Contracts outline for the California Bar Exam, June 2009Full description
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II. CONTRACTS (Read Arts. 1305-1422) A. General Provsons Provsons
1. !e"nton Art#le 1305. A #ontra#t s a $eetn% o" $nds &et'een t'o ersons 'ere&* one &nds $s $sel el"+ "+ 't 't res rese# e#tt to te te ote oter+ r+ to %ve %ve so$etn% or to render so$e serv#e. ,alane: ,alane: thinks that the definition in Art. 1305 is inaccurate. The term “persons” should be substituted by the term “parties”. Also, contracts may be multilateral there can be more than ! parties in"ol"ed #i.e. partnership$. SANC/-ROAN a %uridical “con"ention” manifested in le&a le&all form form,, by "irt "irtue ue of 'hc 'hc one one or more more part partie iess bind bind themsel"es in fa"or of one another or others, or reciprocally, to d fulfillment of a prestation to &i"e, to do or not to do. Tolentno: Tolentno: (ontracts ')reciprocal *s e+cluded by d def.
Q: MAY…eed of sa!e s"gned by on!y # party? A: es, in auto ATO-CONTRACT ATO-CONTRACT s a - e+ecuted by one person only, but in such e+ecution he represents at least ! parties
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+ecuted by one person, either:
'hen a person in his capacity as rep, of 1. himself, or 'hen as a rep of ! diff persons he brin&s abt 2. a - bet his principals by -2in& ')himself 4: "alid, e+c. 161. /: - of A( #4ead art. 1760$
&o"ernm &o"ernment ent
The prohibition rests on the fact that &reed mi&ht &et the better of loyalty. The la' does not trust human nature to resist the temptations likely to arise out of the anta&onism bet'een the interest of the seller 9 the buyer. •
An a&ent 'ho 'ho has renounced renounced the a&ency 9 is is a %ud&ment creditor of his principal principal may ac;uire ac;uire the latter2s property in a public sale. •
The prohibition a&ainst la'yers is intended to curtail any undue influence the la'yer may ha"e o"er his client on account of their confidential association. uch sales are "oid 9 cannot be ratified. >ublic interest 9 public policy remain paramount 9 do not permit compromise 9 ratification. •
Q: W$en "s a t$"ng deemed to be t$e s%bect of !"t"gat"on? ot only if there is some contest or liti&ation in court, but also fr. the moment it becomes sub%ect to %udicial %udicial action. action. •
Art#le 10. 10. f the a&ent has been empo'ered to borro' money, money, he may may himsel himselff be the lender lender at the current current rate of interest. f he has been authori8ed to lend money at interest, he cannot borro' it 'ithout the consent of the principal. A%ent #an &e lender &t e $a* not &e te &orro'er. •
9 n ales #art. 161$: one party can ne"er "alidly &i"e consent. Art#le 141. 141. The The foll follo' o'in in& & pers person onss cann cannot ot ac;u ac;uir iree by purchase, e"en at a public or %udicial auction, either in person or throu&h the mediation of another: (CAPACIT6 TO ,6 OR S77) #1$ The %ardan, %ardan, the the prop propert erty y of the the pers person on or persons 'ho may be under his &uardianship #!$ A%ents, A%ents, the property 'hose administr administration ation or sale sale may may ha"e ha"e bee been n intrus intrusted ted to them, them, unless unless the consent of the principal has been &i"en #3$ #3$ 8e#tors and ad$nstrators, ad$nstrators , the property of the estate under administration #$ #$ P&l# o""#ers and s, s, the property of the tat tatee or of any any subd subdi" i"is isio ion n ther thereo eof, f, or of any any
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(ontin&ent fee< not contrary to la' as it 'ill encoura&e encoura&e the la'yer to 'ork harder to 'in the case in order order to earn the said said fee. thus, thus, it is to the client2s client2s ad"anta&e. ?ut the court may reduce the fee is found to be unconscionab unconscionable. le. #@ A @B 4C4A AD C4?A AD$ Art#le 1<4<. The 1<4<. The persons dis;ualified to buy referred to in articles 160 and 161, are also dis;ualified to become lessees of the thin&s mentioned therein •
TO7NTINO •
All -s under 161 are "oid by reason reason of >>
n (ode of commerce, #Art.!=E$ a #o$$sson #o$$sson a%ent ')o permis permissio sion n of princi principal pal cannot buy for himself or for another, nor to sell 'hat he ou&ht to buy. •
(2) 7NTS O> CONTRACTS
a) TA b) ATC4A c) A((DTA
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(a) ssental le$ents The essenti essential al elemen elements ts are those those 'ithou 'ithoutt 'hich there can be no contract. #indispensable r;mts.$ •
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These elements are, in turn, subdi"ided into:
#o$$on #comm%nes$ those those 'hich 'hich are 1.) presen presentt in all contract contracts, s, such as #onsent+ #onsent+ o&:e#t #ertan+ and #ase # ase
2.)
