Essential Requisites of Contracts – Section 1: Consent

Article 1315. Contracts are perfected by mere consent, and from that moment
the parties are bound not only to the fulfillment of what has been expressly
stipulated but also to all the consequences which, according to their nature,
may be in keeping with good faith, usage and law. (1258)

Article 1318. There is no contract unless the following requisites concur:

(1) Consent of the contracting parties;

(2) Object certain which is the subject matter of the contract;
(3) Cause of the obligation which is established. (1261)

Article 1319. Consent is manifested by the meeting of the offer and the
acceptance upon the thing and the cause which are to constitute the contract.
The offer must be certain and the acceptance absolute. A qualified acceptance
constitutes a counter-offer.
Acceptance made by letter or telegram does not bind the offerer except from the
time it came to his knowledge. The contract, in such a case, is presumed to have
been entered into in the place where the offer was made. (1262a)

Article 1320. An acceptance may be express or implied. (n)

Article 1327. The following cannot give consent to a contract:

(1) Unemancipated minors;
(2) Insane or demented persons, and deaf-mutes who do not know how to
write. (1263a)

Stages in the Life of a Contract:

1. Preparation or negotiation
2. Perfection or birth
3. Consummation or termination

Classes of Elements of a Contract:

 1. Essential Elements
2. Natural Elements
3. Accidental Elements

Meaning of Consent:

Consent is the conformity or concurrence of wills (offer and acceptance) and with
respect to contracts, it is the agreement of the will of one contracting party with that
of another or others, upon the object and terms of the contract.

a. Meaning of Offer:

Offer is a proposal made by one party to another to enter into a contract.

Example: “Will you buy this watch for 10,000.00?” This is an offer.

b. Meaning of Acceptance:

Acceptance is the manifestation by the offeree of his assent to the terms of

the offer.

Example: S asked B this question: “Will you buy my (specific) car for
200,000.00?” If B answers “yes, I accept your offer,” or “yes, I agree,” or just
“yes,” the acceptance of B is absolute or unconditional.

But if B proposes to pay only 160,000.00 for the car or to buy instead another
car or a land of S for 200,000.00, his acceptance is qualified and becomes a
counter-offer. In this case, B is now the new offerer, and S, who was the
original offerer, the new offeree.

c. Parties:

The very essence of consent is the conformity of the parties in the

stipulations laid down in the contract. The moment there is a meeting of the
minds and their acceptance of the contract is made known to each other
makes the contract comes to life and binds them accordingly.

d. Effect of lack of capacity or authority and disqualification:

 Persons Who Cannot Give Consent:

1. Unemancipated minors
2. Insane or demented persons
3. Deaf-mutes

Effects of Contracts Entered by Incapacitated Persons:

The contracts entered into by the incapacitated persons enumerated in the

law are not void. They are only voidable if only one party cannot give his
consent. But if both parties are incapacitated to give consent, the resulting
contract is unenforceable (Article 1407).

Article 1330. A contract where consent is given through mistake, violence,

intimidation, undue influence, or fraud is voidable. (1265a)

Article 1331. 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.

Mistake as to the identity or qualifications of one of the parties will vitiate

consent only when such identity or qualifications have been the principal
cause of the contract.

A simple mistake of account shall give rise to its correction. (1266a)

Article 1335. There is violence when in order to wrest consent, serious or

irresistible force is employed.

There is 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.

To determine the degree of the intimidation, the age, sex and condition of the
person shall be borne in mind.

A threat to enforce one’s claim through competent authority, if the claim is

just or legal, does not vitiate consent. (1267a)
Article 1337. There is 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. The following circumstances shall be
considered: the confidential, family, spiritual and other relations between the
parties, or the fact that the person alleged to have been unduly influenced was
suffering from mental weakness, or was ignorant or in financial distress. (n)

Article 1338. There is 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. (1269)

Article 1339. Failure to disclose facts, when there is a duty to reveal them, as
when the parties are bound by confidential relations, constitutes fraud. (n)

Article 1342. Misrepresentation by a third person does not vitiate consent,

unless such misrepresentation has created substantial mistake and the same
is mutual. (n)

e. Vices of Consent

1. Error or mistake
 The false notion of a thing a fact material to the contract.
2. Violence or force
 Violence requires the employment of physical force. To make
consent defective, the force employed must be either serious or
irresistible.
3. Intimidation or threat or duress
Nature:
 It must produce a reasonable and well-grounded fear of evil.
 The evil must be imminent and grave.
 The evil must be upon his person or property, or that of his spouse,
descendants, or ascendants.
 It is the reason why he enters into the contract.
4. Undue influence
 Undue influence is the influence of a kind that so overpowers the
mind of a party as to destroy his free will and make him express
the will of another, rather than his own.
5. Fraud or deceit
  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, without which, consent will not be secured.
 Fraud by Concealment: A neglect or failure to communicate that
which a party to a contract knows and ought to communicate. In
this case, concealment is equivalent to misrepresentation.

