I.

Definition of Contract

II. Elements

III. Classification

IV. Stages

V. Basic Principles

VI. Cause of Contracts

VII. Defective Contracts

1. Rescissible
2. Voidable
3. Unenforceable
4. Void
5. Illegal

VIII. Form of Contract

Q. What is a contract?
A. A contract is a meeting of minds between two persons whereby one binds himself,
with respect to the other, to give something or to render some service.

Q. What are the essential elements of a contract?

A. They are as follows:
1. Consent of the contracting parties
2. Object certain which is the subject matter of the contract.
3. Cause or consideration of the obligation which must be established.

Q. What is a consent?
A. Consent is the manifestation of the meeting of the offer and the acceptance upon the
thing and the cause which are to constitute the contract.

Q. What maybe an object of a contract?

A. All things which are not outside the commerce of men, including future things; rights
which are transmissible; and all services which are not contrary to law, morals, good
customs, public order or policy.

Q. What is a cause?
A. It is the essential reason why a party enters into a contract which must be of
existence, lawful and true.
Q. What are the stages of a contract?
A. Preparation, Perfection and Consumation.

1. Preparation (or Conception, Negotiation) – involves preliminary bargaining,

discussion of terms and conditions, with no arrival yet of a definite agreement.

2. Perfection (or birth) – the point where there is a meeting of minds between the
parties on a definite subject matter and valid cause.

3. Consumation (or death or termination) – when the terms of the contract have been
fulfilled resulting in its accomplishment.

Q. What are the basic principles of contract?

A. The basic principles are:
1. Liberty of contract or freedom to stipulate
2. Mutuality of contracts
3. Relativity of contracts
4. Consensuality of contracts
5. Obligatory force of a contract and compliance in good faith.

Q. What is the Liberty of contract or freedom to stipulate principle?

A. The contracting parties may establish such stipulations, clauses, terms and
conditions as they may deem convenient provided they are not contrary to law, morals,
good customs, public order or policy.

Please take note that the freedom to enter into a contract is one of the liberties
guaranteed by the State subject only to five limitations.

Q. What is the mutuality of contracts principle?

A. The contract must bind both contracting parties, its validity or compliance cannot be
left to the will of one of them.

Q. How about the relativity of contracts principle?

A. Contracts take effect only between the parties, their assigns and heirs, except where
the rights and obligations are not transmissible by law, stipulation or by nature.

Q. Define consensuality of contract?

A. Contracts are perfected by mere consent except in the following contracts which
need to comply with additional requirements:

1. In real contracts such as deposit, pledge, and commodatum which are perfected
upon the delivery of the object of the obligation.
2. In formal or solemn contracts,, which required to be in form provided by law to be
perfected such as donation of immovable property together with the acceptance,
otherwise, the contract is void.
Q. Obligatory force of a contract and compliance in good faith, concept.
A. Obligations arising from contracts have the force of law between the contracting
parties and should be complied in good faith. Upon perfection of the contract the
parties are bound to the following:
1. The fulfillment of what has been expressly stipulated.
2. All the consequences which according to their nature may be keep in good faith,
usage and law.

Q. What are the classification of contracts?

A. Contracts can be classified:

1. According to perfection or formation.

a. Consensual – those that are perfected by mere consent (such as contract of
sale and lease).

b. Real – those that are perfected by the delivery of the object of the contract
(such as contract of deposit, pledge and commodatum).

c. Formal or solemn – those which must be in the form provided by law for their
perfection (such as contract of donation)

2. According to cause

a. Onerous – where there is an exchange of valuable considerations (such

as sale and barter). Take note that for each contracting party, the cause
is the prestation or the promise of a thing or service by the other.
b. Gratuitous – where one party received no equivalent consideration (such
as donation and commodatum).
c. Remuneratory – the cause here is the service or benefit remunerated.

3. According to importance or dependence

a. Principal – one that can stand by itself (such as sale, loan).

b. Accessory – one whose existence depends upon another contract (such as

pledge, mortgage which is dependent upon a principal contract such as loan)

c. Preparatory – one which serves as a means by which other contracts may be

entered into (such as agency and partnership)

4. According to name or designation

a. Nominate – those which have a name under the law (such as contract of sale,
loan, barter)
 b. Innominate – those without any name under the law, such as the following:

i. Do ut des (I give that you may give)

ii. Do ut facias (I give that you may do)
iii. Facio ut des (I do that you may give)
iv. Facio ut facias ( I do that you may do)

The rules that govern innominate contracts are:

- Stipulation of the parties

- Provisions law
- Customs of the place

Q. How can Consent of the contracting parties manifest?

A. Consent is the manifestation of the meeting of the meeting of the offer and the
acceptance upon the thing and the cause which are to constitute the contract.