se#al #espec"a!es$ are pres present ent only only in in certain certain contracts, contracts, such as delver* in in real contracts, or "or$ in "or$ in solemn ones.
3.)
e8traordnar* #espec"a!"ss"mos$ are those 'hich are peculiar to a specific contract #i.e. r#e in r#e in sales$. (&) NATRA7 7NTS those 'hich are deri"ed from the nature of the contract and ordinarily accompany the same.
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They are presumed by la', althou&h they can be e+cluded by the contractin& parties if they so desire.
(3) (4) (5)
Futuality @bli&atory Borce 4elati"ity
(1) ,01SE1S2A'3+Y 04 ,01+A,+S Art#le 1305. A cont contra ract ct is a meet meetin in& & of minds minds bet'een t'o persons 'hereby one binds himself, 'ith respect to the other, to &i"e somethin& or to render some ser"ice. Art#le 131B. o 131B. o one may contract in the name of anothe anotherr 'ithou 'ithoutt bein& bein& author authori8 i8ed ed by the latter, latter, or unless he has by la' a ri&ht to represent him. A contract entered into in the name of anot anothe herr by one one 'ho 'ho has has no auth author orit ity y or le&a le&all representation, or 'ho has acted beyond his po'ers, shall shall be unenforceab unenforceable, le, unless it is ratified, ratified, e+pressly or impliedly, by the person on 'hose behalf it has been e+ecuted, before it is re"oked by the other contractin& party. Consent vtated voda&le I" &* Re atort* s vod nen"or#ea&le
#c$ A##dental le$ents le$ents The accide accidenta ntall elemen elements ts are those those 'hich 'hich e8st onl* 'en te artes e8ressl* rovde "or te$ for te$ for the purpose of limitin& or modifyin& the normal effects of the contract #i.e. conditions, terms, modes$ •
CONTRACT O> A!SION Ghere one party has already prepared the form form of a -, containin containin& & stips. stips. he desire desires, s, and he simply asks the other party to a&ree to them if he 'ants to continue ')d - •
The party 'ho adheres to the - is in reality free to re%ect it entirely, but if he does, he consents
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n case of doubt in interpretation of stip in -, such 'ill be construed "s. d party 'ho prepared such stip. H: - of adhesion adhesion is bein& disputed disputed on the &round &round of lack of consent of the other other party. s this tenableI A: ( held no, - is "alid. #ng #ng !iu "# $%$ $%$
5a6 t$ose entered "nto "n t$e name name of anot$er person person by one w$o $as been g"/en no a%t$or"ty or !ega! representat"on( or w$o $as acted beyond $"s powers 5r7t Art.#8#9 6
A: by a mt& of the offer and acceptance, upon the thin& 'hc is to constitute the - and as to the cause. The follo'in& contracts are nen"or#ea&le nless nless te* are rat"ed (Art. 1403)
E2B'3, /( '+ '++ 2< SCRA <20 RATIO: RATIO: 4reedom of part"es to st"p%!ate ; >arties can not be coerced to enter into a contract 'here no a&reement is had bet'een them as to the principal terms and conditions of the contract. Breedom to stipulate such terms and conditions is of the essence of our contractual system, and by e+press pro"ision of the statute, a contract may be annulled if tainted by "iolence, intimidation, or undue influence influence (Art#les 130<+ 133<+ 133B+ CC).
