2 INTRODUCTION TO LAW

PART 2

Directions : Please answer in an ESSAY form.

1. Edgar entered into a one year contract of lease of a commercial space to Carlo who is a
minor. Is there a problem with the contract? Why?
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2. Ana and Banny planned to get married on December 25, 2019. Unfortunately Banny
was not able to attend his wedding because he realized that he loved someone else.
What do you think Ana can do?
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3. Ronnie paid his loan to Helen in the amount of P10,000. by issuing a post dated check,
unfortunately upon withdrawing the said check to its drawee bank the check bounced? What is
the remedy of Helen to the bounced check that Ronnie paid her?
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NOTE: We will concentrate our discussion to Civil Law since this will be the main topic of our course
discussion in Business Law and Regulations
 CONTRACTS
Contracts are bilateral or multilateral legal transactions that create mutual obligations
between individuals or between individuals and states. In Business Law the contracts are the basis for
the exchange of goods and services. It is necessary to understand that the contract does not effectuate
the exchange but only creates the mutual duty to do so in the future.
Individual autonomy in the context of legal transactions means freedom of contract (A
Fundamental Law in Germany!), again limited by statutory prohibitions (eg. sale of drugs) and by
public policy (eg. usury).
Freedom of contract means that the individual is free to decide whether and with whom to
conclude a contract and what contents the contract should have. Only in exceptional cases there is a
legal duty to conclude a contract.
The contract comes into existence by two corresponding declarations of will, offer and
acceptance. In order for the contract to be valid the parties must have the legal capacity to contract,
their assent must be genuine (no fraud, misrepresentation or mistake), the contract must be for a
lawful purpose and where the law requires a certain form (eg. writing) that must be complied with.
Under Common Law there is a further requirement: consideration, which means that each person
must give something and receive something in return.
Example 1 - HW who are both of legal age (capacity to contract) enter into a contract with Manila
Hotel for their “Mid-Year Promo.” A 2 day accommodation for P5,000.00 (consideration) on July 29
and 30,2020 the Manila Hotel confirmed and accepted the payment and they both signed a contract
stating details of the agreement.
In this contract HW accept the offer (offer and acceptance) of Manila Hotel for their “Mid-Year
Promo” accommodation (the will to decide to whom they want to enter into a contract) in return
Manila Hotel is obliged to comply what they agreed upon which is the 2 day accommodation on July
29 and 30,2020.
Question 1:Supposed HW is not of legal age when he enters the contract, what is the effect in the
contract between the parties?
Answer : The contract will be VOID because one element is lacking.which is the legal capacity of
HW to enter into a contract

NOTE: If any of the mentioned elements is lacking the contract will be void, that is unenforceable in
court, or voidable, which means that the contract may be canceled at the option of one party.

Question 2: Supposed Manila Hotel fails to accommodate HW on July 29 and 30,2020,What is

the effect in the contract?

Answer : Manila Hotel is liable to HW for breach of contract.

NOTE: If one party fails to abide by the agreement, this constitutes a breach of contract and gives the
other parties remedies that can be enforced in court. These may be damages or specific
performance.

From the start of the contractual negotiations and irrespective of whether a contract is
concluded in the end, the parties are under a mutual duty to act fairly; breach of this duty may also
give rise to a claim for damages.

Example 2: A singer who was due to sing at a concert has failed to turn up on the day agreed and it's
too late to arrange for it to be held on another day will have to pay compensation (damages) for
breaking the agreement.

Agreements which are legally binding

Civil law systems hold that if an agreement is serious, definite and meant to be legally binding it is
legally enforceable.
Common law systems, on the other hand, generally require something more. Their point of view is
derived from the model of business dealings. Bargains, in which each party stands to gain something
from the agreement, can be enforced, just because each party stands to gain from them. And an
agreement can be enforced by a party who stands to lose if it is not enforced, because he has relied on
it. But a promise to do someone a favour to make a gift, however seriously meant, cannot be enforced,
unless the promise is made by a written deed, signed or witnessed.

Example: Suppose you have rented a flat and the landlord has told you that, as you are in financial
difficulties, he will let you off the rent for three months. Later he finds that he needs the money and
demands the rent for those three months all the same. His agreement to let you off was seriously
meant but, but it was not a bargain. He did not stand to benefit from the agreement. So from a
common law point of view the agreement is not binding, though from a civil law point of view it is
binding. The agreement would be binding in common law if to your landlord's knowledge you had lost
the chance of moving to cheaper lodgings because you relied on his keeping his promise.

How contracts can be enforced

For contracts to be enforced the state must have sufficient force at its disposal. Given state
force, courts can order parties to an agreement to carry it out, or to provide a substitute for what was
promised, or to pay compensation for not doing what was agreed.
The law can also allow to withdraw from an agreement which the other party is clearly not
going to carry out.

