ENGINEERING CONTRACTS,

SPECIFICATIONS AND ETHICS

CHAPTER 1:
INTRODUCTION
TO CONTRACTS

INTRODUCTION TO
CONTRACTS
GENERAL CONSIDERATION
Without being aware of it, each one
of us enters into a contract as often
as the need arises.

INTRODUCTION TO
CONTRACTS
OBLIGATION DEFINED
An obligation is a juridical necessity
to give, to do or not to do.
It comes from the Latin word
obligare which means to bind
through giving, doing or not doing
something.

INTRODUCTION TO
CONTRACTS
MEANING OF OBLIGATION
GIVE, TO DO OR NOT TO DO

TO

The obligation to give is in essence a

real obligation because a physical
thing is involved and delivery of the
same extinguishes the obligation.

INTRODUCTION TO
CONTRACTS
REQUISITES OF AN OBLIGATION
Four essential requisites:

Juridical tie or vinculum the link

that bind the parties

Prestation the giving, doing or

not doing of something

INTRODUCTION TO
CONTRACTS
REQUISITES OF AN OBLIGATION
Four essential requisites:

Active subject the person who

holds the right to demand the
prestation

Passive subject the person

against whom the prestation may be

INTRODUCTION TO
CONTRACTS
SOURCES OF OBLIGATION
Article 1157 of the Civil Code enumerates
the sources of obligations, namely:

Law
Contracts
Quasi-contracts
Acts or omissions punishable by law
Quasi-delicts

INTRODUCTION TO
CONTRACTS
OBLIGATIONS ARISING FROM LAW

Law is a rule of conduct, just, obligatory,

laid down by the legitimate authority for
common observance and benefit.

Without it, there will be no order in a

society which will be ruled by the maxim
of what is might is right

INTRODUCTION TO
CONTRACTS
OBLIGATIONS
CONTRACTS

ARISING

FROM

A contract is the meeting of minds

between two persons whereby one
binds himself with respect to the
other to give something or render
some services.

INTRODUCTION TO
CONTRACTS
OBLIGATIONS ARISING FROM
QUASI-CONTRACTS
A quasi-contract is a juridical relation
arising from lawful, voluntary and
unilateral acts by virtue of which the
parties become bound to each other
to the end that no one shall be
unjustly enriched or benefited at the
expense of another.

INTRODUCTION TO
CONTRACTS

Negotorium Gestio
Solutio Indebiti

INTRODUCTION TO
CONTRACTS
Negotorium Gestio is the voluntary
administration or management of an
abandon
business
or
property
belonging to another without his
consent.
the management must refer to
specific affairs
the business or property is neglected
or abandoned

INTRODUCTION TO
CONTRACTS
there is no express or implied
authority from the owner
there is no prohibition from the
owner
the management must be for an
intention to protect the interest of
the owner

INTRODUCTION TO
CONTRACTS
Solutio indebiti the juridical relation
which is created by virtue of a
payment by mistake, consequently,
obliging the payee to return to payer
what he has received

INTRODUCTION TO
CONTRACTS
OBLIGATIONS
CRIMES

ARISING

FROM

Acts or omissions punishable by law

are better known as crimes or delicts,
like homicide or damage to property
through reckless imprudence.

INTRODUCTION TO
CONTRACTS
OBLIGATIONS ARISING FROM
QUASI-DELICT
A quasi-delict is a legal wrong committed
through fault or negligence causing
damage to a person or property thereby
obliging the wrong to pay for the
damage done, provided that there exists
no contractual relation between them

INTRODUCTION TO
CONTRACTS
DILIGENCE REQUIRED IN THE
PERFORMANCE OF AN OBLIGATION
Every person obliged to give something is
also to take care of it with the diligence of
a good father of the family, unless the law
or stipulation of the parties requires
another standard of care (Article 1163)

INTRODUCTION TO
CONTRACTS
RIGHTS TO THE FRUITS OF THE
THING TO BE DELIVERED
The creditor has the right to the fruits
of the thing from the time the
obligation to deliver arises