8. to pay money for an immoral cause N i.e. commit a crime bribe a public ofc marry testify in court.
56 A2+010MY 04 ,01+A,+S: Art. 130<. The contractin& parties may establish such stipulations, clauses, terms and conditions as they may deem con"enient, pro"ided they are not contrary to la', morals, &ood customs, public order or public policy.
,23 @. AE''A10 ## -3' #8 5#CD#6
+: unconscionable)usurious interest #Jurado$
T>CAT@ (@T4A4 T@ >.>.
autonomy of 'ill iberty of -s)Breedom to
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contract CONSTI 1on<"mpa"rment ,!a%se+ le&isture nor (ourts may not prescribe the terms of a le&al -, Kfreedom to - ')o prior restraint •
>arties may freely stipulate #as lon& as not contrary to )F)()>@)>>$ but the %uridical relations created by their - 9 the rts 9 *s arisin& therefrom are det. ?y a' #+: a &acto de 'etro ale may be construed by court to be loan ')mort&a&e after lookin& at the substance of d - 9 not merely its form or name. •
Breedom to - limited by the common &ood #>olice >o'er$
S#olarss are a'arded n re#o%nton o" $ert E NOT to ;ee stdents n s#ool to &olster rest%e. As for the Def., scholarship a'ard is a business scheme desi&ned to increase the business potential of an educational institution.
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/: a > 'hc constitute a &amblin& debt is unenforceable •
(ompromise A&reement appro"ed by court, 'here a &rantee of public land promised to sell to another, 'ithin the 5
SA2A /. S313,0+ 10B P 33< S+32'A+301 ,01+AY +0 ..
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RATIO:
Among t$ose t$at may not be t$e s%bect matter 5obect6 of contracts are certa"n r"g$ts of "nd"/"d%a!s( w$"c$ t$e !aw and p%b!"c po!"cy $a/e deemed w"se to eGc!%de from t$e commerce of man.
7$tatons n >reedo$ to Contra#t n A&ency, a stipulation 'hich e+cludes one or more partners from any share in the profits or losses is "oid. # Art#le 1B) n >led&e)mort&a&e The creditor cannot appropriate the thin&s &i"en by 'ay of pled&e or mort&a&e, or dispose of them. Any stipulation to the contrary is null and "oid. # Art#le 20) Art#le 2130. A stipulation forbiddin& the o'ner from alienatin& the immo"able mort&a&ed shall be "oid. >arties may not A&ree on a ceilin& price of mort&a&ed prop.in e+ecution b)c such shd be made to d hi&hest bidder #Garner ", Jaucian$ nor stipulate that upon non
Tere are #ertan $atters 'ere $an+ &* natre $st ave "reedo$ o" de#son+ ts $a* not valdl* &e &ond &* Fal H+ s# as 1. promise to marry or not, to secure le&al sep, or to adopt a child •
+$e contract m%st b"nd bot$ contract"ng part"esH "ts /a!"d"ty or comp!"ance cannot be !eft to t$e w"!! of one of t$em #Art. 1307$. •
2. promise to chan&e citi8enship, professions, reli&ion or domicile 3. promise not to hold public ofc, or limit perf or ofc duties 4. promise to %oin a poli.party or separate fr it.
