Short answer. Yes. The Civil Code expressly allows the parties to leave the determination of the performance to a third person. What you cannot do is leave it to one of yourselves. The third person's decision, however, binds nobody until it has been communicated to both sides.

What the law says

The determination of the performance may be left to a third person, whose decision shall not be binding until it has been made known to both contracting parties.

Civil Code, Article 1309 — Determination by a Third Person. Read the full provision →

Why the law permits an outsider to decide

Article 1309 says that the determination of the performance may be left to a third person. This is a practical rule. Parties routinely agree on everything except a figure that nobody can fix yet — the value of a property at a future date, the fair rent on renewal, the quantity of work actually done. Rather than force them to guess, the law lets them name an appraiser, an auditor, a surveyor or any other outsider to supply the missing element. The contract is not void for want of a price or a measure; it is complete, with one term left to a mechanism the parties themselves chose.

The line this rule does not cross

The permission is for a third person — someone outside the contract. It is not a licence to let one contracting party set the terms afterwards. Article 1308 lays down the opposite rule: a contract must bind both parties, and its validity or compliance cannot be left to the will of one of them. So a clause saying "the lessor shall determine the increase" or "the buyer shall fix the price he considers fair" is not saved by Article 1309, because the decision-maker there is a party, not a stranger to the agreement. The third person must be genuinely independent of both sides for the mechanism to work.

Nothing is binding until both of you are told

The second half of the article is the part people overlook: the third person's decision shall not be binding until it has been made known to both contracting parties. A valuation sitting in the appraiser's file, or sent to only one side, does not yet oblige anyone. Until communication to both, neither party is in delay for failing to pay or deliver according to it, because the content of the obligation is not yet known to them. In practice this is why the appointment clause should say in writing how the determination will be released — to whom, in what form, and at whose cost.

When the outsider's figure is grossly unfair

Leaving the term to a third person is not the same as surrendering to whatever number appears. Article 1310 provides that the determination is not obligatory if it is evidently inequitable, and in that case the courts decide what is equitable under the circumstances. "Evidently inequitable" is a high bar — a price you dislike, or one lower than your own estimate, will not do; the disparity must be plain on the face of things. If the third person refuses to act, dies, or is disqualified, the contract may fail for lack of a determinable term unless the parties provided a substitute. Say in advance who replaces him. If the figure has already landed and looks indefensible, bring the appointment clause and the valuation itself to counsel; the wording of the clause usually decides how much room you have.

Cases citing this provision

These Supreme Court decisions cite the provision above. We list them so you can read them yourself; the summaries of what each decided are not ours to give.

Related provisions

Note. Statute text quoted on this page is reproduced from the official enactment and is linked to the full provision. The explanation around it is general legal information from Vivas & Nobles Law Office, not legal advice. Whether it applies to your situation depends on facts only a lawyer reviewing them can assess.