INTRODUCTION TO
CONTRACTS
RULE WHEN
DELAY

OBLIGOR

INCURS

Those obliged to deliver or to do

something incur in delay from the time
the obligee judicially or extra judicially
demands from them the fulfillment of
their obligation. The demand by the
creditor shall not be necessary in
order that delay may exist:

INTRODUCTION TO
CONTRACTS

when the obligation

expressly so declares

or

the

law

when
from
the
nature
and
circumstances of the obligation it
appears that the designation of the
time when the thing is to be
delivered or the service is to be
rendered was the controlling motive
for the establishment of the contract

INTRODUCTION TO
CONTRACTS

when demand would be useless, as

when the obligor has rendered it
beyond his power to perform

INTRODUCTION TO
CONTRACTS
LIABILITY OF OBLIGOR FOR FRAUD,
NEGLIGENCE, DELAY, ETC.
Those who in the performance of their
obligation
are
guilty
of
fraud,
negligence, or delay, and those who in
any manner contravene the tenor
thereof are liable for damages (Article
1170)

INTRODUCTION TO
CONTRACTS
LIABILITY ARISNG FROM THE
FORTUITOUS EVENT
Except in the cases expressly specified
by law, or when it is otherwise
declared by stipulation, or when the
nature of the obligation requires the
assumption of risk, no person shall be
responsible for those events which
could not be foreseen, or which,
though foreseen, were inevitable

INTRODUCTION TO
CONTRACTS
KINDS OF OBLIGATION
The Civil Code classifies obligation into:
Pure and Conditional
B. Obligations with a period
C. Alternative and Facultative
D. Joint and Solidary
E. Divisible and Indivisible
F. Obligation with a Penal Cause
A.

INTRODUCTION TO
CONTRACTS
PURE
OBLIGATION

A
pure
obligation is one which is not subject
to any condition or burden and whose
fulfillment is neither dependent upon a
future or uncertain or even a past
event unknown to the parties, hence,
immediately demandable.

INTRODUCTION TO
CONTRACTS
CONDITIONAL OBLIGATION A
conditonal obligation is one whose
performance is subject to a condition
which may either be suspensive or
resolutory in effect.
OBLIGATION WITH A PERIOD An
obligation with a period is one in which
a day certain has been fixed for its
fulfillment.

INTRODUCTION TO
CONTRACTS
ALTERNATIVE OBLIGATION An
alternative obligation is one where
various prestations are due, but the
performance of one, usually chosen by
the obligor, is sufficient.
FACULTATIVE OBLIGATION In this
obligation, only one prestation is due
but the obligor or debtor may
substitute another in lieu of the

INTRODUCTION TO
CONTRACTS
JOINT
OBLIGATION

A
joint
obligation is one where the entire
obligation
is
to
be
fulfilled
proportionately by the various obligors
or debtors, and each one of the
obligees or creditors is entitled and
can demand a proportionate part of
the credit due from each of them.

INTRODUCTION TO
CONTRACTS
SOLIDARY OBLIGATION A solidary
obligation is exactly the opposite of a
joint obligation in the sense that each
of the solidary debtors is liable for the
entire obligation as long as the same
has not been performed, and each of
the creditors an demand compliance.

INTRODUCTION TO
CONTRACTS
DIVISIBLE
OBLIGATIONS

A
divisible obligation is one capable of
being performed partially
INDIVISIBLE OBLIGATION This is
the exact opposite of divisible
obligation as no partial performance is
permitted.

INTRODUCTION TO
CONTRACTS
OBLIGATION WITH A PENAL CAUSE
An obligation which contains an
accessory undertaking to assume a
greater liability in case of breach is an
obligation with a penal cause

ENGINEERING CONTRACTS,
SPECIFICATIONS AND ETHICS

CHAPTER 2:
CONTRACTS

CONTRACTS
DEFINITION OF A CONTRACT
The law defines a contract as a
meeting of the minds between two
persons whereby one binds himself,
with respect to the other, to give
something or render some services.