Q. What are the rules on offer?

A. They are:

1. The offer must be certain because there could be no meeting of minds if it

is vague or not definite.

Example: If S, who has several lots, offers to sell his lot to B without
designating which of the lots he is selling, the offer is not certain.

Q. What is the nature of advertisements?

A. Business advertisements of things for sale are not definite offers, but mere invitations
to make an offer unless it appears otherwise.

Examples:
1. An advertisement reads: “For sale: residential house for P3M. Call
723-4567” This is not an offer but a mere invitation to make an offer.

2. “For sale: 3 bedroom bungalow on a 200 square meter lot located at

No. 123 Molave Street, Bgy. Mayamot, Antipolo City, for P2M cash.”
This is a definite offer because it contains all the matters required of a
contact.

Q. How about the advertisements to bidders?

 A. Advertisements for bidders are merely invitations to make proposals and the
advertiser is not bound to accept the highest or lower bidder, unless the contrary
appears.

 An offer becomes ineffective upon the death, civil interdiction, insanity or

insolvency of either party before acceptance is conveyed.

 When the offeror has allowed the offeree a certain period to accept, the offer may
be withdrawn at any time before acceptance by communicating such withdrawal,
except when the option is founded upon a consideration as something paid or
promised.

Q. What is an Option?

A. Option is a contract whereby the offeror gives the offeree a certain period within
which to buy or not to buy a certain object for a fixed price. It may or may not be for a
valuable consideration.

Q. During the option period can the offeror withdraw the offer?
A. a. If there is no consideration for the option, the offeror may withdraw the offer at
anytime within the option period provided there has not yet been acceptance.

b. If there is a consideration, the offeror may not withdraw the offer within the option
period. Otherwise, he will be liable for damages to the offeree for breach of contract.

Note: In both cases, the option is extinguished upon the lapse of the period, unless
in the meantime, the offeree has accepted the offer.

Example:

S promised to sell his car to B for P100,000.00 giving B 30days to decide. B accepts
the promise. S may withdraw his promise even before the lapse of the 30-day period
by informing B of the withdrawal. However, if B had given to S option money of say,
P1,000.00, S cannot withdraw the offer before the lapse of the option period
because the option given to B was founded upon a consideration.

Q. What are the rules on acceptance?

A.

1. The acceptance must be absolute. If the acceptance varies the offer, there
is no contract since there is no meeting of minds.
a. If the acceptance is qualified, it constitutes a counter-offer.

Example: S offers to sell his car for P100,000.00 to B. B accepts the

offer but is willing to pay the price of P95,000.00 only. The acceptance made by
 B is a qualified acceptance which constitutes a counter-offer. Accordingly, no
contract is perfected. However, If S accepts the counter-offer, then there will be a
perfected contract at the price of P95,000.00

b. If the offer fixes the time, place and manner of acceptance, all must be
complied with. Otherwise, there will no meeting of minds.

2. Acceptance made by letter or telegram does not bind the offeror except
from the time it came to his knowledge. The contract in such a case is
presumed to have been entered into the place where the offer was made.

The second sentence is important to determine which law will apply regarding the
contract.

3. Acceptance may be express or implied.

The acceptance is express if made orally or in writing. It is implied if it can be

inferred from the conduct of the parties.

Thus, if S offers to sell a kilo of his mangoes to B for P20.00, and B, without
saying anything to S, takes the mangoes and begins to eat one and offers the
rest to others, then B is deemed to have impliedly accepted the offer of S.

4. An offer made through an agent is accepted from the time it is

communicated to him.

This is so because the agent is merely an extension of the personality of the

principal.

Q. What are the rules on Consent?

A.
1. The parties must have the capacity to enter into a contract. The following cannot
give consent to a contract:
a. Unemancipated minors – Emancipation takes place by the attainment of
majority which is eighteen years.
b. Insane or demented persons – However, contracts entered into during
lucid intervals are valid. Lucid interval refers to the period of temporary
sanity of an insane person.
c. Deaf-mutes who do not know how to write.

