a. Definition and Essential Elements

1. General Provisions

a. Definition of a Contract b. Elements of a Contract i. Essential Elements ii. Natural Elements

GENERAL PROVISIONS

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. (NCC, Art. 1305)

A contract is a meeting of the minds between two or more parties, whereby one party binds himself with respect to the other, or where both parties bind themselves reciprocally, in favor of one another, to fulfill a prestation to give, to do or not to do.

ELEMENTS OF A CONTRACT

• Natural Elements – Those which are derived from the very nature of the contract, and as a consequence, ordinarily accompany the same.
• Essential Elements – Those without which there can be no contract.
• Accidental Elements – those which exist only when the contracting parties expressly provide for them.

ELEMENTS OF A CONTRACT OF SALE

• Essential elements – for validity:
• Consent – meeting of the minds to transfer ownership in exchange for the price;
• Determinate subject matter – determinate thing which is the object of the contract; and
• Consideration – price certain in money or its equivalent.
• Natural elements –inherent in the contract, and are deemed to exist in the contract in the absence of any contrary provision.

Examples:

• Warranty against eviction; and
• Warranty against hidden defects.
• Accidental elements – dependent on parties’ stipulations;

Examples:

• Conditions;
• Payment of Interest;
• Time and Place of Payment; and
• Penalty.

Definition

An obligation is a juridical necessity to give, to do or not to do. (An Act to Ordain and Institute the Civil Code of the Philippines [CIVIL CODE], Republic Act No. 386, art. 1156 (1950))

Essential Elements

• Consent
• Subject Matter
• Consideration

Coverage

A compromise comprises only those objects which are:

• definitely stated therein, or
• which by necessary implication from its terms should be deemed to have been included in the same

A general renunciation of rights is understood to refer only to those that are connected with the dispute which was the subject of the compromise [Art. 2036, CC]

Tortious Act

It is a wrongful act. It is the commission or omission of an act by one, without right, whereby another receives, some direct or indirect injury, in person, property, or reputation.

GR: An action for damages can only be maintained by the person directly injured, not by one alleging the collateral injury.

XPN: There are instances where injury to one may operate as an injury to another, e.g. a lone parent cannot sue for the injury suffered by his child, but may maintain an action in his own right for any damages suffered as a result of the injury.

Nature

As a contract, agency must have consent, a certain object, and a lawful cause. (CIVIL CODE, Art. 1318; see also Art. 1868.)

Acceptance

Manifestation by the offeree of his assent to the terms of the offer; must be absolute (i.e., must not qualify the terms of the offer) (Oesmer v. Paraiso Development Corporation, G.R. No. 157493)

NOTE: A qualified acceptance constitutes a counteroffer.

Rule on advertisements as offers

• Business advertisements – Not a definite offer, but mere invitation to make an offer, unless it appears otherwise.
• Advertisements for bidders – They are simply invitations to make proposals and the advertiser is not bound to accept the highest or lowest bidder, unless the contrary appears.

Article 1326 of the Civil Code, which specifically tackles offer and acceptance of bids, provides that advertisements for bidders are simply invitations to make proposals and that an advertiser is not bound to accept the highest bidder unless the contrary appears. (PMO v. STRADEC, G.R. No. 200402)

Causes in some contracts:

• Onerous contracts – The prestation or promise of a thing or service by the other. (CIVIL CODE, art. 1350)
• Remuneratory contracts – The service or benefit remunerated. (CIVIL CODE, art. 1350)
• Contracts of Pure Beneficence – Mere liberality of the donor or benefactor. (CIVIL CODE, art. 1350)
• Accessory Contracts Like Mortgage and Pledge – The cause is generally the same as the cause for the principal contract of loan. (China Bank v. Lichauco, G.R. No. L-22001)
• Accessory Contracts of Personal Guaranty – Generally pure liberality but sometimes material consideration may be given. (Standard Oil Co. v. Arenas, G.R. No. L-5921)

Rule in case of inadequacy of Cause (or when there is lesion)

General Rule: Does not invalidate contract

“Present”

Generally, face to face, but includes people conversing directly through technology (e.g. over the telephone or through a videoconference).

Commencement of CPG

CPG shall commence at the precise moment when the marriage ceremony is celebrated.