CONTRACTS
CONTRACT DIFFERENTIATED FROM
AGREEMENT
Contract
is
often
times
used
interchangeably
with
the
term
agreement. A contract forms a
subdivision of the genus agreement
from which follows that, while every
contract is based on agreement, not
every agreement is a contract.

CONTRACTS
STAGES OF A CONTRACT

Preparation or Conception
Perfection or Birth
Consumption or termination

CONTRACTS
CLASSIFICATION OF CONTRACTS
Express and implied contracts
Unilateral and bilateral contracts
Consensual and real contracts
Executed and executory contracts
Nominate
and
innominate
contracts

CONTRACTS
FREEDOM IN CONTRACTS
The
freedom
to
contracts
as
guaranteed by the constitution is
articulated by Article1306 of the code
which provides that the contracting
parties
may
establish
such
stipulations,
clauses,
terms
and
conditions thereof must not be against
the law, good customs, morals , public

CONTRACTS
CONTRARY TO LAW
The parties cannot stipulate
matters against the law.

on

CONTRARY TO MORALS AND

GOOD CUSTOMS
Contract offending morals or good
customs are void and without effect.

CONTRACTS
CONTRACTS
AGAINST
PUBLIC
ORDER AND
PUBLIC POLICY
Public policy is much broader than
public order.
EQUALITY OF PARTIES
UNDER THE CONTRACT
The law gives equal standing or
treatment upon the parties, such that

CONTRACTS
PARTIES
BOUND
UNDER
CONTRACT, EXCEPTION

THE

The rule is that only the parties to the

contract and their assigns and heirs
are bound thereto unless the rights
and obligations arising therefore
cannot be transferred to the heirs and
assigns of the parties provisions of
law.

CONTRACTS
Examples of intransmissible rights
and obligations are:
By Law
By nature
By stipulation

CONTRACTS
STIPULATIONS IN FAVOR OF NONPARTIES TO THE CONTRACT
If
a
contract
should
contain
stipulations granting a favor to a
person not a party to the contract, the
latter may demand its fulfillment
provided
he
communicate
his
acceptance to the obligor before
revocation. This stipulation, better
known as pour autri, must be clearly

CONTRACTS
CONSENSUAL CONTRACTS
Contracts are perfected by mere
consent, and form that moment, the
parties are bound not only to the
fulfillment of what has been expressly
stipulated
but
also
for
the
consequences which, according
to
their nature, may be in keeping with
good faith, usage and law.

CONTRACTS
CONTRACTS
RIGHTS

CREATING

REAL

Real rights are those rights relating to

immovable
properties,
land
and
buildings, like the right belonging to a
mortgagee or lessee of a piece of
land.

CONTRACTS
CONTRACTS
RIGHTS

CREATING

REAL

Law provides that in contracts

creating real rights, third person who
come into possession of the object of
the contracts are bound thereby
subject to the provisions of the
Mortgage Law and Land Registration
Law.

CONTRACTS
PROTECTION TO CREDITORS

Creditors are protected in cases of

contracts intended to defraud them.

A fictitious contract alienating the

debtors only property in order to
escape paying his creditor or
creditors may be rescinded at the
instance
of the latter for being

CONTRACTS
THIRD PARTIES INTERFERING
IN THE CONTRACT
Any third persons who induces
another to his contract shall be liable
for damages to the other party, an
instance where a stranger to a
contract becomes liable for damages.

