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Art. 1327 In general, contracts entered into by the
The following cannot give consent to a contract: persons enumerated in Article 1327 are
(1) Unemancipated minors; voidable
(2) Insane or demented persons, and deaf-mutes However in certain cases. Their incapacity may
who do not know how to write. (1263a) be modified by the law, that is, they can also
Capacity To Give Consent Presumed give valid consent. Thus:
Civil code does not define who have the capacity i. When necessaries such as food are sold
or legal ability to give consent to a contract and delivered to a minor or other
It defines on the contrary who have no capacity person without capacity to act, one
by which it can be inferred that capacity is the must pay a reasonable price
general rule, which exists in those of whom law ii. A minor 18 year old or above may
has not denied it contract for life, health and accident
Burden of proof is on the party who asserts insurance provided the insurance is
incapacity taken on his life and the beneficiary
Person Who Cannot Give Consent appointed is the minor’s estate/family
A contract entered into where one of the parties iii. Contract is valid if enter through a
is incapable of giving consent is voidable guardian or legal representative
A voidable contract is valid and binding until is iv. Contract is valid where the minor
annulled by a proper action in court; susceptible misrepresented his age and
of ratification convincingly led the other party to
1. Unemancipated minors – persons who have not believe in his legal capacity
reached the age of majority are still subject to v. Contract is valid where a minor
parental authority between 18 and 21 years old
2. Insane/Demented Persons – insanity exist at the voluntarily pays a sum of money or
time of contracting; unless proved otherwise a delivers a fungible thing in fulfillment of
person is presumed sane his obligation; oblige has spent or
3. Deaf-mutes – if the deaf-mute knows how to consumed it in good faith
write, the contract is valid for then he is capable Special Disqualifications May Be Provided By Law
of giving intelligent consent; a contract entered 1. Under the rules of court, the ff. are considered
into by a deaf-mute who knows how to read is incompetents and may be placed under
valid although he cannot write because of some guardianship:
physical reasons i. Persons suffering the accessory penalty
Reasons For Disqualification civil interdiction
Persons mentioned can easily be victims of ii. Hospitalized lepers
fraud as they are not capable of iii. Prodigals (spendthrifts)
understanding/knowing the nature or iv. Deaf and dumb who are unable to read
importance of their actions and write
v. Those who are of unsound mind even
Art. 1328 though they have lucid intervals
Contracts entered into during a lucid interval are vi. Those who, by reason of age, disease,
valid. Contracts agreed to in a state of drunkenness or weak mind and other similar causes,
during a hypnotic spell are voidable. (n) cannot (without outside aid) take care
of themselves and manage their
Definition property, becoming an easy prey for
Lucid Interval – temporary period of sanity deceit and exploitation
A contract entered into by an insane or 2. Contract entered into by any of the above is
demented person during a lucid interval is valid valid except where it is voidable by reason of
It must be shown, however, that there is a full incapacity under Articles 1327 and 1328 or of
return of the mind to sanity as to enable him to causes which vitiate consent (1330) or where
understand the contract he is entering into incompetent has been placed under
Effect Of Drunkenness and Hypnotic Spell guardianship. Thus, a prodigal is presumed to
Both impair the capacity of a person to give have capacity to enter into a contract
intelligent consent a. Insolvents until discharged
These conditions are equivalent to temporary b. Married women in cases specified by
insanity, hence the law considers a contract law
entered into in a state of drunkenness or during c. Husband and wife with respect to sale
a hypnotic spell voidable and it is not required of property to each other
that such state was procured by the d. Other persons especially disqualified by
circumvention of the other party law
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iii. Opinion turned out to be false or When fraud is employed by both parties, neither
erroneous may ask for annulment as the fraud of one
neutralizes that of the other; contract is valid
Art. 1342. therefore
Misrepresentation by a third person does not In accordance with the principle that “he who
vitiate consent, unless such misrepresentation has created comes to court, must come with clean hands”
substantial mistake and the same is mutual. (n)
Art. 1345.
Fraud By A Third Person Simulation of a contract may be absolute or
Third person has no connection with a contract relative. The former takes place when the parties do not
A party should not be made to suffer for the intend to be bound at all; the latter, when the parties
imprudence of another in believing the fraud of conceal their true agreement. (n)
a third person
Presumption is that both contracting parties are Art. 1346.
acting in good faith An absolutely simulated or fictitious contract is
If misrepresentation has created substantial void. A relative simulation, when it does not prejudice a
mistake and the same is mutual that affects third person and is not intended for any purpose contrary to
both parties, contract may be annulled but law, morals, good customs, public order or public policy
principally on the ground of mistake\ binds the parties to their real agreement. (n)
If misrepresentation has been employed by a
third person in connivance with/knowledge of Definition
the party benefited by the fraud, is deemed to Simulation of a Contract – act of deliberately
have been exercised by such party upon the deceiving others, by feigning or pretending by
other contracting party agreement the appearance of a contract which
It should be remembered that force or is either non-existent or concealed
intimidation employed by a third person on one Kinds of Simulation
of the parties makes a contract voidable 1. Absolute Simulation – contract does not really
because consent is vitiated exist and the parties do not intend to be bound
at all; absolutely simulated or fictitious contracts
Art. 1343. are inexistent and void
Misrepresentation made in good faith is not 2. Relative Simulation – contract entered into by
fraudulent but may constitute error. (n) the parties is different from their true
agreement. Parties are bound by their real
Effect Of Misrepresentation Made In Good Faith agreement provided it doesn’t prejudice a third
If misrepresentation is not intentional but made person and is not intended for a purpose
in good faith (person making the false statement contrary to law, morals, good customs, public
believed it to be true), it is considered a mere order and public policy.
