Contracts Essay

CONTRACTS CONTRACT ?a meeting of minds between 2 persons whereby one binds himself, with respect to the other, to give something or to render some service (ARTICLE 1305) GENERAL PROVISIONS (Arts. 1305-1317) Distinguish an ordinary Contract: a. ) from a Contract of marriage b. ) from an obligation c. ) from an imperfect promise d. ) from a pact e. ) from a stipulation a. ) from a Contract of marriage ORDINARY CONTRACT 1. The parties may be 2 or more persons of same or different genders 2. Nature, consequences and incidents are governed by agreement of the parties 3. Once Contract is executed, result is a Contract . Can be terminated or dissolved by mere agreement of parties 5. In case of breach, injured party will institute an action for damages CONTRACT OF MARRIAGE 1. It is necessary that parties must be 1 man and 1 woman 2. Nature, consequences and incidents are governed by law 3. Once marriage is celebrated, result is a status 4. Cannot be terminated or dissolved 5. In case of breach, injured party will institute Civil Action (for legal separation) or Criminal Action (for adultery or concubinage) b. from an obligation CONTRACTOBLIGATION ? the cause? the effect However, among 5 Sources of Obligations (1.

Law, 2. Contracts, 3. Quasi-contracts, 4. Acts punished by law, 5. Quasi-delicts), the most important are Contracts. There can be an obligation w/o a Contract, but there can be no Contract w/o resultant obligation. c. from an imperfect promise IMPERFECT PROMISE (Policitation) ?an unaccepted offer ?represents the starting point of a Contract d. from a pact PACT ?an incidental part of a Contract which can be separated from principal agreement e. from a stipulation STIPULATION ?an essential and dispositive part of Contract which cannot be separated from principal agreement

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The Elements of a Contract include the following: 1. ESSENTIAL – are those elements without which there can be no contract. 2. NATURAL – are those elements which are derived from the nature of the contract and ordinarily accompany the same. – they are presumed by the law, although they can be excluded by the contracting parties if they so desire. 3. ACCIDENTAL – are those elements which exist only when the parties expressly provide for them for the purpose of limiting or modifying the normal effects of the contract. Ex. conditions, terms, modes 1. ESSENTIAL – is further subdivided into 3: . 1 common (comunes) – are those which are present in all contracts Ex. consent, object certain, cause 1. 2 special (especiales) – are present only in certain contracts Ex. delivery in real contracts or form in solemn ones 1. 3 extraordinary or peculiar (especialisimos) – are those which are peculiar to a specific-contract Ex. price in a contract of sale There are different classes of Contracts. It comprises the following: a. ) According to their relations to other contracts. b. ) According to their perfections. c. ) According to their form. d. ) According to their purpose. e. According to their subject matter. f. ) According to the nature of vinculum which they produce. g. ) According to their cause. h. ) According to the risks involved. i. ) According to their names or norms regulating them. a. )According to their relations to other contracts: (1) Preparatory – those which have for their object the establishment of a condition in law which is necessary as a preliminary step towards the celebration of another subsequent contract. Ex. partnership, agency (2) Principal – those which can subsist independently from other contracts and whose purpose can be fulfilled by themselves.

Ex. sale, lease (3) Accessory – those which can exist only as a consequence of, or in relation with, another prior contract. Ex. pledges, mortgage b. )According to their perfections: (1) Consensual – those which are perfected by the mere agreement of the parties. Ex. sale, lease (2) Real – those which require not only the consent of the parties for their perfection, but also the delivery of the object by one party to the other. Ex. commodatum, deposit, pledge c. )According to their form: (1) Common or Informal – those which do not require some particular form. Ex. loan, lease 2) Special or Formal – those which require some particular form. Ex. donation, chattel mortgage d. )According to their purpose: (1) Transfer of ownership Ex. sale (2) Conveyance of use Ex. commodatum (3) Rendition of services Ex. Agency e. )According to their subject matter: (1) Things Ex. sale, deposit, pledge (2) Services Ex. agency, lease of services f. )According to the nature of vinculum which they produce: (1) Unilateral – those which give rise to an obligation for only one of the parties. Ex. commodatum, gratuitous deposit (2) Bilateral – those which give rise to reciprocal obligations for both parties.

