CE LAWS  The contracting parties may establish
PRELIMS stipulation, clauses, terms and condition
Contract
- Meeting of minds between two persons
whereby one binds himself with respect f
the other
- To give or render services
According to Sanchez Roman
- A contract is s juridical convention
manifest in legal form, by virtue of which
one or more person bind themselves in
favor of one another
- Or reciprocally to the fulfillment of a
prestation to givem to do or not to do
Elements of Contract
1. Essential E – those without which no contract
can validly exist
Requisites of a contrac:
A. Consent of the contracting parties
B. Object certain which is the subject matter of the
contract
C. Cause of consideration of the obligation which is
established
2. Natural E – those are presumed to exist in
certain contracts unless the contrary is expressly
stipulated by the parties
- like warrant against hidden, defects
in a contrary of sale
3. Accidental E – are the particular clauses, terms
and conditions established by the parties in their
contract like interests and penalties
Stages of a Contract
1. Preparation, conception or generation
- under this stage, the parties of are still in
the negotiating preliminaries.
- the parties have not yet arrived at any
definite agreement, although steps are being taken
up until they finally agree.
2. Perfection of Birth
- at this stage, the parties have already
come to a definite agreement for the meeting of the
mind between them exists as to the subject matter
and cause and contract.
3. Consummation or Termination
- the parties at this stage have already
performed their respective obligation which led to
consummation or termination
Freedom to Contract Constitutionally
Guaranteed
 Constitution provides “Now law
impairing the obligation of contracts
shall be passed. --- the constitution
guarantee against impairment of
contract obligation refers only to valid
contracts
as they may deem convenient –
provided not contrary to law, morals,
good customs, public order or public
policy.
The constitutional provision is intended to protect
creditors, to assure fulfillment of lawful promises
and to guard the integrity of contractual obligations
Obligation of contract may be legally impaired by:
1. the police power of the state
2. the power of eminent domain
3. the right to impair the obligation is reserved
Instances of Unlawful Contract
The following contracts are unlawful, namely:
a. Contract whereby it provides payment of
usurious interest is void
b. Parties cannot enter into contract that will
deprive a court of the jurisdiction conferred it by
law, for jurisdiction cannot be the subject-matter of
the contract
c. A waiver signed by a student-scholar whereby he
relinquishes his right to transfer to another school
unless he refunds to the University the equivalent
of his scholarship grant: is void
d. A contract whereby service will be rendered
without remuneration is contrary to law and morality
e. A promise of marriage based on illicit relation
such as an agreement to become a common-law
wife: is void
Essential Characteristics of Contracts
1. Obligatory force of contract
- based on the principle that once the
contract is perfected it shall obligatory force upon
contracting parties
2. Autonomy of Contracts
- it is based on the principle that the
contracting parties are free to enter into a contract
and establish such terms and conditions provided
they are not contrary to law, morals, good customs,
public orders, or public policy
3. Mutuality of Contracts
- it is based on the principle that the contract
must be bind both contracting parties and
necessarily the must be mutual consent
4. Relativity of Contracts
- it is based on the principle that the contract
takes effect only between the parties, their assigns
and heirs
Effects of Contracts
If the contract contains some stipulation in
favor of third person, he may demand its fulfilment
provided he communicated his acceptance to the
Obligor before its revocation.
- The clear and deliberate conferment of
favor upon a this person is knowns as
stipulation pour auirui
Classification of Contracts

1. According to their designation

A. Nominate – those that can be identified by their
individuality and are regulated by special provision
of law, such contract of agency, lease, sale.
B. Innominate – which lack individuality are
regulated by the stipulation of the parties. They are
not regulated by special provision of law

2. According to their perfection

A. Consensual – those which are perfected by
mere consent of the parties without need of other
families, such contracts of sale and partnership
B. Real – which require not only the consent of the
parties, but also the delivery of the object of the
contract which is necessary such as, deposit,
commodatum or pledge.

3. According to their form

A. Common or Informal – those which do not
require any formality such as loan or lease
B. Special or Formal – those which the law
prescribes some formalities, such as donation or
chattel mortgage. They should be made in public
documents

4. According to the Nature and Obligation they

produce
A. Unilateral – those which give rise to an
obligation for only one of the parties such as in
case of gratuitous deposits.
B. Bilateral – those which give rise to reciprocal
obligation such as in the case of contract of sale
5. According to their cause or consideration
A. Onerous – those which benefit is derived
through something which is given or promised,
such as contract sale.
B. Gratuitous – which one of the parties derives
benefits without giving any equivalent or
compensation, such as simple donation

6. According to risk involved

A. Commutative – those which what is given by
one party is considered an equivalent given by the
other, such as contract of lease
B. Aleatory – consideration is unequal and depend
upon the happening of an uncertain event such as
in insurance contract where the business is at risk
of loss/gain

7. According to relation with other contracts

A. Principal – those which can exist independently
from other contracts such as contracts of lease and
sale
B. Accessory – those which cannot exist without
another prior contract, such as mortgage and
pledge.