TITLE II: CONTRACTS b.

Formal or solemn

ARTS. 1305-1422, CIVIL CODE 5. According to obligatory force

CHAPTER 1: GENERAL PROVISION a. Valid

Contract (1305) b. Rescissible

 A meeting of minds between two parties whereby one c. Voidable

binds himself, with respect to the other, to give
something or to render some service, or to refrain from d. Unenforceable
doing some particular thing.
e. Void or inexistent
Distinction of contract vs. obligation (1305)
6. According to person obliged
1. Contract is one of the sources of obligation; obligation is
the legal tie or relation itself that exists after a contract has a. Unilateral
been entered into.
b. Bilateral
2. There can be no contract if there is no obligation accepted in
7. According to risks
return for some benefit to be enjoyed; but an obligation may
exist without a contract. a. Commutative
Distinction of contract vs. agreement (1305) b. Aleatory
1. Contracts are binding agreements through legal 8. According to liability
proceedings in case the other party does not comply with his
obligation under the agreement. a. Unilateral

2. Those agreements which cannot be enforced by action in b. Bilateral

the courts of justice are not contracts but merely moral or
social agreement. 9. According to status

- Agreements to stroll at mall; agreement to go to a a. Executory

birthday party.
b. Executed
“All contracts are agreements but not all agreements are
contracts” 10. According to dependence to another contract

Classification of contract (1305) a. Preparatory

1. According to name or designation b. Accessory

a. Nominate c. Principal

b. Innominate 11. According to dependence of part of contract to

other parts
2. According to perfection
a. Indivisible
a. Consensual
b. Divisible
b. Real
Valid Contract (1306)
3. According to cause
 Those that meet all legal requirements and limitations
a. Onerous for the type of agreement involved and are, therefore,
legally binding and enforceable.
b. Remuneratory or remunerative  The contracting parties may establish stipulations,
clauses, terms and conditions as they deemed
c. Gratuitous convenient, provided they are not:
o Contrary to law
4. According to form
o Contrary to moral
a. Informal, common or simple o Contrary to good customs
o Contrary to public order

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 o Contrary to public policy - If K dies, who should J pay? J should pay the heirs
of K.
Classification of contracts according to its name or - If K assigns his credit to L, then J should pay L.
designation
“J is indebted to K for P10,000. L is the heirs of J. If J dies, is L
Nominate Contract (1307) liable to pay K?”

 Has a specific name or designation in law. - Yes, L should pay K.

- What is the limit of the liability of L? Not more
Innominate Contract (1307) than the value of L’s inheritance.
 Has no specific name or designation under the law. Exceptions:
Kinds of Innominate Contract - When the rights and obligations arising from the contract are
not transmissible:
1. do ut facias (I give that you may do)
a. By their nature (contracts involving personal qualifications -
2. facto ut des (I do that you may give)
painting, singing)
3. facto ut facias (I do that you may do)
b. By stipulation (in accordance with the principle of freedom
Rules Governing Innominate Contract (1307) to contract)

1. The agreement of the parties c. By provision of law (as in agency, partnership, and
commadatum, when death extinguishes the legal relationships)
2. The provision of the civil code on obligations and contracts
Case when Strangers or 3rd Persons Affected by a
3. The rules governing the most analogous contracts Contract (1311)

