Essential Requisites of Contract: Consent, Object Certain Cause
Essential Requisites of Contract: Consent, Object Certain Cause
LAW 121/OBLICON
SECTIONS JD 1A & JD 1B
By: Atty. JEN N. ASUNCION
I. GENERAL PROVISIONS:
a. ESSENTIAL ELEMENTS – those without which there can be no contract. (Art. 1318, NCC). The
essential elements may be:
i. COMMON – present in all contracts. Art. 1318 refers to the common essential elements
of contracts – CONSENT, OBJECT CERTAIN and CAUSE.
ii. SPECIAL – essential elements present in certain contracts. (e.g. donation, chattel
mortgage, antichresis, pledge, lease)
iii. EXTRAORDINARY OR PECULIAR – those which are peculiar to a specific contract. (e.g.
price (sale), rent (lease), loan (REM/Chattel Mortgage)
b. NATURAL ELEMENTS – those that are presumed to exist in certain contracts unless the contrary
is expressly stipulated by the parties. (e.g. warranty against eviction [sale of real property];
warranty against hidden defects [sale of real or personal property]).
c. ACCIDENTAL ELEMENTS – those which exist only when the parties expressly provide for them
for the purpose of limiting or modifying the normal effects of the contract. (e.g. conditions,
penalties, interest)
1. Concept. Consent is the conformity of the parties to the terms of the contract; the
acceptance by one of the offer made by the other; the concurrence of the minds of the
parties on the object and the cause which shall constitute the contract.
MUTUAL ASSENT between the parties on the subject matter and the cause which are to
constitute the contract.
NB: Mutual Assent or agreement takes place when there is an offer and acceptance of
the offer.
2. MANIFESTATION. Consent is manifested by the meeting of the offer and the acceptance
upon the thing and the cause which are to constitute the contract.
3. REQUISITES OF CONSENT.
(a) AN OFFER THAT MUST BE CERTAIN. (Art. 1319, 1325 and 1326, NCC)
i. DEFINITION. Offer means a unilateral proposition which one party makes to the
other for the celebration of the contract.
E.g.
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OFFER IS UNCERTAIN: “I am willing to entertain the purchase of my house and
lot to you for P5M”.
(2) WITHDRAWAL. As a general rule, the offerer may withdraw the offer at
any time before he learns of the acceptance by the offeree.
WHEN PERIOD IS GIVEN. When the offerer has allowed the offeree a certain
period to accept –
GENERAL RULE: If the offerer has allowed the offeree a certain period to
accept, the offer may be withdrawn at any time before acceptance.
An OPTION CONTRACT grants a person the choice, for a distinct and separate
consideration, to purchase a determinate thing at a predetermined fixed
price.
Example: A offered to sell his house and lot for P7M to B, who was
interested to buy the same. A gave B 10 days to decide. If after 10 days there
is no acceptance, A may withdraw the offer. However, if money is paid or
promised to be paid (option money) in consideration of the option, the offer
may not be withdrawn until the end of the period agreed upon.
NB: Option Contract is separate and distinct from the contract which will
be perfected upon the acceptance of the offer. In case of breach, the
remedy of the offeree is DAMAGES for breach of the option contract, and
not damages or specific performance of the contract which is the object
of the option.
RIGHT OF FIRST REFUSAL (where A gives B the right to buy a property should
A decide to sell it) is NOT AN OPTION CONTRACT because it depends on
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Actually a partial payment of the purchase price and is considered proof of the perfection of the contract.
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whether A will decide to sell the property and on terms that are not yet
determined.
- Since it is not an option contract, a right of first refusal does not need
separate consideration to be valid. The right of first refusal may be a
clause in a principal contract (e.g. lease), in which case the consideration
for the right of first refusal forms part of the consideration for the
principal contract.
- In case the right of first refusal is violated – i.e., A sells the property not
a third person without first allowing B (the right-holder) to purchase it
– the right-holder may: (a) seek the rescission of the sale as rescissible
contract; and (b) seek specific performance of the owner’s obligation
to grant him the right of first refusal (by allowing the right-holder to
buy the property at the same terms and conditions at which it was sold
to the third party.)
(3) ADVERTISEMENTS.
For Sale: 150 square meter lot located at Aurora Hill, Baguio City for
P2M.
