)
4. Option of Contract

Is one giving a person for a consideration a certain period within to

accept the offer of the offerer. It is separate and distinct from the
contract which will be perfected upon the acceptance of the offer.
Option may also refer to the privilege itself given to the offeree to accept
an offer within a certain period.

5. Option Money Distinguished from money Earnest Money

Is the money paid or promised to be paid in consideration for the option.

It is not to be confused with earnest money which is actually a partial
payment of the purchase price and is considered as proof of the
perfection of the contract. (see Art. 1482)

6. Business Advertisements Generally Not Definite Offer

Business advertisements of things for sale are not definite offer

acceptance of which will perfect a contract but are merely invitations to
the reader to make an offer. However, it is necessary in a contract, it
may amount to a definite offer which, if accepted, will produce a
perfected contract.

7. Advertisements for Bidders are Generally Not Definite Offers

In an advertisement for bidders, the advertiser is not the one making

the offer. In reality, the bidder is the one making the offer which the
advertiser is free to accept or reject. Acceptance by the advertiser of a
given bid is necessary for a contract to exist between the advertiser and
the bidder, regardless of the terms and conditions of his bid.

8. Person who Cannot Give Consent

A contract entered into where one of the parties is capable of giving

consent to a contract is voidable. A voidable contract is valid and
binding until it is annulled by a proper action in court. It is susceptible
of ratification. (Art. 1390)

9. Contracts Entered During Lucid Intervals

Is a temporary period of sanity. A contract-entered into by an insane or

demented person during a lucid interval is valid. It must be shown,
however, that there is a full return of the mind to sanity as to enable him
to understand the contract he is entering into.
10. Effect of Drunkenness and Hypnotic Spell

Drunkenness and hypnotic spell impair the capacity of a person to give

intelligent consent. (8 Manresa 660-661)

These conditions are equivalent to temporary insanity. Hence, the law

considers a contract entered into in a state of drunkenness, or during a
hypnotic spell voidable and it is not required that such state was
procured by the circumvention of the other party.

11. Other Special Disqualifications May Be Provided by Law

In addition to the incapacity declared in Article 1327, other special

disqualifications may be provided by law. (1) Under the rules of court,
the following are considered incompetents and may be placed under
guardian ship: (A) Person suffering the accessory penalty civil
interdiction (see Art. 34 Revised Penal Code.); (B) Hospitalized lepers;
(C) Prodigals(Spendthrifts); (D) Deaf and dumb who are unable to read
and write; (E) Those who are of unsound mind even though they have
lucid intervals; (F) Those who, by reason of age, disease, weak mind and
other similar causes, cannot without outside aid, take care of themselves
and manage their property, becoming thereby an easy prey for deceit
and exploitation. (Sec, Rule 92, Rules of Court.)
12.Characteristics of Consent

In order that consent may be valid for purposes of contract, it is

required, not only that it exist, but that it must be given with exact
understanding over the thing consented to. In other words, the contract
must be based on the genuine assent of the both parties to the contract
and the terms thereof.

13. Vices of Consent

Aside from incapacity and simulation of contract, the following are the
causes that vitiate consent or render it defective so as to make the
contract voidable:

Error or Mistakes
Violence or Force
Intimidation or Threat or Duress
Undue Influence
Fraud or Deceit

14.Simulation of Contract
 Simulation of an contract is the act of deliberately deceiving others, by
feigning or pretending by agreement the appearance of a contract which
is either non-existent or concealed. (1 Castan 504)

Absolute Simulation- when the contract does not really exist and the
parties do not intend to be bound at all.

Relative Simulation- when the contract entered into by the parties is

different from their true agreement. (Art. 1345) The parties are bound
by their real agreement provided it does not prejudice a third person
and is not intended for a purpose contrary to law, morals, good customs,
public policy. (Art. 1346)

B. Object
1. Concept of Object of Contract

In reality, the object of every contract is the obligation created. But since
a contract cannot exist without an obligation, it may be said that the
thing, service, or right which is the object of the obligation is also the
object of the contract.

2. Kinds of Object of Contract

Object certain is the second essential element of a valid contract.
(Ibid). The object may be things (as in sale), rights (as in assignment of
credit), or services (as in agency).