4. Customs of the place 1. In contracts containing a stipulation in favor of a third

person (stipulation pour autrui)
Both parties must be bound (1308)
2. In contracts creating real rights
 A contract must bind both parties in order that it can
be enforced against either. 3. In contracts entered into defraud creditors
 Its validity and compliance cannot be left to the will of
one of them. 4. In contracts which have been violated at the inducement of
 It is a meeting of the minds, and, therefore must be a third person.
mutual consent.
Stipulation Pour Autrui (1311)
Determination of Performance by a Third Person (1309)
 A stipulation in a contract clearly and deliberately
“J sold his vintage car to K. The parties agreed that L, an conferring a favor upon a third person who has a right
independent assessor, would be the one to establish the selling to demand its fulfillment provided he communicated
price of the vintage car.” his acceptance to the obligor before its revocation by
the oblige or the original parties.
- Once the price has been determined by L, it must be
made known to J and K who will be bound by the “It was agreed that J will build a condominium unit for K. The
same. condo will boost the value of the adjoining properties. In
anticipation of the benefit, L purchased more lots near the
The determination shall not be obligatory if it is place where the condo is to be built. L plants to re-sell the lots
evidently inequitable. In such case, the courts shall at profitable prices when the condo is completed. J was not
decide what is equitable under the circumstances. able to fulfill his obligation. Consequently, L’s expectations will
(1310) not materialize.”

Persons Affected by a Contract (1311) - Can L sue J for breach of contract? No, the
fact that L incidentally derive some benefit from
 As a general rule, a party’s rights and obligation are the contracts give him no right to sue J for breach
transmissible to the successors. of contract.
 Contracts take effect only between the parties, their
assigns and heirs, meaning, only the parties, their “J is obliged to pay K P10,000 after one year at 10% interest.
assigns and heirs can have rights and obligations under Their agreement provides that the interest of P1,000 will be
the contract. paid by J to L who is indebted to K for the same amount. L
communicated his acceptance to J before any revocation of the
“J is indebted to K for P10,000” stipulation is made.”
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 - L is not a party to the contract at the Ex. Donation of real property which must be in a public
beginning, is L can sue K? Yes, from the instrument.
moment communication of acceptance is duly
made, L becomes the party of the contract. Stage in the life of a contract

Third persons are bound by contracts creating Real 1. Preparation or negotiation - includes all the steps taken
Right (1312) by the parties leading to the perfection of the contract.

Real Right is binding against the whole world and attaches to  Parties have not yet arrived at any definite agreement
the property over which it is exercised wherever it goes.
2. Perfection or birth - when the parties have come to a
 Real rights include ownership, use, pledge, mortgage definite agreement or meeting of the minds regarding the
and predial servitude. subject matter and cause of the contract.
o Usufruct gives a right to enjoy the property of
3. Consummation or termination - parties have performed
another with the obligation of preserving its
their respective obligations and the contract may be said to
form and substance, unless the title
have been fully accomplished or executed, resulting in the
constituting it or the law otherwise provides
extinguishment or termination thereof.
o Predial Servitude- a charge they invested for
the use and utility of another.  Be terminated after its perfection, not by performance,
but by mutual agreement.
“A land owner by K was mortgaged to L. The mortgage was
duly registered. K sold the same land to M. Is M bound by the Effect of perfection of the contract
mortgage contract between K and L?”
1. To the fulfillment of what has been expressly stipulated
- Yes, because the right of L to the mortgage is a
real right. A real right follows the property 2. to all the consequences which according to their nature, may
wherever it goes. be in keeping with good faith, usage and law.