mistake /error
Fraud is more serious than mistake, thus, the SECTION 2. - OBJECT OF CONTRACTS
party guilty of fraud is subject to greater liability
Art. 1347.
Art. 1344. All things which are not outside the commerce of
In order that fraud may make a contract voidable, it men, including future things, may be the object of a
should be serious and should not have been employed by contract. All rights which are not intransmissible may also
both contracting parties. be the object of contracts.
Incidental fraud only obliges the person employing No contract may be entered into upon future
it to pay damages. (1270) inheritance except in cases expressly authorized by law.
All services which are not contrary to law, morals,
2 Kind Of (Civil) Fraud In The Making Of Contract good customs, public order or public policy may likewise be
Causal Fraud – which is a ground for the the object of a contract. (1271a)
annulment of a contract; although it may also
give rise to an action for damages Art. 1348.
Incidental Fraud – which only renders the party Impossible things or services cannot be the object
who employs it liable for damages because the of contracts. (1272)
fraud was not the principal inducement that led
the other to give his consent Concept of Object Of A Contract
Requisites Of Causal Fraud Object of a contract is its subject matter
In order for causal fraud may vitiate consent Object of every contract is the obligation
under the said article, the ff. are the requisites: created
i. Should be serious Since a contract cannot exist without an
ii. Should not have been employed by obligation, it may be said that the thing, service
both contracting parties (should not be or right which is the object of the obligation is
in pari delicto: article 1411,1414) also the object of the contract
iii. Should not have been known by the Kinds Of Object Of Contract
other contracting party Object certain is the second essential element of
Requirement that fraud should be serious a valid contract
excludes slight and usual deviations from the Object may be things (as in sale), rights (as in
truth assignment of credit), or services (as in agency)
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Requisites of Things (As Object of Contract) Kinds of Impossibility
i. Thing must be within the commerce of men, 1. Physical – when the thing or service in the very
that is, legally be the subject of commerce nature of things cannot exist or be performed.
transaction With particular reference to services, the
ii. Must not be impossible, legally or physically impossibility may be:
iii. Must be in existence or capable of coming into a. Absolute – when the act cannot be
existence done in any case so that nobody can
iv. Must be determinate or determinable without perform (fly like bird)
the need of a new contract between the parties b. Relative –arises from special
Requisites of Services (As Object of Contract) circumstances of the case (make
i. Service must be within the commerce of men payment to a dead person, drive a car
ii. Must not be impossible, physically or legally on flooded highway) or special
iii. Must be determinate or capable of being made conditions or qualifications of the
determinate obligor (paint a portrait of a blind
Rights as Object Of Contract person)
General rule: all rights may be the object of a 2. Legal – when the thing or service is contrary to
contract; exceptions are when they are law, morals, good customs, public order, or
intransmissible by their nature, or by stipulation public policy; an act is contrary to law, either
or by provision of law because it is forbidden by penal law (to sell
Examples: shabu) or a rule of law makes it impossible to be
a. Outside the commerce of men – clings done (to make a valid will, where the testator is
of public ownership such as sidewalks, under 18 years of age)
public places, bridges, streets; things
common to everybody like air, and Art. 1349.
sunlight The object of every contract must be determinate
b. Impossible, physically or legally – as to its kind. The fact that the quantity is not determinate
prohibited drugs and all illicit objects, shall not be an obstacle to the existence of the contract,
to get soil from Jupiter provided it is possible to determine the same, without the
c. Determinable things – all the cavans of need of a new contract between the parties. (1273)
rice in a bodega, all the eggs in a
basket, my land with the smallest area Quantity Of Object Of Contract Need Not Be Determined
d. Future things or rights – things to be object of contract must be determinate as to its
manufactured, raised or acquired after kind or at least determinable without the
the perfection of the contract such as necessity of anew or further agreement
wine that a vineyard is expected to between the parties (same is true of the
produce, rice to be harvested next quantity of the object of the contract)
harvesting season, milk that a cow may sufficient that it is possible to determine the
yield same without the need of a new contract
- future things include future rights, between parties
thus, an author may assign the royalty when the obligation consists in the delivery of a
which he expects to receive from his generic thing, whose quality and circumstances
publisher have not been stated, Article 1246 governs.
e. Intransmissible Rights – political rights
such as the right to vote; family, marital
and parental rights, right to public SECTION 3. - CAUSE OF CONTRACTS
office
Definition Of Future Inheritance Art. 1350.
