Contracts (1) Flashcards
The stages of a contract are
- negotiation
- perfection
- consummation
when is there perfection of a contract?
There is perfection of a contract when there is:
- the AGREEMENT OF T&C, and
- the meeting of the minds as to the THING and CAUSE of the contract because there had been an
- OFFER that is CERTAIN and an ACCEPTANCE that is absolute.
note
- perfection of the contract, as distinguished from negotiation, confers rights and confers obligations that are demandable
- signing of a contract is NOT NECESSARILY the perfection of the contract
Provide the RULES ON OFFER insofar as the lecture is concerned
- Consent
- Must be free and voluntary
- Must NOT be fictitious
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- Offer must be made by the one who has CAPACITY to give consent and NOT DISQUALIFIED by law (1327)
- Offeror may fix time, place, and manner of acceptance
- if either party [diic] BEFORE the acceptance is conveyed, then the offer becomes Ineffective (c.f.1323)
a. death
b. insanity
c. insolvency
d. civil interdiction
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7. may be effective for a certain period
8. business advertisements and advertisement for bidders are NOT NECESSARILY offers
9. May be made through an Agent
10. may be made electronically (RA 8792)
for an OFFER to be considered as one that can create a perfected contract,
when is an offer certain?
an offer is certain if it is certain as to the thing [and] as to the cause/consideration
[X] i will sell to you something (not certain as to the thing)
[ ] i will deliver you a particular model of a car (generic but valid offer because it is certain as to the thing)
but both certain thing and certain/consideration must be present
[ ] deliver a car at a certain amount, then there is no specific amount and therefore the offer is NOT certain
if the offeror fixes a time, place, and manner and the buyer does not comply, what is the effect?
the acceptance CANNOT bind the offeror
note
Note that the code recognizes this right on the part of the person making an offer to fix these matters of time, place and manner, such that it will also govern the time, place, and manner of acceptance. An offeror can do that as recognized in 1321
in what instance will the death, insanity, insolvency, or civil interdiction cause the ineffectiveness of the offer?
when BEFORE acceptance
to ANY of the parties such that any acceptance will have no effect
1319
“ xxx 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. “
the code was enacted in 1950 but congress passed a bill making offers now made through electronic messages. what RA?
8792 “Electronic Commerce Act of 2000” (s16)
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what is option contract?
Rule on Offer with Period to Accept:
If the offerer gives the offeree a certain period to accept an offer, it can be withdrawn anytime by communicating such withdrawal!
EXCEPTIONS
1. 1. When offeree already accepts the offer (even while the acceptance has not yet come to the knowledge of offere?);
2. When there is a valid “Option Contract”. (option money vs. Earnest money) (how much should the option money be to be valid?)
“What if A withdrew his offer on March 9, 2020 in a letter that has not yet reached B, could the contract have been perfected nonetheless?”
Laudico vs Arias
While we follow cognition theory insofar as acceptance is concerned, we do not follow cognition theory insofar as revocation of the offer is concerned. What this means is that, even if the fact of revocation of the offer has not yet reached the knowledge of the offeree, the revocation of the offer by the offeror would already have legal effects
A withdrew his offer on March 9, 2020 right? And the letter was sent on March 10, 2020. What if on March 11, it had reached A, but before the date the acceptance was received, A already withdrew the offer. So the moment the letter of acceptance reached Mr. A, that letter of acceptance would have no effect at all, because at that time the offer has already been withdrawn. Even if, that fact of revocation had not yet reached B (the offeree).
Such is the ruling of Laudico v. Arias.
If the OFFEREE wants to revoke his acceptance, that revocation of acceptance must reach the offeror first, before his acceptance will come to the knowledge of the offeror. This is the ruling of the SC as discussed in Laudico vs Arias, insofar as revocation of acceptance is concerned.
MINORS
GR: Contract entered into by person who is incapacitated to give consent is voidable
what are the EXC
e XPN: 1. Minor “actively” misrepresents age (estoppel) [see Mercado v. Espiritu where the minor stated that he was of age; ‘active misrepresentation’ vs. Braganza v. Villa Abrille case where minority was accepted as a partial defense] 2. Sales and delivery of necessaries to minors 3. Creditor consumes good in good faith
note
Mercado v. Espiritu. Thus, the contract is not voidable. It is valid insofar as the minor is concerned because of estoppel
distinguish the case of Mercado and Braganza
The Mercado case is different because the document signed therein by the minor specifically stated that they were of age; on the Braganza case, the promissory note contained no such statement.
In other words, in the Mercado case, the minors were guilty of active misrepresentation whereas in the Braganza case, the minors are guilty of passive or constructive misrepresentation.
There have been several questions on the bar as to: 1. MISTAKE OF FACT (1331) 2. MUTUAL MISTAKE AS TO THE LEGAL EFFECTS OF THE AGREEMENT (1334) 3. MUTUAL MISTAKE AS TO FACTS (1361)
absolute simulated contract
z issued das to y without consideration. z issued das(2) to x and x paid 10mil
- can y claim?
