OBLICON_GENERAL PROVISIONS ON CONTRACT PART 2

Summary

This video script delves into the three stages of contract law: preparation or negotiation, perfection or birth, and consummation or termination. It explains that a contract is perfected when parties reach a definite agreement, creating obligations to fulfill stipulated terms in good faith. The script also covers exceptions involving third parties, essential elements of contracts, and the importance of consent. It clarifies the difference between void and voidable contracts and illustrates the process of offer and acceptance, emphasizing the legal capacity of parties to enter into contracts.

Takeaways

• 📝 The video discusses the three stages of contracts: preparation or negotiation, perfection or birth, and consummation or termination.
• 🤝 Preparation or negotiation involves the steps taken by parties leading to the perfection of the contract.
• 🎯 A perfected contract exists when parties are in negotiation about the price or other terms, indicating a mutual agreement is yet to be fully established.
• 🌟 Perfection or birth of a contract occurs when there is a definite agreement or meeting of the minds regarding the subject matter and cause of the contract, as per Article 1319 of the Civil Code.
• 📚 Once a contract is perfected, obligations arise between the parties, and they are bound to fulfill what has been expressly stipulated in good faith, as per Article 1315.
• 🔄 Consummation or termination is when parties have performed their respective obligations, fully accomplishing or executing the contract, which results in its extinguishment.
• 🚫 Exceptions exist where contracts are only effective between parties, and rights and obligations are not transmissible, such as in the case of personal services like painting or singing.
• 📜 Third parties generally have no rights or obligations under a contract unless it is specifically stipulated in favor of a third person, creating an exception to the general rule.
• 🔑 Essential elements of contracts include consent of the parties, a certain object or subject matter, and a cause or purpose for the obligation, as outlined in Article 1318.
• 📬 Acceptance is a critical component, manifesting when one party agrees to the terms of the offer, and it must be absolute for a contract to be valid.
• 📝 The legal capacity of parties is crucial for a contract to be valid; the law presumes everyone has capacity unless proven otherwise.

Q & A

What are the three stages of contracts mentioned in the script?

The three stages of contracts mentioned are: 1) Preparation or Negotiation, 2) Perfection or Birth, and 3) Consummation or Termination.

What does the term 'preparation or negotiation' in the context of contracts entail?

Preparation or negotiation refers to all the steps taken by the parties leading to the perfection of the contract, which is self-explanatory and involves discussions and agreements on the terms of the contract.

Can you explain what is meant by a 'perfected contract'?

A perfected contract is one where the parties have come to a definite agreement or meeting of the minds regarding the subject matter and cause of the contract, as per Article 1319 of the Civil Code.

What happens when there is a 'meeting of minds' between the parties in a contract?

When there is a meeting of minds, obligations between the parties arise, and they are bound to the fulfillment of what has been expressly stipulated, in compliance with the law and in good faith, as per Article 1315 of the Civil Code.

What is the significance of 'consummation' in the context of contracts?

Consummation refers to the stage when the parties have performed their respective obligations, and the contract is fully accomplished or executed, resulting in its extinguishment or termination.

What are the exceptions when contracts are effective only between the parties?

Contracts are effective only between the parties when the rights and obligations arising from the contract are not transmissible, such as in personal services like painting or singing, as discussed in previous modules.

According to Article 1178 of the new Civil Code, what happens when death extinguishes legal relationships?

According to Article 1178, death extinguishes the legal relationships whether it involves the parties themselves or third persons affected by a contract. However, third persons have no rights and obligations under a contract since they are not privy to it.

What are the essential requisites of contracts as per Article 1318 of the Civil Code?

The essential requisites of contracts are the consent of the contracting parties, a certain object which is the subject matter of the contract, and a cause of the obligation, which are the elements without which no contract can validly exist.

What is the difference between 'void' and 'voidable' contracts as mentioned in the script?