Example (Exception):
For Sale: 150 square meter residential lot located at Aurora Hill, Baguio
City covered by TCT No. 1234567890 for P2.7M all-in.
b. Advertisements for bidders are simply invitations to make proposals, and the
advertiser is not bound to accept the highest or lowest bidder, unless the
contrary appears. (Art. 1326, NCC)
(b) THE ACCEPTANCE MUST BE ABSOLUTE. (Art. 1319, 1320, 1321 and 1322, NCC)
ii. ABSOLUTE.
To produce a contract, the acceptance must not qualify, modify or vary the
terms of the offer.
Any modification or variation from the terms of the offer annuls the latter
and frees the offerer. The original offerer is free to accept or refuse the
counter-offer.
a. The offerer may withdraw his offer before he learns of the acceptance
thereof by the offeree. The contract is not perfected if the offerer
withdraws his offer, and the withdrawal is made before he learns of the
acceptance.
b. Acceptance made by letter or telegram does not bind the offerer except
from the time it came to his knowledge.
iv. EXPRESS or IMPLIED. An acceptance may be express or implied. (Art. 1320, NCC)
b. In general, the offerer is not bound to answer a proposal, and his silence per
se cannot be construed as an acceptance. As an exception, however,
acceptance may be implied from silence, if clearly warranted by the
circumstances.
v. TIME, PLACE and MANNER. The person making the offer may fix the time, place,
and manner of acceptance, all of which must be complied with. (Art. 1321, NCC)
Example: A (offerer) may tell B (offeree) that the latter must accept the offer
personally on May 20, 2020 before 5:00 o’clock in the afternoon in the residence
of A. All of which must be complied with.
b. In general, when the offerer has not fixed a period for the offeree to accept
the offer, and the offer is made to a person present, the acceptance must be
made immediately.
a. CAPACITY. As a general rule, any person of legal age can give consent to a contract
unless there is a ground for his incapacity provided by law.
NB: Capacity is PRESUMED, the party who alleges the incapacity of a certain person
has the burden to prove such incapacity.
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b. INCAPACITY. The following cannot give consent to a contract: (Art. 1327, NCC)
i. UNEMANCIPATED MINORS
- Contract entered into during lucid interval are valid. (Art. 1328, NCC)
- Contracts agree to in a state of drunkenness or during a hypnotic spell
are voidable. (Art. 1328, NCC)
NB: REASON FOR DISQUALIFICATION: Persons mentioned in Art. 1327 and the
Rules of Court can easily be victims of fraud or taken advantage by the other
contracting party.
c. EFFECT OF INCAPACITY.
5. VICES OF CONSENT.
If consent is present, but it was given through mistake, violence, intimidation, undue
influence, or fraud, the contract is voidable. (Art. 1330, NCC)
(1) It should be intelligent or with an exact notion of the matter to which it refers;
(2) It should be free and voluntary; and,
(3) It should be conscious and spontaneous.
NB: These requisite characteristics are VITIATED by the aforementioned vices or defects of
consent – intelligence is vitiated by error; freedom is vitiated by violence, intimidation
or undue influence; and, spontaneity is vitiated by fraud.
- The substance of the thing which is the object of the contract; or,
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- Those conditions which have principally moved one or both parties to
enter into the contract. (Art. 1331, NCC)
NOTES:
(1) The concept of error in Art. 1331, NCC includes both: (a) IGNORANCE, which
is the absence of knowledge with respect to a thing, and (b) MISTAKE
PROPER, which is a wrong conception about said thing, or a belief in the
existence of some circumstance, fact, or event, which in reality does not
exist. In both cases, there is lack of full and correct knowledge about the
thing.
Examples: (a) sale of a parcel of land which the seller mistakenly thought
he owned; (b) sale of a parcel of land which the seller thought and
represented to be 30 hectares, but turned out to be only 17 hectares.
(2) The error must be the causal, not merely incidental, factor that induced the
complaining party to enter into the contract. (revisit the distinction
between dolo causante v. dolo incidente)
(3) Mere error as to the designation will not vitiate consent, as long as the
intended object is clear. Thus, a sale of particular parcel of land may be
considered valid even if there is a mistake in the designation of the Lot
number or TCT number. The remedy is reformation of instrument.
(4) There is no mistake if the party alleging it knew the doubt, contingency or
risk affecting the object of the contract. (Art. 1333, NCC)
- To invalidate consent, the error must be real and not one that could have
been avoided by the party alleging it. An error so PATENT and OBVIOUS
that nobody could have made it, or one which could have been avoided
by ordinary prudence, cannot be invoked by the one who made it in order
to annul his contract.