Any property or right (not in existence or
capable of determination at the time of the In onerous contracts the cause is understood to be,
contract) that a person may inherit for each contracting party, the prestation or promise of a
Such person having only an expectancy of a thing or service by the other; in remuneratory ones, the
purely hereditary right service or benefit which is remunerated; and in contracts of
Inheritance ceases to be future upon the death pure beneficence, the mere liberality of the benefactor.
of the decedent or deceased (1274)
Validity of Contracts Upon Future Inheritance
A contract concerning future inheritance is void, Definition
except in cases expressly authorized by law Cause (causa) is the essential reason or purpose
Law permits contracts on future inheritance: which the contracting parties have in view at the
i. In the case of donations by reason of time of entering into the contract
marriage between future spouses with the immediate, direct and proximate reason
respect to their future property to take which justifies the creation of an obligation
effect, only in the event of death, to through the will of the contracting parties.
the extent laid down by law in Something bargained for or given by a party in
testamentary succession exchange for a legally enforceable promise of
ii. In the case of partition of property by another
act inter vivos by a person (i.e. Civil Code term for: consideration in Anglo-
owner/source of the property) to take American or common law
effect upon his death
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Cause vs Object bring it under the rule of Article 1353
In a bilateral or reciprocal contract like a as stating a false consideration
purchase and sale, the cause for one is the c. Promises to make a gift or to render
subject matter or object for the other and vice some gratuitous service in the future
versa are not enforceable as contracts
Hence the distinction is only a matter of because they contain no consideration
viewpoint d. Promises made in gratitude for good
Classification of Contracts Accdg. To Cause deed of others cannot be enforced for
1. Onerous –parties are reciprocally obligated to they constitute only moral (not legal)
each other: ex: sale, lease of thing, partnership consideration
2. Remuneratory or remunerative – purpose of the Effect Of Failure Of Cause
contract is to reward the service that had been Absence of cause should be distinguished from
previously rendered by the party remunerated; inadequacy of cause which, as a general rule, is
ex: K rendered services as the defense counsel not a ground for relief and from failure of cause
of y, he agreed to pay K money for the services which does not render a contract void
3. Gratuitous – liberality of the benefactor or giver; Contract of sale is void for being without cause
ex: commodatum, pure donation, when the purchase price is appeared theron as
paid, has in fact never been paid by the buyer to
Art. 1351. the seller
The particular motives of the parties in entering Failure to pay the stipulated price after the
into a contract are different from the cause thereof. (n) execution of a contract of sale does not convert
the contract void without cause or consideration
Definition of Motive Effect of illegality of Cause
Motive – purely personal or private reason Implies that there is a cause but the same is
which a party has in entering into a contract; unlawful or illegal
different from cause Contracts with unlawful cause are null and void
Motive vs. Cause Effect of Falsity of cause
Cause is immediate or direct reason; motive is Falsity of cause: Meant that the contract states
remote or indirect reason a valid consideration but such statement is not
Cause is always known to the other contracting true
party; motive may be unknown False cause may be erroneous or simulated
Cause is an essential element of a contract; is (Erroneous) If the cause is false, the contract is
not rendered void because the same actually does
Illegality of cause affects the validity of a not exist
contract; illegality of one’s motive ideas doesn’t (Simulated)Does not always void the contract
render a contract void because it may happen that the hidden but true
Note: may be regarded as cause if founded upon a fraudulent purpose to prejudice a
third person
cause is sufficient to support the contract
If the parties can show that there is another
Art. 1352. cause and the cause is true and lawful then the
Contracts without cause, or with unlawful cause, parties shall be bound by their true agreement
produce no effect whatever. The cause is unlawful if it is
contrary to law, morals, good customs, public order or Art. 1354.
public policy. (1275a) Although the cause is not stated in the contract, it
is presumed that it exists and is lawful, unless the debtor
Art. 1353. proves the contrary. (1277)
The statement of a false cause in contracts shall
render them void, if it should not be proved that they were Cause presumed to exist and lawful
founded upon another cause which is true and lawful. Not necessarily that cause is expressly stated at
(1276) in the contract
Presumption is that the cause exists and is
Requisites of Cause lawful unless the debtor proves contrary
i. Must exist at the time the contract is entered This presumption is in accord with the natural
into order of things
ii. Must be lawful Presumption is not conclusive but only prima
iii. Must be true or real facie and may be contradicted by contrary
Effect of Absence of Cause evidence
Absence or want of cause means that there is a
total lack of any valid consideration for the Art. 1355.
contract Except in cases specified by law, lesion or
Contracts without cause confer no right anf inadequacy of cause shall not invalidate a contract, unless
produce no legal effect, thus: there has been fraud, mistake or undue influence. (n)
a. A contract which is absolutely
simulated or fictitious is inexistent and Definition
void Lesion – any damage caused by the fact that the
b. Where there is, in fact, no price is unjust or inadequate
consideration (ex: price) the statement - is the injury suffered in consequence of
of one in the contract will not suffice to inequality of situation, by one party who doesn’t
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receive the full equivalent for what he gives in a
commutative contract (like a sale)
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