law on obligation and contract ppt

8/11/2019 Law on Obligation and Contract Ppt.

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TITLE II

CONTRACTS


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ART. 1305. 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 service.

1254a)


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The above article defines the term Contract.In a contract, one or more persons bind

themselves with respect to another orreciprocally, to the fulfillment of apresentation to give, to do or not to do.


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1. As to perfectiona. Consensual one which is perfected by mere

consent (Art. 1315b. Real Contract perfected by mere consent and by the

delivery of the object or subject matter. Ex. Deposit,pledge, or commodatum.

2. As to dependence to other contract.a. Principal one which can stand alone. Ex. A

contract of sale, lease.b. Accessory those which are dependent upon anothercontract. Ex. Contract of mortgage, pledge of

guaranty.c. Preparatory those which is created in order that afuture transaction or contract may be entered into by teparties. Ex. Contract of partnership or agency.


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3. According to name or designationa. Nominate one which has particular name or

designation such as sale, agency, etc.

b. Innominate those without particular name.

4. According to the nature of obligationa. Unilateral where only one ha an obligation to perform. Ex.

Contract of donation, commodation.b. Bilateral where both parties have reciprocal

obligation to perform. Ex. Sale.

5. According to risk involveda. Commutative - where there is an exchange of values, such

as lease.b. Aleatory - one which the fulfillment of the obligation

depends upon chance. Ex. Contract of insurance.

6. According to causea. Onerous one which imposes valuable consideration such

as sale, mortgage.b. Gratuitous one which one of the parties does not receive

any valuable consideration, such as commodatum.


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7. According to forma. Oral by word of mouth of the parties

b. Written the agreement which is reduced inwriting which may be public or private or privatedocument

ART. 1306. The contracting parties may

establish such stipulations, clauses, terms and

conditions as they may deem convenient, provided they

are not contrary to law, morals, good customs, public

order, or public policy. 1255a)


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ART. 1308. The contract must bind both

contracting parties; its validity or compliance

cannot be left to the will of one of them. 1256a)


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Contracts entered by and between the parties mush

bind both parties in order that it can be enforced againsteach other. This is also known as mutualityof contract.Hence, its validity or compliance cannot be left to the willof one of them. This principle is based on the essentialequality of the parties. It is elementary rule that no party

can renounce or violate the law of the contract without theconsent of the other. (11 Manresa 380)

Example, Tina and Laura entered into a contract to

sell whereby Tina binds herself to sell her only parcel ofland to Laura if Tina decides to leave for States. Thecontract is void because the fulfillment of the conditiondepends on the will of Tina.


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ART. 1309. The determination of

the performance may be left to a thirdperson, whose decision shall not be bindinguntil it has been made known to both

contracting parties.

ART. 1310. The determination shallnot be obligatory if it is evidently inequitable.

In such case, the courts shall decide what isequitable under the circumstances.


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As a rule, compliance with a contract cannot be left tothe will of one of the contracting parties. However, thedetermination of its performance may be left to a thirdperson after it has been made known to both contracting

parties. Provided, further, the parties are not bound by thedetermination if it is evidently inequitable or unjust when thethird person acted in bad faith or by mistake, the courts shalldecide what is equitable under the circumstances.

Example: Tina sold her parcel of land to Laura. It was

agreed that Maya, a real estate appraiser would be the one todetermine the reasonable price of the land. Maya, then, fixedthe price after considering the factors affecting the value ofthe land, and informing both contracting party that thedecision is just and suitable. If the decision made by Maya ismanifestly inequitable, the court may be called upon todecide what is equitable.


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ART. 1311. Contracts take effect only between the

parties, their assigns and heirs, except in case where

the rights and obligations arising from the contract are

not transmissible by their nature, or by stipulation, or

by provision of law. The heir is not liable beyond the

value of the property he perceived from the decedent.

If a contact should contain some stipulation in

favor of third person, he may demand its fulfillment

provided he communicated his acceptance to the

obligor before its revocation. A mere incidental benefitor interest of a person is not sufficient. The contracting

parties must have clearly and deliberately conferred a

favor upon a third person. (1257a)


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1. In determining the performance of both parties (Art.1309).

2. In contracts containing a stipulation in favor of a thirdperson (Art. 1311).

3. In contracts creating real rights (Art. 1312).

4. In contracts entered into to defraud creditor (Art. 1313).

5. In contracts which have been violated at the inducementof the third person (Art. 314).

Example: Tina mortgaged her parcel of land in favor of Lauraas collateral for her debt. The mortgage is duly registered. Lateron, Tina sold the same land to Tito. In this case, Tito bought theland subject to the mortgage constituted thereon. Tito, althougha stranger in the mortgage, being a real right follows theproperty on the right of Laura to the mortgage.


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law on obligation and contract ppt

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