Contracts

Question 1

Stages of Contract (NPC)
- other term is preparation or conception

Answer 1

Negotiation
- Offer must be certain
- Acceptance must be absolute
- A qualified acceptance constitutes a counteroffer

Advertisement → not an offer, mere invitations

Question 2

Stages of Contract (NPC)
- other term is birth
- other term is death or termination

Answer 2

Perfection
- Meeting of Minds

Consummation
- Obligation is extinguished

Question 3

What characteristic of Contract
- contract must bind both contracting parties
- validity or compliance cannot be left to will of one of them

Can one party unilaterally cancel contract?
Can the determination of performance be left to a third person?

Answer 3

Mutuality

• No (violates mutuality)
• Yes (but it will be binding only after it is made known to both parties)

Question 4

What characteristic of Contract
- take effect or binding only between the parties, their heirs and assigns

As a general rule, rights and obligations from contracts are transmissible. True or False?
As a general rule, third parties are bound by the terms of a contract. True or False?

Answer 4

Relativity

• True (XPN : Those purely personal)
• False (GR : Not Bound)

Question 5

Exceptions to General Rule in Case of Third Persons
- bound → registered to Registry of Deeds = notice to whole world
- interfere → accion pauliana & accion directa
- liable → 3P induces one of the parties (3P liable for damages)
- benefit → stipulation pour autrui

Answer 5

Yes

Question 6

Requisites of Stipulation Pour Atrui
- parties must clearly and deliverately give in favor to 3rd person
- to be binding → 3rd person must say “I accept” to ?
- to be revoked → by whom? when?

Answer 6

• obligor → no form is required (can even be implied from acts of 3rd person)
• revocation → by both obligor and obligee
• revocation → before acceptance of 3rd person

Question 7

Innominate Contracts
- Do ut Facias
- Facio ut Facias

Is do ut des an innominate contract?

Answer 7

• I give, you do
• I do, you do

No (I give, you give is a nominate contract. Specifically, it is a barter)

Question 8

Essential Elements of Contract (COC)
- for consensual contracts
- for formal contracts
- for real contracts

Answer 8

• consensual contracts = COC
• formal contracts = COC + Required Form
• real contracts = COC + Delivery

Real Contracts → deposit, pledge, commodatum, loan

Question 9

If through letter
- when is the meeting of the minds?

• What if one of the party died before knowledge of acceptance?
• What if someone backed out and he send his letter, but the other party received the letter after knowledge of acceptance already?

Answer 9

the time the offeror knew of the acceptance of offeree

• no meeting of minds
• still, no meeting of minds

Question 10

Absolute Simulation vs Relative Simulation

Answer 10

• Absolute = void
• Relative = bound by their real agreement

Question 11

Absolute Incapacity (MIDD)
- Minor (XPN : necessity, misrepresented his age)
- Insane (XPN : during lucing interval)
- Demented
- Deaf-Mute (X write)

Answer 11

YES
- Remember in Deaf-Mute = X write, not X read

X write = since pag nakakapagbasa, mababasa pa rin naman yung contract

Question 12

Relative Incapacity
- Husband and Wife → cannot sell to each other
- Guardian → cannot buy ward’s property
- Agent → cannot buy principal’s property
- Executor→ cannot buy estate’s property
- Government Official → cannot buy property under administration
- Alien → cannot buy land

Answer 12

Absolute Incapacity = Voidable
Relative Incapacity = Void

Question 13

Vices of Consent (MFVIU)
- MF → affects intelligence
- VIU → affects voluntariness

Answer 13

Yes

Question 14

Mistake of Fact
1. As to the object
2. As to principal condition
3. As to identity or qualifications
4. As to legal effects → loan & pacto de retro

Bad motive (sell marijuana)
- Valid or Void?

Answer 14

Yes

Valid (motive is different to cause)

Question 15

Causal Fraud
- serious AND not employed by both contracting parties (pari delicto)

Not Causal Fraud
- usual exaggerations in trade
- failure to disclose facts → no duty to disclose them
- expression of opinion → not an expert
- misrepresentation → by 3P, in good faith = treat as mistake

Answer 15

Yes

Question 16

Violence
- serious or irresistible physical force

Intimidation
- reasonable and well-grounded fear
- directed against the other party or other party

Undue Influence
- takes advantage of power
- one giving the influence MUST have moral ascendancy (professor - student)

If intimidation because of legal ground → not a vice of consent = VALID

Answer 16

Yes

Question 17

Object / Subject Matter of Contract
- thing, service, or right
- Requisites

Can future inheritance be an object of contract?