Ex. sale, lease g. )According to their cause: (1) Onerous – those in which each of the parties aspires to procure for himself a benefit through the giving if an equivalent or compensation. Ex. sale (2) Gratuitous – those in which one of the parties proposes to give to the other a benefit without any equivalent or compensation. Ex. Commodatum h. )According to the risks involved: (1) Commutative – those where each of the parties acquires an equivalent of his prestation and such equivalent is pecuniarily appreciable and already determined from the moment of the celebration of the contract.

Ex. lease (2) Aleatory – those where each of the parties has to his account the acquisition of an equivalent of his prestation, but such equivalent, although pecuniarily appreciable, is not yet determined, at the moment of the celebration of the contract, since it depends upon the happening of an uncertain event, thus charging the parties with the risk of loss or gain. Ex. Insurance i. )According to their names or norms regulating them: (1) Nominate – those which have their own individuality and are regulated by special provision of law.

Ex. sale, lease (2) Innominate – those which lack individuality and are not regulated by special provisions of law. There are different phases or stages in the life or biology of a Contract. The life of a contract has 3 phases or stages: 1. GENERATION ?comprehends the preliminary or preparatory process for the formation of the contract. 2. PERFECTION ?the birth of the contract. 3. CONSUMMATION ?comprehends the fulfillment of the purpose for which the contract was constituted. There are four (4) most essential characteristics of a Contract.

The four (4) most essential characteristics of a contract are listed as follows: 1. Obligatory Force or Character of Contracts (obligatoriedad del contrato) – principle that once a contract is perfected, it shall be of obligatory force upon both of the contracting parties. 2. Autonomy of Contracts – principle that the contracting parties are free to enter into a contract and to establish such stipulations, clauses, terms and conditions as they may deem convenient. 3. Mutuality of Contracts – the essential equality of the contracting parties whereby the contract must bind both of them. . Relativity of Contracts (relatividad del contrato) – principle that the contract takes effect only between the parties, their assigns and heirs. Contracts are perfected in the following areas: If the contract is consensual, it is perfected by mere consent. However, if the contract is real, it is perfected by the delivery of the object of the contract by one contracting party to the other. REQUISITES OF CONTRACTS (Art. 1318) There are essential requisites of a Contract. There is NO CONTRACT unless ff. requisites concur: 1. Consent of contracting parties 2.

Object certain which is subject matter of Contract 3. Cause of obligation which is established CONSENT (Arts. 1319-1346) CONSENT ?signifies the concurrence of the wills of the contracting parties with respect to the object and the cause which shall constitute the contract. ?signifies the meeting of the offer and acceptance upon the thing and the cause which are to constitute the contract. There are different requisites of Consent. Under the Civil Code, in order that there is consent, the following elements must concur: 1. Consent must be manifested by the concurrence of the offer and the acceptance. . Contracting parties must possess the necessary legal capacity. 3. Consent must be intelligent, free, spontaneous and real. Contracts are perfected in different circumstances. In general, contracts are perfected from the moment that there is a manifestation of the concurrence between the offer and the acceptance with respect to the object and the cause which shall constitute the contract. However, if the acceptance is made by letter or telegram, we must distinguish. Manifestation, Expedition, Reception and Cognition Theories are defined below as applied to perfection of Contracts: 1.

Manifestation Theory (manifestacion) – contract is perfected from the moment the acceptance is declared or made. 2. Expedition Theory (expedicion) – contract is perfected from the moment the offeree transmits the notification of acceptance to the offeror, as when the letter is placed in the mailbox. 3. Reception Theory (recepcion) – contract is perfected from the moment that the notification of acceptance is in the hand of the offeror in such a manner that he can, under ordinary conditions, procure the knowledge by reason of absence, sickness or some other cause. 4.

Cognition Theory (cognicion) – contract is perfected from the moment the acceptance comes to the knowledge of the offeror. Hence, in the Philippines, we have adapted the “Cognition Theory. ” The acceptance by letter or telegram does not bind the offeror except from the time it comes to his knowledge. In the event of death, civil interdiction, insanity or insolvency of either offeror or offeree before acceptance is conveyed, the offer becomes ineffective. The following are incapacitated to give their consent to a contract: 1. Unemancipated minors 2. Insane or demented persons 3.

