BizCLIR

The ability to create and enforce contracts under a clear, consistent legal framework is a critical component of economic growth. Where there is widely held expectation that agreements freely entered into between businesses or individuals will be subject to enforcement by a court or other tribunal, a marketplace can be transformed. Namely, what was once mere hope for performance based on a personal relationship or vague insinuation becomes a legitimate expectation of delivery. When business partners are in fact required to do what they have said that they will do—pay money, deliver goods, provide services, and so forth—risk diminishes and the recipients of a promise can better plan for the future. With decreased risk, the cost of doing business goes down, thereby elevating the private sector’s prospects for profit. Philippine contract law is comprehensive and generally consistent with modern commercial codes. However, the institutions responsible for the enforcement of contracts lack predictability and efficiency, causing a chilling effect on some forms of commerce in the country.