3. Requisites of Things as Object Contract

In order that things may be the object of an contract, the Following

requisites must be present:

The thing must be within the commerce of men, that is, it can
legally be the subject of commercial transactions;

It must not be impossible, legally or physically;

It must be determinate or determinable without the need of a

new contract between the parties.

4. Requisites of Services as Object of Contract

In order that service may be the object of a contract, the following

requisites must concur:
 The service must be within the commerce of men;

It must not be impossible, physically or legally; and

It must be determinate or capable of being made determinate.

5. Right as Object of Contract

As a general rule, all rights may be the object of a contract. The

exceptions are when they are intransmissible by their nature, or by
stipulation, or by provision of law.

6. Kinds of Impossibility
a) Physical - when the thing or service in the very nature of things cannot exist
(e.g., a monkey that talks) or be performed. With particular reference to
services (see Arts. 1206, 1207.), the impossibility may be:

(1)Absolute - when the act cannot be done in any case so that nobody can
perform it.

(2)Relative - when it arises from the special circumstances of the case (e.g.,
to make payment to a dead person, to drive a car on a flooded highway,
etc.) or the special conditions or qualifications of the obligor (to paint a
portrait by a blind person, etc.).

b) Legal - when the thing or service is contrary to law, morals, good customs,
public order, or public policy. An act is contrary to law, either because it is
forbidden by penal law (e.g., to sell shabu, etc.) or a rule of law makes it
impossible to be done (e.g., to make a valid donation of real property
without a public instrument [Art. 749.], to make a valid will, where the
testator is under 18 years of age [Art. 797.], etc.)
C. Cause of Contract
1. Meaning of Cause

Cause (causa) is the essential reason or purpose which the contracting

parties have in view at the time of entering into the contract. It is something
bargained for or given by a party in exchange for a legally enforceable
promise of another.

2. Cause Distinguished from Object

In a bilateral or reciprocal contract like purchases and sale, the cause for
one is the subject matter or object for the other, and vice versa. Hence, the
distinction is only a matter of viewpoint.

3. Motive
 Is the purely personal or private reason which a party has in entering into
a contract. It is different from the cause of contract.

4. Cause distinguished from Motive

a. Cause is the immediate or direct reason, while motive is the remote or

indirect reason;
b. Cause is always known to the other contracting party, while motive may
be unknown;
c. Cause is an essential element of a contract, while motive is not;
d. The illegality of the cause affects the validity of a contract, while the
illegality of one’s motive does not render the contract void.

5. Requisites of Cause

1) It must exist at the time the contract is entered into (Arts. 1352, 1409[3].);
2) It must be lawful (Ibid);
3) It must be true or real. (Art. 1353.)

6. Effect of Absences of Cause

Absence or want of cause means that there is a total lack of any valid
consideration for the contract.

Contract without cause confer no right and produce no legal effect

whatever.

7. Effect of Failure Cause

Absence of cause should be distinguished from inadequacy of cause which,

as a general rule, is not a ground for relief. (Art. 1355) and from failure of
cause, which does not render a contract void. (see Arts. 1169, par. 3;
1170,1191)

Thus, the failure to pay the stipulated price after the execution of a contract.

8. Effect of Illegality of Cause

Implies that there is a cause but the same is unlawful or illegal.

9. Effect of Falsity of Cause

 Is meant that the contract states a valid consideration but such statement
is not true.

A false cause may be erroneous or simulated. The first always renders a

contract void. If the cause is false, the contract is rendered void because the
same actually does not exist. (Arts. 1353, 1409[3]). The second does not
always produce this effect, because it may happen that the hidden but true
cause is sufficient to support the contract. If the parties can show that there
is another cause and that said cause is true and lawful, then the parties shall
be bound by their true agreement. (Art. 1346.)

III. Form of Contracts

A. Meaning of Form of Contracts

Refers to the manner in which a contract is executed or manifested.

The contract may be oral, or in writing, or partly oral and partly in writing.
It may be express when the parties expressly set forth their intentions, or
implied when their intentions may be inferred from their actions or
conduct. If in writing, it may be in a public or a private instrument.

