SECTION 2 – Obligations with a Period

 Meaning of obligation with a period:

Obligation with a period – is one whose effects or consequences are
subjected in one way or another to the expiration or arrival of said period
or term.

 Meaning of period or term:

Period – is a future and certain event upon the arrival of which the
obligation subject to it either arises or is terminated.

 Kinds of period or term:

1. According to effect - a. Suspensive period
b. Resolutory period
2. According to source - a. Legal period
b. Conventional period
c. Judicial period
3. According to definiteness – a. Definite period
b. Indefinite period

 Presumption as to benefit of period:

-In an obligation subject to a period fixed by the parties, the period is

presumed to have been established for the benefit of both the creditor ad
debtor.

 Exceptions to the general rule:

1. Term is for the benefit of the debtor alone.

2. Term is for the benefit of the creditor.

 Computation of term or period:

1. Legal periods

2. Calendar month

 Court generally without power to fix a period:

-If the obligation does not state a period and no period is intended, the
court is not authorized to fix a period.

 Exceptions to the general rule:

1. No period is fixed but a period was intended.
2. Duration of the period depends upon the will of the debtor

Legal effect where suspensive period/condition depends upon will of

debtor:

1. The existence of the obligation is not affected.

2. The conditional obligation is void.

SECTION 3 – Alternative Obligations

 Kinds of obligation according to object:

1. Simple obligation – one where there is only one prestation.

2. Compound obligation – one where there are two or more prestations.

a. Conjunctive obligation

b. Distributive obligation

 Alternative obligation

 Facultative obligation

 Meaning of alternative obligation:

Alternative obligation – one wherein various prestations are due but the

performance of one of them is sufficient as determined by the choice

which, as a general rule, belongs to the debtor.

 Effect of loss of objects of obligation:

1. Some of the objects – the latter is not liable.

2. All of the objects – the creditor shall have the right to indemnity for

damages.

 Meaning of facultative obligation:

Facultative obligation – one where only one prestation has been agreed

upon but the obligor may render another in substitution.

SECTION 4 – Joint and Solidary Obligations

 Kinds of obligations according to the number of parties:

1. Individual obligation – one where there is only one obligor or one

oblige

2. Collective obligation – one where there are two or more debtors and/or

two or more creditors.

 Meaning of joint and solidary obligations:

Joint obligation – one where the whole obligation is to be paid or fulfilled

proportionately by the different debtors and/or is to be demanded

proportionately by the different creditors.

Solidary obligation – or one where each one of the debtors is bound to

render, and/ or each one of the creditors has a right to demand from any

of the debtors, entire compliance with the prestation.

 Words used to indicate joint liability:

-Mancomunada; mancomunadamante; pro rata; proportionately.

  When obligation solidary:

1. The obligation expressly so states;

2. The law requires solidarity;

3. The nature of the obligation requires solidarity

 Words used to indicate solidary liability:

-solidaria; in solidum; together and/or separately; individually and/or

collectively; juntos o separadamante.

 Kind of solidarity:

1. According to the parties bound:

a. Passive solidarity

b. Active solidarity

c. Mixed solidarity

2. According to source:

a. Conventional solidarity

b. Legal solidarity

c. Real solidarity

 Kind of solidary obligation:

1. Uniform

2. Non-uniform or varied

 Act of solidary creditors useful/prejudicial to others:

-A solidary creditor may do any act beneficial or useful to the others but

he cannot perform any act prejudicial to them.

  Assignment by solidary creditor of his rights:

-In the absence of consent given by the others, a solidary creditor cannot

assign his rights to a third person.

 Payment to any of the solidary creditors:

-The rule is that the debtor may pay any one of the solidary creditors.

 Effects of payment by a solidary debtor:

1. Between the solidary debtors and creditors – extinguishes the

obligation.

2. Among the solidary debtors – the paying solidary debtor can demand

reimbursement.

1. Among the solidary creditors – the receiving creditor is jointly liable

to the others.

 Effect of payment after obligation has prescribed or become illegal:

-When a solidary debtor pays the obligation; he is entitled, as a rule, to

reimbursement from his co-debtors.

 Effect of remission of share after payment:

-If payment is made first, the remission or waiver is of no effect.

