Essential Requisites to Perfect a Contract
In general, a contract is perfected only when all of the following requisites are present: (1) consent of the contracting parties; (2) object certain which is the subject matter of the contract; and (3) cause of the obligation which is established.
Consent is manifested by the meeting of the offer and the acceptance upon the thing and the cause which are to constitute the contract. The offer must be certain and the acceptance must be absolute. If a party offers a qualified acceptance, the same is considered a counter-offer.
An acceptance of an offer may either be express or implied. In case an acceptance is made via a letter or telegram by a party, the contract is only perfected once the offeror learns of the acceptance. In this case, there arises a presumption that the contract has been entered into in the place where the offer was made.
The party making an offer may fix the time, place, and manner of acceptance, all of which are required to be complied. If the offer was coursed through an agent, the other party may manifest his acceptance to the agent binding the principal. The offer becomes ineffective upon the death, civil interdiction, insanity, or insolvency of either party before acceptance is conveyed.
If the offer carries with it a certain period to accept, the party making an offer may still withdraw at any time before acceptance of the other by informing the latter. This right to withdraw is not available when the option is founded upon a consideration, as something paid or promised.
The following cannot give consent to a contract: (a) minors; (b) insane or demented persons; and (c) deaf-mutes who do not know how to write. Even if a party is insane or demented, he may still validly enter into a contract during a lucid interval. Contracts agreed into in a state of drunkenness or during a hypnotic spell are voidable.
For goods, an object of a contract includes all things which are not outside the commerce of men, including future things and transmissible rights. For services, an object of a contract includes all services which are not contrary to law, morals, good customs, public order, or public policy may likewise be the object of a contract.
The object of a contract is required to be determinate as to its kind. If it involves an indeterminate quantity, the contract remains valid so long as it is possible to determine the same, without the need of a new contract between the parties. Future inheritance cannot be an object of a contract, unless otherwise expressly authorized by law. However, impossible things or services cannot be the object of contracts.
In onerous contracts, the cause is the prestation or promise of a thing or service by the other. For remuneratory ones, the cause is the service or benefit which is remunerated. In gratuitous contracts, the cause is the mere liberality of the benefactor.
Best Legal Practices:
State cause on written contracts – The causes for entering the contract should be stated in the where-as clauses. These stipulations are important in order to reflect the intention of the parties, as well as the context, nature, and circumstances of the transaction. In case of controversy, these clauses will be used to determine the intent of the parties.
As an essential requisite, a contract without a cause or with an unlawful one does not produce any legal effect whatsoever. A cause is unlawful if it is contrary to law, morals, good customs, public order or public policy.
A contract is void if what is stated therein is a false cause and it is later not proved that it was founded upon another cause which is true and lawful. If the cause is not stated in the contract, it is presumed that it exists and is lawful unless otherwise proven by the debtor.
A lesion or inadequacy of cause does not invalidate a contract except: (a) as otherwise provided for by law, or (b) there was fraud, mistake, or undue influence.