Article 1345. Simulation of a contract may be absolute or relative. The former

takes place when the parties do not intend to be bound at all; the latter, when
the parties conceal their true agreement. (n)

Article 1346. An absolutely simulated or fictitious contract is void. A relative

simulation, when it does not prejudice a third person and is not intended for
any purpose contrary to law, morals, good customs, public order or public
policy binds the parties to their real agreement. (n)

f. 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 that is either non-
existent or concealed.

Essential Requisites of Contracts – Section 2: Object of Contracts

Article 1347. All things which are not outside the commerce of men, including
future things, may be the object of a contract. All rights which are not
intransmissible may also be the object of contracts.

No contract may be entered into upon future inheritance except in cases

expressly authorized by law.

All services which are not contrary to law, morals, good customs, public order
or public policy may likewise be the object of a contract. (1271a)

g. Requisites of Things as Object of Contract:

 1. The thing must be within the commerce of men, that is, it can legally be the
subject of commercial transaction. (Article 1347)
2. It must not be impossible, legally or physically. (Article 1348)
3. It must be in existence or capable of coming into existence. (Articles 1461,
1493, 1495)
4. It must be determinate or determinable without the need for a new contract
between the parties. (Articles 1318 [2], 1349)

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.

h. Matters which cannot be the object of contract:

 Outside the commerce of man, such as public properties.

 Intransmissible, such as civil and political rights.
 Contrary to law, morals, good customs, public order, or public policy.

Essential Requisites of Contracts – Section 3: Cause of Contracts

Article 1350. In onerous contracts the cause is understood to be, for each
contracting party, the prestation or promise of a thing or service by the other;
in remuneratory ones, the service or benefit which is remunerated; and in
contracts of pure beneficence, the mere liberality of the benefactor. (1274)

i. Meaning of Cause:

Cause (causa) is the essential or more proximate purpose which the

contracting parties have in view at the time of entering into the contract.

j. Distinguished from motives

Cause Distinguished from Motive

 Cause Motive

The immediate or direct reason. The remote or indirect reason.

Always known to the other Motive may be unknown.

contracting party.

An essential element of a contract. Not an essential element of a

contract.

The illegality of the cause affects The illegality of one’s motive does
the validity of a contract. not render the contract void.

k. Absence/Unlawful Cause

Effect of Absence of Cause:

 Absence or want of cause means that there is a total lack of any valid
consideration for the contract.
 Contracts without cause confer no right and produce no legal effect
whatever. Thus, a contract that is absolutely simulated or fictitious is
inexistent and void.

Effect of Illegality of Cause:

 Illegality of cause implies that there is a cause but the same is unlawful or
illegal. Contracts with an unlawful cause are also null and void.

Effect of Failure of Cause:

 Failure of cause or consideration does not render a contract void.

l. Inadequacy of Cause:

General Rule:
 Lesion or inadequacy of cause does not of itself invalidate a contract.

Exceptions:

Lesion will invalidate a contract:

1. When there has been fraud, mistake, or undue influence.

2. In cases specified by law.
Forms of Contract

Article 1356. Contracts shall be obligatory, in whatever form they may have
been entered into, provided all the essential requisites for their validity are
present. However, when the law requires that a contract be in some form in
order that it may be valid or enforceable, or that a contract be proved in a
certain way, that requirement is absolute and indispensable. In such cases,
the right of the parties stated in the following article cannot be exercised.
(1278a)

Article 1358. The following must appear in a public document:

(1) Acts and contracts which have for their object the creation,
transmission, modification or extinguishment of real rights over
immovable property; sales of real property or of an interest therein are
governed by Articles 1403, No. 2, and 1405;
(2) The cession, repudiation or renunciation of hereditary rights or of those of
the conjugal partnership of gains;
(3) The power to administer property, or any other power which has for its
object an act appearing or which should appear in a public document, or
should prejudice a third person;
(4) The cession of actions or rights proceeding from an act appearing in a
public document.
All other contracts where the amount involved exceeds five hundred
pesos must appear in writing, even a private one. But sales of goods,
chattels or things in action are governed by Articles 1403, No. 2 and
1405. (1280a)

General Rule: Contracts shall be obligatory in whatever form in which the same may
have been entered into, provided all of the essential requisites for its validity are
present.