Deaf-mutes who do not know how to write 4. Married women of age in cases specified by law 5. Persons suffering from civil interdiction 6. Incompetents under guardianship The following persons are prohibited from entering into certain contracts: 1. Insolvents before they are discharged by the Insolvency Court. 2. Non-Christians of Mindanao, Sulu, Mountain Province, and Nueva Vizcaya. 3. Husband and wife. 4. Persons who are prohibited from giving each other any donation or advantage. 5. Persons holding a fiduciary relation with respect to certain properties. a. ) Guardian b. ) Agents c. Executors & administrators d. ) Public officers & employees e. ) Justices, judges, prosecuting attorneys, clerks of superior and inferior courts and other officers and employees connected with the administration of justice, the property and rights in litigation or levied upon on execution before the court within whose jurisdiction or territory they exercise their respective functions f. ) any others specially disqualified by law OBJECT (Arts. 1347-1349) OBJECT OF CONTRACT ?defined as the thing, right or service which is the subject matter of the obligation which is created or established.

The following requisites must concur in order that a thing, right or service may be the object of the Contracts. As a general rule, all things, rights or services may be the object of contracts. However, it is essential that the following requisites may concur: 1. The object should be within the commerce of men. 2. The object should be real or possible. 3. The object should be licit. 4. The object should be determinate, or at least, possible of determination, as to its kind. There are things, rights or services that can not be the object of Contracts.

The following can not be the object of contracts: 1. Things which are outside the commerce of men. 2. Intransmissible rights. 3. Future inheritance except in cases expressly authorized by law. 4. Impossible things or services. 5. Services which are contrary to law, morals, good customs, public order or public policy. 6. Objects which are not determinable as to their kind. Thus, if the parties enter into a contract with respect to the above objects, the contract is void or inexistent. There are exceptions to the rule that no person can enter into a contract with regard to future inheritance.

They are: 1. Under Art. 130 of the Code, which allows the future spouses to give or donate to each other in their marriage settlement their future property to take effect upon the death of the donor and to the extent laid down by the provisions of the Civil Code relating to testamentary succession. 2. Under Art. 1080 of the Code, which allows a person to make a partition of his estate among his heirs by an act inter vivos provided that the legitime of the compulsory heirs is not prejudiced. CAUSE (Arts. 1350-1355) CAUSE In general, is the why of the contract or the essential reason which moves the contracting parties to enter into the contract. ?it is the immediate, direct or most proximate reason which explains and justifies the creation of an obligation through the will of the contracting parties. CAUSE ?In particular: 1. ONEROUS CONTRACTS – the cause is understood to be for each contracting party, the prestation or promise of a thing or service by the other. 2. REMUNERATORY CONTRACTS – it is the service or benefit which is remunerated. 3. CONTRACTS OF PURE BENEFICENCE – it is the liberality of the enefactor. In order that the there will be a sufficient cause upon which a contract may be founded, it is essential that the following requisites may concur: 1. The cause should be in existence. 2. The cause should be licit or lawful. 3. The cause should be true. FORMS OF CONTRACTS (Arts. 1356-1358) As a general rule, whatever may be the form in which a contract may have been entered into, according to Art. 1356 of the Civil Code, the general rule is that it shall be obligatory provided all of the essential requisites for its validity are present. There are exceptions to the mentioned rule.

These exceptions include: 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. There are various formalities which are merely for the convenience of the parties. 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 a 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. Hence, all other contracts where the amount involved exceeds five hundred pesos (Php 500. 00) must appear in writing, even a private one. There are different formalities which are necessary for the validity of contracts: a. Contracts which must appear in writing are as follows: 1. Donation of personal property whose value exceeds five thousand pesos (Php 5,000. 00). 2. Sale of a piece of land or any interest therein by an agent. 3. Antichresis 4. Agreement regarding payment of interest in contracts of loan. b. )Contracts which must appear in a public document re as follows: 1. Donations of immovable property. 2. Partnerships where immovable property or real rights are contributed to the common fund. c. )Contracts which must be registered are as follows: 1. Chattel Mortgages 2.