Right of a Creditor to Dispute Contracts Intended to Unauthorized contracts are unenforceable (1317)
Defraud Them (1313)
 As a general rule, a person is not bound by the
“K owes L P3,000,000. In order that L may not attached his contract of another which he has no knowledge or to
house and lot in payment of his obligation, K sold it to M. K has which he has not given his consent.
no other property. What right does L has in order that he may  Free will of the parties and only he who enters into the
be paid the P3,000,000?” contract can be bound thereby.
 A contract entered into in the name of another by one
- M, who is a stranger to the contract between K who has no authority is unenforceable against the
and L, is given by law the right to ask for rescission former unless it is ratified by hi,, before it is revoked by
or cancellation of the sale in order that he may the other contracting party.
paid by his claim.
Unauthorized contracts can be cured only by
Liability of 3rd Person Responsible for Breach of ratification (1317)
Contract (1314)
 It cannot be cured except by the subsequent
“K and L have a contract that K would sell his sports car to L. M ratification of the person in whose name the contract
convinced K to sell the sports car to N. Can L sue K for breach was entered into or by his duly authorized agent and
of contract? Can L sue M for damages?” not by any other person not so empowered.
 Ratification must be clear and express not to admit of
- Yes, L can sue K for breach of contract.
any doubt or vagueness.
- Yes, L can sue M for damages for he is the one
who convinced. When a person is bound by the contract of another
(1317)
Classification of contracts according to perfection
(1315) 1. The person entering into the contract must be duly
authorized, expressly or impliedly, by the person in whose
1. Consensual contract - perfected by mere consent.
name he contracts or he must have, by law, a right to
2. Real Contract - perfected by the delivery of the thing represent him (like a guardian or an administrator)
subject matter of the contract.
2. He must act within his power
3. Solemn Contract - requires compliance with certain
formalities prescribed by law, such prescribed form being
thereby an essential element thereof.

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CHAPTER 2: ESSENTIAL REQUISITES OF CONTRACTS

GENERAL PROVISIONS Options (1324)

Requisite of Contracts (1318) 1. Option Contract - giving a person for a consideration a

certain period within which to accept the offer to the offerer.
1. Consent of the contracting parties
2. Option Period - The period given within which the offeree
2. Object certain which is the subject matter of the obligation must accept the offer.

3. Cause of the obligation which is established 3. Option Money - the money paid or promised to be paid in
consideration for the option.
4. Not contrary to law, morals, good customs, public order or
public policy  It is not to be confused with earnest money which is
actually a partial payment of the purchase price is
SECTION 1 - Consent considered as proof of perfection of the contract.
Consent (1319) “J made an offer to sell his diamond ring to K for a special
price of P50,000. J gave K 15 days to make up his mind.”
 The meeting of minds, or mutual assent between the
parties on the subject matter and the cause which are - Should J want to cancel the offer on the 10th
to constitute the contract even if neither has been day, can he still withdraw? Yes, J can as long as
delivered. the offer has not been accepted.
 Mutual assent (or consent or agreement) takes place - Suppose K paid an amount in consideration of
when there is offer of acceptance. the 15-day period. Can J withdraw the offer on
the 10th day when K had not accepted the offer?
Offer (1319)
No, the option is covered by consideration.
 A proposal made by one party (offerer) to another
Advertisements (1325/1326)
(offeree), indicating a willingness to enter into a
contract.  Business advertisements of things for sale are
 It is more than an expression of desire or hope. not definite offers, but are merely invitations to the
 It is really a promise to act or to refrain from acting, on reader to make an offer.
condition that the terms thereof are accepted by the  Advertisements for bidders are simply invitations to
person to whom it is made. make proposals, wherein the advertiser is not bound to
 The offer must be certain or definite so that the liability accept highest or lowest bidder, unless the contrary
or the rights of the parties be exactly fixed. appears.
 It is necessary that the acceptance be identical with
the offer to create a contract without any further act People Who Cannot Give Consent (1327)
on the part of the offeror.
 An offer made in jest or in anger, or while emotionally 1. Unemancipated Minors
upset or in other ways indicating that the some was
not seriously intended is not a valid offer. 2. Insane or demented persons

Acceptance (1319-1323) 3. Deaf-mute who do not know how to write

 The manifestation by the offeree of his assent to all  A person, who does not know how to write, does not
the terms of the offer. know how to read.
 Acceptance must be clear, absolute, unconditional or
unqualified. Lucid Intervals and State of Drunkenness or Hypnotic
 Acceptance may be express or implied. Spell (1328)
 The offerer may fix the time, place and the manner of
Lucid Interval - a temporary period of sanity, during which, a
acceptance, all of which must be complied with.
contract entered into by an insane or demented person is valid.
 An offer made through an agent is accepted from the
time acceptance is communicated to him. Drunkenness and Hypnotic Spell - these conditions are
 An offer may be revoked or withdrawn at anytime equivalent to temporary insanity, hence, the law considers a
before it is accepted by merely communicating the contract entered during these conditions voidable.
intention.
 At the time acceptance is communicated, both parties, Voidable Contract (1330)
offerer and offeree, must be living and capacitated.
 A contract that has legal effect and force when it is
made, but is liable to be subsequently annulled or set
aside by the courts through the process of rescission.

