Contracts

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.

Essential Requisites
1. Consent of the contracting parties;
2. Object certain which is the subject matter of the contract
3. Cause of the obligation which is established
Note:
 There must be atleast 2 parties to every contract
 Consent presupposes capacity. There is no effective consent in law
without the capacity to give such consent

Accordingly, as a general rule the contracts entered into by a minor are

voidable. However, where necessaries are sold and delivered to him,
without the intervention of the parent or guardian, he must pay a
reasonable price for such sale. The contract is, therefore, valid but the
minor has the right to recover any excess above a reasonable value paid
by him.

Further, minor can also be made liable as in the case of Mercado and
Mercado vs. Espiritu (G.R. No. L-11872, December 1, 1917) where the
court laid down the rule that a sale of real estate effected by minors who
pretended to have already reached their majority, while in fact they have
not, is valid, and they cannot be permitted afterwards to excuse
themselves from compliance with the obligations assumed by them or to
seek their annulment.

What is consent?

Consent in contracts presupposes the following requisites:

(1) it should be intelligent or with an exact notion of the matter to which it

refers; (2) it should be free; and
(3) it should be spontaneous. Intelligence in consent is vitiated by error;
freedom by violence, intimidation or undue influence; and spontaneity by
fraud.
Thus, a contract where consent is given through mistake, violence,
intimidation, undue influence or fraud is voidable.

CONSENT ( cum sentire ) : agreement of wills

  As applied to contracts-concurrence of the wills of the contracting
parties with respect to the object and the cause which shall
constitute the contract

Requisites
1. Consent must be manifested by the concurrence of the offer and the
acceptance
2. Contracting parties must possess the necessary legal capacity
3. Consent must be intelligent, free spontaneous and real

FORMS OF CONSENT

1. Express
2. Implied
-implied acceptance may arise or facta which reveal the intent to
accept, such as the consumption of the thingss sent to the offeree, or
the fact of immediately carrying out of the contract offered.

MANIFESTATION
- Consent is manifested bby the concurrence of offer and acceptance with
respect to the object and the cause of the contract. Once there is such a
manifestation, the period or stage of negotiation is terminated

A contract where consent is given through mistake, violence, intimidation,

undue influence, or fraud is VOIDABLE

WHO CANNOT GIVE CONSENT

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

OBJECT OF A CONTRACT
- The object of a contract is its subject matter. It is the thing, right, or
service which is the subject-matter of the obligation arising from the
contract.
Requisites:
1. It must be within the commerce of man;
2. It must be licit, or not contrary to law, morals, good customs, public
policy, or public order;
3. It must be determinate as to its kind.

Things which are outside the commerce of man:

 1. Services which imply an absolute submission by those who render
them, sacrificing their liberty, their independence or beliefs, or
disregarding in any manner the equality and dignity of persons, such
as perpetual servitude or slavery;
2. Personal rights, such as marital authority, the status and capacity of
a person, and honorary titles and distinctions;
3. Public offices, inherent attributes of the public authority, and political
rights of individuals, such as the right of suffrage;
4. Property, while they pertain to the public dominion, such as the
roads, plazas, squares, and rivers;
5. Sacred things, common things, like the air and the sea, and res
nullius, as long as they have not been appropriated.

Even future things can be the object of contracts, as long as they have the
possibility or potentiality of coming into existence.

The law, however, generally does not allow contracts on future inheritance. A
contract entered into by a fideicommissary heir with respect to his eventual
rights wouldbe valid provided that the testator has already died. The right of a
fideicommissary heir comes from the testator and not from the fiduciary.

Cause of Contracts

The cause of the contract is the “why of the contract,” the immediate and most
proximate purpose of the contract, the essential reason which impels the
contracting parties to enter into it and which explains and justifies the creation
of the obligation through such contract.

The cause as to each party is the undertaking or prestation to be performed by

the other. The object of the contract is the subject matter thereof (e.g. the land
which is sold in sales contract). Consideration, meanwhile, is the reason,
motive, or inducement by which a man is moved to bind himself by an
agreement.