(5) MUTUAL ERROR as to the LEGAL EFFECT of an agreement when the real
purpose of the parties is frustrated, may vitiate consent. (Art. 1334, NCC)
- GENERAL RULE: Mistake of law does not vitiate consent. (Ignorantia Legis
Non Excusat)
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effect of the agreement; and (iii) the real purpose of the parties is
frustrated.
(6) When one of the parties is unable to read, or if the contract is in a language
not understood by him, and mistake or fraud is alleged, the person enforcing
the contract must show that the terms thereof have been fully explained to
the former. (Art. 1332, NCC)
- PRESUMPTION: One always acts with due care and signs with full
knowledge of all the contents of the documents.
- PRESUMPTION DOES NOT APPLY: (1) When one of the parties is unable
to read; or (2) the contract is in a language not understood by one of the
parties.
- The person enforcing the contract must show that the terms thereof have
been fully explained to the former.
- If the illiterate party is the one seeking to enforce the contract, he need
not prove that the contract was fully explained to him.
- RATIONALE: Art. 1332 is based on the principle that when one of the
parties is at a disadvantaged on account of his moral dependence,
ignorance, indigence, mental weakness, tender age or other handicap,
the courts must be vigilant for his protection. (Art. 24, NCC)
b. VIOLENCE.
(1) The force must be the determining cause of the contract, or must have
caused the consent to be given; and,
iii. Violence shall annul the obligation, although it may have been employed by a
third person who did not take part in the contract. (Art. 1336, NCC)
c. INTIMIDATION
i. There is intimidation when one contracting party is compelled to give his consent
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. (Art. 1335, NCC)
(1) The intimidation must be the determining cause of the contract, or must
have caused the consent to be given;
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Example: A threat to file a case for immorality against a bar
candidate if he does not marry a girl he had sex with, does not vitiate
consent.
(3) The threat must be real and serious, there being an evident disproportion
between the evil and the resistance which all men can offer, leading to the
choice of the contract as the lesser evil; and,
(4) The threat produces a reasonable and well-grounded fear from the fact that
the person from whom it comes has the necessary means or ability to inflict
the threatened injury.
iii. To determine the degree of intimidation, the age, sex and condition of the
person shall be borne in mind.
iv. Intimidation shall annul the obligation, although it may have been employed by
a third person who did not take part in the contract. (Art. 1336, NCC)
d. UNDUE INFLUENCE.
i. 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.
(Art. 1337, NCC)
- Influence that overpowers the mind of a party to prevent him from acting
understandingly and voluntarily to do what he would have done if he had
been left to exercise freely his own judgment and discretion.
(1) The confidential, family, spiritual and other relations between parties; or,
(2) The fact that the person alleged to have been unduly influenced was suffering
from mental weakness or was ignorant or in financial distress.
RULES:
(2) Note, however, that contracts of adhesions are not invalid per se and not
strictly against the law; they are as binding as ordinary contracts. This is
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particularly so in contracts entered into by educated persons or by seasoned
businessmen, since they are presumed to have acted with due care and to
have signed the contracts with full knowledge of its import.
v. Undue influence shall annul the obligation, although it may have been employed
by a third person who did not take part in the contract. (Art. 1336, NCC)
e. FRAUD
(1) The fraud must be material and serious, that is, it really induced consent;
(2) The fraud must be employed by only one of the contracting parties;
(3) There must be deliberate intent to deceive or to induce; therefore,
misrepresentation in good faith is not fraud;
(4) The other party must have relied on the untrue statement and must himself
not be guilty of negligence in ascertaining the truth; and,
(5) It must be alleged and proved by clear and convincing evidence.
(1) Failure to disclose facts, when there is a duty to reveal them, as when the
parties are bound by confidential relations, constitutes fraud.
(2) The usual exaggerations in trade, when the other party had an opportunity
to know the facts, are not in themselves fraudulent. (Art. 1340, NCC)
- Caveat Emptor – the buyer beware. The buyer is expected to make the
proper inquiries and not simply rely on or accept the seller’s assertion at
face value.
(3) A mere expression of an opinion does not signify fraud. (Art. 1341, NCC)
- EXCEPTION: Opinion constitutes fraud if: (i) made by an expert; and (ii)
the other party relied on the former’s special knowledge. (e.g.,
quality of land, precious stones, etc.)