Sales or transfer of large cattle. REFORMATION OF INSTRUMENTS (Arts. 1359-1369) There is a doctrine of reformation of instruments under the Civil Code. When the true intention of the parties to a perfected and valid contract are not expressed in the instrument purporting to embody their agreement, by reason of mistake, fraud, inequitable conduct or incident, one of the parties may ask for the reformation of the instrument so that such true intention may be expressed. In order that there can be a reformation of the instrument, the following requisites must, therefore, concur: 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. The following instruments can not be reformed: 1. Simple donations 2. Wills 3. Those where the real agreement is void DEFECTIVE CONTRACTS There are 4 classes of defective contracts under the present Civil Code: 1. Rescissible contracts 2. Voidable contracts 3. Unenforceable contracts 4. Void and inexistent contracts RESCISSIBLE CONTRACTS (Arts. 1380-1389) RESCISSIBLE CONTRACT is a contract which is valid because it contains all of the essential requisites prescribed by law, but which is defective because of injury or damage to either of the contracting parties or to third persons, as a consequence of which it may be rescinded by means of a proper action for rescission. RESCISSION ?is a remedy granted by law to the contracting parties, and even to third persons, to secure the reparation of damages caused to them by a contract, even if the same should be valid, by means of the restoration of things to their condition prior to the celebration of the contract. The following contracts are rescissible: . Those which are entered into by guardians whenever the wards whom they represent suffer lesion by more than one-fourth of the value of the things which are the object thereof. 2. Those agreed upon in representation of absentees, if the latter suffer the lesion stated in the preceding number. 3. Those undertaken in fraud of creditors when the latter cannot in any other manner collect the claims due them. 4. Those which refer to things under litigation if they have been entered into by the defendant without the knowledge and approval of the litigants or of competent judicial authority. 5.

All other contracts specially declared by law to be subject to rescission. 6. Payments made in a state of insolvency for obligations to whose fulfillment the debtor could not be compelled at the time they were effected, are also rescissible. There is a period of prescription for an action to claim the rescission. It includes the following: – As a general rule, the action to claim rescission must be commenced within four (4) years. – If the action is based on lesion, the period must be counted from the time of the termination of the incapacity of the ward from the time the domicile of the absentee is known. If it is based on fraud, the period must be counted from the time of the celebration of the contract. – However, in certain contracts of sale which specially declared by law to be rescissible, the period is six (6) months or even forty (4) days, counted from the day of delivery. VOIDABLE CONTRACTS (Arts. 1390-1402) VOIDABLE CONTRACTS ?are those in which all of the essential elements for validity are present, but the element of consent is vitiated either by lack of legal capacity of one of the contracting parties, or by mistake, violence, intimidation, undue influence or fraud.

The following contracts are voidable or annullable, even though there may have been no damage to the contracting parties: 1. Those where one of the parties is incapable of giving consent to a contract. 2. Those where the consent is vitiated by mistake, violence, intimidation, undue influence or fraud. Hence, these contracts are binding, unless they are annulled by a proper action in court. UNENFORCEABLE CONTRACTS (Arts. 1403-1408) UNENFORCEABLE CONTRACTS are those which cannot be enforced by a proper action in court, unless they are ratified, because either they are entered into without or in excess of authority or they do not comply with the Statute of Frauds or both of the contracting parties do not possess the required legal capacity. The following contracts are unenforceable, unless they are ratified: 1. Those entered into in the name of another person by one who has been given no authority or legal representation, or who has acted beyond his powers; 2. Those that do not comply with the Statute of Frauds as set forth in this number.

In the following cases an agreement hereafter made shall be unenforceable by action, unless the same, or some note or memorandum, thereof, be in writing, and subscribed by the party charged, or by his agent; evidence, therefore, of the agreement cannot be received without the writing, or a secondary evidence of its contents: (a) An agreement that by its terms is not to be performed within a year from the making thereof. (b) A special promise to answer for the debt, default, or miscarriage of another. (c) An agreement made in consideration of marriage, other than a mutual promise to marry. d) An agreement for the sale of goods, chattels or things in action, at a price not less than five hundred pesos, unless the buyer accept and receive part of such goods and chattels, or the evidences, or some of them, of such things in action or pay at the time some part of the purchase money; but when a sale is made by auction and entry is made by the auctioneer in his sales book, at the time of the sale, of the amount and kind of property sold, terms of sale, price, names of the purchasers and person on whose account the sale is made, it is a sufficient memorandum. e) An agreement of the leasing for a longer period than one year, or for the sale of real property or of an interest therein. (f) A representation as to the credit of a third person. VOIDABLE OR INEXISTENT CONTRACTS (Arts. 1409-1422) In General: VOID AND INEXISTENT CONTRACTS ?defined as as those which lack absolutely either in fact or in law one or some of those elements which are essential for its validity. In Particular: VOID CONTRACTS ?are those contracts where all of the requisites prescribed by law for ontracts are present, but the cause, object or purpose is contrary to law, morals, good customs, public order or public policy, or they are prohibited by law, or they are declared by law to be void. INEXISTENT CONTRACTS ?are those contracts which lack absolutely one or some or all of those requisites which are essential for validity. The following contracts are inexistent and void from the beginning: 1. Those whose cause, object or purpose is contrary to law, morals, good customs, public order or public policy; 2.