Example 1. : If the plumber who has agreed to repair my leaking pipe delays too long in coming to my
apartment to carry out urgent repairs I can withdraw from my contract with him (rescind the
contract) and get another plumber instead.

Example 2. : If I have made an advanced payment for the rent of a holiday villa and the owner does
not make it available as agreed, I can recover the advance payment (claim restitution). These
remedies, as they are called, reflect one of two ideas. One is that a legally binding agreement must be
carried out. If it is not, state force should be used to see that it is, or that the other party is put in as
good a position as if it had been. When a contract is broken, it sometimes seems right to put the party
who suffers in as good a position as if the other party had kept his agreement. In other cases it seems
right to put the party who suffers in as good a position as if he had not made the agreement in the first
place.
PROPERTY LAW
Definition of property
Property (Ownership) is the legal power to deal with a piece of property according to one's
will. It is anything that has a money value and can be cashed or exchanged: land, buildings, furniture,
vehicles, leases, money, shares, copyrights. For something to be property it has to be possible to have
an exclusive right on it.Under modern law it is subject to severe limitations in the public interest.
There are absolute rights which confer a more limited power to dispose of a piece of property e.g. a
pledge, which is the right to sell off an object belonging to somebody else in order to cover a money
claim out of the proceeds.
Possession is the physical control of a thing. As property rights are absolute rights that have to
be respected by everybody, possession is important in that it gives an indication of the legal situation:
The person who has a thing in his possession is considered to be the owner; the consequence of this
legal assumption is that anybody who disputes that the possessor is the owner, has the burden of
proof.
Possession may be lawful, e.g. in the case of the tenant, or unlawful, e.g. that of a thief.

Who owns what?

The owner is said to have the property in the thing he owns. By “owner” is meant the person who has
the best right to control the thing in the long run, though in the short run someone else may have a
more immediate right on it.

Example: I can own an apartment though at the moment it is lend to you or mortgaged .

To decide who has the best long-term right, several factors need to be taken into account, of which the
most important are: rewarding initiative, giving effect to agreements to pay for or transfer things,
encouraging trade, and seeing that things are properly looked after. The present owner will be the
person who can trace his right back to the original owner by one or more sales, gifts, etc. Owning a
thing includes the right to pass on the ownership of the thing on to another. Sometimes, however, the
ownership of a thing is transferred without the owner's consent. There are two ideas. One is that a
person cannot be deprived of his ownership without his consent. This idea gives priority to long-term
security.

Example: If I lend or hire my lap-top computer to you or you steal it or find it left in your office and
you then sell it to Jane, I can claim it back from Jane, even if she thought it was yours. When she
bought it, she took the risk that it did not belong to you.
To sum up, property must have some value: and things have value only if they can be controlled; and
the control, for which the legal term is possession, can be physical or legal. Let's have an example
according to that.

Example: Can one own fish in the sea? Not if they are swimming about freely. But if I am fishing in a
place where I have the right to fish and have caught fish in my net I have them in my control and so I
can own them.

The protection of property rights

In protecting property rights law has two main aims.

1. Protecting the owner
2. Protecting the possessor.
The owner is the person with the best long-term right to the possession of the thing; so there
are two ways to protect him. One is to give him a right to claim the thing from anyone who cannot
show that he is entitled to keep it temporarily. The second way is to give the right to claim not to the
owner but to the person who is immediately entitled to possess the thing. This protects the owner in
the long run. The owner is always entitled to possess the thing in the long run, but not always in the
short run.

Example: A lessee is entitled to possess the flat he has leased until the lease runs out.
But to protect the owner it is not enough if the law is to promote social peace and harmony. To
discourage people from taking the law into their own hands, the person who possesses a thing
without owning it also needs to be protected. A person who is dispossessed of a thing can get it back
from the person who took it.

Example: If you take the motorcycle I have been riding without asking me, you dispossess me and I
can take it back without asking you. Provided I don't use force. If someone else took the motorcycle
from you, the dispossessed you in turn and you can claim it back from him though you don't own it.

Why protect property?

1. One reason for protecting private property is that it helps those who own it to be more
independent. For this purpose there have to be rules that lay down who owns what.
2. Another reason is to make sure that economic and domestic life can be carried on without too
much interference by others. A viable economy and home life is only possible if people are not
 free to take things from others without their leave. It is better that those who are in control of
things (who have what the law calls possession), should remain in control and be free to use
the thing broadly.
3. A third reason for having a law of property is that property law can be used to create assets of
a sort that did not exist before, such as patents and copyrights, and in that way reward
originality and stimulate enterprise.