A void contract is one that is inexistent or not existent from the beginning, such as in the case of a simulated contract where there was no intention to be bound. A voidable contract, on the other hand, is one that is valid until it is avoided due to certain defects like fraud, error, or undue influence.

What is the importance of 'consent' in the formation of a contract?

Consent is crucial as it is manifested by the meeting of the offer and acceptance upon the thing and the cause which are to constitute the contract. It presupposes legal capacity and the fulfillment of conditions if any are attached.

What happens if an offer is withdrawn before acceptance?

If an offer is withdrawn before the acceptance is communicated, the offeror is allowed to do so by law, as there was no meeting of the minds between the parties yet, hence no contract had been perfected.

Outlines

00:00

📝 Stages of Contract Formation

The first paragraph introduces the three stages of contract formation: preparation or negotiation, paradigm perfection or birth, and consummation or termination. It explains that preparation involves steps taken by parties leading to a perfected contract. A perfected contract is characterized by a definite agreement or meeting of the minds regarding the subject matter and cause of the contract, as per Article 1319 of the Civil Code. The obligations between parties arise once there is mutual agreement, and parties must fulfill what has been stipulated in good faith, as per Article 1315 and 1159 of the Civil Code. Consummation occurs when parties perform their obligations, leading to the contract's full accomplishment and termination.

05:46

👥 Contract Parties and Third Parties

The second paragraph discusses the exceptions to the general rule that contracts are only effective between the parties involved. It explains that rights and obligations from contracts are not transmissible to third parties, except in specific cases. These include contracts containing stipulations in favor of a third person, contracts creating real rights, contracts entered into to defraud creditors, and contracts violated due to the inducement of a third person. The paragraph also touches on the concept of a 'stranger' to a contract, who has no rights or obligations under it, unless they fall into one of the exceptions mentioned.

10:47

📜 Essential Elements of Contracts

The third paragraph outlines the essential elements of contracts as per Article 1318 of the Civil Code. It states that a contract cannot exist without the consent of the parties, a certain object which is the subject matter of the contract, and a cause or consideration. These elements are necessary for the validity of any contract. The paragraph also differentiates between general provisions applicable to all contracts and special elements that are peculiar to certain specified contracts. It further explains the concept of offer and acceptance, which are crucial for consent to be manifested, and the legal implications of qualified acceptance or acceptance made by letter or telegram.

15:48

🔍 Legal Capacity and Consent in Contracts

The fourth paragraph delves into the concept of legal capacity and consent in the context of contracts. It emphasizes that for a contract to be valid, the parties must have the legal capacity to enter into it, which is generally presumed unless proven otherwise. The paragraph also discusses the importance of consent, stating that without it, there can be no contract. It highlights situations where consent might be lacking, such as in jokes or simulated contracts, and the legal consequences of such scenarios, including the contract being void or voidable.

20:50

📨 Offer, Acceptance, and Legal Capacity

The fifth paragraph focuses on the process of offer and acceptance in contract formation and the role of legal capacity. It explains that an offer is a proposal to enter into a contract and must be more than just an expression of desire; it should be a promise to act or refrain from acting if accepted. Acceptance is the manifestation of agreement to the offer's terms. The paragraph also discusses the right to withdraw an offer before acceptance occurs, using an example to illustrate the point. It reiterates the importance of legal capacity, noting that without it, a person cannot enter into a contract.

Keywords

💡Contract

A contract is a legally binding agreement between two or more parties that creates obligations enforceable by law. In the video, contracts are discussed in the context of their stages, from preparation and negotiation to perfection and consummation. The script mentions that contracts involve 'meeting of the minds regarding the subject matter and cause of the contract,' which is essential for a valid agreement.

💡Preparation or Negotiation

This stage of a contract refers to the initial phase where parties discuss and negotiate the terms of the agreement. The script describes it as 'all the steps taken by the parties leading to the perfection of the function.' It is a crucial phase as it sets the groundwork for the contract's final form.