Those which are absolutely simulated or fictitious; 3. Those whose cause or object did not exist at the time of the transaction; 4. Those whose object is outside the commerce of men; 5. Those which contemplate an impossible service; 6. Those where the intention of the parties relative to the principal object of the contract cannot be ascertained; 7. Those expressly prohibited or declared void by law. These contracts cannot be ratified. Neither can the right to set up the defense of illegality be waived.

NATURAL OBLIGATIONS NATURAL OBLIGATIONS ?are those based on equity and natural law, which are not enforceable by means of a court action, but which, after voluntary fulfillment by the obligor, authorize the retention by the obligee of what has been delivered or rendered by reason thereof. ESTOPPEL ESTOPPEL ?a condition or state by virtue of which an admission or representation is rendered conclusive upon the person making it, and cannot be denied or disproved as against the person relying thereon.

TRUSTS TRUST ?defined as the legal relationship between one (1) person having an equitable ownership over a certain property and another having the legal title thereto. SALES CONTRACT OF SALE ?by the contract of sale of one of the contracting parties obligates himself to transfer the ownership of and to deliver a determinate thing, and the other to pay therefore a price certain in money or its equivalent. The essential requisites of a contract of sale are: 1.

Consent of the contracting parties by virtue of which the vendor obligates himself to transfer the ownership of and to deliver a determinate thing, and the vendee obligates himself to pay therefore a price certain in money or its equivalent. 2. Object certain which is the subject matter of the contract. 3. Cause of the obligation which is established. Distinguish between a Contract of sale and a Contract of sell: CONTRACT OF SALE: 1. The title passes to the vendee upon delivery of the thing sold. 2. Non-payment is a negative resolutory condition. . The vendor has lost and can not recover ownership until and unless the contract is resolved or rescinded. CONTRACT OF SELL: 1. By agreement, ownership is reserved in the vendor and is not to pass until full payment of the price. 2. Full payment is a positive suspensive condition. 3. Title remains in the vendor, and when he seeks to eject the vendee because of non-compliance by such vendee with the suspensive condition stipulated, he is enforcing the contract and not resolving the same. BARTER OR EXCHANGE BARTER (Exchange) defined as a contract by virtue of which one of the parties binds himself to give one (1) thing in consideration of the other’s promise to give another thing. LEASE LEASE ?defined as a consensual, bilateral, onerous and commutative contract by virtue of which one person binds himself to grant temporarily the use of a thing or to render some service to another who undertakes to pay some rent, compensation or price. GENERAL PROVISIONS LEASE OF RURAL AND URBAN LANDS (Arts. 1646-1688) TACIT RENEWAL OF A CONTRACT OF LEASE (tacita reconduccion) refer to the new contract of lease which is impliedly created or established if at the end of the old contract the lease should continue enjoying the thing leased for fifteen (15) days with the acquiescence of the lessor, provided that a notice to the contrary had not been previously given by either party. ?the period of the implied new lease in such case shall be the legal period established in either Art. 1682 or Art. 1687 of the Civil Code, but the other terms of the original contract shall be revived.

There are certain requisites of a tacit renewal Contract of lease. In order that there will be an implied new lease, it is clear from the above that the following requisites must concur: 1. That the contract of lease should have ended. 2. That the lessee should have continued enjoying the thing leased for fifteen (15) days 3. That such continued enjoyment should be with the acquiescence of the lessor. 4. That a notice to the contrary by either party should not have been previously given. 5.