 Rules in case thing has been lost or prestation has become

impossible:

1. Loss is without fault and before delay

2. Loss is due to fault on the part of a solidary debtor

3. Loss is without fault but after delay

 Defenses available to a solidary debtor:

1. Defenses derived from the nature of the obligation

2. Defenses personal to, or which pertain to share of, debtor sued.

3. Defenses personal to other solidary debtors

SECTION 5 – Divisible and Indivisible Obligations

 Meaning of divisible and indivisible obligations:

Divisible obligation – is one the object of which, in its delivery or

performance, is capable of partial fulfillment.

Indivisible obligation- is one the object of which, in its delivery or

performance, is capable of partial fulfillment.

 Kinds of division:

1. Qualitative division

2. Quantitative division

3. Ideal or intellectual division

 Kinds of indivisibility:

1. Legal indivisibility
2. Conventional indivisibility.

3. Natural indivisibility

 Divisibility or indivisibility in obligations not to do:

-The character of the prestation in each particular case shall determine

their divisibility or indivisibility.

SECTION 6 – Obligations with a Penal Clause

 Meaning of principal and accessory obligations:

Principal obligation - is one which can stand by itself and does not depend
for its validity and existence upon another obligation.

Accessory obligation – is one which is attached to a principal obligation.

 Meaning of obligation with a penal clause:

Obligation with a penal clause – is one which contains an accessory

undertaking to pay a previously stipulated indemnity in case of breach of
the principal prestation, intended primarily to induce its fulfillment.

 Penal clause - is an accessory undertaking attached to an obligation

to assume greater liability in case of breach
 Kinds of penal clause:

1. As to its origin – a. Legal penal clause

b. Conventional penal clause

2. As to its purpose – a. Compensatory penal clause
b. Punitive penal clause
3. As to its demandability or effect – a. Subsidiary penal clause
b. Joint penal clause
 When creditor may recover damages:

1. When so stipulated by the parties;

2. When the obligor refuses to pay the penalty, in which case the creditor
may recover legal interest thereon; or
3. When the obligor is guilty of fraud in the fulfillment of the obligation.

 When penalty may be enforced:

-The penalty may be enforced only when it is demandable in accordance

with the provisions of the Civil Code.

 Penal clause presumed subsidiary:

1. Where there is performance
2. Where there is no performance

 When penalty may be reduced by the courts:

1. When there is partial or irregular performance
2. When the penalty agreed upon is iniquitous or unconscionable

Chapter 4 – EXTINGUISHMENT OF OBLIGATIONS

GENERAL PROVISIONS

 Causes of extinguishment of obligations:

1. Death of a party in case of an obligation requiring personal service

2. Mutual desistance or withdrawal

3. Arrival of resolutory period

4. Compromise

5. Impossibility of fulfillment

6. Happening of a fortuitous event

Section 1 – Payment or Performance

 Meaning of payment:

Payment – refers to the delivery of money

 When debt is considered paid:

Debt may refer to an obligation to deliver money, to deliver a thing, to do
an act, or not to do an act.

1. Integrity of prestation
2. Identity of prestation
 Requisites for the application of Article 1234:

1. There must be substantial performance

2. The obligor must be in good faith

 Requisites for the application of Article 1235:

1. The obligee knows that the performance is incomplete or irregular

2. He accepts the performance without expressing any protest or

objection

 Persons from whom the creditor must accept payment:

1. The debtor

2. Any person who has an interest in the obligation

3. A third person who has no interest in the obligation when there is

stipulation that he can make payment.

 Meaning of “free disposal of thing due” and “capacity to alienate”:

Free disposal of the thing due – means that the thing to be delivered
must not be subject to any claim or lien or encumbrance of a third
person.

Capacity to alienate – means that the person is not incapacitated to enter

into contracts and to make a disposition of the thing due.

 Person to whom payment shall be made:

1. The creditor or oblige

2. His successor in interest

3. Any person authorized to receive it.

 Effect of payment to an incapacitated person:

-Payment to a person incapacitated to administer or manage his property

is not valid.

 Effect of payment to a third person:

-Payment to a third person or wrong party is not valid

 When benefit to creditor need not be proved by debtor:

1. Subrogation of the payer in the creditor’s rights;
2. Ratification by the creditor;
3. Estoppel on the part of the creditor.
 Special forms of payment:
1. Dation in payment
2. Application of payments
3. Payment by cession
4. Tender of payment and consignation
 Meaning of dation in payment:

Dation in payment – is the conveyance of ownership of a thing as an

accepted equivalent of performance.

 Losing party generally pays judicial costs

Judicial costs – are the statutory amount allowed to a party to an action

for his expenses incurred in the action.