💡Perfection or Birth

Perfection of a contract occurs when the parties have reached a definite agreement or 'meeting of the minds' on the terms of the contract. The script cites Article 1319 of the Civil Code, emphasizing that 'by mere consent, delivery, unless and until there is a perfected contract, there is no obligation.' This signifies the point at which the contract becomes legally enforceable.

💡Consummation

Consummation of a contract is when the parties have fully performed their respective obligations, leading to the contract's completion or termination. The script mentions that this results in 'extinguishment or termination,' indicating the end of the contractual relationship once all terms have been fulfilled.

💡Meeting of the Minds

The term 'meeting of the minds' refers to the mutual agreement and understanding between the parties regarding the terms of the contract. In the script, it is used to describe the moment when a contract is perfected, as it signifies that both parties have agreed upon the same terms and are bound to them.

💡Good Faith

Good faith is a legal principle that requires parties to act honestly, fairly, and in a manner that upholds the contract's purpose. The script refers to Article 1159 of the Civil Code, stating that 'compliance thereof must be in good faith,' which means that parties are expected to fulfill their contractual obligations with integrity.

💡Legal Capacity

Legal capacity refers to an individual's ability to enter into a contract. The script implies that for a contract to be valid, the parties must have the legal capacity to do so. It is mentioned that 'there is no contract' if there is 'absolutely no consent,' which presupposes the parties' legal capacity to give consent.

💡Offer and Acceptance

Offer and acceptance are fundamental components of contract formation. An offer is a proposal to enter into a contract on certain terms, and acceptance is the unqualified agreement to those terms. The script explains that 'consent is manifested by the meeting of the offer and the acceptance,' which is necessary for a contract to be formed.

💡Stipulation

A stipulation is a specific term or condition agreed upon by the parties in a contract. The script discusses stipulations in favor of third persons and contracts creating real rights, indicating that certain contracts may have specific provisions that affect the rights and obligations of parties beyond the immediate contractants.

💡Third Party

A third party refers to someone who is not a party to the contract but may have certain rights or be affected by the contract. The script explains that third persons generally have no rights or obligations under a contract unless it is a 'stipulation in favor of a third person,' which is an exception to the general rule.

💡Void and Voidable

Void contracts are those that are not enforceable from the outset due to a fundamental flaw, while voidable contracts are enforceable but may be avoided due to certain defects. The script clarifies that a contract affected by 'error, fraud, or undue influence' is not void but merely voidable, which means the parties have the option to avoid the contract under certain conditions.

Highlights

Introduction to the three stages of contracts: preparation or negotiation, perfection or birth, and consummation or termination.

Explanation of a perfected contract during the negotiation stage.

The importance of definite agreement or meeting of the minds for contract perfection under Article 1319 of the Civil Code.

The binding nature of a perfected contract and the obligations arising from it.

The requirement of good faith in fulfilling contractual obligations as per Article 1159 of the Civil Code.

The concept of consummation as the full accomplishment or execution of a contract.

Exceptions when contracts are effective only between parties and non-transmissible rights and obligations.

Article 1178 of the New Civil Code discussing the extinguishing of legal relationships upon death.

The rights and obligations of third persons in contracts, including stipulations in favor of a third person.

Contracts creating real rights and their stipulations under Article 1312 of the New Civil Code.

The impact of contracts on creditors and fraudulent contracts under Article 1313 of the New Civil Code.

Essential requisites of contracts as outlined in Article 1318 of the New Civil Code.

The importance of consent in contracts and the manifestation of consent through offer and acceptance.

Legal capacity as a prerequisite for entering into a contract.

The distinction between void and voidable contracts based on consent and intention.

The process of offer and acceptance, and the conditions that must be met for a valid contract.

The role of legal capacity in the validity of a contract and the burden of proof regarding incapacity.

