BUSINESS LAWS AND REGULATIONS

LAW – rule of conduct, mandatory

Elements of contracts
 Content
 Subject matter
 Consideration

10-01-22
Penalty clauses
- Teach lesson
- Huwag ng gayahin ng iba

Quasi-contracts
- Legal obligation

Delics/acts/omissions punished by law

- Omissions – hindi pagsunod/hindi sinasadya

Special contracts
Contracts of sale
 art.1458, By the contract of sale one of the contracting parties
obligates himself to transfer the ownership and to deliver a
determinate thing, and the other to pay therefor a price certain in
money or its equivalent.
- Two parties, seller – obli. able transfer ownership and deliver, buyer –
obli to pay
- Third person – government
Essential requisites of contracts of sale
1. Meeting of minds or consent
 contract is perfected when meeting of minds happened.
 Delivery of payment is not required.
2. Subject matter
 Must be specific or determinate thing.
 It can be designated with particularity.
 Lawful, seller must have the right to transfer ownership to
buyer.
3. Consideration
 form of money or its equivalent, art. 1458
 w/o consideration, contract is void.
 Obligation of seller
1. deliver the thing
2. transfer ownership
3. warrant against hidden defects
4. pay for the expenses of the deed of sale
5. preserve of thing from the perfection of contract until the
delivery of it.
 Obligation of buyer
1. accept delivery
2. fill the price

 Contracts can be oral or written. obligatory

 Writing – sale of land or personal property, P500,000 and more

Contract of Agency
  art. 1868. By the contract of agency, a person binds himself to render
some service or to do something in representation or on behalf of
another, with the consent or authority of the latter.
 Can be defined as a relationship between two parties whereby one
party called the PRINCIPAL authorizes another party called the AGENT
to act for and his behalf in transaction with third person.
 Perfected by the meeting of the offer and acceptance upon the thing
and the cost which are to constitute the contract.
 ACCEPTANCE must be made expressly or impliedly
 can be done between two persons who are present, principal
delivers the power of attorney to the agent, and the latter
receives it without any objections.
 can be done between two persons who are absent, the
acceptance of an agency cannot be implied from the silence of
the agent except;
1. when the principal transmits his power of attorney to the
agent, who receives it w/o any objections.
2. when the principal entrusts to him by letter or telegram a
power of attorney w/ respect to the business in which he’s
habitually engaged as an agent, and he didn’t reply to the
letter of telegram.

BASIC PRINCIPAL OF AGENCY

1. It has the ff characteristics:
 Consensual, bilateral, nominate, principal, and preparatory to
contract.
 Consensual, bcause it is perfected by mere consent. Except
when it involves the sale of land or any interest therein.
  Bilateral, bcause the principal and the agent have reciprocal
obligations.
 Nominate, a contract of agency is preparatory to a subsequent
contract.
 Preparatory, purpose of contract of agency is to empower the
agent to conduct subsequent action.

 Appointment of an agent by the principal is based on trust.

 The agent is expected to act within the scope of his authority
and act in behalf of the principal.
 Situations that may arise:
1. The agent acts with authority and in behalf of the principal – ideal
goal of an agency.
2. The agent is authorized by the principal, but he acts on behalf of
himself and not on behalf of the principal.
3. The agent acts without authority but in behalf of the principal.
 The contract of sale is invalid.
 The contract of sale can be ratified.
4. The agent acts without authority and in his own behalf.

Obligations of an Agent
 1881 – act within his scope of authority by authority
 1884 – the agent is bound by his acceptance to carry out agency, be
liable of damages
 1886 – advance necessary funds if stipulated except if the principal is
insolvent.
 1887 – act in accordance with the instructions of principal, he shall do
all that a good father of a family would do. Level of diligence.
  1888 – not to carry out agency if execution would manifest result in
loss or damage to d principal.
 1889 – liable of damages if, there being a conflict between his interest
and principal’s.
 1891 – obligate an agent to render an account of his transaction and
to deliver to principal whatever he may received by virtue of the
agency, if there is a stipulation, void.

Obligations of principal
 Comply – 1910, comply with all obligations which agent may have
contracted within the scope of his authority.
 Advance – 1912, advance to the agent, to latter request (bayaran
lahat ng ginasto ni agent), hindi require na bayaran agent (agent’s
fault) Should the agent have advanced them, the principal must
reimburse him therefor, even if the business or undertaking was not
successful, provided the agent is free from all fault.
 Reimburse – 1912, The reimbursement shall include interest on the
sums advanced, from the day on which the advance was made.
 Indemnify – 1913, the principal must also indemnify the agent for all
the damages which the execution of the agency may have caused the
latter, without fault or negligence on his part.

Art. 1918. The principal is not liable for the expenses incurred by the agent
in the following cases:
(1) If the agent acted in contravention of the principal's instructions,
unless the latter should wish to avail himself of the benefits derived
from the contract;
(2) When the expenses were due to the fault of the agent;
 (3) When the agent incurred them with knowledge that an
unfavorable result would ensue, if the principal was not aware thereof;
(4) When it was stipulated that the expenses would be borne by the
agent, or that the latter would be allowed only a certain sum.

Contract of Partnership
 Art. 1767, two or more persons bind themselves to contribute
money, property, or industry to a common fund, with the
intention of dividing the profits among themselves.
 based on mutual trust
 Art. 1768, partnership has a judicial personality separate and
distinct from that of each of the partners, even in case of failure
to comply with the requirements of Article 1772, first paragraph.

Essential Elements of Partnership

1. Agreement to contribute money, property, or industry to a common
fund.
2. Intention to divide the profits among the contracting parties.

Kinds of partnership
1. General partnership
2. Limited partnership
3. Universal partnership