Basics of Contracts in the Philippines

Basics of Contracts in the Philippines

Written By
Joy Cunanan
Updated on
April 6, 2022
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Contracts in the Philippines

Contracts in the Philippines

The Civil Code of the Philippines defines how a contract is created, and it requires three elements.

1. Parties must manifest their consent to be bound by the contract by making and accepting an offer. 

2. The product or service which is the object of the contract must be within the commerce of man and is not contrary to law, morals, good customs, public order, and public policy. 

3. There must be a cause or consideration, which the Philippine Supreme Court defines as “the essential reason which moves the contracting parties to enter into the contract.”

If contracts are in digital or electronic form, they may only be considered as an original document if there is a reliable guarantee that evidences the integrity of the same, and if it is capable of being shown to the person it is being presented to. 

For a contract to be validly terminated, the following must first be taken into consideration: 

1. Implied Terms

2. Notice Period

3. Force Majeure

4. Automatic Termination In Case of Insolvency

5. Termination Due to Financial Distress

Force majeure cannot be used as a defense to avoid liability unless all four elements concur:

1. The cause of the breach was not brought about by human will.

2. The event was either unforeseeable or unavoidable.

3. This event must be so grave that it has become impossible for the debtor to perform his or her obligations. 

4. The debtor must not have participated in or aggravated the creditor’s injury.

Joy Cunanan
Joy is the Digital Transformation Manager at Lexagle. As a marketing professional in the Tech and B2B industry for over seven years, she is always on the lookout for the next best solution in the ever-changing online world. With a passion for helping businesses thrive and optimize operations, she shares her expertise in the power of contract lifecycle management and its capacity of easing the contracting process for busy organizations worldwide.
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