CE LAWS  The contracting parties may establish

PRELIMS stipulation, clauses, terms and condition

as they may deem convenient –
provided not contrary to law, morals,
Contract good customs, public order or public
- Meeting of minds between two persons policy.
whereby one binds himself with respect f
the other The constitutional provision is intended to protect
- To give or render services creditors, to assure fulfillment of lawful promises
and to guard the integrity of contractual obligations
According to Sanchez Roman
- A contract is s juridical convention Obligation of contract may be legally impaired by:
manifest in legal form, by virtue of which 1. the police power of the state
one or more person bind themselves in 2. the power of eminent domain
favor of one another 3. the right to impair the obligation is reserved
- Or reciprocally to the fulfillment of a
prestation to givem to do or not to do Instances of Unlawful Contract

Elements of Contract The following contracts are unlawful, namely:

1. Essential E – those without which no contract a. Contract whereby it provides payment of

can validly exist usurious interest is void
b. Parties cannot enter into contract that will
Requisites of a contrac: deprive a court of the jurisdiction conferred it by
A. Consent of the contracting parties law, for jurisdiction cannot be the subject-matter of
B. Object certain which is the subject matter of the the contract
contract c. A waiver signed by a student-scholar whereby he
C. Cause of consideration of the obligation which is relinquishes his right to transfer to another school
established unless he refunds to the University the equivalent
of his scholarship grant: is void
2. Natural E – those are presumed to exist in d. A contract whereby service will be rendered
certain contracts unless the contrary is expressly without remuneration is contrary to law and morality
stipulated by the parties e. A promise of marriage based on illicit relation
- like warrant against hidden, defects such as an agreement to become a common-law
in a contrary of sale wife: is void

3. Accidental E – are the particular clauses, terms Essential Characteristics of Contracts

and conditions established by the parties in their
contract like interests and penalties 1. Obligatory force of contract
- based on the principle that once the
Stages of a Contract contract is perfected it shall obligatory force upon
contracting parties
1. Preparation, conception or generation 2. Autonomy of Contracts
- under this stage, the parties of are still in - it is based on the principle that the
the negotiating preliminaries. contracting parties are free to enter into a contract
- the parties have not yet arrived at any and establish such terms and conditions provided
definite agreement, although steps are being taken they are not contrary to law, morals, good customs,
up until they finally agree. public orders, or public policy
3. Mutuality of Contracts
2. Perfection of Birth - it is based on the principle that the contract
- at this stage, the parties have already must be bind both contracting parties and
come to a definite agreement for the meeting of the necessarily the must be mutual consent
mind between them exists as to the subject matter 4. Relativity of Contracts
and cause and contract. - it is based on the principle that the contract
takes effect only between the parties, their assigns
3. Consummation or Termination and heirs
- the parties at this stage have already
performed their respective obligation which led to Effects of Contracts
consummation or termination If the contract contains some stipulation in
favor of third person, he may demand its fulfilment
Freedom to Contract Constitutionally provided he communicated his acceptance to the
Guaranteed Obligor before its revocation.
 Constitution provides “Now law - The clear and deliberate conferment of
impairing the obligation of contracts favor upon a this person is knowns as
shall be passed. --- the constitution stipulation pour auirui
guarantee against impairment of
contract obligation refers only to valid
contracts
Classification of Contracts

1. According to their designation

A. Nominate – those that can be identified by their
individuality and are regulated by special provision
of law, such contract of agency, lease, sale.
B. Innominate – which lack individuality are
regulated by the stipulation of the parties. They are
not regulated by special provision of law

2. According to their perfection

A. Consensual – those which are perfected by
mere consent of the parties without need of other
families, such contracts of sale and partnership
B. Real – which require not only the consent of the
parties, but also the delivery of the object of the
contract which is necessary such as, deposit,
commodatum or pledge.

3. According to their form

A. Common or Informal – those which do not
require any formality such as loan or lease
B. Special or Formal – those which the law
prescribes some formalities, such as donation or
chattel mortgage. They should be made in public
documents

4. According to the Nature and Obligation they

produce
A. Unilateral – those which give rise to an
obligation for only one of the parties such as in
case of gratuitous deposits.
B. Bilateral – those which give rise to reciprocal
obligation such as in the case of contract of sale
5. According to their cause or consideration
A. Onerous – those which benefit is derived
through something which is given or promised,
such as contract sale.
B. Gratuitous – which one of the parties derives
benefits without giving any equivalent or
compensation, such as simple donation

6. According to risk involved

A. Commutative – those which what is given by
one party is considered an equivalent given by the
other, such as contract of lease
B. Aleatory – consideration is unequal and depend
upon the happening of an uncertain event such as
in insurance contract where the business is at risk
of loss/gain

7. According to relation with other contracts

A. Principal – those which can exist independently
from other contracts such as contracts of lease and
sale
B. Accessory – those which cannot exist without
another prior contract, such as mortgage and
pledge.