A contract entered into by the above-named incapacitated persons is

voidable. However, when both parties are incapable of giving consent to a
contract, the contract is unenforceable.
 The incapacity aforementioned is subject to the modifications determined by
law, and is understood to be without prejudice to special disqualifications
established in the laws.

 An incapacitated person must pay a reasonable price for food and

other necessaries sold to him. The sale here is valid.

 On the other hand, a person may be capacitated but is disqualified to

enter into some contracts, such as in the case of the husband and the
wife who, as a general rule, are prohibited to sell to each other or
donate to each other.

2. Contracts agreed to in a state of drunkenness or during a hypnotic spell are

voidable. This is so because consent given in such states is not freely and
intelligently given.

3. A contract where consent is given through mistake, violence, intimidation, undue

influence, or fraud is voidable.

Q. What are the causes that vitiate consent or the vices of consent?
1. A. through mistake, violence, intimidation, undue influence, and fraud.

Q. What are the rules on the occurrence of mistake?

A. They are as follows:
1. When mistake invalidate consent
Example: If B bought a lot on which he wanted to construct a factory
believing that it was situated in an industrial area, he can
have the contract annulled if the lot was actually situated in a
residential area.

a. If the mistake refers to those conditions which have principally moved

one or both parties to enter into the contract.

Example: S sold his car to B for P100,000.00 cash because he needed

the money to settle a debt. The deed of sale signed by him
showed, however, that the price would be paid in 4 equal
instalments. S can have the sale annulled because of a
mistake as to the condition of the contract.

b. If the mistake refers to the identity or qualifications of one of the

parties if such identity or qualifications have been the principal cause of
the contract.
 Example: D donated a lot C believing that D was his illegitimate don. D
found out later, however, that C was not his son. The identity
of C was material to the contract; hence, D can have the
contract annulled on the ground of mistake as to the identity
of the done.

c. If the mistake refers to the legal effect of an agreement when the real
purpose of the parties is frustrated and the same is mutual.

This refers to mistake of law which does not generally vitiate consent
because of the rule that ignorance of the law excuses no one from
compliance therewith. However, the contract shall be voidable if the
mistake as to the legal effect of the agreement is mutual and frustrates
the real purpose of the parties.

Example: S and B entered into a contract of sale with a right to

repurchase believing that the contract has the same effect
as a contract of loan and mortgage. The mistake here refers
to the legal effect of their agreement.

2. When mistake vitiates consent?

a. If the mistake refers to a simple mistake of account which shall only be

corrected.

Thus, if 10 books were sold at P567.80 each but the total price was
shown at P5,876.00 instead of P5,678.00, the mistake in computation
will not render the contract voidable but will only be corrected.

b. If the party alleging it knew the doubt, contingency or risk affecting the
object of the contract.

Thus, if B buys a brand new car stereo for P500.00, he cannot allege
mistake if the car stereo later turns out to have been stolen. The fact that
the car stereo was offered to him at a very low price should have put him
on guard that it might have come from an illegal source.
 3. Rule when one party unable to read or does not understand the language of
the contract.

If mistake or fraud is alleged, the person enforcing the contract must show
that the terms thereof have been fully explained to the former.

This is an exception to the rule that he who alleges fraud or mistake must
prove the same.

 Violence or physical coercion

Q. When violence vitiates consent?
A. There is violence when in order to wrest consent, serious or irresistible force is
employed. This is true although it may been employed by a third person who did not
take part in contract.

Example:

S signed a deed of sale of his land to B because B twisted and threatened to break his
arm if he refused to sign Consent here is given because of violence.

 Intimidation or moral coercion

Q. When intimidation vitiates consent

A. There is intimidation when one of the contracting parties is compelled by a

reasonable and well-grounded fear of an imminent and grave evil upon his
person or property, or upon the person or property of his spouse, descendants or
ascendants to give his consent. This intimidation exists although it may have
been employed by a third person who did not take part in the contract.

Example :

In the example above, if S signed the deed of sale because B pointed a gun on his head
and threatened to shoot him if he did not sign the deed of sale, consent here is given by
reason of intimidation. There is likewise intimidation if B threatened to burn the house of
S if S did not sign the deed of sale.

Q. What are the factors to be considered in determining the degree of intimidation

a. Age
b. Sex and
c. Condition of the person

Q. When no intimidation exists

 No intimidation exists in case of a threat to enforce one’s claim through
competent authority, if the claim is just or legal.

