People often have question or concern on validity and enforceability of a contract that is not executed before witness. This article discusses whether or not it is necessary to have witness whenever parties execute (sign or affix thumbprints on) their contract.
According to Article 311 of the Civil Code, a contract means the matching of intentions held by two or more parties for the purpose of creating, amending or extinguishing an obligation. Furthermore, Article 336, paragraph 1 of the Code provides that a contract comes into effect once an offer and the acceptance thereto conform to each other. Accordingly, in principle, as long as there is agreement of the parties, the contract is valid and binding obligations of such parties even though it is not executed in the presence of the witness.
However, there are certain cases where laws require execution of contract be made in presence of witness. For example, Article 73 of the Labor Law provides that a labor contract of specific duration normally terminates at the specified ending date. It can, however, be terminated before the ending date if both parties are in agreement on the condition that this agreement is made in form of writing in the presence of a Labor Inspector and signed by the two parties to the contract. Furthermore, Article 336, paragraph 2 of the Civil Code rules that a contract in which one of the parties bears an obligation to transfer or to acquire ownership of an immovable comes into effect only upon such contract having been executed in the form of anotarized document.
Although there are cases where laws do not so require, the parties may execute their contract before the witness in order to prove that their transaction is genuine and agreed according to their true and free will. The witness can be lawyer, public notary, official of local authorities or any person selected by the parties.