B. Classification of Contract According to Form

1. Informal or common or Simple Contract- Or that which may be entered into

in whatever form provided all the essential requisites for their validity are
present. (Art. 1356.), such as the contract of sale. An informal contract may
be oral or written and, in fact, may even be implied from the conduct of the
parties;

2. Formal or Solemn Contract- Or that which is required by law for its efficacy
to be in a certain specified from.

C. Rules Regarding Form of Contract

General rule. Contracts are binding and, therefore enforceable reciprocally

by the contracting, parties, whatever may be the form in which the contract
has been entered into, provided all the three (3) essential requisites
(consent, object, and cause) for their validity are present. So, a contract
may be oral or written. A written contract may consist of a letter,
memorandum, note or other language, it being sufficient that the parties
clearly express their intentions.

D. Form for Validity of Contract

 There are rare cases when the law requires that a contract be in a certain
form for the validity of the contract.

E. Contracts which Must Appear in a Public Document

The contracts covered by this article are valid and enforceable though not
contained in a public document or instrument or in writing. The public
document is required only for the convenience and greater protection of
the parties and to make the contract binding as against third persons.

IV. Interpretation of Contracts

A. Meaning of Interpretation of Contracts

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.

B. Literal meaning Controls when Language Clear

Contracts, which are the private laws of the contracting parties, should be
fulfilled according to the literal sense of their stipulations, if the terms of a
contract are clear and unequivocal. The parties are bound by such terms.
(Phil. Am. Gen. Ins. Co., Inc. vs. Mutuc, 61 SCRA 22.) In this case, the
question is not what existed in the minds of the parties but what intention
is expressed in the language used. (17 C.J.S 700.)

C. Evident Intention of Parties Prevails Over Terms of Contract

Where 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. It
is a cardinal rule in the interpretation of contracts that the intention of the
contracting parties should always prevail because their will has the force of
law between them. (Art. 1159; see Borromeo vs. Court of Appeals,47 SCRA
65.)

D. Contemporaneous and Subsequent Acts Relevant in the Determination of

Intention

Where the parties to a contract have placed an interpretation to the terms

thereof by their contemporaneous and/or subsequent conduct, as by acts
in partial performance, such interpretation may be considered by the court
in determining its meaning and ascertaining the intention of the parties (17
C.J.S 755.) when such intention cannot clearly be ascertained from the
words used in their contract. (Art. 1370, par. 2.)
E. Special Intent Prevail Over a General Intent

As a rule, where in a contract there are general and special provisions

covering the same subject matter, the latter control over the former when
the two (2) cannot stand together. (Hibberd vs. Estate of McElroy, 25 Phil.
164.)

The reason for this rule is that when the parties express themselves in
reference to a particular matter, the attention is directed to that, and it
must be assumed that it expresses their intent; whereas, a reference to
some general matter, within which the particular matter may be included,
does not necessarily indicate that the parties had that particular matter in
mind. (12 Am. Jur. 779.)

F. Interpretation of Stipulation with Several Meanings

When an agreement is susceptible of several meanings, one of which would

render it effectual, it should be given that interpretation. Thus, if one
interpretation makes a contract valid and the other makes it illegal, the
former interpretation is one which is warranted by the rule stated in Article
1373.

G. Interpretation of Various Stipulations of a Contract

A contract must be interpreted as a whole and the intention of the parties

is to be gathered from the entire instrument and not from particular words,
phrases, or clauses. All provisions should, if possible, be so interpreted as
to harmonize with each other.

H. Interpretation of Word with Different Significations

If a word is susceptible of two or more meanings, it is to be understood in

the sense which is most in keeping with the nature and object of the
contract in line with the cardinal rule that the intention of the parties must
prevail. (Art. 1370.)

I. Resort to Usage or Custom as Aid in interpretation

The usage or custom of the place where the contract was entered into may
be received to explain what is doubtful or ambiguous in a contract on the
theory that the parties entered into their contract with reference to such
usage or custom.

J. Interpretation of Obscure words

 A written agreement should, in case of doubt, be interpreted against the
party who has drawn it, or be given an interpretation which will be
favorable to the other who, upon the faith of which, has incurred an
obligation. (12 Am. Jur. 795-796.)