- if y was able to sell the registered land to mr. a, can mr. A go after
[a] no
[b] the rule says no but in the case of Locsin v. Hizon and PD 1529, by virtue of the Mirror Doctrine, a defective title can give rise to a completely legal and valid title
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X, places in the newspaper an advertisement that says “lot for sale number 1234, consisting of 10 hectares for 10million
is this a binding offer done through advertisement?
No.
When is a business offer is so specific as to:
- the thing
- the cause/consideration
- other factors
whereby the public only need to accept it
- it is not stated that the 10 million should be payable in full, onetime payment, or that it is payable in cash or check.
On the rule that the one making offer must have the capability to give consent and is not disqualified by law,
who are those that cannot give consent?
Art. 1327. The following cannot give consent to a contract:
- unemancipated minors
- Insane or demented persons [and] deaf-mutes who do not know how to write.
John, a judge, presided over a civil litigation case involving a disputed piece of land. After the case concluded, Judge expressed interest in purchasing the land from the prevailing party.
Can the judge make an offer to buy the land? Use the rules on offer to answer
By specific provisions of the law, Judge is disqualified from acquiring that property.
So the rule on offer where one is capable of giving consent is present [but] is disqualified by law.
March 15, Juan OFFERED to repair the motorcycle of Pedro for 10,000.
Pedro did not immediately accept the offer of Juan.
Juan gave Pedro 10 days within which to decide whether or not to accept the offer.
On March 19,(4 days after) Juan(offerer) changed his mind and withdrew his offer without Pedro having accepted the offer.
Was the withdrawal of the offer proper? (Answer with the rules)
Yes, it is valid as Pedro had not accept the offer
Rule on Offer>Effective for a period to accept [1324]
If the offerer gives the offeree a certain period to accept an offer, it can be withdrawn anytime by communicating such withdrawal
Exceptions: (still not binding in this situations)
1. When offeree (b) already accepts the offer (even while the acceptance has not yet come to the knowledge of offere?
- When there is a valid “OPTION Contract”.
March 15, Juan OFFERED to repair the motorcycle of Pedro for 10,000.
Pedro did not immediately accept the offer of Juan.
Juan gave Pedro 10 days within which to decide whether or not to accept the offer.
[A]
After sleeping, Pedro accepts the offer and sends the a letter to Juan telling he accepts. Can Pedro withdraw the offer?
Was the withdrawal of the offer proper? (Answer with the rules)
following the Cognition Theory, the acceptance of Pedro had not reached Juan thus, the contract was not yet perfected
Therefore, Pedro can validly withdraw his offer in spite of Juan accepting
note
THE ACCEPTANCE MADE THROUGH A LETTER OR TELEGRAM will ONLY bind the offerer, if the latter has knowledge of that acceptance, following the COGNITION theory.
Rule on Offer>Offer with Period to Accept>1324, withdrawn anytime by communicating> Exc 2 Option Contract
[A]
Option Money |v| Earnest Money
[B]
Relevance for the distinction
OM
- is a consideration in an option contract
note
- called ‘option contract’ precisely because something had been paid
- option CONTRACT is a period given to the offeree to accept an offer
EM
- forms part of the purchase price
[B]
- Relevant with rescission of contract cases as there is no Restitution
knowledge check:
if A gave B 5,000.00 option money in consideration of B’s offer to sell land, and is later rescinded, can A validly claim his 5,000.00?
No,
No. Because that is not a consideration of the contract that had been rescinded. It is a consideration of the option contract, which under this situation, had already been consummated
knowledge check
differentiate
Rescission as Resolution (1191)
and
Termination
1191
- The undoing of a contract with the consequent obligation of MUTUAL RESTITUTION
TERMINATION
involves to the act of putting an end to the life of a valid contract.
knowledge check:
differentiate
Rescission |v| Resolution
in contracts
Rescission
- ground on lesion
- SUBSIDIARY action
Resolution
- ground on substantial breach of contract
- PRINCIPAL action
note
atty wants to call 1191 as resolution
Rule on Offer>Valid Withdraw of Offer
⚠️⚠️⚠️Distinguish 1324 |v| 1479 ⚠️⚠️⚠️
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.”
1479
“ A PROMISE TO BUY [AND[ SELL a determinate thing for a price certain is reciprocally demandable.”
An ACCEPTED UNILATERAL PROMISE TO BUY OR SELL a determinate thing for a price certain is binding upon the PROMISOR if the promise is supported by a consideration distinct from the price.
note
1479 - both parties involved in the contract have the right to demand performance from each other.
1324 (offer)
- what is accepted is an offer thereby perfecting the contract
- pertains to contracts in general
1479 (promise)
- what is accepted is an option or the promise to buy or the promise to sell which can still be withdrawn despite acceptance of the promise to buy/sell
- applicable only to SALES or CONTRACT TO SELL
In the case of Sanchez v. Rigor, the court ruled that
note
promisor & promisee is technically different from offerer and offeree such that different provisions apply (1479, 1324, respectively)
B unilaterally promised to buy S’s motorcycle and the S** unconditionally accepted** the promise on March 18,
Then B withdrew his promise to buy on March 22, was B’s withdrawal of the promise valid?
The acceptance of the promise has no effect because the problem never mentioned that there was a consideration distinct from the price.
Therefore, withdrawal of the promise is proper.
note
- there was no promise here on part of S when he unconditionally accepted the promise of B to buy