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  A contract where consent is given through mistake,  If he alleges fraud or mistake, the burden of proof is
violence intimidation, undue influence, or fraud is upon him.
voidable.
Exception:
Mistake (1331)
 When one of the parties is unable to read or if the
 It is the false notion of a thing or a fact material to the contract is in a language not understood by him.
contract. o It is the party enforcing the contract who is
 An erroneous belief, at contracting, that certain facts duty-bound to prove that there has been no
are true. fraud or mistake and the terms of the contract
 It can be argued as a defense, and if raised have been fully explained.
successfully can lead to the agreement in question
being found void. Effect of Knowledge of Risk (1333)

Mistakes Which Do Not Vitiate Consent (1331)  If party knew beforehand the doubt, contingency or
risk affecting the object of the contract, it is to be
1. Error as regards the incident of a thing or accidental assumed that he has willing to take chances and
qualities thereof. cannot claim mistake.

e.g. accessibility of a residential house to means of “M sold his farm to N. Before the contract of sale was finalized,
transportation, if not taken as the principal N was informed that the farm is drawn-in a litigation where O
consideration. is the petitioner. If O recover the farm later, can N claim
mistake in his contract?”
2. Mistakes as to quality or amount unless it goes to the
essence of the contract. - No, because he knew the risk that the farm might be
recover later by O.
3. Error as regards the motives of the contract unless the
motives constitute a condition or cause of contract. When Mistake of Law Vitiates Consent (1334)

“K sells his car for P500,000 to L. Mistake of Law - arises from an ignorance of some provision
of law, or from an erroneous interpretation of its meaning, or
For K, the cause or consideration is the P500,000 from an erroneous conclusion as to the legal effect of an
agreement, on the part of one of the parties.
But K’s motive or private reason is to use the money to buy
another car. Effect of Mistake of Law - As a general rule, mistake does
not invalidate consent because “ignorance of the law excuses
The motives are not always the cause of the contract.”
no one from compliance therewith”.
4. Mistakes as regards the identity or qualifications of a party,
Mistakes Which Do Not Vitiate Consent (1331)
except when such identity have the principal cause of the
contract. 1. Error as regards the incidents of a thing or accidental
qualities thereof.
e.g. Obligations to do requiring personal qualifications
2. Mistakes as to quality or amount unless it goes to the
5. Error which could have been avoided by the party alleging it.
essence of the contract.
“J is selling his old car to K provided that L will sell him his new
3. Error as regards the motives of the contract unless the
car. J heard from M that L is willing to sell him his new car.
motives constitute a condition or cause of contract.
After the date of sale was executed between J and K, J knew
that L is not selling his new car. Can J invoke mistake in order 4. Mistakes as regards the identity or qualifications of a party,
to annul the sale?” except when such identity have the principal cause of contract.
- No, J cannot, he should have avoid the mistake by 5. Error which could have been avoided by the party alleging it.
being diligent.
Violence and Intimidation (1335)
Burden of Proof in Case of Mistake or Fraud (1332)
Violence or Force - The employment of serious or irresistible
General Rule: physical force.
 When a person signs a document, it is presumed that “M signed a contract because each time he refuses; his head is
he does so with full knowledge and understanding of submerged in drum full of water until he loses breath. This is
the same. done every time he declines. In this case, M must not given
 He is bound by all its items. consent. He signed but his feelings obviously different.”