Protecting ownership makes for long-term stability and protecting possession for short-term stability.
Both have a place in a system of property law.

Transfer of rights in real property is by way of legal transaction. This falls into two parts: an
agreement that property should pass and a visible act transferring the object of the property.
Remedies for interference with property rights: action for restitution; action for disturbance of
possession

BUSINESS ENTITIES

Corporations

As already said, the law may accord artificial entities the capacity to have rights and duties i.e.
legal personality. These entities are named corporations. Legal personality with respect to a
corporation is termed corporate personality.

Once a corporate personality comes into existence its legal identity is separation and
independence from its members. Corporations may sue and be sued; they are entitled to carry on
activities like human persons, and to hold and dispose of land and other property. They also may form
themselves and become members of corporations.

As corporate personality is accorded by law, the law determines what corporations may be
formed and what formalities must be complied with for their formation. In essence what is necessary
is a contract (memorandum and articles of association) in the form deed certified by a public
notary and the registration with companies` register. The contract is the constitution of the
corporation; it sets forth the rights and duties of the members, the organs and the management and
the control of the corporation.

The business corporations are the public limited company, the private limited company
and the co-operative. For non-business purposes the law provides for the associations and
societies. However as professional associations, trade associations or trade unions they play an
important role in business.

Partnerships

Partnerships are relationships between several persons carrying on business together with a
view of profit. Initially they had no legal personality at all. The partners were jointly owners of the
assets and liable for the liabilities. Gradually it became recognized that partnerships could sue and be
sued and that they could own property. However there was still the important criterion that they
were not independent from their members, which means that if one of the members dies, resigns or is
expelled, the partnership dissolves.

Explai

Settling Disputes
Disadvantage of going to court
1. Time Consuming – attending hearings/trials- you are required to attend hearings/trial as
scheduled and directed by the Court.
2. Expensive- hiring a lawyer these days is quite expensive, you will be paying acceptance fee,
appearance fee and other
3. Stress and tension - the stress of having to provide evidence and discuss personal matters in
court

NEGOTIATION
It is when people try to resolve the conflict by reaching a solution that is acceptable to all.
Is important because the skills involved in handling conflict responsibly are used everyday by
people in all aspect of life
People can hire attorneys to negotiate in situations like road accidents.
3 PHASES of Negotiation
Phase 1 - Preparation
1. All parties should have a sincere interest in settling disputes .
2. Identify issue causing the conflict
3. Consider issue from the other side
4. Identify two workable solutions to resolve problem

Phase 2- Negotiation
1. Work together to identify issue causing conflict
2. After identifying issues, parties should work together to create a list of possible solutions.
(Identify 2-3 most workable)
3. Repeat all points of the final agreement to be sure of understanding
-Write agreement and decide on consequence if broken
Phase 3- Post-negotiation
-Make final decisions

ARBITRATION
Is when both parties agree to have a 3 party listen to their arguments and make a decision for
rd

them.
Decision made by an arbitrator are legally binding
Common places to have an arbitration hearing :
● Contract and Labor Management Disputes
● International Law cases

MEDIATION
Is when a 3 party helps the disputing parties talk about their problems and settle their
rd

differences.
Mediators do not make decisions for the parties they only help the settlement between them.

COURT ACTION
*Lastly you could take court action
Case Law or Judicial decisions are official interpretations or manifestations of law made by
persons and agencies of the government performing judicial and quasi-judicial functions. At the apex
of the Philippine Judicial System is the Supreme Court, or what is referred to as court of last resort.
The reorganization of the Judiciary of 1980 (Batas Pambansa Blg. 129) established the following
courts:
● Court of Appeals;
● Regional Trial Courts divided into different judicial regions,
● Metropolitan Trial Court;
● Municipal Trial Court in Cities;
● Municipal Trial Courts;
● Municipal Circuit Trial Courts.

The Shariah (Sharia’a) Circuit and District Courts (Presidential Decree No. 1083), Court of Tax
Appeals (Republic Act No. 1125) and the Sandiganbayan (Presidential Decree Nos. 1486 and 1606),
sec. 4, Art XI of the 1987 Constitution were created by separate laws.
Guided Practice

What do you think is the role of NEGOTIATION in any litigation? Explain.

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Note: The evaluation / assessment will be posted / published in the Google Classroom.

Thank you!

Reference: ASEAN Law ASSOCIATION'S GUIDE TO THE LEGAL SYSTEM,

WWW.UNCFSU.EDU,HTTPS://SAYLORDOTORG.GITHUB.IO,HTTP://KRETSCHMER.CC. .”Black’s

Law Dictionary, 6th ed., s.v. “law.”GlobaLex, Lawshelf educational media