CONTRACTS
CONTRACTS ENTERED
IN THE NAME OF ANOTHER
A contract entered into in the name of
another without his authority, or
without a legal right to represent him
or in excess of the authority given is
unenforceable by action unless the
contact is ratified expressly or
impliedly by him before the other

CONTRACTS
CONTRACTS ENTERED
IN THE NAME OF ANOTHER
A contract entered into in the name of
another without his authority, or
without a legal right to represent him
or in excess of the authority given is
unenforceable by action unless the
contact is ratified expressly or
impliedly by him before the other

ENGINEERING CONTRACTS,
SPECIFICATIONS AND ETHICS

CHAPTER 3:
REQUISITES OF CONTRACTS

CONTRACTS
ELEMENTS OF A CONTRACT
There is no contract unless
following elements are present:

the

Consent of the contracting parties

Object certain which is the subject
matter of the contract
Cause of the obligation which is
established.

CONTRACTS
ELEMENTS OF A CONTRACT
If the contract lacks any of the said
elements, the contract is null and void
as if it had not existed at all.

CONTRACTS
CONSENT, MEANING OF
Is the conformity of wills of the
contracting parties upon the objects
and cause as well as the other terms
and conditions of the contract.
It is manifested through the meeting
of the offer which must be certain
and the acceptance which must be
absolute.

CONTRACTS
RULE ON OFFER AND ACCEPTANCE
General rule is that the person
making the offer has inherent right
to fix the time, place and manner of
acceptance.
Once fixed, the acceptance must be
made strictly in such manner to give
birth to the consent.
If this fixation is not followed consent

CONTRACTS
WHEN
OFFER
INEFFECTIVE

BECOMES

An offer become ineffective if before

its acceptance by the offeree, the
offerors will die or suffer civil
interdiction or becomes insane or
insolvent.

CONTRACTS
WHEN
OFFER
INEFFECTIVE

BECOMES

If any of these circumstances will

supervene after the acceptance has
bean made, the contract will
continue to have force and effort but
the rights and obligations arising
therefrom will decend to the heirs
and assigns of the parties depending

CONTRACTS
PUBLISHED ADVERTISEMENT
NOT AN OFFER

Business advertisement of thing

which are for sale in newspaper ads
or media are not definitely offers but
mere invitations to make offer, and
the
same
true
as
regards
advertisement calling for bidders to
make proposals.

CONTRACTS
PUBLISHED ADVERTISEMENT
NOT AN OFFER

In either case, the advertiser is not

bound even if a person responds
completely to the terms published
unless indication show otherwise.

CONTRACTS
PUBLISHED ADVERTISEMENT
NOT AN OFFER

An exception to the rule however

could take the form of reward for an
act specified in the advertisement.

CONTRACTS
PERSON
WHO
CONSENT

CANNOT

GIVE

Consent can only be given by person

who have capacity to act.

If given by person without capacity

to act or with disqualification, their
consent may not give birth to the
contract.

CONTRACTS
PERSON
WHO
CONSENT

CANNOT

GIVE

Law states that un-emancipated

minors, insane or demented persons,
and deaf-mutes who do not know
how to write cannot give consent
except through their natural or legal
guardians.

CONTRACTS
VICES ON CONSENT
The law enumerates five causes by
which consent may be vitiated or
rendered defective.
Mistake
Violence
Intimidation
Undue Influence

CONTRACTS
VICES ON CONSENT
If the consent of the party to the
contract is given or secured through
the state of drunkenness or during
hypnotic spell is voidable.

CONTRACTS
MISTAKES RENDERING
CONTRACT DEFECTIVE

In
order
that
mistakes
may
invalidate consent, it should refer to
the substance of the thing which is
the object of the contract, or to
those
conditions
which
have
principally moved one or both
parties to enter into the contract.

CONTRACTS
MISTAKES RENDERING
CONTRACT DEFECTIVE

Mistakes as to the identify or

qualification of one of the parties will
vitiate consent only when such
identity or qualification have been
the primary cause of the contract.

CONTRACTS
MISTAKES RENDERING
CONTRACT DEFECTIVE

Simple mistake of account will

render the contract voidable but will
give rise only to the correction of the
account.

CONTRACTS
MISTAKE IN SUBSTANCE
Takes place when both parties thought
that the subject matter they are
dealing into does not turn out to be
what it exactly is.

