Contracts Chapter 3 Form of Contracts

The lecture introduces Chapter 3 on the form of contracts. Form refers to how a contract is executed or manifested, which can be oral, written, or a combination. Written contracts can be private or public instruments. Public instruments are notarized private instruments that bind the entire world and are acceptable in court for evidentiary value. All terms of an agreement must be in writing to be recognized as a written contract; otherwise, it's considered an oral contract.

Contracts are classified into informal (or common) and formal (or solemn). Informal contracts can be in any form as long as essential requisites are present, applying primarily to consensual contracts. Formal contracts, however, require specific formalities prescribed by law for their validity. In these cases, form becomes an essential element alongside cause, object, and consent.

Article 1356 outlines three exceptions to the general rule that form does not matter for contract validity: 1. Form is required for validity (e.g., specific instruments must be in writing or public). 2. Form is required for enforceability (e.g., certain contracts must be in a specific form to be proven in court). 3. Form is required for convenience or greater efficacy (e.g., for convenience of parties and to affect third persons).

Several contracts require specific forms for validity. This includes donations of personal property exceeding 5,000 pesos, which must be in writing with written acceptance, otherwise they are void. Oral donations are allowed for personal property valued 5,000 pesos or less with simultaneous delivery. Also, stipulations reducing the common carrier's liability from extraordinary to lesser diligence must be in writing to be valid. The sale of land through an agent requires the agent's authority to be in writing, or the sale is null and void. Stipulations to pay interest and contracts of antichresis (where the creditor receives fruits of an immovable to pay interest/principal) must specify the principal and interest in writing to be valid.

Some agreements must not only be in writing but also in a public instrument (notarized) for validity. This includes donations of real property, where both the deed of donation and the acceptance must be in a public instrument. If real property is contributed to a partnership, the contract of partnership must be in a public instrument, and an inventory of the immovable property must be attached.

Article 1403, paragraph 2, known as the Statute of Frauds, dictates that certain agreements must be in writing and signed to be enforceable. While the contract remains valid if essential elements are present, it cannot be proven in court and is unenforceable if not in writing. An unenforceable contract is without force and effect, though it can become valid if ratified. The Statute of Frauds applies to agreements such as leases for more than one year or sales of real property.

Articles 1357 and 1358 discuss form required for convenience or greater efficacy. In these cases, non-compliance with the required form does not affect the validity or enforceability of the contract between the parties. Either party can compel the other to execute the proper public instrument for registration or to affect third persons. An example is the sale of real property; while a private instrument is valid between parties, a public instrument is needed for registration and to bind third parties. If a contract is unenforceable under the Statute of Frauds, Article 1357 cannot be invoked.

Article 1358 enumerates contracts that must appear in a public document for convenience, not validity or enforceability. These include acts and contracts creating, transmitting, modifying, or extinguishing real rights over immovable property (like a mortgage), cession of hereditary rights, or renunciation of conjugal partnership gains. Powers to administer property or any other power that should appear in a public instrument (e.g., special power of attorney) also fall under this category. Finally, cession of actions or rights proceeding from an act appearing in a public instrument also requires a public instrument.