General provisions – Contracts Law

1. Concepts

A “contract” – is a meeting of minds between two persons whereby one binds himself, with respect to the other, to give something or to render some service. (Article 1305, Civil Code)

2. Principles of contracts

a. Principle of autonomy

The contracting parties may establish such stipulations, clauses, terms and conditions as they may deem convenient, provided they are not contrary to law, morals, good customs, public order, or public policy. (Article 1306, Ibid.) 

b. Principle of mutuality

The contract must bind both contracting parties; its validity or compliance cannot be left to the will of one of them. (Article 1308, Ibid.)

The determination of the performance may be left to a third person, whose decision shall not be binding until it has been made known to both contracting parties.(Article 1309, Ibid.)

The determination shall not be obligatory if it is evidently inequitable. In such case, the courts shall decide what is equitable under the circumstances. (Article 1310, Ibid.)

c. Principle of relativity

Contracts take effect only between the parties, their assigns and heirs, except in case where the rights and obligations arising from the contract are not transmissible by their nature, or by stipulation or by provision of law. The heir is not liable beyond the value of the property he received from the decedent. (Article 1311, Ibid.)

1) Stipulation in favor of third persons (pour autrui)

If a contract should contain some...