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Intimidation or Threat - vitiates consent of a party to a Usual Exaggerations in Trade (1340)
contract when:
 When the other party had an opportunity to know the
1. It produces a reasonable and well-grounded fear of an evil; facts, are not in themselves fraudulent.
“Deliver happiness”
2. The evil must be imminent and grave; “100% dandruff-free forever”

3. The evil must be upon his person or property or that of his Expression of an Opinion (1341)
spouse; descendants, or ascendants;
 A mere expression of an opinion does not signify fraud,
4. It is the reason why he enters into the contract. unless:
1. Made by an expert
TAKE NOTE: Intimidation is internal while violence is external. 2. The other contracting party has relied on
the expert’s opinion;
Undue Influence (1337)
3. The opinion turned out to be false or
 There is undue influence when a person takes erroneous.
improper advantage of his power over the will of
Misrepresentation by a Third Person (1342)
another, depriving the latter of a reasonable freedom
of choice.  A misrepresentation by a representation does not
 An influence of a kind that so overpowers the mind of vitiate consent.
a party as to prevent him from acting understandingly
and voluntarily to do what he would have done if he “K is selling his land so he tried to find out its value. L deceive
had been left to exercise freely his own judgment and K by quoting the price at P1,000 per square meter. K used this
discretion. value to sell the land to M at P1,000 per square meter. The
 The influence must be improper to avoid a contract. prevailing selling price of the land is P2,000 per square meter
o If gained by kindness and affection, or which K found out later. Can K ask for annulment for the sale?”
argument and persuasion, the influence will
not vitiate consent. - No, the misrepresentation was made by a party who
o Circumstances to be considered: has no connection with the contract.
1. Confidential*, family, spiritual and
other relations between the parties. Misrepresentation Made in Good Faith (1343)
2. The fact that the person alleged to
 If the misrepresentation is not intentional but made in
have been unduly influenced was the:
good faith, as when the person making the false
suffering from mental weakness, or
statement believed it to be true, there is no fraud but a
was ignorant or in financial distress.
mere mistake or error.
*Confidential - entrusted with the confidence of another or
“M sold sets of Jewelries to N. M honestly believed that these
with the secret affairs or purposes; intended to be held in
are original Pandora treasures. It was found out later that
confidence or kept secret.
these are replications. Is the contract voidable? On what
Confidential relation - a relationship in which one person ground?”
has confidence in, and relies on another, because of some
- The contract is voidable, not on the ground of fraud
combination of a history of trust, older age, family connection,
but on the ground of mere mistakes.
superior training and knowledge, to a point where the party
relied upon dominates the situation, for good or bad. Kinds of Fraud in the Making of Contract (1344)
Causal Fraud (1338) 1. Causal Fraud - a fraud that makes a contract voidable. It
must be:
 Insidious words or machinations of one of the
contracting parties to induce the other to enter into a o Serious
contract which, without them, he would have not o Should have not been employed by both
agreed to.
contracting parties
o Include any misrepresentation in words or
o Should have not been known by the other
actions done with fraudulent purpose.
party
Fraud by Concealment (1339)
2. Incidental Fraud - renders the party who employs it liable
 A neglect or failure to disclose facts, when there is for damages.
duty to reveal them, as when the parties are bond by
 The fraud was not the principal inducement, hence,
confidential relations, constitutes fraud.
does not vitiate consent.

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Simulation of a Contract (1345) Once the quantity agreed upon has been selected,
segregated, physically designated and distinguished from all
 It is the act deliberately deceiving other by feigning or other grade A dinorado rice, it becomes determinate.”
pretending by agreement, the appearance of a
contract which is either non-existent or concealed. 4. Must be in existence or capable of coming into existence
(future things or rights)
Kinds of Simulation (1346)
 Thing that are to be produced or acquired after the
1. Absolute Simulation - The contract does not really exist perfection of the contract.
and the parties do not intend to be bound at all. - Future harvests, expected fruits
- Royalties
 Absolutely simulated or fictitious contracts are
inexistent and void. 5. Transmissible Rights

“D is indebted to C. Upon learning that C is going to enforce - Right to vote, right to public office, marital right
his credit, D pretended to sell his land to B, his father-in-law. D (cannot be the object of the contract)
did not receive a single centavo for the transaction and he
continued in possession of the land as the contract was merely 6. Not contrary to law, morals, good customs, public order or
simulated or fictitious.” public policy may likewise be the object of a contract.

