Contracts 1: General Principles, Essential Characteristics, and Kinds of Contracts

Summary

This video provides an educational overview of the general principles of contract law, explaining key concepts like the stages of a contract (preparation, perfection, and consummation), essential requisites, and characteristics of contracts such as autonomy, mutuality, and relativity. It covers different contract types, including consensual, real, onerous, and gratuitous contracts, as well as concepts like breach, stipulations for a third party, and unilateral vs. bilateral contracts. The video also touches on formal vs. informal contracts and discusses defective contracts, aiming to provide foundational knowledge for anyone interested in contract law.

Takeaways

• 😀 A contract is a meeting of the minds between two persons where one party binds themselves to give something or render a service.
• 😀 An obligation is a juridical necessity, whereas contracts are merely a source of obligations.
• 😀 Contracts have three stages: preparation (negotiation), perfection (birth), and consummation (fulfillment).
• 😀 Autonomy in contracts means parties are free to establish terms unless they violate law, morals, good customs, public order, or policy.
• 😀 Mutuality in contracts ensures both parties are bound, and compliance cannot be left to one party's discretion.
• 😀 A third-party determination in a contract (e.g., price set by a third party) is valid unless it’s inequitable or unenforceable.
• 😀 Contracts are generally binding only to the parties involved, their heirs, or assigns, with a few exceptions like stipulations for third-party benefits.
• 😀 A stipulation in favor of a third party, or stipulation pour autrui, can confer a benefit upon a third party, and they can demand fulfillment if accepted.
• 😀 Real contracts are perfected through the delivery of the subject, whereas consensual contracts are perfected by mere consent.
• 😀 A breach of contract occurs when a party fails to comply with the terms, and the injured party may seek remedies for such breach.
• 😀 Contracts can be categorized into nominate (with specific names in law) and innominate (without specific names) contracts, each governed by different rules.

Q & A

What is the definition of a contract according to the law?

A contract is a meeting of the minds between two persons, where one binds himself to give something or render a service to the other.

What are the three stages of a contract's life?

The three stages of a contract's life are preparation (negotiation stage), perfection (when the contract is formed), and consummation (when the contract is completed or terminated).

What is the difference between a contract and an obligation?

An obligation refers to a juridical necessity to give, do, or not do something. A contract is a source of obligations, which can arise from various sources including contracts themselves.

What is meant by the characteristic of autonomy in contracts?

The characteristic of autonomy in contracts means that the parties are free to establish whatever terms, conditions, or stipulations they wish, provided these do not violate the law, morals, public order, or public policy.

What does the principle of mutuality in contracts refer to?

The principle of mutuality means that both parties must be bound by the contract. The contract cannot be valid or enforceable if the obligations are dependent solely on one party's will.

What is the role of a third person in determining contract performance?

In some cases, the performance of a contract can be determined by a third person, such as when the price of a good to be sold is left to the determination of a third party. This arrangement is valid as long as the third person's choice is not inequitable.

What does the principle of relativity in contracts mean?

The principle of relativity means that contracts only take effect between the parties and their heirs or assigns. Third parties are not bound by the contract unless there are exceptions, such as stipulation pour autrui or real rights created by the contract.

What is a stipulation pour autrui in contracts?

A stipulation pour autrui is a provision in a contract that confers a benefit on a third person, who can demand its fulfillment once they accept it before the contract's finalization.

How are real contracts different from consensual contracts?

Real contracts are perfected by the delivery of the object of the contract, whereas consensual contracts are perfected by the mere consent of the parties.

What is breach in the context of contracts?

A breach is the failure, without any legal reason, to comply with the terms of the contract. When a breach occurs, the parties may seek remedies depending on the nature of the breach.