 Meaning of legal tender:

Legal tender – is that currency which if offered by the debtor in the right
amount, the creditor must accept in payment of a debt in money.

 Payment by means of instruments of credits:

1. Right of creditor to refuse or accept

2. Effect on obligation

-Until they have been cashed

-Unless they have been impaired through the fault of the creditor

 Meaning of inflation and deflation:

1. Inflation – is a sharp sudden increase of money or credit or both

without a corresponding increase in business transactions.

2. Deflation – is the reduction in volume and circulation of the available

money or credit, resulting in a decline of the general price level.

SUBSECTION 1. – Application of Payments

 Meaning of application of payments:

Application of payments – is the designation of the debt to which should

be applied the payment made by a debtor who has various debts of the
same kind in favor of one and the same creditor.

 Requisites of application of payments:

1. There must be one debtor and one creditor

2. There must be two or more debts

3. The debts must be of the same kind

4. The debts to which payment made by the debtor has been applied
must be due;

5. The payment made must not be sufficient to cover all the debts.

 Application as to debts not yet due:

1. There is stipulation that the debtor may so apply;

SUBSECTION 2. – Payment by Cession

Meaning of payment by cession:
 Payment by cession- is another special form of payment. It is the
assignment of all the properties of the debtor for the benefit of his
creditors.
 Requisites of payment by cession:
1. There must be two or more creditors;

2. The debtor must be (partially) insolvent;

3. The assignment must involve all the properties of the debtor; and

4. The cession must be accepted by the creditors.

SUBSECTION 3. – Tender of payment and Consignation

 Meaning of “tender of payment” and “consignation”

Tender of payment - is the act, on the part of the debtor, of offering to

the creditor the thing or amount due.

Consignation - is the act of depositing the thing or amount due with the
proper court when the creditor does not desire or cannot receive it.

 Requisites of a valid consignation:

1. Existence of a valid debt which is due

2. Tender of payment by the debtor and refusal without justifiable reason

by the creditor to accept it.

3. Previous notice of consignation to persons interested in the fulfillment

of the obligation.
4. Consignation of the thing or sum due.

5. Subsequent notice of consignation made to the interested parties.

 Requirements for valid tender of payment:

1. It must comply with the rules on payment or with the terms required
by the contract.

2. It must be unconditional and for the whole amount due and in legal
tender

3. It must be actually made.

SECTION 2. – Loss of the Thing Due

 When a thing is considered lost: It is understood that a thing is lost

when it perishes, or goes out of commerce or disappears in such a way
that its existence is unknown or it cannot be recovered.
 When loss of thing will extinguish an obligation to give:
1. The obligation is to deliver a specific or determinate thing
2. The loss of the thing occurs without the fault of the debtor
3. The debtor is not guilty of delay
 When loss of thing will not extinguish liability:
1. When the law so provides
2. When the stipulation so provides
3. When the nature of the obligation requires the assumption of risk
4. When the obligation to deliver a specific thing arises from a crime
 Effect of partial loss of a specific thing: Partial loss is the equivalent
of difficulty of performance in obligations to do.
  Effect of impossibility of performance: The impossibility of
performance will result in the extinction of the obligation.
 Kinds of impossibility - 1.Physical impossibility
2. Legal impossibility
 Effect of difficulty of performance: When the performance of the
service has become so difficult as to be manifestly beyond the
contemplation of both parties, the court is authorized to release the
obligor.
 Effect of fortuitous event where obligation proceeds from a criminal
offense: A fortuitous event does not exempt the debtor from
liability.

SECTION 3. – Condonation or Remission of Debt

 Meaning of condonation or remission:
Condonation or remission - is the gratuitous abandonment by the
creditor of his right against the debtor.
 Requisites of condonation or remission:
1. It must be gratuitous;

2. It must be accepted by the obligor;

3. The parties must have capacity

4. It must not be in officious; and

5. If made expressly, it must comply with the forms of donations.

 Kinds of remission:
1. As to its extent: - a. Complete

b. Partial

2. As to its form - a. Express

b. Implied

3. As to its date of effectivity - a. Inter vivos

 b. Mortis causa
 Effect of inofficious remission: While a person may make donations,
no one can give more than that which he can give by will;
otherwise, the excess shall be inofficious and shall be reduced by
the court accordingly.