(4) Misrepresentation by a third person does not vitiate consent. (Art. 1342, NCC)
(5) Misrepresentation made in good faith is not fraudulent but may constitute
error. (Art. 1343, NCC)
(1) DOLO CAUSANTE makes the contract VOIDABLE provided that it is (a)
serious, and (b) has not been employed by both contracting parties. (Art.
1344, NCC)
(2) DOLO INCIDENTE only obliges the person employing it to pay damages.
6. SIMULATED CONTRACTS
b. REQUISITES OF SIMULATION:
Example: When A and B enters into a sale of land, but did not really intend
it; no consideration was given and the land was not delivered.
Example: When A and B enters into a purported sale of land, but their real
intent is for it to be donation, or equitable mortgage.
EFFECT: The real or true agreement is binding on the parties, provided that: (1)
It does not prejudice a third person; and (2) It is not intended for any purpose
contrary to law, morals, good customs, public order or public policy. (Art. 1346,
NCC)
(a) OSTENSIBLE ACT – contract that the parties pretend to have executed.
Object is the thing, right or service which is the subject matter of the contract. (Arts 1318 and
1347, NCC)
THE FOLLOWING ARE THE REQUISITES FOR A THING, RIGHT OR SERVICE TO BE AN OBJECT
OF CONTRACTS:
i. All things which are not outside the commerce of man, including future things, may
be the object of contracts. (Art. 1347, NCC)
- Things outside the commerce of man are those which are not susceptible
of appropriation or private ownership. (Example: public office, political
rights, purely personal rights, properties of public dominion, etc.)
- Future things are those which are not yet existing, or not yet owned by
the obligor at the time of the contract. (e.g., a person may sell future
goods, those which are not yet existing at the time of perfection of sale,
but are to be manufactured or acquired thereafter) (Art. 1462, NCC)
ii. All rights which are not intransmissible may also be the object of contracts.
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iii. All services which are not contrary to law, morals, good customs, public order or
public policy may likewise be the object of a contract.
b. POSSIBLE.
c. CERTAIN.
i. AS TO KIND. The object of every contract must be determinate as to its kind. (Art.
1349, NCC)
C. CAUSE OF CONTRACTS.
1. DEFINITION. Cause is the essential reason which moves the contracting parties to enter into
it. It is the essential and impelling reason why a party assumes an obligation.
iii. GRATUITOUS CONTRACTS – the cause is the mere liberality of the benefactor.
3. REQUISITES OF A CAUSE:
i. It must be present, or it must exist at the time the contract is entered into;
ii. It must be true or real; and,
iii. It must be lawful.
4. CAUSE v. MOTIVE
CAUSE MOTIVE
The essential reason for the contract The particular or purely personal or private
reason which a party has in entering into a
contract and which does not affect the
other party.
Example: In the sale of a computer, the cause for the buyer is the seller’s undertaking
to deliver a computer to him. The buyer’s motive may be different, e.g., to be able to
surf the internet, or edit his photos, or start an online business.
GENERAL RULE: A party’s motives for entering into the contract do not affect the contract.
A party’s motive does not even have to be known to the other party.
EXCEPTION: The motive may be regarded as the cause “when the motive predetermines
the cause”, i.e., when the contract is conditioned upon the attainment of the motives of
one of the contracting parties.
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Example: Where a man donated land to a woman with the motive of getting her to
agree to have sexual relations with him, the motive was deemed the (illegal) cause.
i. PRESUMPTION. Although the cause is not stated in the contract, it is presumed that
it exist (and is lawful), unless the debtor proves the contrary. (Art. 1354, NCC)
6. LEGALITY OF CAUSE. The cause must be legal. Contract with unlawful cause produce no
effect whatever (Art. 1352, NCC), i.e., VOID.
i. PRESUMPTION. The cause is presumed lawful. Although the cause is not stated in
the contract, it is presumed that it exist and is lawful, unless the debtor proves the
contrary.
ii. UNLAWFUL CAUSE. The cause is unlawful if it is contrary to law, morals, good
customs, public order or public policy
iii. FALSE CAUSE. The statement of a false cause in contracts shall render them void,
unless it should be proved that they were founded upon another cause which is true
and lawful.
7. ADEQUACY OF CAUSE
i. GENERAL RULE: As a general rule, lesion (injury) or inadequacy of cause shall not
invalidate a contract (Art. 1355, NCC)
ii. EXCEPTIONS –
b. If there has been fraud, mistake or undue influence. (Art. 1470, NCC)
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