Summary
Highlights
Article 1318 outlines the three essential requisites for a valid contract: consent of the contracting parties, a certain object that is the subject matter of the contract, and the cause of the obligation. These elements are subdivided into common, natural, and special elements, with additional requirements for real contracts (delivery) and solemn/formal contracts (compliance with formalities).
Consent is defined as the meeting of the minds between parties regarding the subject matter and cause of the contract. Key requisites include having two or more parties, no vitiation of consent (must be voluntary and intelligent), no conflict between declared and intended terms, and proper declaration of intent. The offer must be certain, and acceptance must be absolute; a qualified acceptance constitutes a counter-offer, rejecting the original offer.
Acceptance made by letter or telegram binds the offeror only from the time it comes to their knowledge. The death, civil interdiction, insanity, or insolvency of either party before acceptance is communicated renders the offer ineffective. An offeror may withdraw an offer at any time before acceptance, unless the option is founded upon a consideration (option money), which makes the offer irrevocable within the stipulated period.
Business advertisements of things for sale are generally not definite offers but mere invitations to make an offer, unless they appear to be definite with all specific particulars. Advertisements for bidders are also typically invitations for proposals, allowing the advertiser to accept or reject any bid, as they are not definite offers themselves.
Unemancipated minors, insane/demented persons (except during lucid intervals), and deaf-mutes who cannot write cannot give consent. Contracts entered into by such incapacitated persons are voidable. However, certain modifications exist, such as minors entering specific insurance contracts. Contracts made in a state of drunkenness or during a hypnotic spell are also voidable, as these states temporarily remove understanding.
A contract where consent is given through mistake, violence, intimidation, undue influence, or fraud is voidable. Consent must be intelligent, free, and voluntary. Mistake must be substantial (regarding the object, principal conditions, or identity/qualifications of a party) to vitiate consent; a simple mistake of account only warrants correction. Violence involves serious physical coercion, while intimidation involves reasonable and well-grounded fear of an imminent and evil threat upon a person, their property, or their family, compelling them to enter a contract. Undue influence involves improper advantage over another's will, depriving them of reasonable freedom of choice, considering factors like relationships, mental weakness, or financial distress. These vices, even if employed by a third person, can make a contract voidable.
Fraud occurs when insidious words or machinations induce one party to enter a contract they wouldn't have without these deceptions (dolo causante). Incidental fraud (dolo incidente) does not vitiate consent but may lead to damages. For fraud to vitiate consent, it must be material, serious, employed by only one party, and involve a deliberate intent to deceive. Misrepresentation in good faith is not fraud but may constitute an error. Fraud by concealment, where there is a duty to disclose facts, also constitutes fraud. Usual exaggerations in trade are not fraudulent if the other party had the opportunity to know the facts. A mere expression of opinion is not typically fraud, unless made by an expert and relied upon, turning out to be false. Misrepresentation by a third person does not vitiate consent unless it creates a substantial and mutual mistake.
Simulation of contracts occurs when parties mutually agree not to express their true intent. It can be absolute, where parties do not intend to be bound at all (rendering the contract void), or relative, where they conceal their true agreement (the true agreement binds them, unless it prejudices a third person or is contrary to law, morals, good customs, public order, or public policy).