5. - not to en&a&e in 'ork, labor 6. to "ote for a candidate, 7. to do, at the risk of life,
The determination of the performance may be left to a 3 person, 'hose decision shall not be bindin& until it has been made kno'n to both contractin& parties #Art. 1306$. •
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The determination shall not be obli&atory if it is e"idently ine;uitable. n such case, the courts shall decide 'hat is e;uitable under the circumstances #Art. 1310$. •
An e+ample of a determination made by a 3rd person #Art. 1306$ is the fi+in& of the price by the 3 rd person. •
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m%t%a!"ty of contracts ordaned n Art#le 130 o" te •
The contract may be re"oked if there is mutual
dissent. The condition can ne"er depend solely upon the 'ill of the debtor. f the condition depends solely on the 'ill of the debtor, the obli&ation is "oid #Art. 112$. •
The obli&ation is "oid because there is no "inculum (uris. The creditor could ne"er compel the debtor to perform the *. (otestatve ssensve H tat deends on sole 'll o" !&)
Cvl Code.
Esca!at"on c!a%ses are /a!"d st"p%!at"ons "n commerc"a! contracts to ma"nta"n f"sca! stab"!"ty and to reta"n t$e /a!%e of money "n !ong term contracts.
t is pro"ided by the parties, to ad%ust compensation)consid. upon the happenin& of an e"ent.
H: >erfection of - &oes into 'hat principleI A: @bli&atory force of -, 'hen parties became bound
imitation of ((2s liability for loss of passen&er2s ba&&a&e that 'as under declared by the latter, "alid. (0ng Y"% /. ,A)
!onaton o" $$ova&les (Art. B4) The donation must be in a public instrument.
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s#alator #laseJ Lalid if not potestati"e solely on the 'ill of one of the parties #"iolates mutuality$ K - of oan) - of G@4O)ser"ice)pro%ect< independent -in& •
The acceptance must either be in the same public instrument or in a d ifferent public instrument. Acceptance shall not take effect unless it is done durin& the lifetime of the donor. f the acceptance is made in a separate public instrument, the donor shall be notified thereof in an authentic form, and this step shall be noted in both instruments
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34< (B) RATIO A contract w$"c$ embod"es an Esca!at"on ,!a%se a%t$or"J"ng a%tomat"c "ncrease "n "nterest rates "n t$e e/ent a K!aw "ncreas"ng t$e !awf%! rates of "nterest t$at may be c$argedL( does not "nc!. a ,B ,"rc%!ar( w$c( a!t$o%g$ $a/"ng t$e face & effect of !aw( "s not str"ct!y a stat%te or a !aw. An Esca!at"on ,!a%se to be /a!"d m%st "nc!%de a de
4'0E10 @S ,A+ 2<5 SC
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GN R7: The contract is bindin& only upon the parties and their successors #Art. 1311$. Po'e"er, if the contract is purely personal #"nt%"t% personae$, then the contract 'ill not bind assi&ns and heirs. #intransmissible rts.$ •
Tol GR 4ts. 9 *s under a - are transmitted to the heirs of the parties. Peirs can2t be considered as 3>, bec. there is pri"ity of interest bet. them 9 their predecessor.
(3) or by st o" artes i.e. pacto de retro sale 'here only the party may redeem not anyone else
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#>A$ A##etan#e &* 3P no art#lar "or$. ?efore acceptance, the -2in& parties, by mutual a&reement, may modify the - or re"oke it. #>A$ ince 3>2s rt. is based directly on the -, it is also sub%. to all defenses a"ailable ". the -, such as those affectin& its "alidity. ,av : A #ons%nee+ to% not str#tl* a art* n te F o" transo+ #an se+ on te F+ te #o$$on #arrer. Reason Tere s a st. n s "avor. • n Art. 1314, Any 3> 'ho induces another to "iolate his - shall be liable to the other contractin& party.
Tol Re=s. o" a8n nder ts art#le • e+istence of a "alid • kno'led&e by 3> of -2s e+istence • interference by 3> in the -2al relation ')o le&al %ustification • Ghate"er may be the char. of the liability ')c a stran&er to a - may incur by ad"isin& or assistin& one of the parties to e"ade perf., such stran&er can2t become more e+tensi"ely liable in dama&es for non
the "endor
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