Example:

C threatened to sue D if he did not pay his debt to C. D, afraid of a court action,
assigned his property to C to pay his debt. The deed of assignment is not voidable as
there is no intimidation.

 Undue influence

Q. When undue influence vitiates consent

A. There is undue influence when a person takes improper advantage of his power
over the will of another, depriving the latter of a reasonable freedom of choice.

Example:

If a church minister improperly takes advantage of his power over a member of his
congregation who regularly confides in him by persistently telling the member to sell
his property to him, the contract will be voidable on the ground of undue influence.

Q. What are the factors to be considered in determining the existence of undue

influence?
A. 1. Confidential, family, spiritual and other relations of the parties,
2. Mental weakness,
3. Ignorance, or
4. Financial distress of the person alleged to have been unduly influenced.

 Fraud
Q. When fraud exists (dolo causante)?

A. When, through the insidious words or machinations of one of the contracting

parties, the other is induced to enter into a contract which, without them, he
would not have agreed to.

Example:

S induced B to buy a ring which S claimed was made of pure gold. However, S
knew all along that the ring was only gold-plated.

Note that there is also fraud when there is a failure to disclose facts, when there is a
duty to reveal them, as when the parties are bound by confidential relations.

Example:
A and B were partners in a real estate business. During the existence of the
partnership, A met X who told A that he was interested in buying a large tract of land. A
did not inform B about X’s proposal. Instead, he persuaded B to sell his interest in the
partnership to him. After A became the sole owner of the business, he sold real property
to X realizing a huge profit. The contract between A and B for the sale of B;s interest is
voidable on the ground of fraud. A was duty bound to disclose the proposal of X to B
since as partners, they are bound by trust and confidence.

Q. What are the requisites to make a contract voidable by reason of fraud?

A. They are as follows:

a. The fraud should be serious.

Incidental fraud only obliges the person employing it to pay damages.

b. The fraud should not have been employed by both contracting parties.

If both parties employed fraud, the bad faith of one negate the bad faith of the other.
The law will consider both of them in good faith; hence, the contract will be valid.

 Please also take note that no fraud exists on the following:

a. In case of the usual exaggerations in trade, when the other party had an
opportunity to know the facts.

This is to give allowance to dealer’s talk or sales talk.

b. In case of a mere expression of an opinion, unless made by an expert and the

other party has relied on the former’s special knowledge.

Example: S, a farmer who knows nothing about gems, tells B that in his (S’s)
opinion, his ring is embellished with diamond and that he is selling it. B buys the
ring believing that the ring is really adorned with diamond. Later, B discovers that
the gemstones is really emerald. There is no misrepresentation here because S
is not an expert in gems. However, if S is a gemologist, B can annul the contract
on the ground of fraud.
c. In case of misrepresentation by a third person, unless such misrepresentation
has created substantial mistake and the same is mutual.

 Consent will likewise be vitiated if the third person connived with a

party to the contract in making the misrepresentation.

Example: B wants to buy the land of S because he is interested in putting up

a factory. However, S and B do not know the classification of the area where the
land is located. So they consult T, a third person, who tells them that the land
 situated in an industrial area. S and B thus proceed with the sale. Later, however,
B finds out that he could not put up a factory because the land is situated in a
residential area. Is the contract between S and B voidable?

Answer: Although generally, misrepresentation by a third person does not

affect the validity of the contract, the contract in this case is voidable because the
misrepresentation by T, a third person, has created a substantial mistake that is
mutual.

d. If the misrepresentation was made in good faith. However, the same way
constitute error.

Example: S has a ring which he honestly believes is adorned with diamond.

He offers to sell the ring to B telling B that the gemstone is diamond. B buys the
ring believing it to be so. Later, he discovers that the gemstone is emerald. No
fraud exists here because S was in good faith. However, B may annul the
contract on the ground of mistake.

Q. What are the kinds of dolo or fraud

A: 1. Fraud in obtaining consent
a. Causal fraud or dolo causante – fraud without which consent would not have
been given. It renders the contract voidable

b. Incidental fraud or dolo incidente – fraud without which consent would

have still been given but the person giving it would have agreed on
different terms. The contract is valid but the party employing it shall
be liable for damages.