That there should have been no express contract entered into by lessor and lessee after the old contract had ended. WORK AND LABOR HOUSEHOLD SERVICE (Arts. 1689-1699) There are certain rules with regard to the duration of a contract for household service as well as with regard to working hours: – No contract for household service shall last for more than two (2) years. However, such contract may be renewed from year to year. – House helpers shall not be required to work more than ten (10) a day. – Every house helper shall be allowed four (4) days vacation each month, with pay.

There are rules with regard to dismissal of house helpers: – If the period for household service is fixed neither the head of the family nor the house helper may terminate the contract before the expiration of the term, except for a just cause. – If the house helper is unjustly dismissed, he shall be paid the compensation already earned plus that for fifteen (15) days by way of indemnity. – If the house helper leaves without justifiable reason, he shall forfeit any salary due him and unpaid, for not exceeding fifteen (15) days. If the duration of the household service is not determined either by stipulation or by the nature of the service, the head of the family or the house helper may give notice to put an end to the service relation, according to the following rules: (1) If the compensation is paid by the day, notice may be given on any day that the service shall end at the close of the following day. (2) If the compensation is paid by the week, notice may be given, at the latest on the first business day of the week, that the service shall be terminated at the end of the seventh day from the beginning of the week. 3) If the compensation is paid by the month, notice may be given, at the latest, on the fifth day of the month, that the service shall cease at the end of the month. CONTRACT OF LABOR (Arts. 1700-1712) There is a special nature of a contract of labor which distinguishes it from other contracts: – The relations between capital and labor are not merely contractual. They are so impressed with public interest that labor contracts must yield to the common good. Therefore, such contracts are subject to the special laws on labor unions, collective bargaining, strikes and lockouts, closed shop, wages, working conditions, hours of labor and similar subjects. Scenario 1: Suppose that the death or injury of an employee or laborer is due entirely to the negligence of a fellow worker, can the employer be held liable? – Under our law, if the death or injury is due entirely to the negligence of a fellow worker, the employer can be held solidarily liable with the latter. Scenario 2: Suppose that it is due entirely to the intentional or malicious act of a fellow worker, can the employer be held liable? However, if the death or injury is due entirely to the intentional or malicious act of such fellow worker, the employer can not be held solidarily liable, unless it should be shown that the latter did not exercise due diligence in the selection and supervision of such fellow worker. CONTRACT FOR A PIECE OF WORK (Arts. 1713-1731) CONTRACT FOR A PIECE OF WORK ?defined as a contract whereby the contractor binds himself to execute a piece of work for the employer, in consideration of a certain price or compensation. Contractor may either employ only his labor or skill, or also furnish the material. MECHANIC’S LIEN ?Refers to the right of retention recognized in Art. 1731 of the Civil Code by virtue of which he who has executed work upon a movable has a right to retain it by way of pledge until he is paid. COMMON CARRIERS (Arts. 1732-1766) COMMON CARRIERS ?are persons, corporations, firms or associations engaged in the business of carrying or transporting passengers or goods or both, by land, water, or air, for compensation, offering their services to the public.

In order that a common carrier may be exempted from liability for the loss, destruction, or deterioration of the goods by reason of a natural disaster, the following requisites are necessary: – Common Carriers are responsible for the loss, destruction, or deterioration of the goods, unless the same is due to any of the following causes only: 1. Flood, storm, earthquake, lightning, or other natural disaster or calamity. 2. Act of the public enemy in war, whether international or civil. 3. Act of omission of the shipper or owner of the goods. 4.

The character of the goods or defects in the packing or in the containers. 5. Order or act of competent public authority. In order that an agreement between the carrier and the shipper limiting the liability of the former for the loss, destruction, or deterioration of the goods to a degree less than extraordinary diligence shall be valid, the following requisites are necessary: – A stipulation between the common carrier and the shipper or owner limiting the liability of the former for the loss, destruction, or deterioration of the goods to a degree less than extraordinary diligence shall be valid, provided it be: 1.

In writing, signed by the shipper or owner. 2. Supported by a valuable consideration other than the service rendered by the common carrier. 3. Reasonable, just and not contrary to public policy. PARTNERSHIP CONTRACT OF PARTNERSHIP ?by the contract of partnership two or more persons bind themselves to contribute money, property, or industry to a common fund, with the intention of dividing the profits among themselves. ?two or more persons may also form a partnership for the exercise of a profession.

