I. CONSENT II. OBJECT III. CAUSE
I. Consent
Conformity of the parties to the terms of the contract; the acceptance by one of the offer made by the other. (Manresa)
Requisites:
1. It must be manifested by the concurrence of the offer and acceptance (Arts. 1319-1326) 2. The contracting parties must possess the
necessary legal capacity (Arts. 1327-1329) 3. It must be intelligent, free, spontaneous, and
real (not vitiated) (Arts. 1330-1346) A. Concurrence
1. Offer: a unilateral proposition which one party makes to the other for the celebration of the contract. (Tolentino)
Requisites:
a. Definite b. Intentional c. Complete
Invitations to make offers
(advertisements)
Business advertisements of things for sale, are NOT definite offers, just invitations to make an offer, UNLESS the contrary appears (Art. 1325)
Advertisements for bidders are invitations to make proposals, advertiser is NOT bound to accept lowest or highest bid, UNLESS contrary appears;
the bidder is the offeror (Art. 1326).
Statements of intention: no contract results even if accepted
Rosenstock v. Burke, 1924:
FACTS: Elser, in a letter, informed Burke that he was
‘in a position and is willing to entertain’ the purchase of the yacht under some terms.
HELD: The word “entertain” applied to an act does not mean the resolution to perform said act, but simply a position to deliberate for deciding to perform or not to perform said act. It was merely a position to deliberate whether or not he would purchase the yacht and invitation to a proposal being made to him, which might be accepted by him or not.
OFFER TERMINATES upon:
a. Rejection by the offeree
b. Incapacity (death, civil interdiction, insanity, or insolvency) of the offeror or offeree before acceptance is conveyed c. Counter-offer
d. Lapse of the time stated in the offer without acceptance being conveyed e. Revocation of the offer before learning
of acceptance
f. Supervening illegality before acceptance (J.B.L. Reyes)
2. Acceptance Requisites:
a. Unqualified and Unconditional, i.e. it must conform with all the terms of the offer, otherwise it is a counter-offer (Art.
1319)
b. Communicated to the offeror and learned by him (Arts. 1319, 1322). If made through an agent, the offer is accepted from the time the acceptance is communicated to such agent.
c. Express/Implied, but is not presumed OPTION CONTRACT: A preparatory contract in which one party grants to the other, for a fixed period, the option to decide whether or not to enter into a principal contract. (Art. 1324)
With consideration Without consideration
Offeror cannot
unilaterally withdraw his offer
Offeror may withdraw by communicating withdrawal to the offeree before acceptance
B. Capacity
1. Incapacitated to Give Consent
a. Minors, UNLESS, the minor’s consent is operative in contracts:
For necessaries (Art.1427)
Where the minor actively misrepresents his age (estoppel)
Mercado v. Espiritu, 1917:
Minors held in estoppel through active misrepresentation
Bambalan v. Maramba, 1928:
There is no estoppel if the minority was known.
b. Insane or demented persons, UNLESS, they contract during a lucid interval
c. Deaf-mutes who do not know how to read and write.
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2. Disqualified to Contract (Art. 1329):
a. Those under Civil interdiction for transactions inter vivos (RPC Art. 34) b. Undischarged insolvents (Insolvency
Law, Sec.24)
c. Husband and wife: cannot donate (Art.
123 FC) to each other, nor sell if the marriage is under ACP (Art.1490) d. The ff. cannot purchase (Art. 1491):
The guardian: his ward’s property
The agent: the principal’s property
Executors and administrators:
property under administration
Public officers-state property under their administration
Justices, judges, prosecutors, clerks of court, lawyers-property attached in litigation.
e. Members of Ethnic Minorities: their contracts (excluding sale of personal property or personal service contracts) must be approved by the Governor or his representative. (Public Land Act) Incapacity to Give
Consent (Art. 1327)
Disqualification to Contract (Art.1329) Restrains the exercise of
the right to contract
Restrains the very right itself
Based on subjective circumstances of certain persons
Based on public policy and morality
Voidable Void
C. Vices of Consent (Art. 1330, CC) (MIVUF) 1. Mistake
Inadvertent and excusable disregard of a circumstance material to the contract. (J.B.L.
Reyes)
In order that mistake may invalidate consent, it should refer to the substance of the thing which is the object of the contract, or to those conditions which have principally moved one or both parties to enter into the contract (Art.1331)
Mistake of Fact Mistake of Law Mutual Mistake When one or
both contracting parties believe that a fact exists when in reality it does not, or vice versa
When one or both parties arrive at an erroneous conclusion on the
interpretation of a question of law or the legal effects
Must be as to the legal effect of an agreement
Must be
mutual
Real purpose of the parties must have been
frustrated
2. Intimidation
When one of the contracting parties is compelled by a reasonable and well-grounded fear of an imminent and grave evil upon his person or property, or upon the person or property of his spouse, descendants or ascendants, to give his consent (Art. 1335).