Exceptions:

1. When the law requires that the contract must be in a certain form in order to
be valid.
2. When the law requires that the contract must be in a certain form in order to
be enforceable.
Different kinds of formalities are prescribed by law for certain contracts:

1. For convenience of for the purpose of binding third persons.

The following must appear in a public document:

a. Acts and contracts which have for their object the creation, transmission,
modification, or extinguishment of real rights over immovable property, sales of real
property, or of an interest therein.

b. The cession, repudiation or renunciation of hereditary rights or of those of the

conjugal partnership of gains.

c. The power to administer property, or any other power which has for its object an
act appearing or which should appear in a public document, or should prejudice a
third person.

d. The cession of actions or rights proceeding from an act appearing in a public

document.

e. All other contracts where the amount involved exceeds P500.00 must appear in
writing, even a private one. But sales of goods, chattels or things in action are
governed by Articles 1403, No. 2, and 1405. (Art. 1358, NCC.)

2. Necessary for the validity of contract.

Contracts with must appear in writing are as follows:

a. Donation and acceptance of personal property whose value exceeds Php

5,000.00 shall be made in writing; otherwise, it shall be void.

b. Sale a piece of land or any interest therein by an agent. If the authority of the
agent is not in writing, the sale is void.

c. In contracts of antichresis, the amount of the principal and the interest shall be
specified in writing; otherwise, the contract shall be void.

d. Agreements regarding payment of interest in contracts of loan. No interest shall

be due unless it has been expressly stipulated in writing. The validity of the contract
of loan, however, is not affected.

Contract which must appear in a public document are as follows:

a. Donations of immovable property must be made in a public document. The
acceptance, on the other hand, may be made in the same deed of donation or in a
separate public document. If the acceptance is made in a separate public document,
the donor shall be notified thereof in an authentic form, and this step shall be noted
in both instruments. Non-compliance with any of these formalities shall render the
donation void.

b. Partnership where immovable property or real rights are contributed to the

common fund, it is necessary that the contract must appear in a public instrument
and that there must be an inventory of the immovable property or real rights, signed
by the partners, and attached to the public instrument; otherwise, the contract is
void.

Contract which must be registered are as follows:

a. In chattel mortgages, personal property is recorded in the Chattel Mortgages

Register as a security for the performance of an obligation. If the movable, instead
of being recorded, is delivered to the creditor of a third person, the contract is a
pledge and not a chattel mortgage.

b. No sales or transfers of large cattle shall be valid unless it is duly registered and a
certificate of transfer is secured.

3. Necessary for the enforcement of the contract.

Reformation of Instruments:

 When the true intention of the parties to a perfected and valid contract is not
expressed in the instrument purporting to embody their agreement, by
reason of mistake, fraud, inequitable conduct, or accident, one of the parties
may ask for the reformation of the instrument so that such true intention may
be expressed.

Requisites:

1. There must be a meeting of the minds of the parties,

2. Their true intention is not expressed in the instrument.

3. Such failure to express their true intention is due to mistake, fraud, inequitable
conduct, or accident.

Interpretation of Contracts:

 If the terms of a contract are clear and leave no doubt upon the intention of
the contracting parties, the literal meaning of its stipulations shall control. If
the words appear to be contrary to the evident intention of the parties, the
latter shall prevail over the former.
 The interpretation of obscure words or stipulations in a contract shall not
favor the party who caused the obscurity.
Sources:
Chapter 2: ESSENTIAL requisites of contracts – page 4. (2016, March 27). Retrieved
February 12, 2021, from https://lspuoblicon2015.wordpress.com/category/ii-
contracts/chapter-2-essential-requisites-of-contracts/page/4/
Object of contract. (n.d.). Retrieved February 12, 2021, from
https://philawgov.wikia.org/wiki/Object_of_Contract
Realestatelawyer, & Says:, I. (2016, March 04). Real estate LAWYER
PHILIPPINES. Retrieved February 12, 2021, from
https://realestatelawyer.com.ph/essential-requisites-of-a-contract/
S., D. L., & Jr, D. L. (2014). The Law on Obligations and Contracts. Manila: Rex
Book Store.