Transcripts

[Music]

hi

everyone welcome to my channel always

remember ignorance of the law excuses no

one

this is

three stages of contracts unai

preparation or negotiation second

paradigm perfection or birth

and impact law consummation or

termination

so let's proceed with the preparation

for negotiation i mean

it's self-explanatory this includes all

the steps taken

by the parties leading to the perfection

of the function

[Music]

[Music]

oh

is a perfected contract yes yes there is

a perfected contract

in that case i'm in a negotiation as to

the price

preparation preparation or medication

[Music]

[Music]

so next stage is perfection or birth of

a contract

this is when the parties have come to a

definite agreement

or meeting of the minds regarding the

subject matter and cause of the contract

under article 1319 of the civil code

by mere consent

[Music]

delivery

unless and until there is perfected

contract there is no

obligation

or negotiation

is a perfection or birth of the hundred

once the parties agree

i mean i'm a mutual meeting of my own

meeting of mines

so uh obligations between the parties

will arise

yes okay and uh by this the parties are

bound to the fulfillment of what has

been expressly

stipulated as according to article 13

15 of the civil code and compliance

thereof must be in good faith according

to article

1159 of the civil code

right so there must be good faith to

fulfill compliance in good faith

yes so the parties are also bound to all

the consequences

which according to their nature may be

in keeping with good faith

usage and law all right

so preparation

or negotiation that there is already a

perfection of the contract

and there is what we call consummation

or

so this is when the parties have

performed

their respective obligations and the

contract may be said to have been fully

accomplished or

executed resulting in extinguishment or

termination

8 000 pesos there is already preparation

negotiation and then perfection of the

contract

in certain cases okay so

self-explanatory the part

um

[Music]

okay

yes so exceptions the cases when

contracts are effective only between the

parties or when the rights and

obligations arising

from the function are not transmissible

intonations

such as painting singing we have

discussed this

in our previous modules so put it in

among

stipulations the parties may stipulate

that uh even if

[Music]

and when death extinguishes the legal

relationships

yes that's according to article 1178 of

the

new civil code right whether it is

young parties or your persons affected

by

a contra i young third person

but no one has a third persons

uh have no rights and obligations under

a contract since

of course they are not privy to the

contract

but uh of course um uh they are

well in that case the third persons are

a stranger

and therefore the third person has no

standing

in contract and again he has

no right to demand for the enforcement

of whatever it is that should be

enforced under the

contract right but

a third person we still have uh rights

and obligations

um arising from the contract even if in

this election example point

when third persons can be affected by a

contract among such cases or the

following according to

your number contracts containing a

stipulation in favor of a third person

or stipulation per attribute

by the amount contracts creating real

rights

under article 13 12 of the new civil

code

crediting in contracts entered into to

defraud the creditors

under article 13 13 of the new civil

code

by the contracts which have been

violated

at the inducement of a third person

under article 13

14. also yes so

mentioned apparently and the first one

is um when there is a stipulation of

we

or the person who procured such

insurance and yet this third person

designated as beneficiary has

the rights over uh the proceeds of that

insurance privacy so

i try stranger that's a third person it

uh is contract it is named that

uh he is a party let's say he is

affected by the contra

that's an exception another example is

entered into different creditors under

article 13 13 of the new zealand quote

obviously

would you have

me what's up an admin and their

obligations say one of the remedies of

the creditors whenever the debtor

wouldn't uh pay his uh or do

well could that satisfy the payment in

full

take note of that okay now um

after what we've talked about so far

um essential requests of contracts right

yes

um and uh under essential requests

of contracts um general provisions under

article 13 18 of the news

so article 13 18 there is no contract

unless the following requisites concur

first consent of the constructing

parties

second object certain which is the

subject matter of the contract

and last uh cause of

the obligation which is established

mm-hmm

elements and essential elements they are

those without which no contract can

validly exist

yes and they are also known as requests

of a contra

first of which is common present in all

contracts

coc lagging may say in all kinds of

contracts

under article 13 18 of the

[Music]

