Forms of Contracts Flashcards
When contract considered in written form
It is generally recognized that to be a written contract, all its terms must be in writing. So, a contract partly in writing and partly oral is, in legal effect, an oral contract.
When is form required in contracts
(a) when the law requires that a contract be in some form to be valid;
(b) when the law requires that a contract be in some form to be enforceable or proved in a certain way; or
(c) when the law requires that a contract be in some form for the convenience of the parties or for the purpose of affecting third persons. (Art. 1356.)
What contracts must appear in a public document?
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 are 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 Ar- ticles 1403, No. 2 and 1405. (1280a)
Facts: The probate court authorized S, as special co-administrator, to sell a subdivision. Under the authority, S sold a lot on installment basis to B who paid an initial amount of P200.00 by virtue of which, S issued a receipt. Subsequently, the court issued another order authorizing X (bank), as administrator, to sell the subdivision at the earliest possible time at the best obtainable price. X sold the entire subdivision to MR. It refused to receive further payments from B.
The lower court ruled that there was consummated sale between S and B because they had agreed on the subject matter and the purchase price and that the latter paid part of the purchase price while the former delivered the land.
Issue: Did the sale between S and B bind MR who acquired the property with the approval of the probate court and in sole reliance on the clean title of the property?
Held: No. The alleged sale made by S to B should have been embod- ied in a public instrument in accordance with Article 1358 and duly regis- tered with the Register of Deeds to make it binding against third persons. The authority given by the probate court to S specifically required the execution of accessory documents.
B not only failed to obtain a deed of sale from S but also failed to secure any kind of writing evidencing the contract of sale other than the receipt issued by S. No explanation was offered as to why there was no effort on the part of B for about five (5) years to pay the balance of the purchase price during the time that S was the special co-administrator. (Manotok Realty, Inc. vs. Court of Appeals, 149 SCRA 174 [1987].)
Facts: X and Y contributed P1,000.00 and P2,000.00, respectively, to a partnership which was entered into, orally, between them. X brought action on the partnership contract. Y now claims that the case falls under Article 1358 (last par.) and that before X can maintain any action on the verbal contract, he must proceed under Article 1357 to compel Y to reduce it to writing.
Issue: Is this contention of Y well-founded?
Held: No. Article 1357 does not impose an obligation, but confers a privilege upon both contracting parties and the fact that X has not made use of the same, does not bar his action. Far from making the enforceability of the contract dependent upon any special extrinsic form, Article 1357 recognizes its enforceability by the mere act of granting to the contracting parties, an adequate remedy to compel the execution of a public writing, or any other special form, notwithstanding the absence of any express agreement by them to that effect, whenever such form is necessary in order that the contract may produce the effect which is desired, according to whatever may be its object.
The subordination of the principal action for the enforcement of the contract to the bringing of the secondary action concerning the form would be unnecessary as the cause of action would be the same in both cases, i.e., the existence of a valid contract. (Thunga Chui vs. Que Bentec, supra.)
