Commercial Contracts Defined

What are Commercial Contracts?

These are contracts entered into by merchants in the pursuit of their activities as merchants, involving articles of commerce, or those defined as such contract by certain special commercial laws.

What are the Governing Laws?

Primarily, the Code of Commerce and in a suppletory manner, the New Civil Code.

RULE In case of inconsistency between the laws: The NCC prevails over the Code of Commerce. Exception: If the contract (such as loans on bottomry and respondentia) is explicitly governed by the Code of Commerce, the same shall be applied.

           

How are Commercial Contracts perfected?

General Rule: Commercial Contracts are consensual as to perfection.

Exception: When the Code of Commerce require specific forms, such as charter parties and loans on bottomry and respondentia.

           

When shall contracts by correspondence be deemed perfected?

Contracts shall be perfected the moment an answer is made accepting the offer or the conditions by which the latter may be modified. This kind of perfection is called the manifestation theory under Art. 54 if the Code of Commerce.

           

On the other hand, the New Civil Code follows the cognition theory which provides for acceptance to effectively bind the offeror only “from the time it came to his knowledge.”

           

As regards to which theory governs, there are two conflicting views. One view calls for the Civil Code to supercede Art. 54. The other view provides for the applicability Art. 54 since implied repeals are not favored.