Martinez v. HSBC, 1910: The conveyance of several properties by to her husband’s creditors, though reluctant is still consent. She assented to the requirements of the defendants, the civil and criminal actions against them would be dropped. A contract is valid even though one of the parties entered into it against his wishes and desires, or even against his better judgment. Contracts are also valid even though they are entered into by one of the parties without hope of advantage or profit.
3. Violence
Irresistible force used to extort consent (J.B.L. Reyes)
4. Undue Influence
When a person takes improper advantage of his power over the will of another, depriving the latter of a reasonable freedom of choice (Art. 1337).
Circumstances:
a. Relationship of the parties (family, spiritual, confidential etc.)
b. That the person unduly influenced was suffering from infirmity (mental weakness, ignorance etc.) (Art.1337) 5. Fraud
When through insidious words or machinations of one of the contracting parties, the other is induced to enter into a contract which, without them, he would not have agreed to (Art. 1338).
Art. 1339, Civil Code. Failure to disclose facts, when there is a duty to reveal them, as when the parties are bound by confidential relations, constitutes fraud.
Art. 1340, Civil Code. The usual exaggerations in trade, when the other party had an opportunity to know the facts, are not in themselves fraudulent.
Art. 1341, Civil Code. A mere expression of an opinion does not signify fraud, unless made by an expert and the other party has relied on the former's special knowledge.
Art. 1342, Civil Code. Misrepresentation by a third person does not vitiate consent, unless, such misrepresentation has created substantial mistake
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and the same is mutual.
Art. 1343, Civil Code. Misrepresentation made in good faith is not fraudulent but may constitute error.
SIMULATION OF CONTRACTS (Art. 1345-1346): Declaration of a non-existent will made deliberately for the purpose of producing the appearance of a transaction that does not exist, or which is different from the one which actually arose. (J.B.L. Reyes)
Absolute Relative
No real transaction is intended
Real transaction is hidden Fictitious contract Disguised contract
Void Bound as to hidden
agreement, so long as it does not prejudice a third person and is not contrary to law, morals, good customs, public order or public policy
II. Object
The thing right or service which is the subject matter of the obligation arising from the contract.
Requisites:
a. Lawful: Not contrary to law, morals, good customs, public order or public policy.
b. Actual or possible
c. Transmissible: Within the commerce of man d. Determinate or determinable
All things or services may be the object of contracts, EXCEPT:
Things which are outside the commerce of men
Intransmissible rights
Future inheritance except in cases authorized by law
Impossible things or services
Objects which are indeterminable as to their kind, the genus should be expressed
In order that a thing, right or service may be the object of a contract, it should be in existence at the moment of the celebration of the contract, or at least, it can exist subsequently or in the future.
A FUTURE THING may be the object of a contract, such contract may be interpreted as a:
Conditional contract: where its efficacy should depend upon the future existence of the thing
Aleatory contract: where one of the contracting parties assumes the risk that the thing will never come into existence, e.g. insurance
III. Cause
It is the impelling reason for which a party assumes an obligation under a contract.
Requisites:
a. Existing b. Licit or Lawful c. True the promise of the thing or service by the other party
The service or benefit which is remunerated
Mere liberality of the
benefactor
In Villaroel v. Estrada (1940), where a moral obligation is based upon a previous civil obligation, which has already been barred by the statute of limitations at the time the contract is entered into, it constitutes a sufficient cause or consideration to support a contract (Natural Obligation).
BUT,
In Fisher v. Robb (1939), if the moral obligation arises wholly from ethical consideration, it cannot constitute a sufficient cause to support an onerous contract, as when the promise is made on the erroneous belief that one was morally responsible for the failure of an enterprise (Moral Obligation).
Cause Defined Effect
Lack of
Cause
Absence or total lack of cause
The contract confers no right and has no legal effect
Illegality of Cause
Contrary to law, morals, good customs, public policy and public order
Null and Void
Falsity of cause
Cause is stated but is untrue
Void if it should not be proved that it was founded upon another cause which was true and lawful Lesion or
inadequacy of cause
Cause is not proportionate to object
Shall not invalidate the contract except when
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a)there is fraud, mistake, undue influence
b)when parties
intended a
donation
Liguez v. CA (1957): In making the donation in question, Lopez was not moved exclusively by the desire to benefit Liguez, but also to secure her cohabiting with him, so that he could gratify his sexual impulses. The donation was an onerous transaction and clearly predicated upon an illicit causa.
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