Obligation Contracts

8/10/2019 Obligation Contracts

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OBLIGATIONS


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Nature of obligations under Civil Code

Civil Obligations legally demandable and the

courts of justice maycompel their performance.

Natural Obligations based on morality,

natural law and conscience,they are not legally

demandable.


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Requisites of Obligations

Juridical or legal tie the vinculum or the link that

binds the party

Prestation - consist in giving, doing or not doing

something

Active subject person who can demand the

performance of the obligation or known as the

creditor or obligePassive subjectthe person from whom prestation

is demandable orknown as the debtor or obligor


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Sources of Obligations


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Law


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Contracts

the meeting of minds between twopersons whereby onebinds himself

with respect to the other to give

something or to render service.


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Quasi-contracts

the act of a person, permitted by

law, by which he obligates himselftowards another, or by which

another binds himself to him,

without any agreement between

them.


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Acts or omissions punished by law

refers to a crime or a penal offense.


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Quasi-delicts

a legal wrong, committed

through fault or negligence,

on a person or property,

independent of contract.


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Requisites of Quasi-delicts

An act or omission;

Accompanied by fault or negligence; Causing damage to another;

There must be no pre-existing

contractual relation between the parties.


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DIFFERENT KINDS OF OBLIGATIONS


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Pure and Conditional Obligations

Pure Obligations one which is not subject

to conditions nor does itmention a specificdate for its fulfillment.


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Conditional Obligations is one which is

subject to a condition

Two Kinds of Conditions

Suspensive Condition a condition which

suspends the demandabilityof the obligation until

the fulfilment of the condition.

Resolutory Condition produces the

extinguishment of an obligation upon the

happening of the event.


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Obligations With a Period

those whose consequences are subjected in

one way or the other to the expiration of

said term.


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Alternative Obligations

is one wherein various things are due, but

the payment of one of them is sufficient,

determined by the choice which as a

general rule belongs to the obligor.


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Joint and Solidarity Obligations

Joint Obligations is one which each of the

debtors is answerable only fora proportionate

part of the debt and each one of the creditors is

entitled to a proportionate part of the credit.


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Solidarity Obligations is one which each

of the debtors is liable for the whole

obligation and each of the creditors maydemand compliance of the entire

obligation.


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Divisible and Indivisible Obligations

Divisible Obligation is one which is capable of

partial performance.

Indivisible Obligation is one which is not

capable of partial performance.


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Obligations With a penal Clause

Definition of Penal Clause an accessory undertaking

to assume greater liability in case of a breach.

Two Classifications of Penal Clause

Subsidiary when only the penalty can be

demanded

Jointwhen both the principal contract and thepenal clause can beenforced


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EXTINGUISHMENT OF OBLIGATIONS

By Payment or Performance payment means not only

the delivery ofmoney but also the performance, in anyother manner, of an obligation.

By the loss of the thing due when it perishes or goes

out of commerce ordisappears in such a way that its

existence is unknown or it cannot be recovered.

By the condition or remission of the debtit is an act

of liberality by whichthe oblige, who receives no price

or equivalent thereof, renounces the enforcement ofthe obligation, which is extinguished in its entirely or in

that part or aspect of the same to which the remission

refers.


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EXTINGUISHMENT OF OBLIGATIONS

By the confusion or merger of the rights of

creditor and debtorit is themeeting in oneperson of the qualities of obligee and obligor

with respect to the same obligation.

By compensation takes place when twopersons, in their own right, are creditors and

debtors of each other.

By novation it is the change, substitution, or

renewal of an obligation orobligatory relation,

with the intention of extinguishing or

modifying essentially the former(new debt for

old debt).


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CONTRACTS


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Contract is the meeting of the minds between two

persons whereby one binds himself with respect to the

other to give something or to render service. It comes

from the Latin word contractus which signifies an

agreement.


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Elements of Contracts

Essential Elements

consent of the parties

object or subject matter

cause or consideration

Natural elements are those the existence of which is resumed by law

unless there is an agreement to the contrary

Accidental elements consist of the unusual stipulation of the partiessuch as conditions, terms, etc.


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Stages of a Contract

Preparation or Conception

Perfection or Birth

Consummation or Termination


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Preparation or Conception includes all the initial

stages up to the time the parties agree upon the terms

of the contract.

Juan offers to sell his horse to Pedro for P2,000.00. Pedro asks

Juan to bring his horse to his place to enable him to see

whether the horse is fit for carretela purposes. Juan brings the

horse to Pedrosplace and the latter is allowed by Juan to usehis horse in pulling Pedros carretela to enable the latter to

see whether the horse has sufficient speed, is physically fit,

etc. After trying the horse, Pedro bargains with Juan as to the

price. Up to this stage, the parties are doing things leading tothe meeting of the minds.


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Perfection or Birth the time when the minds of theparties meet inagreement upon the object or subject

matter as well as to the price or consideration.

Juan agrees to receive P2,000.00 for his horse and Pedro

agrees to take the horse for that amount. The contract here is

perfected because there is already a meeting of the minds.


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Consummation or Termination

Juan delivers the horse to Pedro and the same is accepted.

Pedro gives the amount P2,000.00 as purchase price and thelatter receives it. In here, the contract is consummated and

terminated.


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Classification of Contracts

Express and Implied Contracts is one written in the intent of the parties is shown by

words, oral or written.

