Under the Civil Code of the Philippines, contracts have the force of law between the parties. Once you sign, you are generally bound by its terms. Reviewing a contract carefully before signing can prevent costly disputes later.
Check the parties
Make sure the names of all parties are complete and correct. If you are dealing with a company, confirm that the person signing has the authority to bind it, such as through a board resolution or secretary's certificate.
Understand each party's obligations
The contract should clearly state what each party must do, by when, and to what standard. Vague obligations are a common source of disagreement.
Review payment terms
Look closely at:
- The amount and currency
- Due dates and installment schedules
- Penalties or interest for late payment
- Taxes and who will shoulder them
Look at the term and termination clauses
How long does the contract last? Can either party end it early, and on what grounds? Is notice required? Are there fees for early termination?
Check the remedies and dispute resolution
Find out what happens if a party does not comply. Some contracts require mediation or arbitration before going to court, and many specify the venue where cases may be filed.
Watch for automatic renewals and waivers
Clauses that automatically renew the contract or waive certain rights are easy to overlook but can have significant consequences.
When in doubt, ask
If a provision is unclear, ask for clarification in writing or have the contract reviewed before signing.
This article is general information only and is not legal advice. For a review of your contract, request a consultation.