K. Rules in Case Doubts Impossible settle

When, despite the application of the preceding rules (Arts. 1370-1371.),

certain doubts still exist, such doubts shall be resolved in accordance with
the supplementary rules stated in the present article.

V. Kinds of Defective Contracts

A. Rescissible Contract
1. Meaning of Rescissible Contract

Are those validly agreed upon because all the essential elements exist and,
therefore, legally effective, but in the cases established by law, the remedy of
rescission is granted in the interest of equity.

2. Binding Force of Rescissible Contract

They are valid and enforceable although subject rescission by the court there
is economic damage or prejudice to one of the parties or to a third person. In
a rescissible contract, there is no defect at all but by reason of some external
facts, its enforcement would cause injustice.

3. Meaning of Rescission

Is a remedy granted by law to the contracting parties and sometimes even to

the third persons in order to secure reparation of damages caused them by a
valid contract, by means of the restoration of things to their condition in
which they were prior to the celebration of said contract. (see 8 Manresa 748-
749.)

4. Requisites of Rescission

The following are the requisites before the remedy of rescission may be
availed of:

1) The contract must be validly agreed upon (Art. 1380.)

2) There must be lesion or pecuniary prejudice one the parties or to a
third person (Art. 138.);
3) The rescission must be based upon a case especially provided by
law (Arts. 1380, 1381, 1382.);
 4) There must be no other legal remedy to obtain reparation for the
damage. (Art. 1383.);
5) The party asking for rescission must be able to return what he is
obliged to restore by reason of the contract (Art 1385, par. 1.);
6) The object of the contract must not legally be in the possession of
third person who did not act in bad faith
7) The period for filling the action for rescission must not have
prescribed. (Art. 1389.)

5. Cases of Rescissible Contracts

1) Contracts entered into in behalf of wards – A ward is a person under

guardianship by reason of some incapacity. (see Art. 1329.)

2) Contracts agreed upon in representation of absentees - an absentee is a

person who disappears from his domicile his whereabouts being unknown, and
without leaving an agent to administer his property. Likewise, the absentee must
suffer lesion by more than one-fourth of the value of the property object of the
contract to entitle him to the remedy of rescission.

3) Contracts undertaken in fraud of creditors - the requisites are:

Existence of a credit prior to the contract to be rescinded, although it

is not yet due or demandable;

There must be fraud on the part of the debtor which may be presumed
or proved; and

The creditor cannot recover his credit in any other manner, it not
being required that the debtor be insolvent.

4) Contracts which refer to things under litigation

B. Voidable Contracts
1. Meaning of Voidable Contract

Voidable or annullable contracts are those which possess all the essential
requisites of a valid contract but one of the parties is incapable of giving
consent, or consent is vitiated by mistakes, violence, intimidation, undue
influence, or fraud.

2. Binding force of Voidable Contracts

 They are valid and binding between the parties unless annulled by a proper
action in court by the injured party. Once ratified, they become absolutely
valid and can no longer be annulled. (see comments under Arts. 1327, 1328,
1330.)

Note that the existence of economic damage is not essential for their
annulment as in the case of rescissible contracts.

3. Kinds of Voidable Contracts

A contract otherwise legal in object and operation is voidable because of a

defect caused by either:

1) Legal incapacity to give consent, where one of the parties is incapable of

giving consent to the contract;

2) Violation of consent, where the vitiation is done by mistake, violence,

intimidation, undue influences, or fraud.

4. Meaning of Annulment

Is a remedy provided by law, for reason of public interest, for the declaration
of the inefficacy of a contract based on a defect or vice in the consent of one
of the contracting parties in order to restore them to their original position in
which they were before the contract was executed.

5. Ratification

a) Meaning of Ratification – means that one voluntarily adopts or approves some

defective or unauthorized act or contract which, without his subsequent approval
or consent, would not be binding on him. It indicates an intention on the part of
the ratifier to be bound to the provisions of the contract.

b) Effect of Ratification- Cleanses the contract from all its defects from the moment
it was constituted. (Art. 1396.). The contract thus becomes valid. (Art. 1390.)
Hence, the action to annul is extinguished. (Art. 1392)

c) Kinds of Ratification
1) Express- when the ratification is manifested words or in writing.
2) Implied or tacit- it may take diverse forms, such as by silence or
acquiescence; by acts showing adoption or approval of the contract; or by acceptance
and retention of benefits flowing therefrom. (see Cadano vs. Cadano, 49 SCRA 33.)
 d) Requisites of Ratification

The requisites for implied ratification are the following:

i. There must be knowledge of the reason which renders the

contract voidable;
ii. Such must have ceased;
iii. The injured party must have executed an act which necessarily
implies an intention to waive his right.

