Article 1322

An offer made through an agent is accepted from the time acceptance is communicated to him.

Ang alok na ginawa sa pamamagitan ng isang ahente ay masasabing tinanggap ng pinag-alukan sa oras na tinanggap nito ang alok ng ahente.

Discussion:

This article means that when an offeror appoints a third person as his agent to represent him, the offer by the agent, when accepted by the offeree, is deemed accepted not from the knowledge of the acceptance by the offeror (principal) but from the moment the agent has received the communication of acceptance. The meeting of the minds is thus established.

The agent must be authorized by the offeror. An example of an agent is an attorney-in-fact, authorized through a power of attorney. If the intermediary is not authorized, the offer is not binding to the offeror.

The offeree may also act through an authorized agent.

Illustration:

Jay was appointed by Zola as his attorney-in-fact. Jay wanted to enter into a contract with Joy for the lease of Joy’s warehouse. The offer was made through Zola. Joy accepted the offer. The reckoning point for the acceptance of the offer, or the giving of consent is the moment when Zola was informed by Joy that she accepts the offer, and not the time when Zola informs the offeror Jay of the acceptance by Joy of the offer.

Article 1323

An offer becomes ineffective upon the death, civil interdiction, insanity, or insolvency of either party before acceptance is conveyed.

Ang isang alok ay mawawalan ng bisa sa pagkamatay, civil interdiction, pagkasira ng ulo, o insolvency ng alin man sa partido bago tangapin ay ipinasa sa iba.

Discussion:

Definition of Civil Interdiction, insanity and insolvency

Civil Interdiction – mandatory accessory penalty deemed imposed whenever the sentence rendered is within the range of reclusion temporal to death. If the latter is not executed by reason of commutation or pardon.

Insanity – legal term for mental disorder; disease or defect of the brain.

Insolvency – inability or the lack of means to pay one’s debt.

Illustrations:

          Death: Maria Mercedes offer to sell her beach resort to Luis Sancuevas for the amount of 1.5M pesos but before the day that they are going to meet up for the payment and their contract will be made, Maria Mercedes died therefore the meeting of the mind of the two parties became ineffective because of the death of Maria Mercedes.

          Civil Interdiction: In the preceding illustration, supposing that Maria Mercedes was sentenced for life imprisonment because she was found guilty in murder case and there is no acceptance had been conveyed by Luis to Maria before the sale, therefore the offer made by Maria became ineffective because her sentenced carried with civil interdiction.

          Insanity: Same as the above illustration if Maria Mercedes became insane before Luis Sancuevas accepted her offer the contract became ineffective because an insane person cannot give consent to a contract.

          Insolvency: Also, if Maria Mercedes was declared by the court as an insolvent person due to her inability or lack of means to pay one’s debt before Luis Sancuevas accepted the offer therefore the meeting of the minds of the parties is not valid because of the insolvency of the offeror.

         

Article 1324

When the offerer has allowed the offeree a certain period to accept, the offer may be withdrawn at any time before acceptance by communicating such withdrawal, except when the option is founded upon a consideration, as something paid or promised. (n)

Kapag ang nag-aalok ay nagbigay ng palugit na panahon sa kanyang inaalok upang tanggapin ito, ang pag-aalok ay maaari na niyang kanselahin sa oras na lumipas na ito, maliban kung ang bagay na inialok bilang konsiderasyon ay ipinalalagay na kabayaran o kumpromiso.

Discussion:

The article applies only to a situation where the offeror has allowed the offeree “a certain period of time to accept”. This is giving the offeree the option to accept or not to accept within a fixed period of time.

The time of acceptance will depend on the circumstances:

If a period is fixed by the offeror;

If no period is fixed by the offeror.

Option contract, concept. It is a contract between the offeror and the offeree whereby the former grants the latter, for a valuable consideration, the privilege to buy or not to buy certain objects at anytime within the specified period and for a fixed price.

The option contract or contract of option is separate and distinct from the principal contract which the parties may enter into later if they finally conclude their main agreement. It is therefore a preparatory contract to the principal contract should the parties, finally consummate their transaction which is under negotiation. The matter is said to be still under negotiation because the offeror may or not take advantage of the privilege granted him.

Option money and earnest money

Option money – is the consideration paid in an option contract. If the principal contract is not consummated, the option money is not refunded

Earnest money is the payment made to the seller by the buyer to show his good faith. It will constitute as part of the purchase price, if the sale is finally consummated. It is also a proof of the perfection of the contract. If the sale is not concluded, the earnest money shall be returned to the would be buyer unless there is a contrary agreement.

What is an option contract?

It is a contract between the offeror and the offeree whereby the former grants the latter, for a valuable consideration, the privilege to buy or not to buy certain objects at anytime within the specified period and for a fixed price.

The option contract or contract of option is separate and distinct from the principal contract which the parties may enter into later if they finally conclude their main agreement. It is therefore a preparatory contract to the principal contract should the parties, finally consummate their transaction which is under negotiation. The matter is said to be still under negotiation because the offeror may or not take the advantage of the privilege granted him.