ENGINEERING CONTRACTS,
SPECIFICATIONS AND ETHICS

OBJECT OF CONTRACTS

Object certain.
An object which must be certain is
the second element of a contract.
All things which are within the
commerce of man including future
things having potential existence.
Rights which are not intransmissible.
Services which are not contrary to
law, morals, good customs, public
order and

Object certain.
public policy, and not impossible of
compliance may be the object of a
contract.
No contract may be entered into
upon future inheritance except in
cases expressly authorized by law.
Things or services, as object of the
contract must not be physically or
illegally impossible.
As to service, impossibility may be

Outside the commerce

of man.

It has been held that a municipal

council cannot sell or lease public
property, such as plazas, streets,
common lands, rivers, bridges, etc.
because they are outside the
commerce of man; If it has been
done so by leasing part of the plaza
the lease is null and void, for it is
contrary to law, and the thing leased
cannot be the object of the contract.

Outside the commerce

of man.

A thing or service may, though within

the commerce of man, later on become
prohibited by law hence, goes outside
the commerce of man.
Example:
Before,
slaughtering
of
carabaos for consumption or sale is not
banned, but in many municipalities, the
same has been prohibited bu local
ordinances hence, goes outside the
commerce of man.

Things having potential

existence.

Things having potential existence are

those which are sure to come barring
only unforeseen events although not yet
possessed.
Example: Mangoes from existing mango
trees for the coming season; grains that
may be harvested from a definite area of
rice land; milk that a cow will yield in the
coming year or young animals from a
definite mother cow.

Intransmissible rights and

services.

Rights which are intransmissible

cannot be the object of a contract
because they are either too personal
to the parties or are not permitted by
law to be the object of contract.
Example: Right to vote and be voted
upon;
those
emanating
from
marriage and personal relationship.

Future inheritance.
Contract
involving
a
future
inheritance is void as this will likely
tempt an instituted heir or legatee to
end up the life of the benefactor.
The test of whether an inheritance is
future or not is the time of death; if
death of the benefactor had come
ahead of the contract involving the
whole or part of an inheritance the
contract is removed from the

Object must be
determinate,
exceptions.
The object of a contract must be
determinate as to leave no doubt as
to which is intended from the kind
where it belongs, or must have
definite limits.
The fact that the quantity is not
determinate is not an obstacle to the
existence of the contract, provided it
possible to determine what the
object is without the need of a new

Object must be
determinate,
exceptions.
Example: A contract whose object is
described as the first batch of
lanzones from a five-hectare land in
Paete, Laguna, in which the quantity
is not capable of the determination
at the time of the contract is a
determinate object.

ENGINEERING CONTRACTS,
SPECIFICATIONS AND ETHICS

CAUSE OF CONTRACTS

Cause, meaning of.

A cause which must be in existence at

the time of the contract is the last
element of a valid contract.
Cause or consideration is the immediate,
direct and proximate reason why a party
enters into the contract and without
which the contract becomes nullity.
Cause
may
either
be
onerous,
remuneratory or gratuitous.

Onerous Contracts

In this contract, the cause or

consideration is understood to be, for
each contracting party, the promise
of a thing or service by another.
Example: If x sells his land to y for
100,00.00 Php coming from y,
whereas, that of y is the land coming
from x.

Remunatory Contracts

In this contract, the cause or

consideration is then service or
benefit which is remunerated or
paid.
Example: The professional fee of an
engineer who pursuant to a contract
with a client prepares the plan or
design of the latters residential
house.

Gratuitous Contracts

In this contract, or one of the

beneficence,
the
cause
or
consideration is pure liberality on the
part of the benefactor. The obligor
does not receive any valuable or
material consideration. The liberality
or cause of in this case is the inner
satisfaction of the giver of having
done or given a valuable favor or
help to the receiving party.

Gratuitous Contracts
Example: A contract donating a
piece of land to a poor community so
that the youth can use it for their
sport and common needs in order to
deviate their attention from any form
of vices.