AGENCY CONTRACT OF AGENCY ?by the contract of agency, a person binds himself to render some service or to do something in representation or on behalf of another, with the consent or authority of the latter. LOAN COMMODATUM ?defined as a contract by virtue of which one of the contracting parties delivers to the other a non-consumable (nonfungible) thing so that the latter may use the same for a certain time and return it. SIMPLE LOAN (mutuum) defined as a contract by virtue of which one of the contracting parties delivers to the other money or any other consumable (fungible) thing subject to the condition that the same amount of the same kind and quality be paid or returned. DEPOSIT DEPOSIT ?is that which is constituted from the moment a person receives a thing belonging to another with the obligation of safely keeping it and of returning the same. There are different classes of Deposits. It may either be: 1.

JUDICIAL – when it is constituted by virtue of a court order for the attachment or seizure of property in litigation. 2. EXTRAJUDICIAL – when it is not constituted by virtue of a court order for the attachment or seizure of property in litigation. ALEATORY CONTRACTS ALEATORY CONTRACT ?one of the parties or both reciprocally bind themselves to give or to do something in consideration of what the other shall give or do upon the happening of an event which is uncertain, or which is to occur at an indeterminate time. COMPROMISES AND ARBITRATIONS (Arts. 028-2046) COMPROMISE ?is a contract whereby the parties, by making reciprocal concessions, avoid a litigation or put an end to one already commenced. CONTRACT OF ARBITRATION ?is one whereby two (2) or more persons agree to stand by and accept the decision of another or others with respect to their controversy over respective rights. GUARANTY GUARANTY ?is a contract by virtue of which a person called the “guarantor,” binds himself to the creditor to fulfill the obligation of the principal debtor in case the latter should fail to do so. SURETYSHIP Is a contract by virtue of which a person binds himself solidarily with the principal debtor to fulfill the obligation. PLEDGE PLEDGE ?defined as an accessory, real and unilateral contract by virtue of which the debtor or a third person delivers to the creditor or to a third person movable property as security for the performance of the principal obligation, upon the fulfillment of which the thing pledged, with all its accessions and accessories, shall be returned to the debtor or the third person. REAL ESTATE MORTGAGE REAL ESTATE MORTGAGE Defined as an accessory contract whereby the debtor guarantees the performance of the principal obligation by subjecting real property or real rights as security in case of non-performance of such obligation within the period agreed upon. ANTICHRESIS ANTICHRESIS ?is a contract by virtue of which the creditor acquires the right to receive the fruits of an immovable of his debtor, with the obligation to apply them to the payment of the interest, if owing, and thereafter to the principal if his credit. CHATTEL MORTGAGE CHATTEL MORTGAGE by a Chattel Mortgage, personal property is recorded in the Chattel Mortgage Register as a security for the performance of an obligation. Note: ?if the movable, instead of being recorded, is delivered to the creditor or a third person, the contract is a pledge and not a chattel of mortgage. EXTRA-CONTRACTUAL OBLIGATIONS QUASI-CONTRACTS (Arts. 2142-2175) QUASI-CONTRACTS ?defined as those juridical relations arising from lawful, voluntary and unilateral acts of persons based on the principle that no one shall be unjustly enriched or benefited at the expense of another.

There are different kinds of quasi-contracts. Quasi-Contracts are either: 1. NOMINATE – there are 2 kind of nominate quasi-contracts regulated by the Civil Code: 1. 1 negotiorum gestio 1. 2 solutio indebiti 2. INNOMINATE – are those regulated by Arts. 2164-2175 of the Civil Code. QUASI-DELICTS (Arts. 2176-2194) QUASI-DELICTS ?defined as the fault or negligence of a person, who, by his act or omission, connected or unconnected with, but/and independent from, any ontractual relation, causes damage to another person. ?defined as an act, whether punishable or not punishable by law, whether criminal or not criminal in character, whether intentional or voluntary or negligent, which result in damage to another. DAMAGES DAMAGES ?defined as a sum of money which the law awards or imposes as pecuniary compensation, recompense, or satisfaction for an injury done or a wrong sustained as a consequence of the breach of some duty or the violation of some right.

CONCURRENCE AND PREFERENCE OF CREDITS (Arts. 2236-2251) With reference to specific movable property of the debtor, the following claims or liens shall be preferred: 1. Duties, taxes and fees due thereon to the State or any subdivision thereof. 2. Claims arising from misappropriation, breach of trust, or malfeasance by public officials committed in the performance of their duties, on the movables, money or securities obtained by them. 3.