- There is no contract of sale in this case as the parties 7. Future inheritance cannot be the object of contracts
do not intent to be bound at all
 Future inheritance - any property or right, not in
2. Relative Simulation - the contract entered into by parties existence or capable of determination at the time of
is different from their true agreement. the contract, that a person may inherit in the future,
such person having only an expectancy of a purely
 The parties are bound by their real agreement heredity right.
provided:
o It does not prejudice a third person, and is not Cause of Contracts (1350-1355)
intended for a purpose contrary to law, morals,
good customs, public order or public policy. Cause (Causa)

“R sold his property to S. They want to conceal the sale so it  The essential reason or purpose which, for each
was made to appear in the form of a contract of mortgage (the contracting parties have in view at the time of entering
apparent contract) with S as the mortgage. If later, R sells the into the contract. It is something bargained for or
property to T, can T acquire ownership?” given by a party in exchange for a legally enforceable
promise of another.
- Yes, because as far as T is concerned, R is still the
owner of the property he is acquiring. Classification of Contracts According to Cause:

Objects of Contracts (1347-1349) 1. Onerous - the cause of which, for each contracting party is
the prestation or promise of a thing of service by the other; the
 Is its subject matter. parties are reciprocally obligated to each other.

Requisites of Object of Contracts (1347-1349) - Sale, lease, partnership

1. Must be within the commerce of men. 2. Remuneratory or remunerative - the cause of which is
the service or benefit which is remunerated (paid or
- Air, sunlight, rain, clings of public ownership e.g., compensated).
public parks, bridges, streets (Hindi ito pwede)
“A business consultant completed one-month project for JKL
2. Must not be impossible legally or physically company and was paid P450,000”

- Prohibited drugs, kill a person (Hindi ito pwede) 3. Gratuitous - The cause of which is the liberality of the
- Fly to the moon (Hindi ito pwede) benefactor or giver.

3. The object of the contract must be determinate as to its kind - Pure donation, condonation of debt commadatum
and quantity or at least determinable without the necessity of a o Commadatum is a gratuitous loan of a
new contract between the parties. movable property to be used and returned by
the borrower undamaged and without
“J agreed to sell to K 100,000 kilograms of grade A dinorado compensation for its use.
rice for P5,000,000. Here, the promise to J is to be deliver a
generic thing which can be determinable

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Cause of Contracts (1350-1355)

 If the cause is not stated in the contract, it is

presumed that it exists and lawful.

Lesion - any damaged caused by the other inequality of a

situation, by one party who does not receive the full equivalent
of what he gives in a commutative contract

 Lesion shall not invalidate a contract, there has been

fraud, mistake or undue influence.

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CHAPTER 3: FORM OF CONTRACTS contract. It is the process of ascertaining the intention of the
parties from the written words contained in the contract.
Form of a contract - may be oral, or in writing, or partly oral
and partly in writing. Rules in Case of Doubts Impossible to Settle

 May be express or implied 1. Gratuitous Contract - interpretation should be made

which would result in the least transmission of rights and
When written contract is required interests.

a. Donation of real property  Eg. Donation vs. commadatum

b. Donation of personal property the value of which exceeds 2. Onerous Contract - Doubts should be settled in favor of
P5,000. the greatest reciprocity of interests.

c. Authority of agent to sell land “It is not clear if a loan at 10% interest is payable in 6 months
or in one year. How should the period be determined?”
d. Stipulation to pay interest
- It should be assumed that the period agreed upon is
 Must be in writing, otherwise the sale is void one which favors the borrower as he has a longer time
to use the money and at the same time, it favors the
e. Immovable properties contributed to a partnership
lender to earn interest for one year instead of only one
f. contracts covered by the statue of frauds six (6) months.