Motives in entering into a

contract.
Particular motives of the parties in
entering into contract are different
from the cause.
The motive is the special or personal
reason of a party why he entered
into the contract, as distinguished
from the cause of the contract.
Motive has reference to the person
and cause refers to the contract.

Motives in entering into a

contract.
Example: In a sale of a new car for
120,000.00 Php, the motive of the
purchaser may be is to give it to his
wife, whereas, the dealer's motive is
perhaps to reinvest the money
strictly for business profit which is
also personal to him.

Contracts without cause or

with illegal cause.
Contract without a cause or with an
illegal cause, produces no effect
whatsoever.
Cause if it is contrary to law, morals,
good customs, public order and
public policy.

Example: When a deed of sale states

that the seller received the price of
the thing when the truth of the

Contracts without cause or

with illegal cause.
the object of the contract beyond the
reach of the seller's creditors. In this
case, even if there is a deed of sale,
the contract is void as the last
element is lacking.
If the contract has an unlawful
cause, it is as if no contract has been
entered into because the law
prohibits or considers the cause as
illegal.

Contracts without cause or

with illegal cause.
Example: A contract to distribute
contrabands; to deal in prohibited
drugs where both the manufacturer
and dealer are unlicensed; contracts
restraining the flow of trade as when
a party hoards rice or sugar to create
artificial shortage; or a contract to
refrain from prosecuting a crime for
a monetary cause.

Statement of a false cause in

contract.

The statement of a false cause in

contracts shall render them void, if it
should not be proved that it is true
and lawful. This means that it is
incumbent upon the party enforcing
the contract to prove that there exist
another cause which is lawful if the
other party claims the cause to be
false.

Statement of a false cause in

contract.
Example: X signs a contract of sale
stating that he sold and delivered a
Betamax to Y for 10,000.00 Php which
the latter paid in cash. The truth of the
matter however is that Y did not pay any
amount to X as the latter's purpose is to
place the Betamax beyond the reach of
an appliance firm to which he had not
paid
the
complete;
installment
payments.

Statement of a false cause in

contract.
Here, the cause stated is false hence,
the contract is void. But suppose, in an
action to recover the Betamax which
was already paid by X to the company,
Y proved that X has an existing debt to
him worth the same amount. In such a
case, the contract continues to enjoy
the presumption of validity since the
real and true cause has been proven.

Presumption of
consideration.

Although the cause is not stated in the

contract, the same is presumed to exist
and is lawful, unless the debtor proves the
contrary. This means that every contract is
presumed to be based on a cause or
consideration which is lawful and existing,
such that the party against whom the
contract is enforced is required to prove
lack or illegal consideration, otherwise the
contract continues to retain its validity.

Presumption of
consideration.
Example: A negotiable instrument reading
"Pay to bearer on demand the sum of
1,000.00 Php" or statement on the page of
a diary of the creditor stating "I.O.U.
1,000.00 Php", signed at the bottom of the
writing by the debtor, is presumed to have
been issued or made with a consideration.
To absolve the maker from liability, he
should prove that the document or writing
has no true and lawful consideration.

Lesion or inadequacy of
cause.

Lesion or inadequacy of cause shall not

invalidate a contract, unless there has
been fraud or undue influences.
Lesion is simply the damage suffered by
a party because the price is unjust or
inadequate.
It does not avoid or invalidate the
contract unless the price is so grossly
inadequate as to amount to practically a
fraud, oppression or undue influence.

Lesion or inadequacy of
cause.
Example: X, a Visayan resident, is
the owner of a 500 square meters
residential lot in Tagaytay City.
Without knowing that the cost per
square
meter.
Under
the
circumstances, the lesion of 200.00
Php per square meter he suffered
will not invalidate the contract. But if
Y or a third person had deliberately
used fraud or undue influence,

Lesion or inadequacy of
cause.
or Y had committed a substantial
mistake, lesion suffered may be a
basis of an action to invalidate the
contract.