Claims for the unpaid price of movables sold, on said movables, so long as they are in the possession of the debtor, up to the value of the same; and if the movable has been resold by the debtor and the price is still unpaid, the lien may be enforced on the price; this right is not lost by the immobilization of the thing by destination, provided it has not lost its form, substance and identity; neither is the right lost by the sale of the thing together with other property for a lump sum, when the price thereof can be determined proportionally. 4.

Credits guaranteed with a pledge so long as the things pledged are in the hands of the creditor, or those guaranteed by a chattel mortgage, upon the things pledged or mortgaged, up to the value thereof. 5. Credits for the making, repair, safekeeping or preservation of personal property, on the movable thus made, repaired, kept or possessed. 6. Claims for laborers’ wages, on the goods manufactured or the work done. With reference to specific movable property of the debtor, the following claims or liens shall be preferred: 1. For expenses of salvage, upon the goods salvaged. 2.

Credits between the landlord and the tenant, arising from the contract of tenancy on shares, on the share of each in the fruits or harvest. 3. Credits for transportation, upon the goods carried, for the price of the contract and incidental expenses, until their delivery and for thirty days thereafter. 4. Credits for lodging and supplies usually furnished to travellers by hotel keepers, on the movables belonging to the guest as long as such movables are in the hotel, but not for money loaned to the guests. 5. Credits for seeds and expenses for cultivation and harvest advanced to the debtor, upon the fruits harvested. 6.

Credits for rent for one year, upon the personal property of the lessee existing on the immovable leased and on the fruits of the same, but not on money or instruments of credit. 7. Claims in favor of the depositor if the depositary has wrongfully sold the thing deposited, upon the price of the sale. With reference to specific immovable property and real rights of the debtor, the following claims, mortgages and liens shall be preferred, and shall constitute an encumbrance on the immovable or real right: 1. Taxes due upon the land or building. 2. For the unpaid price of real property sold, upon the immovable sold. 3.

Claims of laborers, masons, mechanics and other workmen, as well as of architects, engineers and contractors, engaged in the construction, reconstruction or repair of buildings, canals or other works, upon said buildings, canals or other works. 4. Claims of furnishers of materials used in the construction, reconstruction, or repair of buildings, canals or other works, upon said buildings, canals or other works. 5. Mortgage credits recorded in the Registry of Property, upon the real estate mortgaged. 6. Expenses for the preservation or improvement of real property when the law authorizes reimbursement, upon the immovable preserved or improved. . Credits annotated in the Registry of Property, in virtue of a judicial order, by attachments or executions, upon the property affected, and only as to later credits. 8. Claims of co-heirs for warranty in the partition of an immovable among them, upon the real property thus divided. 9. Claims of donors or real property for pecuniary charges or other conditions imposed upon the donee, upon the immovable donated. 10. Credits of insurers, upon the property insured, for the insurance premium for two years. TRANSITIONAL PROVISIONS

There are new provisions and ruled laid down by the New Civil Code which may prejudice or impair vested rights. Hence, do they have retroactive effect? – No, they do not have retroactive effect. – Although the New Civil Code, following a well-established principle of modern legislation, provides that if a right should be declared for the first time in the said Code, it shall be effective at once, even though the act or event which gives rise thereto may have been done or may have occurred under the prior legislation, nevertheless, there is an exception, and that is when said right prejudices or impairs a vested or acquired right. In such case, such right shall be prospective and not retroactive. REPEALING CAUSE The repealing clause of the New Civil Code includes the following: 1. Those parts and provisions of the Civil Code of 1889 which are in force on the date when this new Civil Code becomes effective. 2. The provisions of the Code of Commerce governing sales, partnership, agency, loan, deposit and guaranty. 3.

The provisions of the Code of Civil Procedure on prescription as far as inconsistent with this Code. 4. All laws, Acts parts of Acts, rules of court, executive orders, and administrative regulations which are inconsistent with this Code. Aug. 30, 1950 ?the Spanish Civil Code was repealed by Rep. Act No. 386, otherwise known as the Civil Code of the Philippines. ?the reason for this is that, it was on this date that the New Civil Code became effective.

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