What Makes A Contract Legally Binding?

When you enter into an agreement, it means there is a meeting of minds which involves fulfilling the obligation to render service or give something. The law considers this agreement as a contract. However, there can be some confusions on the validity of a contract especially if it lacks notarization. Does this mean a contract becomes invalid if it was not notarized? 

It is important to note that a contract can be considered legally binding if it has been made with the consent of contracting parties. The elements of consent, cause and subject must also be present and with that said, contracts can either be verbal or written. 

Art. 1318. There is no contract unless the following requisites concur:

(1) Consent of the contracting parties;

(2) Object certain which is the subject matter of the contract;

(3) Cause of the obligation which is established. 

Notarization converts the contract into a public document hence, the following should appear in a public document under Article 1358 of the Civil Code. 

Art. 1358. The following must appear in a public document:

(1) Acts and contracts which have for their object the creation, transmission, modification or extinguishment of real rights over immovable property; sales of real property or of an interest therein a governed by Articles 1403, No. 2, and 1405;

(2) The cession, repudiation or renunciation of hereditary rights or of those of the conjugal partnership of gains;

(3) The power to administer property, or any other power which has for its object an act appearing or which should appear in a public document, or should prejudice a third person;

(4) The cession of actions or rights proceeding from an act appearing in a public document.

All other contracts where the amount involved exceeds five hundred pesos must appear in writing, even a private one. But sales of goods, chattels or things in action are governed by Articles, 1403, No. 2 and 1405. 

Even if it is a private contract, the contracts where the amount involved is more than five hundred pesos must be written with the exception of chattels, sales of goods and other things in action as they are governed by Articles 1403, no. 2 and 1405. A contract need not be notarized if it only involves a movable property. This means that a contract is still enforceable and valid if it has been proven that the requirement is indispensable and absolute. 

Pinoy Attorney

Written by : Pinoy Attorney