 Presumption in case of voluntary delivery of document of

indebtedness by creditor:
1. Presumption of implied remission

2. Contrary evidence

3. Extent of remission

4. Presumption applicable only to private document.

SECTION 4. – Confusion or Merger of Rights

 Meaning of confusion or merger:
Confusion or merger – is the meeting in one person of the qualities of
creditor and debtor with respect to the same obligation.
 Reason or basis for confusion:
1. The law treats confusion or merger as a mode of extinguishing
obligations.
2. When there is confusion of rights, the purposes for which the obligation
may have been created are deemed realize.
 Requisites of confusion:
1. It must take place between the principal debt and creditor
2. It must be complete
  Effect of merger in the person of principal debtor or creditor : Merger
in the person of the principal debtor or creditor extinguishes the
obligation.
 Effect of merger in the person of guarantor: It extinguishes the
guaranty, leaves the principal obligation in force.
 Confusion in a joint obligation: In a joint obligation, there are as
many debts as there are debtors and as many credits as there are
creditors, the debts and/or credits being considered distinct and
separate from one another.
 Confusion in a solidary obligation: Merger in the person one of the
solidary debtors shall extinguish the entire obligation.

SECTION 5. – Compensation
 Meaning of compensation:
Compensation - is the extinguishment to the concurrent amount of the
debts of the two persons who, in their own right, are debtors and
creditors of each other.
Object of compensation – is the prevention of unnecessary litigations and
payments.

 Kinds of compensation:
1. By its effect or extent:
a. Total – when both obligations are of the same amount and are
entirely extinguished.
b. Partial – when the two obligations are of different amount and a
balance remains.
2. By its cause or origin
a. Legal – when it takes place by operation of law even without the
knowledge of the parties.
b. Voluntary – when it takes place by agreement of the parties.
c. Judicial – when it takes place by order from a court in a
litigation.
 d. Facultative – when it can be set up only one of the parties.

 Requisites of legal compensation:

1. The parties are principal creditors and principal debtors of each other.

2. Both debts consist in a sum of money, or of consumable things of the

same kind and quality

3. The two debts are due or demandable

4. The two debts are liquidated

5. No retention or controversy commenced by a third person.

 Total and partial compensations: Total or partial compensation

applies to all the different kinds of compensation.
 Judicial compensation: Compensation may also take place when so
declared by a final judgement of a court in a suit.
 Compensation of rescission or voidable debts: Rescissible and
voidable obligations are valid until they are judicially rescinded or
avoided.

 Where compensation has taken place before assignment:

-If the extinguished debt is assigned by the creditor to a third person, the
debtor can raise the defense of compensation with respect to the debt.

 Where compensation has taken place after assignment:

1. Assignment with the consent of debtor

2. Assignment with the knowledge but without the consent of the debtor

3. Assignment without the knowledge of the debtor

 Compensation where debts payable at different places:

Foreign exchange – has been defined as the conversion of an amount of
money or currency of one country into an equivalent amount of money of
another.

Exchange rate – is the price of one currency expressed or quoted in

relation to another currency.

 Instances when legal compensation is not allowed by law:

1. Where one of the debts arises from a depositum.

2. Where one of the debts arises from a commodatum.

3. Where one of the debts arises from a claim for support due by
gratuitous title

4. Where one of the debts consists in civil liability arising from a penal
offense

 Consent of parties not required in legal compensation:

1. Compensation takes place automatically by mere operation of law

2. Full legal capacity of parties not required

SECTION 6. – Novation

 Meaning of novation
Novation - is the total or partial extinction of an obligation through the
creation of a new one which substitutes it.
 Dual function of novation:
1. One to extinguish or modify an existing obligation
2. To substitute a new one in its place

 Kinds of novation:
 1. According to origin – a. Legal
b. Conventional
2. According to how it is constituted - a. Express
b. Implied
3. According to extent or effect - a. Total or extinctive
b. Partial or modificatory
4. According to the subject - a. Real or objective
b. Personal or subjective
c. Mixed
 Requisites of novation:
1. A previous valid obligation

2. Capacity and intention of the parties to modify or extinguish the obligation

3. The modification or extinguishment of the obligation

4. The creation of a new valid obligation

 Kinds of personal novation:

1. Substitution – when the person of the debtor is substituted

2. Subrogation – when a third person is subrogated in the rights of the creditor

 Kinds of substitution:
1. Expromision – that which takes place when a third person of his own
initiative and without the knowledge of the original debtor assumes the
latter’s obligation with the consent of the creditor.