 Statute of frauds is enacted to prevent the evil practice 3. Principal Object of Contract - if the doubt refers to the
of giving false testimonies. principal object of the contract and the contract shall be null
and void.
Form for the Convenience of the parties
INTRODUCTION TO Chapter 6, 7, 8, 9
When the law requires that a contract be in some form for the
convenience of the parties or for the purpose of affecting third Kinds of Defective Contracts
persons.
1. Rescissible Contracts
 If a contract for a sale of land is entered into orally,
2. Voidable Contracts
the contract is valid, but it is not enforceable because
the law requires that it be in writing. 3. Unenforceable Contracts
When Contracts Must Appear in a Public Document 4. Void or Inexistent Contracts
(1356-1358)
CHAPTER 6: RESCISSIBBLE CONTRACTS
1. If the object is the creation, transmission, modification, or
extinguishment of real rights over immovable properties, sale Rescissible Contracts - those validly agreed upon because
of real property or an interest therein. all the essential elements exists and, therefore, legally
effective, but in the cases established by law, the remedy of
2. Cession or renunciation of hereditary rights or those of rescission is granted in the interest of equity.
conjugal partnership of gains.
Rescission - the unwinding of a transaction. This is done to
3. Power to administer property. bring the parties, as far as possible, back to the position in
which they were before they entered into a contract (the status
4. Cession of actions or rights.
quo ante)
 The act of relinquishing one’s right
Types of Rescissible Contracts
CHAPTER 4: REFORMATION OF INSTRUMENTS
1. Contracts entered into in behalf of wards, whenever the
Reformation - remedy allowed by law by means of which a wards suffer lesion by more than one-fourth of the value of the
written instrument is amended or rectified so as to express or things which are the object thereof.
conform to the real agreement or intention of the parties when
 A ward is a person under guardianship by reason of
by reason of mistake, fraud, inequitable conduct, or accident,
some incapacity.
the instrument fails to express such agreement or intention.
“The property of a minor was sold by his guardian at half of its
CHAPTER 5: INTERPRETATION OF CONTRACTS
fair value. Can the minor ask for rescission?”
Interpretation of a contract - determination of the meaning
of the terms or words used by the parties in their written
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 - Yes, upon reaching the age of majority, he can, defects provided by law until and unless they are ratified
because the lesion or inadequacy is more than one- according to law.
fourth of the value.

2. Contracts agreed upon in representation of the absentee if

he suffered lesion by more than one-fourth of the value of the Kinds of Unenforceable Contracts
property.
1. Those entered into the name of another by one without
3. Contracts undertaken in fraud of creditors. authority or by one acting in excess of his authority; these are
referred to as unauthorized contracts.
4. Contracts which refer to things under litigation
2. Those that do not comply with the Statute of Fraud which
5. Other instances requires that the following shall be enforceable only if the
contract or some note or memorandum thereof,
Obligation to Return
 Is in writing and,
Rescission creates obligation of mutual restitution. The  Subscribed by the party charged, or by his agent.
parties must return to each other:
a. Agreement not to be performed within one year from
1. The object of the contracts with its accessories the making thereof.
o If the party who demands rescission cannot
return what he is obliged to return the b. Promise to answer for the debt, default or miscarriage of
rescission cannot be availed of. another.
2. The price with legal interest
c. Agreement in consideration of marriage other than
CHAPTER 7: VOIDABLE CONTRACTS mutual promise to marry.