Requisites:

1. It must exist;
2. It must be true;
3. It must be licit.

DEFECTIVE CONTRACTS

1. Rescissible Contracts-
Those which have caused a particular economic damage either to one of the
parties or to a third person and which may be set aside even if valid. It may
be set aside in whole or in part, to the extent of the damage caused

The following contracts are rescissible:

(1) Those which are entered into by guardians whenever the wards whom
they represent suffer lesion by more than one-fourth of the value of the
things which are the object thereof;
(2) Those agreed upon in representation of absentees, if the latter suffer the
lesion stated in the preceding number;
(3) Those undertaken in fraud of creditors when the latter cannot in any
other manner collect the claims due them;
(4) Those which refer to things under litigation if they have been entered into
by the defendant without the knowledge and approval of the litigants or
of competent judicial authority;
(5) All other contracts specially declared by law to be subject to rescission.
(6) Payments made in a state of insolvency.

Note: The action for rescission is subsidiary; it cannot be instituted except

when the party suffering damage has no other means to obtain reparation
for the same.
Rescission shall only to the extent necessary to cover damages cause.

2. Voidable Contracts

Contracts are voidable or annullable:

1. When either party is incapable of giving consent to a contract
2. When consent is vitiated by mistake, violence, intimidation, undue
influence, or fraud;
Note: The contract is binding unless annulled by a proper action in
court.
It can be ratified.
Prescription: 4 years to begin - when the vice is due to
intimidation, violence or undue influence – from the time defect of
consent ceases
Mistake or Fraud- from the time of discovery
Entered into by minors ot those incapable of giving consent- the
moment guardianship ceases

Ratification- extinguishes action for annulment (tacit ot express)

Tacit Ratification- the execution of an act which necessarily implies
an intention to waive his right by the party, who, knowing of the
 reason which renders the contract voidable, has a right to invoke
annulment
-may be effected by the guardian of the incapacitated person

3. Unenforceable Contracts

Art. 1403. The following contracts are unenforceable, unless they are
ratified:
(1) Those entered into in the name of another person by one who has been
given no authority or legal representation, or who has acted beyond his powers;

(2) Those that do not comply with the Statute of Frauds as set forth in this
number. In the following cases an agreement hereafter made shall be
unenforceable by action, unless the same, or some note or memorandum,
thereof, be in writing, and subscribed by the party charged, or by his agent;
evidence, therefore, of the agreement cannot be received without the writing, or
a secondary evidence of its contents:

(a) An agreement that by its terms is not to be performed within a year from the
making thereof;
(b) A special promise to answer for the debt, default, or miscarriage of another;

(c) An agreement made in consideration of marriage, other than a mutual

promise to marry;

(d) An agreement for the sale of goods, chattels or things in action, at a price
not less than five hundred pesos, unless the buyer accept and receive part of
such goods and chattels, or the evidences, or some of them, of such things in
action or pay at the time some part of the purchase money; but when a sale is
made by auction and entry is made by the auctioneer in his sales book, at the
time of the sale, of the amount and kind of property sold, terms of sale, price,
names of the purchasers and person on whose account the sale is made, it is a
sufficient memorandum;

(e) An agreement of the leasing for a longer period than one year, or for the sale
of real property or of an interest therein;

(f) A representation as to the credit of a third person.

(3) Those where both parties are incapable of giving consent to a contract.

4. Void or Inexistent Contracts

The following contracts are void or inexistent from the beginning:

 Those whose cause, object or purpose is contrary to law, morals, good

customs, public order or public policy;
 Those which are absolutely simulated or fictitious;
 Those whose cause or object did not exist at the time of the
transaction;
 Those whose object is outside the commerce of men;
 Those which contemplate an impossible service;
 Those where the intention of the parties relative to the principal object
cannot be ascertained;
 Those expressly prohibited or declared void by law. (a-g, Art 1409,
NCC).
 Those which are the direct results of previous illegal contracts (Art
1422, NCC).