Short answer. Under Article 1305 of the Civil Code, a contract is a meeting of minds between two persons whereby one binds himself to give something or to render some service to the other. A contract can obligate a party to transfer property, pay money, or perform an act.
What the law says
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.
Civil Code, Article 1305 — Definition of a Contract. Read the full provision →
The statutory definition
Article 1305 of the Civil Code defines a contract in two essential elements. First, there must be a meeting of minds — genuine agreement between the parties on the terms. Second, that agreement must result in one party binding himself to the other to either give something or render some service. This covers the vast majority of everyday agreements: a contract of sale obliges the seller to give ownership of property; a service agreement obliges one party to perform work. Both forms are equally valid contracts under Philippine law.
What 'meeting of minds' actually requires
The phrase 'meeting of minds' is the heart of a contract. It means both parties must genuinely agree — not one deceiving the other, not one acting under pressure, not one being mistaken about what was being agreed to. Offer and acceptance must correspond: the acceptance must match the offer without material changes. If one party says 'I will sell you this car for ₱500,000' and the other replies 'I accept at ₱450,000,' there is no meeting of minds on the price and no contract yet. The minds must actually meet on the same terms.
Obligations to give and obligations to render service
The two types of performance a contract can demand — giving and rendering service — cover very different situations. An obligation to give requires the transfer of something: a thing, an amount of money, or a document. An obligation to render service requires the performance of an act: building a structure, providing legal advice, teaching a skill, or delivering professional work. Both types have their own sets of rules under the Civil Code governing what happens when performance is delayed, defective, or impossible.
Why this definition matters in practice
When a dispute arises, the threshold question is often whether a contract existed at all. If the parties did not actually agree on the same thing — if one was joking, or speaking hypothetically, or if the terms were never actually settled — there is no meeting of minds and no binding contract. Similarly, an arrangement that obligates neither party to give anything nor to perform any service may not qualify as a contract, even if it is written and signed. Understanding what the law treats as a contract helps you know when you are bound and when you are not.
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.
- The Insular Life Assurance Company, Ltd., vs. Asset Builders Corporation, G.R. No. 147410, February 5, 2004 — read the decision on LawPhil →
- Pal Employees Saving and Loan Asso., Inc. vs. National Labor Relations Commission, et al, G.R. No. 105963, August 22, 1996 — read the decision on LawPhil →
- Estate of Ferdinand E. Marcos vs. Republic of the Philippines, G.R. No. 212330, November 14, 2023 — read the decision on LawPhil →
- Commissioner of Internal Revenue vs. Toledo Power Company, G.R. No. 259309, February 13, 2023 — read the decision on LawPhil →