A client asked his lawyer: “Attorney, can I sue my friend for violating our agreement even if we have no contract?” This question is not unusual but paradoxical. The paradox lies with the misconception of what is a contract.
A contract is a meeting of minds between two persons whereby one binds himself, with respect to the other, to give something or to render some service (Article 1305, Civil Code of the Philippines). Specifically, by the contract of sale, one of the contracting parties obligates himself to transfer the ownership of and to deliver a determinate thing, and the other to pay therefor a price certain in money or its equivalent (Article 1458). The contract of sale is perfected at the moment there is a meeting of the minds upon the thing and upon the price (Article 1475).
Simply put, contract is synonymous to “agreement” or “deal”. This means that a contract is born the moment two or more persons agreed to give or to do something. This is the rule.
An exception to this rule, however, is when the agreement involves a purchase and sale of a real property, such as land, and a substantial amount of money. The law now requires a certain formality for that agreement to become effective. This is where a Deed of Sale becomes relevant.
The Deed of Sale is the instrument or document that embodies the agreement. The Deed of Sale serves as the evidence of the agreement between the buyer and the seller. In reality, the Deed of Sale serves as a reminder to the buyer and seller of what they agreed upon.
To sum up, there can be a contract even if this contract is not written in a paper. The paper that embodies the contract is one but not the only evidence to prove the existence of the contract. However, there are some contracts that the law requires to be written to be effective. One of these contracts is a purchase and sale of a land.