Summary
Highlights
Contracts have natural elements (presumed to exist unless expressly excluded, like warranties), accidental elements (terms established by parties), and essential elements. Essential elements are common (consent, object, cause) and special (requiring specific forms, objects, or causes by law).
Consent is the meeting of a certain offer and an absolute acceptance. A valid offer must be definite, complete (including all necessary elements like price in a sale), and intentional. Offers become ineffective if the offeror dies, becomes incapacitated, or insolvent before acceptance. Business advertisements are invitations to make proposals, not offers. An offer can be withdrawn before acceptance unless it's an option contract, which is a separate, preparatory contract supported by independent consideration.
Acceptance must cover all terms and be absolute, clear, unconditional, and unqualified. A counter-offer invalidates the original offer. In the Philippines, the cognition theory applies, meaning a contract is perfected when acceptance comes to the offeror's knowledge. Acceptance can be express or implied, and even through silence if there's a duty and opportunity to respond, and the offeree's acts unequivocally indicate assent. Knowledge of an agent is attributed to the principal.
For consent to be valid, it must be intelligently given (capacity), free/voluntary, and conscious/spontaneous. Individuals who cannot give consent include minors, insane/demented persons (except during lucid intervals), and deaf-mutes who cannot write. Drunkenness or hypnotic spells can make a contract voidable. Vices of consent (mistake, violence, intimidation, undue influence, fraud) can render a contract voidable, meaning it's valid until annulled.
The object is the subject matter of the contract. It must be within the commerce of men, not impossible (legally or physically), in existence or capable of existing (future goods), and determinate or determinable without needing a new contract. Contracts with future inheritance as an object are generally void, with exceptions for donations by reason of marriage or inter vivos partitions taking effect upon death.
The cause is the essential reason or purpose why a party enters into a contract. Cause differs from motive: cause is the direct reason and generally objective, while motive is the indirect/remote reason and can vary. Generally, motives don't affect contract validity unless they predetermine the cause, such as a donation contingent on immoral acts or transactions designed to circumvent the law.
The absence, unlawfulness, or falsity of a cause renders a contract void. An unlawful cause is contrary to law, morals, public policy, or public order. A false cause makes a contract void unless there's an underlying true and lawful cause that can be proven. The law presumes a cause exists and is lawful even if not stated, and the burden of proof is on the party claiming otherwise.
Failure of cause (non-performance) results in a breach, while the absence of cause means no contract exists. Lesion (damage from inadequacy of price) generally does not invalidate a contract unless coupled with fraud, mistake, or undue influence. Moral obligations can serve as a cause if they stem from a prescribed civil obligation, but not if they are purely ethical.