11.0. ESSENTIAL REQUISITES OF CONTRACTS

11.0 CLASSES OF ELEMENTS OF A CONTRACT 

ART. 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

There are different elements of a contract:

1. Essential elements. The requisite parts or those important parts of a contract. A valid contract should manifests all the essential elements of a contract.

• Common - those present in all contracts, namely:
• Consent
• Object
• Cause 
•  Special - those which are not common to all contracts or which may be present only in certain specified contracts, which can be noted in:
• As to form [Examples: public instrument in donation of immovable property, delivery in real contracts, registration in real estate mortgage, chattel mortgage]
• As to subject matter [Examples: real property in antichresis, personal property in pledge]
• As to consideration or cause [Examples: price in sale, lease, liberality in commodatum]

1. Natural elements. Parts which are presumed to exist in certain contracts unless stipulated [Examples: warranty against eviction, warranty against hidden defects in sale]
2. Accidental elements. The particular stipulations, clauses, terms, and conditions, established by the parties in their contract [Examples: conditions, period, interest, penalty].

11.1. CONSENT

ART. 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.

Consent is the conformity or concurrence of wills (offer and acceptance). It is the agreement f the will of one contracting party with that of another.

It is the meeting of the minds or mutual assent between the parties of the subject matter and the cause which are to constitute the contract. Mutual assent or agreement takes place when there is an offer and acceptance of the offer.

Offer is a proposal made by one party (offerer) to another (offeree), indicating a willingness to enter into a contract. It is more than an expression of desire or hope.

11.2. VALIDITY OF AN OFFER

1. The offer must be certain or definite so that the liability (or the rights) of the parties may be exactly fixed because it is necessary that the acceptance be identical with the offer.
2. An offer made in jest o in anger,  or while emotionally upset or in other ways indicating that the same was not seriously intended is not a valid offer.

Acceptance is the manifestation by the offeree of his assent to all the terms of the offer. Without acceptance, there can be no meeting of the minds between the parties.

11.3. ACCEPTANCE OF OFFER

ART. 1320: An acceptance may be expressed or implied.

An expressed acceptance in the form of a promise to pay a certain or to do something, may be oral or written.
An implied acceptance is one that is inferred from act or conduct. 

11.4. MATTERS FIXED BY THE OFFERER

ART. 1321: The person making the offer may fix the time, place, and the manner of acceptance, all of which must be complied with.

The person making the offer has the right to prescribe the time, the place, and the manner of acceptance which must be complied with.
A counter-offer can also be constituted as acceptance departing from the terms of the offer. The counter-offer can extinguish the offer and causes a new offer.

11.5. COMMUNICATION OF THE OFFER

The offer must be communicated and received by the offeree.

11.6. COMMUNICATION OF ACCEPTANCE

ART. 1322: An offer made through an agent is accepted from the time acceptance is communicated to him.

1. To offerer. The acceptance of the offer must be absolute.
2. To agent.  An agent is considered an extension of the personality of his principal.

11.7. WHEN OFFER IS INEFFECTIVE

ART. 1323: An offer becomes ineffective upon the death, civil interdiction, insanity, or insolvency of either party before acceptance is conveyed.

The validity of an offer can become ineffective because of the following between parties:

• Death
• Civil interdiction
• Insanity
• Insolvency 

The other grounds for the ineffectivity are as follows:

• Failure to comply with the condition of the offer as to the time, place, and the manner of payment
• The expiration of the period fixed in the offer for acceptance
• The destruction of the thing due before acceptance
• Rejection of the offer

11.8. CONTRACT OF OPTION

ART. 1324: When the offerer has allowed the offeree a certain period to accept, the offer may be withdrawn at any time before acceptance by communicating such withdrawal, except when the option is founded upon a consideration, as something paid or promised.

1. Option contract - one giving a person for a consideration a certain period within which to accept the offer of the offerer.
2. Option period - the period given within which the offeree must accept the offer
3. Option money - the money paid or promised to be paid in consideration for the option.

11.9. BUSINESS ADVERTISEMENTS

ART. 1325: Unless it appears otherwise, business advertisements of things for sale are note definite offers, but mere invitations to make an offer.

Business advertisements of things for sale are not definite offers acceptance of which will perfect a contract but are merely invitations to the reader to make an offer.

11.10. ADVERTISEMENTS FOR BIDDERS

ART. 1326: Advertisements for bidders are simply invitations to make proposals, nd the advertiser is not bound to accept the highest or lowest bidder, unless the contrary appears.

In an advertisement for bidders, the advertiser is not the one making the offer.

As a general rule, the advertiser is not bound to accept the highest bidder or the lowest bidder, unless the contrary appears.

11.11. PERSONS WHO CANNOT GIVE CONSENT

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

(1) Unemancipated minors

(2) Insane of demented persons, and deaf-mutes who do not know how to write. 

