Summary
Highlights
This section introduces the concept of the form of contracts, explaining it as the manner in which a contract is executed or manifested. Contracts can be oral, written, partly oral and partly written, express or implied, informal or formal. The general rule is that contracts are obligatory in whatever form, provided all essential elements (consent, object, and cause) are present.
The video discusses instances where the law requires a certain form for a contract to be valid, making such requirements absolute. Examples include donations of personal property exceeding 5,000 pesos, the authority of an agent selling land, anticrisis agreements, and donations of immovable property. Some contracts also require a public document (notarized) for validity, such as donations of immovable property and partnerships contributing immovable property to a common fund. Registration may also be required for chattel mortgages and sale of large cattle.
This part covers contract enforceability, particularly in relation to the Statute of Frauds (Article 1403, paragraph 2 of the Civil Code of the Philippines), which requires certain contracts to be in writing to be provable in court. It also highlights situations where a specific form is required for greater convenience or efficacy, such as notarization to bind third parties or the entire world, converting a private document into a public one.
Reformation is presented as a legal remedy to correct a written instrument that fails to reflect the true agreement or intention of the parties due to mistake, fraud, inequitable conduct, or accident. It emphasizes that reformation applies only when there is a written document and a clear meeting of the minds, aiming to enforce the original intent rather than create a new contract.
The video outlines the requisites for reformation: a meeting of the minds, a written instrument that doesn't express the true agreement, and the discrepancy being due to mistake, fraud, inequitable conduct, or accident, which must be clearly and convincingly proven. Specific instances where reformation is applicable include mutual mistake, mistake by one party and fraud/inequitable conduct by the other, concealment of mistake, drafting errors by third parties, and contracts erroneously styled as sales when they were intended as mortgages.
Reformation is not allowed in simple donations inter vivos without conditions, wills, or when the real agreement between the parties is void. It's clarified that a party who first asks for enforcement of a contract cannot later ask for its reformation, as this implies ratification of the contract's validity.
The general rule for contract interpretation is presented: if the words of the contract are clear and leave no doubt, a literal interpretation applies because the contract is the law between the parties, and their consent is presumed to be freely and knowingly given. There is no need for interpretation if the words are unambiguous.
When contractual terms are doubtful or ambiguous, the video provides several rules: the evident intent of the parties, determined by contemporaneous and subsequent acts, governs. Special provisions prevail over general ones. General provisions relate only to the specific subject matter. All stipulations must be interpreted together to give meaning to the whole contract. If a stipulation has several meanings, the interpretation that makes it effectual is preferred. Words susceptible to different meanings are interpreted in keeping with the contract's nature and object.
If obscure or uncertain words are used, they are interpreted against the party who introduced them, especially if they were seeking undue advantage. The concept of 'contracts of adhesion' (pro forma contracts where one party merely affixes their signature) is discussed. While generally valid, ambiguities in these contracts are strictly interpreted against the drafting party, offering protection to the adhering party.
In the absence of other rules, default principles apply: for gratuitous contracts, ambiguities are resolved in favor of the least transmission of rights. For onerous contracts, interpretation favors the greatest reciprocity of interests (a win-win for both parties). If the doubt concerns the principal object, the contract may be void. Finally, the usage or customs of the place may be applied to resolve ambiguities, such as determining a fair price for services based on common local rates.