Executed and Executory Contracts

Executed contract is one that has already been performed

Executory contract is one that is not yet performed

Consensual and Real Contracts

Consensual contract is one perfected by mere consent

Real contractis one perfected by the delivery of the thing which is theobject

of the contract

Unilateral and Bilateral ContractsUnilateral contract only one of the parties has an obligation

Bilateral contract both parties has an obligation

Limitations upon the right to contract


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Limitations upon the right to contract

Contrary to lawThe parties to a contract cannot agree to an object orpurpose which

is against the law.

A, for and in consideration of P1,000.00, entered into a contract with B whereby thelatter agreed to murder C.

Against morals No contact may be entered into which is against virtuous conduct

and ethical precept.

A entered into a contract with B whereby for and in consideration of P1,000.00 the

latter agrees to live with A without the benefit of marriage.

Contrary to good customs The contracting parties are prohibited fromentering into

contracts which conflict with good and established practice or customs.

Pedro and Maria decided to get married on October 10, 2007. Invitations were printed

and distributed to relatives and friends and apparel were purchased including

matrimonial bed. Pedro, however walked out of it and was never heard of again.


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Contrary to public order Signifies the public weal which are permanent and essentialin institutions.

An agreement that the creditor can use force or violence to compel the debtor to pay is

contrary to public order.

Contrary to public policy Refers not only to public safety but also to considerations

which are moved by the common good.

A entered into a contract with B whereby A will not enter into any enterprise whatever

in the Philippines. This is against public policy as it is a contract in restraint of trade.


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ESSENTIAL REQUISITES OF CONTRACTS

Consent manifested by the meeting of the offer and the

acceptance upon the thing and the cause which are to constitutethe contract.

Object of Contractsit may be things, rights and services

Things must be within the commerce of men, must not be

impossible, either physical or legally and must be

determinate as to their kind.

Rightsmay be transmissible or not transmissible. Examples

of these rights are the right to vote, rights flowing from a

contract of marriage, parental authority, etc.


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Cause of Contracts the immediate, direct and

proximate reason which justifies the creation ofan obligation thru the will of the contracting

parties.


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Classification of Contracts as to its Cause

Onerous Contract the cause is the mutual

undertaking or promise of either of thecontracting parties.


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Remunetory Contract the cause is the

service or benefit for which theremuneration is given.


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Gratuitous Contractthe cause is the pure

liberality of the giver.


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Requisites of a valid cause or consideration

The cause must be in existence.

That the cause must be lawful and not

contrary to law, morals, good customs, publicpolicy, and

The cause must be true because the

statement of a false cause renders the contract

void.


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REFORMATION OF INSTRUMENTS

Reformation is a remedy in equity by means of which a writteninstrument is made or construed so as to express or conform to the

real intention of the parties when some error or mistake has been

committed.

Requisites of Reformation

There is a valid contract;

The contract is in writing;

The written contract fails to express the true intention of the

parties

The failure of the written contract to express the true

intention is due to mutual mistake, fraud, inequitable conduct,

or accident.


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DEFECTIVE CONTRACTS

Types of Defective Contracts

Rescissible Contract

Voidable Contracts

Unenforceable Contracts

Void or Inexistent Contracts


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Rescissible Contractit has all the essential requisites of a contract

andthe contract itself is valid, but by reason of injury or damage to

third persons, such as creditors, the contract may be rescinded.

Voidable Contracts is one that possesses all the essential

requisites of a valid contract, namely, consent, object and cause or

consideration. It is a valid contract until it is annulled.

Unenforceable Contractsa contract is said to be unenforceable

when it cannot be sued upon or enforced in court unless it is

ratified.

Void or Inexistent Contracts one which is absolutely without

legal force or effect. It is not susceptible of ratification.


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DAMAGES

Damagesis the sum of money which the law awards or imposes

as percuniary compensation, recompense, or satisfaction for an

injury done or a wrong sustained as a consequence either of a

breach of a contractual obligation or a tortious act.


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Types of Damages

Actual or Compensatory Damages

Moral Damages

Nominal Damages

Temperate or Moderate Damages

Liquidated Damages

Exemplary or Corrective Damages


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Actual or Compensatory Damages damages that cover actual

injury oreconomic loss. It is intended to put the injured party in

the position he was in prior to the injury. It typically includes

medical expenses, lost wages and the repair or replacement of

property.

Moral Damages includes physical suffering, mental anguish,

fright, serious anxiety, besmirched reputation, wounded feelings,moral shock, social humiliation, and similar injury.

Nominal Damagesthese are small and trivial sums awarded for

a technical injury due to a violation of some legal right, and as a

consequence of which some damages must be awarded to

determine the right.


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Temperate or Moderate Damages Temperate damages are such

damages as are reasonable compensation for the injury. They are

more than nominal damages but less than compensatory damages

and may be recovered when the court finds that some pecuniaryloss has been suffered but its amount cannot, from the nature of

the case, be proved with certainty.

Liquidated Damages the amount of which has been agreed

upon by the parties or fixed by the judgement of a competent

court.

Exemplary or Corrective Damagesdamages which are given in

enhancement merely of the ordinary damages on account of

wanton, reckless, malicious, or oppressive character of the acts

complained of.

Documents

Obligation Contracts