Answer 17

1. within commerce of men (lawful)
2. possible
3. determinate thing
4. transmissible

No

Question 18

Void Causes
- Unlawful cause
- False cause (XPN : founded by another cause)

LET → lawful, existing, true

Answer 18

Yes

Question 19

General Rule : Inadequacy of Price = VALID
- XPN : law so provides
- XPN : vices of consent

Answer 19

Valid
- Void for specifics of rescissible contract
- Void if with fraud, mistake or undue influence

Question 20

General Rule → no form is required for validity of contract
- XPN : for validity
- XPN : for enforceability
- XPN : for convenience

Answer 20

Yes

Question 21

Exceptions for Validity
- donation of real property
- donation of personal property more than 5K
- interest

Exceptions for Enforceability (SOF)
- sale of real property

Answer 21

• public instrument
• written
• written
• written

Question 22

Exceptions for Convenience (to bind 3rd person)
- real estate mortgage
- hereditary rights or CPOG
- real rights over immovable property

Remedy to require specific form

Answer 22

• all public instrument

Question 23

Reformation
- remedy to amend to conform to real intention of parties
- injured party → the one who can ask for reformation
- what are the requisites?

Answer 23

1. meeting of minds (if wala = annulment)
2. written instrument
3. true intention not expressed

Question 24

Agreement that cannot be reformed

Answer 24

1. simple donation inter-vivos (no condition imposed)
2. wills
3. real agreement is void

Question 25

Rescissible contracts are contracts that caused damage (lesion) to one of the parties or a 3rd person. Is rescissible contract valid?

Answer 25

Yes, valid until rescinded

Question 26

What is the primary remedy for rescissible contracts?

Answer 26

ask that damages be repaired Rescission - only **subsidiary** (dapat hindi muna makaavail ng primary remedy) - shall only be up to the extent necessary to cover the damages caused - he who demands → shall also be able to return - X → if in possession of 3rd person (good faith) ## Footnote Only the innocent party can ask for rescission.

Question 27

Examples of Rescissible Contracts - Guardian - In representation of absentee - In fraud of creditor - Things under litigation ## Footnote In case of guardian or absentee, what if inapprove naman ng court yung contract. Is is still rescissible?

Answer 27

Guardian - must suffer damage **MORE THAN** 1/4 of the value Absentee - must suffer damage **MORE THAN** 1/4 of the value Under litigation - whenever entered without knowledge and approval of litigants or court ## Footnote No (already valid)

Question 28

How many years is the prescriptive period for Rescissible Contracts? - guardian - absentee - in fraud of creditor

Answer 28

4 years - **Guardian** = from termination of incapacity - **In representation of absentee** = from time absentee's domicile is known - **In fraud of creditor** = from discovery of contract

Question 29

Voidable contracts - incapacitated (MIDD) - vices of consent (MFVIU ## Footnote Is voidable contract valid?

Answer 29

Yes, valid until annulled

Question 30

What is the primary remedy for voidable contracts?

Answer 30

Annulment → **principal** However, it may be ratified (may be by guardian) ## Footnote Only the innocent party can ask for annulment - kahit yung creditor hindi pwede

Question 31

How many years is the prescriptive period for Voidable Contracts? - Minor or incapacity - Mistake or Fraud - Violence, Intimidation, or Undue Influence

Answer 31

4 years - **Minor or incapacity** = from time guardianship ceases - **Mistake or Fraud** = from discovery of same - **Violence, Intimidation, or Undue Influence** = from time defect of consent ceases (end)

Question 32

Examples of Unenforceable Contracts (USB) - **U**nauthorized Contracts - do not comply with **S**tatute of Frauds - **B**oth incapable of consent

Answer 32

- Unauthorized Contracts = no authority or **beyond** authority - do not comply with Statute of Frauds = must be written - Both incapable of consent = MIDD + MVIUF

Question 33

Statute of Fraud - promise to answer for debt or default of another - agreement in consideration of marriage (other than mutual promise to marry) - a representation as to the credit of a third person - agreement **not to be performed within 1 year**

Answer 33

Yes

Question 34

Statute of Fraud - sale of personal property - sale of real property - lease of real property - lease of personal property

Answer 34

- **at least** 500 - regardless of amount - period is **more than** 1 year - X (walang ganon, lease of real property lang)

Question 35

Paul and Juan orally agreed to a sale of real property. Paul already paid a downpayment of 500K. This sale is unenforceable since it did not comply with the statute of frauds. True or False?

Answer 35

False (statute of frauds only apply to executory contracts - no performance yet) - thus, this is valid

Question 36

There is a legal remedy for unenforceable contracts. True or False? There is a prescriptive period for unenforceable contracts. True or False?

Answer 36

False (it can be ratified, but ratification is not a legal remedy) False (prescription does not apply)

Question 37

Examples of Void Contracts - contrary to law - outside commerce of men - impossible service - intention cannot be ascertained - absolutely simulated - prohibited by law - object or cause → did not exist at time of transaction

Answer 37

Yes - different to law on sales = sale of future things (valid)

Question 38

There is a legal remedy for void contracts. True or False? There is a prescriptive period for void contracts. True or False? There is ratification for void contracts. True or False?

Answer 38

True (action for absolute nullity) False (action for absolute nullity does not prescribe) False

Question 39

Out of the 4, who can be ratified - Rescissible - Voidable - Unenforceable - Void

Answer 39

- Voidable - Unenforceable

Question 40

Out of the 4, who has prescriptive period - Rescissible - Voidable - Unenforceable - Void

Answer 40

- Rescissible - Voidable