Chapter 3Form of Contracts

CELIMEN, CHRISTOPHER JOHN

MUSNI, RALPH

ECE70/B11

ENGR. JOSE CARDENAS

The form of a contract refers to the manner in which a contract is executed or manifested.

It may be oral, or in writing, or partly oral and partly in writing. If in writing, it may be in a public or a private instrument.

Classification of Contracts According to Form

Informal/Common Contract May be entered into in whatever

form (oral or written)

An example is contract of sale

Formal/Solemn Contract Required by law to be in a certain

specified form

Rules Regarding Form of Contracts

General Rule Contracts are binding therefore

enforceable reciprocally by both parties

Exceptions The contract is required to be in

a specific form when the law requires it to be in that form for its a. validity

b. enforceability

c. convenience

Form of Validity of Contract

Donation of real property – it must be a public instrument

Donation of personal property the value of which exceeds P5,000 – the donation and acceptance must be in writing

Sale of land through an agent – the authority of the agent must be in writing; otherwise, the sale is void

Stipulation to pay interest – it must be in writing; otherwise, no interest is due

Contract of partnership – it must be a public instrument

Chapter 4Reformation of Instruments

CELIMEN, CHRISTOPHER JOHN

MUSNI, RALPH

ECE70/B11

ENGR. JOSE CARDENAS

Reformation

It is the remedy allowed by law by means of which a written instrument is amended or rectified so as to express or conform to the real agreement or intention of the parties when by reason of mistake, fraud, inequitable conduct, or accident, the instrument fails to express such agreement or intention.

Requisites of Reformation

Meeting of the minds

Written instrument does not express the true agreement

Failure to express the true intention is due to mistake, fraud, inequitable conduct, or accident

The facts upon which relief by way of reformation of the instrument is sought are put in issue by the pleadings

There is clear and convincing evidence of the mistake, fraud, inequitable conduct, or accident

Reformation vs Annulment

Reformation There has been a meeting of the

minds of the parties, a contract exists but the written instrument does not express the true intention of the parties

Annulment There has been no meeting of

the minds, the consent of one of the parties being vitiated by mistake, etc.

Mutual Mistake

Mutual mistake is mistake of fact that is common to both parties of the instrument which causes the failure of the instrument to express their true intention. If the mutual mistake is of law, the remedy is annulment.

Requisites for reformation:

o Mistake is a fact

o Mistake must be proved by clear and convincing evidence

o Mistake must be mutual

o Mistake must cause the failure of the instrument

Chapter 5Interpretation of

ContractsCELIMEN, CHRISTOPHER JOHN

MUSNI, RALPH

ECE70/B11

ENGR. JOSE CARDENAS

Interpretation of Contract

It is the determination of the meaning of the terms of words used by the parties in their written contract.

Evident intention of parties prevails over terms of contract.

Special intent prevails over a general intent.

Problem 1

S sold to B his condominium unit “including all its contents.” In the unit, there is an antique chair belonging to X which X agreed to sell to S. Is the chair to be included om the sale of the unit?

o Based on Art. 1372 which explained about the particular matter that may be included and excluded on the terms of the contract, if S already paid the antique chair to X, this chair can be considered part of the agreement. But if S is not yet paid, this chair still belongs to X and it is not included on the contract.

Problem 2

X, architect, designed and supervised the construction of the house of Y. The parties failed to agree beforehand the professional fee of X. How much is Y bound to pay X?

o Based on Art. 1376 which is about the doubtful or ambiguous in a contract which the contradicting parties are entered into, the amount must be determined by the rate customarily paid in the place where the services are rendered. They must also consider the quality of work and other factors that may affect the price of the work of X.

Problem 3

Suppose in the same problem, the professional fee was agreed upon, but it is not clear from the written contract prepared by X upon the request of Y whether it should be the fixed amount of P200,000 or 6% of the cost of construction. How much is Y liable to pay?

o X is the one who created the contract and could have prevented mistakes or ambiguity in the meaning by careful choice of words and also X is the party who causes the obscurity acts with ulterior motives. The terms of contract does not result to the mutual negotiation they’d created and most of it was based upon the one party which is X. The liability of Y is what Y will choose from the terms of the contract. Reformation also can be made if Y chooses to reform the contract.