Example: S sold his lot for P100,000.00 to B who stated in the deed of
sale that he was married. The price was fixed by S at the
said amount in consideration of B’s having a family to
support. In reality, however, B was single. If S would have
sold the lot to B whether B was married or single but that he
would have given a higher price, say P105,000, had he
known that B was single, the fraud here is only incidental.
The contract is not vitiated by fraud but S can recover
damages to the extent of P5,000.00

2. Fraud in the performance of the obligation

This is the deliberate act of evading fulfilment of an obligation in a normal manner.

This presupposes an existing obligation, hence, the fraud has no effect on the
validity of the contract since it was employed after perfection. However, the party
employing it shall be liable for damages.
Q. Simulated contract, concept and kinds:

A. A contract that does not intend to have any legal effect on or a change in the juridical
situation of the parties.

They are two kinds:

1. Absolutely simulated contract – one were the parties do not intend to be bound at
all. Being fictitious it is void.

Example: B is interested in buying the lot of S. S tells B to show his capacity to buy
the lot by asking B to present his bank records. B, however, does not have
any bank account. So he asks XYZ Bank through the manager who is his
friend to certify that B is a depositor of the bank. XYZ Bank issues the
certification when the truth is that D has never opened an account and
made a deposit in the bank. The contract of the bank deposit is absolutely
simulated.

2. Relatively simulated contract – one where the parties conceal their true
agreement. The parties here are bound by their real agreement provided it
does not prejudice a third person and is not intended for any purpose
contrary to law, morals, good customs, public order or public policy.

Example: S and B made it appear that S sold his car to B for P100,000.00. In reality,
however, S donated the car to B. The sale is relatively simulated. S and B
will be bound by the contract of the donation. However, they will be bound
by the sale if B is a public official since donation to a public officials is void
for being contrary to public policy; or if as a result of the donation, the
compulsory heirs of S could not receive their legitime, in which case, the
heirs can demand the prince form B.

Q. What is cause?
A. It is the essential reason why a party enters into a contract?

Q. What are the kinds of cause of contracts?

A. Onerous, Remuneratory and Gratuitous.

Q. What are the requisites of cause?

A. 1. It must exist
2. It must be lawful
3. It must be true.

Q. Distinguish cause from motive.

A. 1. Cause is the essential reason of the contract; while motive is the private or secret
reason or intention of the contracting party.

2. The contract is void if the cause is illegal; the validity of the contract is not affected
by the illegality of the motive.

3. The cause of a contract is always known to the contracting parties, while the motive
of one party may not be known to the other.

Q. What is lesion?
A. Lesion is the inadequacy of cause.
Rule: Lesion shall not invalidate a contract.
Exception: When there was fraud, mistake and undue influence.

Q. What are the defective contracts?

A. 1. Rescissible Contracts
2. Voidable Contracts
3. Unenforceable contracts
4. Void or Inexistent Contracts

Q. Define each.

A. 1. A rescissible contract is one which has all the essential requisites of a contract but
which may be set aside by reason of injury or damage to third persons.

2. Avoidable contract is one that is defective by reason of the incapacity or vitiated

consent of one of the parties. It is binding unless annulled by a proper action in court. It
is susceptible of ratification.

 Annulment is the action brought to set aside a voidable contract.

 Ratification is the adoption or affirmation of a contract which is defective

because of a party’s vitiated consent or incapacity.

3. Unenforceable contract is one that cannot be enforced unless ratified.

4. Void or Inexistent Contracts is one which has no force and effect from the very
beginning, as if it had never been entered into, and which cannot be validated either
by time or ratification.

Pertinent Rules on Defective Contracts:

Q. The following are rescissible contracts:

A. 1. Those entered into by guardians whenever the ward whom they represent suffer
lesion by more than one-fourth of the value of the things which are the object thereof.
2. Those agreed to in representation of absentees, if the latter suffer lesion by
more than ¼ of the value of the things which are the object thereof.

3. Those undertaken in fraud of creditors when the latter cannot in any manner
collect the claims due them.

4. Those which refer things under litigation it they have been entered into by the
defendant without the knowledge and approval of the litigants or of competent judicial
authority.

Q. What is rescission?
A. Rescission is the remedy allowed by law to the contracting parties and to third
persons to repaid the damages caused them by a contract. Rescission shall
only be to the extent necessary to cover the damages caused.

Q. The following are voidable contracts:

A. 1. Those where one of the parties is incapable of giving consent to a contract.
2. those where the consent is vitiated by mistake, violence, intimidation, undue influence
or fraud.