2. Delegacion – that which takes place when the creditor accepts a third
person to take place of the debtor at the instance of the latter.

 Effect of new debtor’s insolvency or non-fulfillment of the obligation

in expromision: In expromision, it will not revive the action of the
creditor against the old debtor whose obligation is extinguished by
the assumption of the debt by the new debtor.
  Effect of new debtor’s insolvency or non-fulfillment of the obligation
in delegacion: The old debtor is not liable to the creditor in case of
the insolvency of the new debtor.
 Meaning of subrogation:
Subrogation - is the substitution of one person in the place of a creditor
with reference to a lawful claim or right.
 Kinds of subrogation: 1. Conventional
2. Legal

 Consent of all parties required in conventional subrogation:

1. The debtor – because he becomes liable under the new obligation to a
new creditor.

2. The old creditor – because his right against the debtor is extinguished.

3. The new creditor – because he may dislike or distrust the debtor.

 Cases of legal subrogation:

1. When a creditor pays another creditor who is preferred.

2. When a third person without interest in the obligation pays with the
approval of the debtor.

1. When a third person with interest in the obligation pays even

without the knowledge of the debtor.

TITLE II – CONTRACTS
Chapter 1: GENERAL PROVISIONS
 Meaning of contract:
Contract - meeting of minds; contracting parties which takes place when
an offer by one party is accepted by the other.
 Contract and obligation distinguished:
Contract – is one of the sources of obligations.
Obligation – is the legal tie or relation itself that exists after a contract
has been entered into.
 Classifications of contract:
1. According to name or designation – a. Nominate
b. Innominate
2. According to perfection - a. Consensual
b. Real
3. According to cause - a. Onerous
b. Remuneratory or remunerative
c. Gratuitous
4. According to form – a. Informal, common, or simple
b. Formal or solemn
5. According to obligatory force – a. Valid
b. Rescissible
c. Voidable
d. Unenforceable
e. Valid or inexistent
6. According to person obliged – a. Unilateral
b. Bilateral
7. According to risks – a. Commutative
b. Aleatory
8. According to liability – a. Unilateral
b. Bilateral
9. According to status - a. Executed

10. According to dependence to another contract - a. Preparatory

b. Accessory
c. Principal
11. According to dependence of part of contract to other parts:
a. Indivisible
b. Divisible
 Meaning of valid contracts:
Valid contracts - are those that meet all the legal requirements and
limitations for the type of agreement involved and are, therefore, legally
binding and enforceable.
  Limitations on contractual stipulations:
1. Law
2. Police power
 Contract must not be contrary to law : A contract cannot be given
effect if it is contrary to law because law is superior to a contract.
 Contract must not be contrary to morals:
Morals – deal with norms of good and right conduct evolved in a
community.
 Contract must not be contrary to good customs:
Customs – consist of habits and practices which through long usage have
been followed and enforced by society or some part of it as binding rules
of conduct.
 Contract must not be contrary to public order:
Public order – refers principally to public safety.
 Contract must not be contrary to public policy:
Public policy – may refer not only to public safety but also to
considerations which are moved by the common good.
 Classification of contracts according to its name or designation:
1. Nominate contract – that which has a specific name or designation in law.
2. Innominate contract – that which has no specific name or designation in
law.
 Kinds of innominate contract:
1. do ut des (I give that you may give)
2. do ut facias (I give that you may do)
3. facto ut des (I do that you may give)
4. facto ut facias (I do that you may do)
 Rules governing innominate contracts:
1. The agreement of the parties;
2. The provisions of the Civil Code on obligations and contracts;
3. The rules governing the most analogous contracts;
4. The customs of the place.
  Determination of performance by a third person: In the provision of
Article 1309, the determination of its performance may be left to a
third person.
 Persons affected by a contract:
1. General rule – a party’s rights and obligations from a contract are
transmissible to the successors. So, their assigns and heirs can have
rights and obligations under the contract.
2. Exceptions:
a. By their nature
b. By stipulation
c. By provision of law
 Cases when strangers or third persons affected by a contract: A
third person is one who has not taken part in a contract and is,
therefore, a stranger to the contract.
1. In contracts containing a stipulation in favor of a third person;
2. In contracts creating real rights;
3. In contracts entered into to defraud creditors;
4. In contracts which have been violated at the inducement of a third person.
 Meaning of stipulation pour autrui:
Stipulation pour autrui – is a stipulation in a contract clearly and
deliberately conferring a favor upon a third person who has a right to
demand its fulfillment.

