Mutuality of contracts is one of the essential characteristics of contracts. A contract is defined as a meeting of minds between two persons whereby one binds himself, with respect to the other, to give something or to render some service.
Core Principle
The principle of mutuality dictates that the contract must bind both contracting parties. Its validity or compliance cannot be left to the will of one of them.
Consequences of Mutuality
A party cannot revoke or renounce a contract without the consent of the other party. This rule applies unless a condition in the contract allows for cancellation upon fulfillment, in which case cancellation is considered a fulfillment of the condition.
Characteristic of Contracts
Mutuality is listed as one of the four characteristics of contracts. The other characteristics are obligatory force, autonomy, and relativity.
Examples
Prohibition Against Unilateral Revocation
A party cannot revoke or renounce a contract without the consent of the other party**. Nor can a party have a contract set aside solely on the ground that they made a bad bargain.
- Example: If two parties enter into a contract, one party cannot simply decide to terminate it on their own without the agreement of the other party.
Exception: Cancellation Based on Contractual Condition
A contract can be cancelled by a party without the other's explicit consent if a condition in the contract itself allows for cancellation upon its fulfillment. Such a cancellation is considered a fulfillment of the condition.
- Example: A contract for lease stipulated that the tenant could cancel the contract at any time upon the completion of a building. The court held this stipulation was valid, and the tenant's cancellation upon building completion was a fulfillment of this condition (Melencio v. Dy Tiao, 5 Phil. 99).
Contracts Violating Mutuality are Void
Contracts where the determination of their validity or compliance is left to the will of only one of the contracting parties are void for violating the principle of mutuality.
- Example: Any contract stipulation that allows one party alone to decide if the contract is valid or if the other party has complied with their obligations is void.