A contract entered into where one of the parties is incapable of giving consent to a contract is voidable. Those who are incapacitated to give consent:

1. Unemancipated minors - Those persons who have not yet reached the age of majority (18 years old) and are still subject to parental authority
2. Insane or demented persons - The insanity must exist at the time of contracting. Unless proved otherwise, a person is presumed sane.
3. Deaf-mutes - If deaf-mute knows how to write, the contract is valid for then he is capable of giving intelligent consent. 

  

11.12. CONTRACTS ENTERED DURING LUCID INTERVAL

ART. 1328: Contracts entered into during a lucid interval are valid. Contracts agreed to in a state of drunkenness or during a hypnotic spell are avoidable.

Lucid interval is a temporary period of sanity. A contract entered into by an insane or demented person during a lucid interval is valid. It must be shown that there is a full return of the mind to sanity as to enable him to understand the contract he is entering into. 

11.13. EFFECT OF DRUNKENNESS AND HYPNOTIC SPELL

Drunkenness and hypnotic spell impair the capacity of a person to give intelligent consent.

These conditions are equivalent to temporary insanity.

11.14. MODIFICATIONS FOR INCAPACITY

ART. 1329: The incapacity declared in ART 1327 is subject to the modifications determined by law, and is understood to be without prejudice to special disqualifications established in the laws.

1. Necessaries delivered to a minor or other person without capacity to act must pay a reasonable price.
2. A minor may contract for health and accident insurance for his life and beneficiaries appointed to the close family.
3. A contract is valid if entered into through a guardian or legal  representative. 
4. A contract is valid where the minor misrepresented his age and convincingly led the other party to believe in his legal capacity.
5. A contract is valid where a minor voluntarily pays a sum of money or delivers a fungible thing in fulfillment of his obligation and the obligee has spend or consumed it in good faith.

11.15. OTHER SPECIAL DISQUALIFICATIONS

The following are considered incompetents and may be placed under guardianship:

1. Persons suffering the accessory penalty civil  interdiction
2. Hospitalized lepers
3. Prodigals
4. Deaf and dumb who are unable to read and write
5. Those who are of unsound mind even though they have lucid intervals
6. Those, who, by reason of age, disease, weak mind and other similar causes, cannot without outside aid, take care of themselves and manage their property, becoming thereby an easy prey for deceit and exploitation.

11.16. CHARACTERISTICS OF CONSENT

ART. 1330: A contract where consent is given through mistake, violence, intimidation, undue influence, or fraud is voidable.

In order that consent may be valid for purposes of contract, it is required, not only that it exists, but that it must be given with exact understanding over the thing consented to. There is no valid consent unless:

1. It is intelligent - there is capacity to act.
2. It is free and voluntarily - there is no vitiation of consent by reason of violence or intimidation.
3. It is conscious or spontaneous - there is no vitiation of consent by reason of mistake, undue influence, or fraud.

11.17. VICES OF CONSENT

Aside from incapacity and simulation of contract, the following vitiate consent:

1. Error or mistake
2. Violence or force
3. Intimidation or threat or duress
4. Undue influence
5. Fraud or deceit

Causes vitiating consent are temporary and refers to the contract itself.

Causes of incapacity are permanent and refers to the person entering into the contract.

Both make a contract "voidable" only not void.

11.18. MISTAKE

ART. 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 mitake of account shall give rise to its correction. 

Mistake or error is the false notion of a thing or a fact material to the contract. 

11.19. NATURE OF MISTAKE

1. Mistake may be of fact or of law. It may arise from ignorance or lack of knowledge.
2. The mistake contemplated by law is substantial mistake of fact, that is, the party would not have given his consent had he known of the mistake. 
3. The mistake may be unilateral, when only one party is mistaken about a material fact, or bilateral (or mutual) when both parties are in error.

11.20. MISTAKE OF FACT TO WHICH LAW REFERS

In order that mistake may vitiate consent, it must refer to:

1. The substance of the thing which is the object of the contract
2. Those conditions which have principally moved one or both parties to enter into the contract
3. The identity or qualifications of one of the parties provided the same was the principal cause of the contract.

11.21. MISTAKE OF FACT WHICH DOES NOT VITIATE CONSENT

1. Error with incidents of a thing or its accidental qualities [Examples: acceptability of a residential house to means of transportation; maximum speed of a car] not taken as the principal consideration in the contract.
2. Mistake as to quantity or amount.
3. Errors  as regards the motives of the contract.
4. Mistake as regards the identity or qualifications or party.
5. Error which could have been avoided by the party alleging it, or which refers to a fact known to him.

11.22.  EFFECT OF MISTAKE OF ACCOUNT

1. Where mistake simple.  A simple mistake of account or calculation does not avoid a contract because it does not affect its essential requisites.
2. Where mistake gross. Where the mistake was so gross that it was clearly apparent to one party and would be impossible to escape his notice.