BORGONIA, KHRYZLIN MAY C.

BSBA-FM-1B

CHAPTER 1

A. DEFINITIONS:
Contract – Is one of the sources of obligations; It could be written or verbal
agreement between two or more parties. Hence, there can be no contract if
there is no obligation. But an obligation may exist without the contract.
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 provided he communicates his acceptance to the obligor before its
revocation by the obligee or the original parties.
Real contract - The delivery of the obligation's object is required for the
completion of real contracts such as deposits, pledges, and commodatum.
Perfection of contract - is a contract that is completed upon delivery of the
item that is the subject of the contract.

B. DISCUSSIONS
1. May a third person acquire rights under a contract to which he is a stranger
or be bound thereby? Explain.
-Based from the Article 1311, contracts only bind the parties, their assignee, and their
heirs unless the rights and obligations arising from the contract are specifically
foreclosed by the agreement or banned by law. The third party may demand if it
applies so as long as there was an heads up about it then it could be void.

2. How contracts perfected?

-Contracts are perfected if their have specific conditions that have been agreed upon,
contracts are concluded by simple approval, and from that point forward, the parties
are expected to uphold any consequences that may result in line with their nature,
good faith, custom, and law. Article 1315 specifies this. However, in accordance
with Article 1316, Real Contracts, such as a deposit, pledge, or accommodated, are
not complete until the obligation's object is delivered.

3. When will a person be bound by a contract entered into by another?

-According to the Article 1317, no one is allowed to enter into a contract on behalf of
somebody else without that person's consent or unless that person is legally
authorized to do so. A contract entered into in the name of another by someone
acting without authority, legal representation, or within the scope of his or her
powers shall be void without the express or implied consent of the person on whose
behalf the contract was executed and before it is revoked by the other contracting
Party.
 4. Give the effect of the perfection of a contract.
-Based on the Article 1316, real contracts, such as a deposit, pledge, and common
datum, are not complete until the delivery of the obligation's object.

C. PROBLEMS

1. A and B entered into a contract not specifically provided in the Civil Code. Is
the contract valid and binding?
-Yes, since contract could already be valid in the first meeting of minds of the parties.
Though it would not of course have legal papers, but it was still considered by the
law.

2. S (seller) and B (buyer) entered into a contract of sale. It was agreed that the
price shall be determined by T, a third person. Can S or B refuse to be bound
by T’s determination of the price if he does not agree with the amount
thereof?
-According to the Article 1309, the performance may be determined by a third party;
however, this decision will not be final until both contracting parties have been
informed of it. Additionally, Article 1310 states that a clearly unfair decision shall not
be binding. The courts will decide what is fair in this case given the circumstances.
Consequently, S and B are not bound by T's decision, and the court will instead
decide what is equitable in accordance with Article 1310.

3. D owes C P20,000. Both are house painters. It was agreed that D instead
paying C, will paint the house of E to which E expressed his conformity to C
whose service as painter was previously contracted by E. Has B the right to
enforce the stipulation between C and D?
-B has no rights or obligations resulting from the agreement formed by D and C, and
he has no legal authority to demand that their agreement be put into effect, in
accordance with the general norm stated in article 1311.

4. X made an office desk for Y. X told Y that the latter may pay whatever
amount he would like to pay for it. When the desk was finished Y offered to
pay P2,000 but X instead demanded P3,000, its fair value. Is X entitled to
P3,000?
-Because the agreement stated that Y could pay whatever he wanted, X is not entitled
to P3,000. According to Article 1308, the legality or compliance of a contract cannot
be based on the will of only one party; it must bind both parties.
CHAPTER 2, Section 1

A. DEFINITIONS:

Consent - Acceptance of the offer, object, and cause that will serve as the
basis for the contract indicates consent.
Acceptance - When one accepts another's offer, they agree to the terms of
that offer. Acceptance occurs when an insurer decides to accept a person's
insurance application and provide a policy insuring the person against
particular risks such as fire or theft, according to insurance legislation. When
people opt to keep a present after receiving one from someone, they are
demonstrating acceptance of the gift.
Natural elements - Those that are legally required to be in the contract even if
the parties do not offer (stipulate), such as a warranty against concealed faults
or eviction in a selling deal.
Option contract - An option contract is a legal agreement in which one party
(the offeror/promissor) grants another party (the offeree/promisee) the right
or privilege to purchase (or sell) a specific item at a specified price if the buyer
or seller does so within a specified time period.
Mistake of law - A legal mistake occurs when a party is unaware of a legal
provision or draws inaccurate conclusions about how a contract will be
construed by the courts.

