A contract is a promise the law will enforce, so the time to understand it is before you sign. This article gives a general checklist for local organizations and for foreign individuals and companies doing business in the Philippines. It is general information only and is not legal advice.
Know who is signing, and with what authority
Check that the party names and details are correct and complete. For a company, confirm that the person signing is authorized to bind it, for example through a board resolution or secretary’s certificate. A contract signed by someone without authority can cause disputes later.
Make sure the key terms are clear
Look for what each party must do, the price or fees and how and when they are paid, the deadlines, and what counts as a breach. Vague wording is a common source of disagreement, so ask for it to be made specific. Check that every attachment or annex mentioned in the contract is included.
Look closely at risk and exit terms
Read the clauses on termination, renewal, penalties and liquidated damages, indemnities and limits on liability. Ask whether the obligations are balanced between the parties, and what happens if one side cannot perform.
Governing law, disputes and venue
Check which law governs the contract, where disputes will be heard, and whether the parties agreed to mediation or arbitration. For agreements with a foreign party, these clauses deserve extra attention, because courts and arbitral bodies in different places can work very differently.
Language, form and formalities
Agreements are generally enforceable even when informal, but some contracts must be in writing or follow a specific form. Notarization, taxes and registration may also be involved, for example for real property or for certain corporate transactions. Confirm the formalities for your type of agreement before relying on it.
Revising and negotiating
A contract can often be improved before it is signed, or amended later by agreement of the parties. Changes are best made in writing, clearly identified, and signed by all parties, so that no one is unsure which version applies.
When to ask a lawyer
Have a lawyer review the contract before signing, especially when large amounts are involved, the other party is foreign or local and unfamiliar to you, or the terms are not what you expected. When you contact us, send the full contract with its attachments, a short summary of the deal, your main concerns and your signing deadline.
General information only, not legal advice. Laws and procedures change; consult a lawyer about your specific situation.
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