C. Unenforceable Contracts
1. Meaning of Unenforceable Contract

Are those that cannot be enforced or given effect in a court of law or

sued upon by reason of certain defects provided by law until and unless
they are ratified according to law.

2. Binding Force of Unenforceable Contracts

While rescissible and voidable contracts are valid and enforceable

unless they are rescinded or annulled, unenforceable contracts,
although valid, are unenforceable in court unless they are cured or
ratified. Once ratified, these contracts may then be enforceable.
3. Kinds of Unenforceable Contracts

Under Article 1403, the following contracts are unenforceable, unless

they are ratified:

a. Those entered into in the name of another by one without, or

acting in excess of, authority;
b. Those that do not comply with the statute of frauds;
c. Those where both parties are incapable of giving.

4. Agreements within the Scope of Statute of Frauds

To be enforceable, a contract does not have to be in writing. In fact, most

made orally are legally enforceable. However, there are agreements
which fall within the scope of the statute of frauds enumerated below,
which are not legally enforceable in court although valid, unless the
same be in writing. In other words, if either party refused to comply with
their agreement, the same could not be enforced.

5. Ratification of Contracts infringing the Statute of frauds

Sec. 4. Secondary evidence when original is lost or destroyed- when the

original writing has been lost or destroyed, or cannot be produced in
 court, upon proof of its execution and loss or destruction, or
unavailability, its contents may be proved by a copy, or by a recital of its
contents in some authentic document or by the recollection of
witnesses. (Rule 130, Rules of Court)

6. When Unenforceable Contract Becomes a Voidable Contract

When both parties to a contract are incapable of giving consent, the

contract is unenforceable. (Art. 1403[3].). However, if the parent or
guardian, as the case may be, of either party, or if one of the parties after
attaining or regaining capacity, ratifies the contract, it becomes
voidable. (par. 1; see Arts. 1390, par 1; 1394.)

7. when Unenforceable Contract becomes a Valid contract

If the ratification is made by the parents or guardians, as the case may

be, of both contracting parties, or by both contracting parties after
attaining or regaining capacity, the contract is validated and its validity
retroacts to the time it was entered into. (see Art. 1396.)

D. Void or Inexistent Contracts

1. Meaning of Void Contract

Are those which, because of certain defects, generally produce no effect

at all. They are considered as inexistent “void contract” is, therefore, a
contradiction in terms. However, the expression is often loosely used to
refer to an agreement tainted with illegality.

2. Meaning of Existent Contracts

On the other hand, inexistent contracts refer to agreements which lack

one or some or all of the elements (i.e., consent, object, and cause) or do
not comply with formalities which are essential for the existence of a
contract. An illegal contract may produce effects under certain
circumstances where the parties are not of equal guilt. (see Arts. 1411-
1412.)

3. Characteristics of a Void or Inexistent Contracts

1) Generally, it produces no force and effect whatsoever;

2) It cannot be ratified (Art. 1409, par. 2.)
3) The right to set up the defense of illegality cannot be waived. (ibid.);
4) The action or defense for the declaration of its inexistence does not
prescribe (Art. 1410.);
5) The defense of illegality is not available to third persons whose interests are
not directly affected (Art. 1421.);
 6) It cannot give rise to a valid contract. (Art. 1422.)

4. Instances of Void or Inexistent Contracts

Void and inexistent contracts are not enforceable from the very
beginning, regardless of the intentions of the parties:

i. Contracts whose cause, object or purpose is contrary to law

ii. Contracts which are absolutely simulated or fictitious
iii. Contracts without cause or object
iv. Contracts whose object is outside the commerce of men
v. Contracts which contemplate an impossible service
vi. Contracts where the intention of the parties relative to the object
cannot be ascertained
vii. Contracts expressly prohibited or declared void by law