NAME: BILIGAN, KING MARCO L.
YR & SECTION: BSBA MM 2-3
1. Define and discuss option contract; option period and option money.
An option contract
- is a preliminary contract that grants a person the right to purchase something in
the future within a specific time frame and under specified conditions which to
accept the offeror’s offer It is distinct and unique from the proposed main
agreement or major contract itself (subject matter of the option) that the parties
may enter into upon the option's completion or that will be finalized upon
acceptance of the option.
Option period
- is the period given within which the offeree must decide whether or not to enter
into the principal contract
Option money
- is the money paid or promised to be paid as a distinct consideration for an option
contract. It is not to be confused with earnest money which is actually a partial
payment of the purchase price and is considered as proof of the perfection of the
contract.
2. Is an advertisement considered an offer? Why or why not? Discuss with
reasons
- And according to ART. 1325. Unless it appears otherwise, business
advertisements of things for sale are not definite offers, but mere invitations to make an
offer. (n). • Ads for things for sale aren't firm offers that, if accepted, make a contract.
Instead, they're just suggestions or invitations for the reader to make an offer. But if the
ad has all the details that are needed in a contract, it could be seen as a firm offer that, if
accepted, would lead to a fully formed contract.
3. Who are the persons who cannot give their consent to a contract?
ART. 1327. The following cannot give consent to a contract:
(1) Unemancipated minors
(2) Insane or demented persons, and deaf-mutes who do not know how to
write. (1263a).
4. What must be the characteristics of consent? Enumerate the different vices of
consent.
In order that consent may be sufficient for purposes of contract, it is required, not only
that it exists. Aside from the requirement that consent must be manifested by the meeting
of the offer and the acceptance (Art. 1319.), there is no valid consent unless:
(1) It is Intelligent
- There is legal capacity to act. (See Arts. 1327-1329.) The consent must be given
with an exact notion over the thing consented to or the matter to which it refers. In
the case of a juridical persons such as a corporation, consent may only be given
through officers duly authorized by its board of directors.
(2) It is free and voluntary
- There is no vitiation of consent by reason of violence or intimidation (see Art.
1330.)
(3) It is conscious or spontaneous.
- There is no vitiation of consent by reason of mistake, undue influence, or fraud.
Aside from incapacity and simulation of contract, the following are the causes that vitiate
consent or render it defective so as to make the contract voidable:
(1) error or mistake (Art. 1331.);
(2) violence or force (Art. 1335.);
(3) intimidation or threat or duress (Ibid.);
(4) undue influence (Art. 1337.); and
(5) fraud or deceit. (Art. 1338.)
5. What is simulation of contract? Give the basic characteristic, purpose and
requisite of simulation.
According to ART. 1345. Simulation of a contract may be absolute or relative. The former
takes place when the parties do not intend to be bound at all; the latter, when the parties
conceal their true agreement. (n)
Simulation of a contract is the act of deliberately deceiving others, by feigning or
pretending by agreement, the appearance of a contract which is either non-existent or
concealed or is different from that which was really executed.
The Basic characteristic, purpose, and requisites of simulation.
(1) The basic characteristic of simulation is the fact that the apparent contract
is not really desired or intended to produce legal effects or in any way alter
the juridical situation of the parties.
(2) The nullity of a simulated contract is based on the absence of true consent
of the parties which is essential to a valid and enforceable contract. The
purpose of simulation is to hide the parties’ true intent, or to deceive or
defraud third persons. The requisites for simulation are:
(a) an outward declaration of will different from the will of the parties;
(b) the false appearance must have been intended by mutual agreement; and
(c) the purpose is to deceive third persons.
The primary consideration in determining the true nature of a contract is the intention of
the parties. Such intention is determined from the express terms of the agreement as well
as from their contemporaneous and subsequent acts.