Q. What are the pertinent rules on annulment of voidable contract?

A. The action for annulment must be brought within the prescriptive period i.e. 4 years.
2. The action may be instituted by all who are obliged principally or subsidiarily and not
by third persons e.g. guardian or the person who’s consent was vitiated.

Q. What are the effects of annulment?

 In obligations to give the contracting parties shall restore to each other.
 In obligations to do,the value of the service shall be the basis of damages.
 When the thing is lost through the fault of the party obliged by the decree of
annulment to return it, the said party shall return the fruits received, value and
interest of the thing at the time of the loss.

Q. How ratification of voidable contracts can be made?

A. Express or Implied. It should be ratified by the same persons who may annul the
contract who are obliged principally or subsidiarily.

Q. What are the effects of ratification?

A. it extinguishes the action to annul a voidable contract and cleanses the contract
from all its defects from the moment it was constituted.

Q. On unenforceable contract to whom the right to defense is available?

A. it is available only to the contracting parties and unenforceable contracts cannot be
assailed by third persons.
Q. The following are unenforceable contracts:

1. Those entered into in the name of another person by one who has been given no
authority or legal representation.

2. Those that do not comply with the Statute of Frauds.

 Statute of frauds is a statute designed to prevent the commission of fraud by

requiring certain contracts to be in writing and be subscribed by the parties.

The following contracts must be in writing, otherwise they are unenforceable:

a. An agreement that by its terms is not to be performed within a year

from the making thereof.
b. Guaranty.
c. An agreement in consideration of marriage, other than mutual promise
to marry.
d. Sale of goods, chattels or things in an auction at a price not less than
P500.
e. An agreement for the lease of a real property or of an interest therein
for more than one year.
f. Sale of real property or an interest therein regardless of the price.
g. A representation as to the credit of a third person.

Contracts infringing the Statute of Frauds are susceptible of ratification either

by failure to object to the presentation of oral evidence or by the acceptance
of benefits under them.

Q. What are the characteristics of a void contract?

A. 1. A void contract cannot be ratified.
2. The right to set up the defense of illegality of the contract cannot be waived.
3. The action or defense for the declaration of the inexistence of a contract does not
prescribe.
4. The defense of illegality of contracts is not available to third persons whose interest
are not directly affected.
5. A contract is void and inexistent if it is the direct result of a previous illegal
contract.

Q. The following are the contracts which are void from the very beginning:
A. 1. Those whose cause, object or purpose is contrary to law, morals, good customs,
public order or public policy.
2. Those which are absolutely simulated or fictitious
3. Those whose object or cause did not exist at the time of the transaction.
4. Those whose object is outside the commerce of men.
5. Those which contemplate an impossible service.
6. Those where the intention of the parties relative to the principal object of the
contract cannot be ascertained.
7. Those expressly prohibited or declared void by law

Q. What are the kinds of illegal contracts?

A. 1. Where the contract is a criminal offense.
a. If both parties are guilty or in pari delicto
 They shall have no right of action against each other, and both shall be
criminally prosecuted, and the effects and instruments of the crime shall be
confiscated in favour of the government.

b. If only one party is guilty

 The guilty party shall be criminally prosecuted;
 Neither party may compel the other to comply with his undertaking
 The instruments will be confiscated in favor of the government.

Q. What about if the contract is not a criminal offense?

a. If both parties are guilty or in pari delicto

 Neither party may recover what he has given or demand the

performance of the other’s undertaking.

b. If only one party is guilty

 The guilty party cannot recover what he has given nor can he ask for
the fulfilment of what has been promised him.

 The innocent party may demand the return of what he has given
without any obligation to comply with his promise.

Q. Form of Contracts.

 Contracts shall be obligatory in whatever form they may have been entered
into, provided all the essential requisites for their validity are present.

The above rule, however does not apply when certain form is required by law
for the following reasons:

1. For validity – if the contract is not in the form provided by law for its validity,
the contract is void.

2. For enforceability – If the contract is not in form provided for by law for its
enforceability, the contract, though it has all the essential requisites for
validity, cannot be enforced against the party sought to be charged.
 If the contract is valid and enforceable but the same is not in the form
required by law, the contracting parties may compel each other to observe
that form.

 There are certain contracts which are required to appear in public document
for the convenience of the parties so that they may be registered in the proper
recording office to be binding against third persons such as sale of real
property, repudiation of hereditary rights, administration of property.

 All other contracts where the amount involved exceeds P500.00 must be in
writing fir the convenience of the parties.