 Classes of stipulations pour autrui:

1. Those where the stipulation is intended for the sole benefit of such person.
2. Those where an obligation is due from the promise to the third person
which the former seeks to discharge by means of such stipulation.
 Third persons are bound by contracts; creating real rights: Third
persons who come into possession of the object of a contract over
which there is a real right, are bound thereby even if they were not
parties to the contract.
  Right of creditor to impugn contracts intended to defraud him: the
creditor is given the right to impugn the contracts of his debtor to
defraud him.
 Classification of contracts according to perfection:
1. Consensual contract
2. Real contract
3. Solemn contract
 Stages in the life of a contract:
1. Preparation or negotiation
2. Perfection or birth
3. Consummation or termination
 How contracts are perfected:
1. Consensual contracts – perfected by mere consent of the parties
regarding the subject matter and the cause of the contract.
2. Real contracts - not merely by consent but by the delivery, actual or
constructive, of the object of the obligation.
 Effect of perfection of the contract:
1. To the fulfillment of what has been expressly stipulated but also;
2. To all the consequences which according to their nature, may be in
keeping with good faith, usage and law.

Chapter 2: ESSENTIAL REQUISITES OF CONTRACTS:

 Classes of elements of a contract:

1.Essential elements - a. Common
b. Special

2. Natural elements

3. Accidental elements
SECTION 1. – Consent

 Meaning of consent:
Consent - is the conformity or concurrence of wills and with respect to
contracts, it is the agreement of the will of one contracting party with that
of another or others.
 Meaning of offer:
Offer - is a proposal made by one party to another, indicating a
willingness to enter into a contract.

 Meaning of acceptance:
Acceptance - is the manifestation by the offeree of his assent to all the
terms of the offer.
 Acceptance of offer must be clear and absolute:
-The acceptance of an offer must not only be clear; it must be absolute,
unconditional, or unqualified.
 Form of acceptance of offer:
-An express acceptance in the form of a promise to pay a certain amount
or to do something, may be oral or written.

 Matters that may be fixed by the offerer:

-The person making the offer has the right to prescribe the time, the
place, and the manner of acceptance, all of which must be complied with.

 Communication of the offer:

-The offer must be communicated and received by the offeree.

 Communication of acceptance:
1. To offerer – the acceptance of the offer must be absolute.

2. To agent – by legal fiction, an agent is considered an extension of the

personality of his principal.
 When offer becomes ineffective:
-Even if the offer is not withdrawn, its acceptance will not produce a
meeting of the minds in case the offer as already become ineffective
because of the death, civil interdiction, etc.

 Meaning of contract of option; option period; option money:

1. Option contract – is one giving a person for a consideration a certain
period within which to accept the offer of the offerer.

2. Option period – is the period given within which the offeree must
accept offer.

3. Option money – is the money paid or promised to be paid in

consideration for the option.

 Withdrawal of offer where period stipulated for acceptance:

-The offer may be withdrawn as a matter of right at any time before
acceptance.
 Persons who cannot give consent:
1. Unemancipated minors

2. Insane or demented person

3. Deaf-mutes

 Contracts entered into during a lucid interval:

Lucid interval - is a temporary period of sanity.
 Effect of drunkenness and hypnotic spell:
-Drunkenness and hypnotic spell impair the capacity of a person to give
intelligent consent.

 Other disqualifications may be provided by law:

a. Persons suffering the accessory penalty civil interdiction;

b. Hospitalized lepers;

c. Prodigals;

d. Deaf and dumb who are unable to read and write;

e. Those who are of unsound mind even though they have lucid intervals;

f. Those who have disease, weak mind and other similar cases

 Characteristics of consent:
1. It is intelligent
2. It is free and voluntary
3. It is conscious or spontaneous
 Vices of consent:
(1) Error or mistake; (2) Violence or force; (3) Intimidation or threat or
duress; (4) Undue influence; (5) Fraud or deceit.

 Meaning of mistake or error:

mistake or error - is the false notion of a thing or a fact material to the
contract.

 Nature of mistake:
1. Mistake may be of fact or of law

2. The mistake contemplated by law is substantial mistake of fact

3. The mistake may be unilateral.

 Meaning of mistake of law:

Mistake of law - is that which arises from an ignorance of some provision
of law or from an erroneous interpretation of its meaning.

