Practice question
A contract ties a payment adjustment to an independently published index using an agreed formula, leaving neither party discretion to alter the index or formula. A party argues that every later change in the amount necessarily violates mutuality. Which answer is sound on the stated facts?
- Any variable amount necessarily leaves compliance to one party's will
- The objective agreed mechanism is distinct from one party's unrestricted unilateral choice, so variation alone does not establish an Article 1308 violation
- Every index formula exempts the contract from all law
- The party collecting payment may secretly rewrite the formula
- The payer may disregard the formula whenever it rises
Legal references
- Civil Code Articles 1306 and 1308–1310: https://lawphil.net/statutes/repacts/ra1949/ra_386_1949.html
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