Voidable or annullable contracts - are those which possess  Does not relate to the marriage itself, but to
all essential requisites of a valid contract but one of the parties promises or agreements made by parties prior to
is incapable of giving consent, or consent is vitiated by marriage.
mistake, intimidation, undue influence, or fraud. o Donations propter nuptias,
o Ante-nuptial (prenuptial) agreement.
 They are valid and binding between the parties unless
annulled by a proper action in court by the injured d. Agreement for the sale of goods at a price not less than
party. P500.00, unless there is delivery or partial or full payment

Annulment - remedy provided by law, for reason of public e. Agreement for leasing for a longer period of one year.
interest, for the declaration of inefficacy of a contract based on
a defect or vice in the consent of one of the contracting parties f. Agreement for the sale of real property or of an interests
in order to restore them to their original position in which they therein.
were before the contract was executed.
3. Those where both parties are incapable of giving consent to
 Have for year period to file an annulment a contract.

Reckoning of the Four Year Period to File an Annulment Unauthorized contracts - those entered into in the name of
another person by one which authority or by one acting in
In case of: excess of his authority, this are referred to as unauthorized
contract.
1.Intimidation, violence or undue influence - from the time the
defect of the consent ceases. CHAPTER 9: VOID OR INEXISTENT CONTRACTS

2. Mistake or fraud - from the time it is discovered. Void Contracts - those which, because of certain defects,
generally produce no effect at all.
Ratification - the voluntary adoption or approval of some
defective or unauthorized act or contract which make the  They are considered as inexistent from the very
voidable or contract binding and enforceable, thus, beginning (void ab initio)

 The contract becomes valid, and the action to annul is Inexistent Contracts - agreement which lack one or some or
extinguished. all of the elements: consent, object, and cause; or do not
comply with the formalities which are essential for the
CHAPTER 8: UNENFORCEABLE CONTRACTS existence of a contract.
Unenforceable Contracts - those that cannot be enforced or Instances of Void or Inexistent Contracts
given effect in a court of law or sued upon by reason of certain

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1. Contracts whose cause, object or purpose is contrary to law, although he has not been benefited thereby, he cannot recover
morals, good customs, public order or public policy. what he has returned.

2. Contracts which are absolutely simulated or fictitious 4. The heir is not personally liable beyond the value of the
property which he received from the decedent; but if he
3. Those whose cause or object did not exist at the time of the voluntarily pays the difference, the payment is valid and cannot
transaction. Future things or rights which are capable of be rescinded by him.
coming into existence can be the legal object of the contract.

4. Contracts whose object is outside the commerce of men.

5. Contracts which contemplate an impossible service.

6. Contracts where the intention of the parties relative to the

object cannot be ascertained.

7. Contracts expressly prohibited or declared void by law.

Illegal Contract and the Act Constitute a Criminal

Offense

If both parties are in pari delicto (equally guilty):

a. the parties have no action against each other.

b. Both shall be prosecuted.

c. The things or the price of the contract shall be

confiscated in favor of the government.

If only one party is guilty or both parties are not

equally guilty:

a. the guilty party loses what he has given.

b. The guilty party cannot ask for the fulfillment of the

other’s undertaking.

c. The innocent party may demand the return of what

he has given.

d. The innocent party cannot be compelled to comply

with his promise.

NATURAL OBLIGATIONS

Natural Obligation - one which in honor and conscience

binds the person who has contracted it, but which cannot be
enforced in a court of justice.

Some Examples of Natural Obligation

1. When the right to sue upon a civil obligation has prescribed,

and the obligor voluntarily performs the contract, he cannot
recover what he has delivered or the value of the service he
has rendered.

2. When a third person pays the prescribed debt of the debtor

without his knowledge, the latter is not legally bound to pay
him; but if the debtor voluntarily reimburses the third person,
he cannot recover what he has paid.

3. When a contract is annulled, a minor is not obliged to make

restitution except insofar as he has been benefited. However,
should he voluntarily return the thing or price received
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