 Effect of mistake of law:

-As a rule, mistake of law does not invalidate consent.

 Requisites for the application of Article 1334:

1. The error must be mutual

2. It must be as to the legal effect of an agreement

3. It must frustrate the real purpose of the parties.

 Nature of violence or force:

Violence - requires the employment of physical force.

 Nature of intimidation or threat:

1. It must produce a reasonable and well-grounded fear of an evil;

2. The evil must be imminent and grave;

3. The evil must be upon his person or property, or that of his spouse,
descendants, or ascendants;

4. It is the reason why he enters into the contract.

 Factors to determine degree of intimidation:

-Depends upon the circumstances, including the age, sex, and condition
of the person.
 Threat to enforce just or legal claim:
-The threat of a court action as a means to enforce a just or legal claim is
justified and does not vitiate consent.
 Violence or intimidation by a third person:
Violence or intimidation may be employed by a third person who did not
take part in the contract

 Meaning of undue influence:

Undue influence - is influence of a kind that so overpowers the mind of a
party as to prevent him from acting understandingly and voluntarily to do
what he would have done.

 Circumstances to be considered:
1. Confidential, family, spiritual and other relations between the parties

2. Mental weakness

3. Ignorance;

4. Financial distress of the person alleged to have been unduly influenced.

 Meaning of causal fraud:

Causal fraud – is the fraud committed by one party before or at the time
of the celebration of the contract to secure the consent of the other.
  How causal fraud committed:
Causal fraud may be committed through insidious words or machinations
or by concealment.

 Requisites of causal fraud:

1. There must be misrepresentation or concealment of a material fact
with knowledge of its falsity

2. It must be serious;

3. It must have been employed by only one of the contracting parties;

4. It must be made in bad faith or with intent to deceive;

5. It must have induced the consent of the other contracting party;

6. It must be alleged and proved by clear and convincing evidence.

 Dealer’s talk or trader’s talk - are representations which do not

appear on the face of the contract and these do not bind either
party.
 Expression of opinion:
1. It must be made by an expert
2. the other contracting party has relied on the expert’s opinion
3. the opinion turned out to be false or erroneous.
 Fraud by a third person:
-It should be remembered that force or intimidation employed by a third
person on one of the parties makes a contract voidable.

 Two kinds of fraud in the making of contract:

1. Causal fraud
2. Incidental fraud
 Requisites of causal fraud:
-It should be serious; It should not have been employed by both
contracting parties; It should not have been known by the other
contracting party.
 Meaning of simulation of a contract:
Simulation of a contract - is the act of deliberately deceiving others, by
feigning or pretending by agreement, the appearance of a contract which
is either non-existence or concealed.
 Kinds of simulation:
1. Absolute simulation
2. Relative simulation

SECTION 2. – Object of Contracts

 Concept of object of a contract:
The object of a contract – is its subject matter.
 Kinds of object of contract:
The object may be things, rights, or services.
 Requisites of things as object of contract:
1. The thing must be within the commerce of men;
2. It must not be impossible, legally or physically;
3. It must be in existence or capable of coming into existence;
4. It must be determinate or determinable without the need of a new
contract between the parties.
 Requisites of services as object of contract:
1. The service must be within the commerce of men;
2. It must not be impossible, physically or legally;
3. It must be determinate or capable of being made determinate.
 Definition of future inheritance:
future inheritance - is any property or right, not in existence or capable of
determination at the time of the contract, that a person may inherit in the
future.
 Kinds of impossibility:
1. Physical
a. absolute
b. relative
2. Legal
SECTION 3. – Cause of Contracts

 Meaning of cause:
Cause – is the essential reason or purpose which the contracting parties
have in view at the time of entering into the contract.

 Classification of contracts according to cause:

1. Onerous
2. Remuneratory or remunative
3. Gratuitous
 Meaning of motive:
Motive – is the purely personal or private reason which a party has in
entering into a contract.
 Requisites of cause:
1. It must exist at the time the contract is entered into
2. it must be lawful
3. and it must be true or real.
 Effect of absence of cause:
absence or want of cause – means that there is a total lack of any valid
consideration for the contract.

 Effect of illegality of cause:

illegality of cause – implies that there is a cause but the same is unlawful
or illegal.

 Effect of falsity of cause:

-By falsity of cause is meant that the contract states a valid consideration
but such statement is not true.
 Meaning of lesion:
Lesion – is any damage caused by the fact that the price is unjust or
inadequate.