Art. 1342.
Misrepresentation by a third person Absolute simulation- the contract is not really
does not vitiate consent, unless such
misrepresentation has created substantial mistake
and the same is mutual.
Art. 1343. Misrepresentation made in good faith is
not fraudulent but may constitute error.
Art. 1344. In order that fraud may make a
contract voidable, it should be serious and should
not have been employed by both contracting
parties.
Incidental fraud only obliges the person
employing it to pay damages
Art. 1345. Simulation of a contract may be
absolute or relative. The former takes place when
the parties do not intend to be bound at all; the
latter, when the parties conceal their true
agreement.
Art. 1346. An absolutely simulated or fictitious
contract is void. A relative simulation, when it
does not prejudice a third person and is not
intended for any purpose contrary to law, morals,
good customs, public order or public policy binds
the parties to their real agreement.
Simulation of Contracts
- VICES of declaration
desired or intended to produce legal effects or in any
way alter the juridical situation of the parties.
- There is colorable contract but it has no
substance as the contracting parties do not
intend to be bound by the contract at all.
- VOID
Relative simulation- The parties state false cause in
the contract to conceal their true agreement.
- BINDING and ENFORCEABLE provided
that it does not prejudice third person or not
contrary to law, morals, good customs,
public order or public policy.
Contracts of Adhesion- Its terms are prepared only
by one party while the other party merely affixes his
signature signifying his adhesion thereto.
- VALID
- VOID when the weaker party is imposed
upon in dealing with the dominant
bargaining party and is reduced to the
alternative of taking it or leaving it,
completely deprived of the opportunity to
bargain on equal footing.