Verbal Contract Legally Binding in Philippines: A Comprehensive Guide
In the Philippines, a contract is an agreement between two or more parties that creates legally binding obligations enforceable by law. While most contracts are typically in writing, there are instances where a verbal agreement can be considered legally binding. This article aims to provide a comprehensive guide on verbal contracts and their legal implications in the Philippines.
What is a Verbal Contract?
A verbal contract, also known as an oral contract, is an agreement between two parties communicated orally or verbally. It is a type of agreement where the terms and conditions are conveyed through spoken words, rather than in writing. Verbal contracts can be made in person or over the phone.
Are Verbal Contracts Legally Binding in the Philippines?
Yes, verbal contracts are legally binding in the Philippines. Both written and verbal contracts are enforceable under the law, provided that certain requirements are met.
To create a legally binding verbal contract, there must be a meeting of the minds between the parties involved. This means that both parties must agree to the terms and conditions of the agreement and intend to be bound by it. Additionally, the contract`s subject matter must be legal, and the terms of the agreement must be clear and unambiguous.
It is worth noting that proving the existence of a verbal contract and its terms can be challenging in the absence of written evidence. Hence, it is always advisable to put agreements in writing, especially when it comes to significant transactions.
Examples of Verbal Contracts
Verbal contracts can occur in different contexts, including personal and business dealings. Here are some examples:
1. A homeowner hires a plumber to fix a leaky faucet and agrees to pay Php 3,000 for the service. The plumber agrees to the terms, and the homeowner pays after the work is completed.
2. An employer verbally promises a raise to an employee who has exceeded expectations in their job performance. The employee accepts the offer, and the employer follows through with the increase in salary.
3. Two friends verbally agree to start a business together and split the profits equally. They both contribute to the start-up costs, and the business becomes successful.
Enforcing Verbal Contracts
If a party fails to fulfill their obligations under a verbal contract, the other party can seek legal remedies to enforce the agreement. To do this, the party seeking enforcement must prove the following elements: the existence of a verbal contract, the terms of the agreement, and the other party`s breach of the contract.
However, it is important to note that the limitation period for enforcing a verbal contract in the Philippines is six years from the date of the breach. This means that legal action must be taken within six years of the breach of contract.
In conclusion, verbal contracts are legally binding in the Philippines, provided that certain requirements are met. While they can be enforceable in court, proving the existence and terms of the agreement can be challenging without written evidence. Therefore, it is always advisable to have written contracts in place, especially for significant transactions.