[Laughter]

special elements eternal those

not common to all contracts or those

which must be present

only in or peculiar to

peculiar to certain specified contracts

and such specularity

may be as regards to form as regards to

subject matter or as regards the

consideration or cause

international

in a public instrument or the donation

of a real property must be embodied

in the public instrument instrument

same as sage same as the sale of real

property

[Music]

those that are presumed to exist in

certain contracts

unless the contrary is expressly

stipulated by the parties

like warranty against eviction or

warranty against

[Music]

[Music]

consent is manifested by the meeting of

the offer

and the acceptance upon the thing and

the costs which are to constitute the

contract

the offer must be certain and acceptance

absolute

a near qualified acceptance constitutes

a

counteroffer acceptance made by letter

or telegram does not bind the offer

except from the time it came to his

knowledge the contract in such a sense

in such a case is presumed to have been

entered into in the place

where the offer was made mm-hmm

of course it's the conformity or

occurrence

of wheels which means the offer

and acceptance and with respect to

contracts

it is the agreement of the will of one

contracting

party with that of another others upon

the object in the terms

of the contract so because consent is

manifested

by the meeting of the offer

and the acceptance upon the thing

and the costs which are to constitute

the

contra so it presupposes legal capacity

and the fulfillment of conditions

should any be attached

so you know that medical capacity to

give

so 18 years old and above

so if there is absolutely no consent

there is no contract um

[Music]

there is no intention to enter into a

contract

therefore there is no contract to begin

with

that but there must be an intention for

the parties to enter

into a contract

so if there is absolutely no consent

that's in the case of a joke

then there is no contract okay the

agreement may be considered

inexistent or not existent or void

and the same rule applies in the case of

absolutely simulated contract

one where the parties never intended to

be done so of course

there is never uh there is no intention

such as error fraud or injury influence

the function is not void

but merely voidable

they confuse void and avoidable

[Music]

19 offer and acceptor

so this is when one party makes a

proposal to another to enter

in a contract

it should be understood as more than

just an

expression of desire or hope it should

really be a promise to act or to refrain

from acting on condition

that the terms they're offer accepted by

the person to whom it is made

so no no

[Music]

[Music]

offer me acceptance acceptance is so

this is when the offering makes a

manifestation of his

ascent to the terms of the offer without

such

acceptance there can be no meeting of

the minds between the parties

so that's in article 1302 of the new

symbol

it's to wait but it's a relationship

[Music]

they decide yes

yep

love yourself

a particular house in love for let's say

three million pesos

before harry could communicate his

consent

panel decided to withdraw the offer

was panado allowed to do so and one

answer

is yes is allowed by law to withdraw

such offers since in this case there was

no meeting of the minds between the

parties yet

hence no contract had been perfected

between manalo and

heart

attorney there was no meeting of mine

yeah

the withdrawal by the offer was made

before

uh the acceptance was made by harry

perry

[Music]

and the meeting i offer and the

uh acceptance which is absolutely so

that's a great

uh way of approaching the problem what

uh we didn't know so

she looked on the essential elements no

existence no

[Applause]

okay

to be valid acceptance must be

manifested by the occurrence of the

offer

and acceptance with respect to object

and cost

[Music]

and there must be a legal capacity

of the parties so take note

that name may occur is not on an offer

and acceptance with respect to the

object

and then there must be legal capacity uh

given your name you cannot enter into a

contract unless

you you are legally capacitated so um

definition telegraph a civil code

consignment legally capacitated

or indefinition of legal capacity uh

there is no

uh there is nothing in the civil code

that defines

who has capacity it does however define

who have known who has no capacity

by which it can be thus inferred that

the general rule is capacity which

exists in

those of whom the law has not denied it

the burden of proof then is on the party

who asserts incapacity to the other

so everyone has capacity yes

everyone has the capacity

you have to prove that in fact she

doesn't have the capacity to enter into

such countries

[Music]

you