B. DISCUSSIONS
1. When is a contract voidable or annullable?
-A contract is voidable under Art.1330 if assent is given under duress, fear, violence,
intimidation, or fraud.

2. Is it always required that he who alleges fraud or mistake in entering into a

contract, must prove his allegation? Explain.
-No. Based on the Article 1332, the party enforcing the contract bears the burden of
proving that there was no fraud or error and that the contents of the contract were
adequately conveyed to the other party if one of the parties is unable to read or the
contract is in a language he does not understand.

3. Give the requisites in order that intimidation may vitiate or annul consent of
a party to a contract.
-According to Article 1335, the harm must: (1) cause a reasonable and well-founded
fear of an evil; (2) be imminent and grave; (3) be against his person or property, or
that of his spouse, descendants, or ascendants; and (4) constitute the basis for his
Contract.
 4. May fraud be commuted by a party to contract though there is no
misrepresentation on his part? Explain.
-Yes. According to Art. 1339, concealment relates to misrepresentation where there is
a failure or neglect to divulge facts that a party to a contract knows and should
Convey.

5. Will the acceptance of a business advertisement of a thing for sale produce

the perfection of a contract? explain.

-In general, ads, catalogs, brochures, and public announcements related to the sale of
items at a defined price are not considered offers to engage into a binding contract.
Rather, they are regarded as invitations to strike a deal.

C. PROBLEMS

1. In a contract containing an option period, when is the offerer not allowed to

withdraw his offer even before acceptance by the offeree? When is the
offerer allowed to withdraw his offer even after acceptance?
-Article 1314 specifies that when the offer has given the offeree a defined term to
accept, the offer may be withdrawn at any moment prior to acceptance by
communicating such withdrawal. When the offer specifies a time limit for the offeree
to accept the offer, the general rule is that the offer may be withdrawn as a matter
of right. The offer, on the other hand, is not entitled to withdraw his offer if the
choice is based on a consideration such as anything paid or promised.

2. S sold his house to B believing that B was C. Can S legally withdraw from the
contract on the ground of mistake?
-Based on the article 1331, Yes. S may formally terminate the agreement as a result
of an error. According to it faults in one of the parties' identification or qualification
will invalidate consent only if such mistakes were the major basis for the contract.
When an accounting error occurs, it must be corrected. We should not just accept
mistakes; instead, we must identify where we went wrong and what we can do to
make amends and learn from the experience.

3. S agreed to deliver to B 500 canvas of rice at P600 per cavan. S delivered

only 490 canvas deliberately misrepresenting that the delivery consisted of
500 canvas. Can B ask the court to annul the contract on the ground of
fraud?
-According to the article 1344, it was said that you could only make the contract
voidable if it was serious enough to be proven. On the other hand, cases like
incidental fraud obliges a person to pay for damages. In this cases since S showed up
but lacked 10 cavans of rice then B should only pay what has been delivered.
 4. S sold to B a commercial land for P1,000,000. S assured B that it is certain
that in two years time, the land would increase in market value by 50% or
P1,500,000. It turned out that the market value of the land even decreased
to about P800,000. Is S liable to B for misrepresentation?
-S isn’t liable to b for misrepresentation since according to article 1340, customers
should know how to take care of their concerns and to rely on their own
independent judgements.

5. Suppose in the same problem, what S sold to B, hardware owner, are 500
bags of cement. S had every reason to believe that the price of cement
would go down. After two weeks, it did go down. Has B the right to have the
sale annulled?
-Based on the article 1339, a failure to disclose facts, when there is duty to reveal
them as when the parties are bound by confidential relations, constitutes fraud. In
this case, s does not have a right to make the contract voidable since he didn’t buy it
on the day it was sale. S didn’t make any fraud about it since it was B’s decision if he
is going to buy it or not on that day.