Defective Contracts – defective contracts are those contracts which under civil law have a certain irregularity or absence in one or more of its elements or has damaged an innocent third party

KINDS:1. Rescissible2. Voidable3. Unenforceable4. Void

RESCISSIBLE CONTRACTS Refer to Art 1381, NCC A rescissible contract is one were all the elements exist and therefore a valid contract

however its very execution has created injury or economic damage to another.o Example: A is the guardian of B, who is a minor. A administers all of the

properties of B. One of B’s properties is a piece of land worth 500K. A connived with C, where A sold the property to C for 200K will the agreement that they will sell it to D for 500K and divide the 300K profit between themselves.

Because B (minor) has suffered damage in the amount of 300K which is ¼ of the total amount of the property the said transaction between A and C is rescissible (B the minor can ask that the valid contract between A and C be annulled or invalidated or rescinded.

VOIDABLE CONTRACTS Refer to Art 1390, NCC A voidable contract can be annulled although there is no damage to a contracting party.

There is a defect/irregularity in the consent given.o Voidable Contracts

Those whose parties are incapable of giving consent. ie. Minors, insane Those whose consent is vitiated by mistake, violence, intimidation, undue

influence or fraud. These contracts may be validated within four years

o Intimidation, violence, undue influence – four years from the time defect in the consent ceases

o Mistake or fraud – four years from the time of discoveryo Minority or guardianship – four years from the time the minor reaches majority

age or four years from the time the guardianship ceases.

UNENFORCEABLE CONTRACTS Refer to Art 1403, NCC These are contracts which can be enforced (opposing party cannot be compelled to

perform) or sued in a court of law by reason of certain defects provided by law until and unless they are ratified.

KINDS:o Unauthorized contracts – entered into by an agent who has no authority or was not

authorized or acted beyond the authority given

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o Those that did not comply with the statute of frauds Contracts under the statute of frauds must be WRITTEN and SIGNED. If

they are not written or signed the said contracts cannot be enforced in a court of law

Performance of the terms are not to be performed within a year.o Contract of Service for 2 years or 5 years

Special promise to answer for the debt, default or miscarriage of another

o Being a co-maker, bondsman Sale of goods or other personal property above 500 pesos Lease of a property for more than 4 years Sale of real property (land/land+building) or an interest in the said

real property.o Those were BOTH parties are incapable of giving consent

VOID CONTRACTS Non-existent contract, void from the beginning. Cannot be ratified or validated because they do not exists The defect in one of the elements has rendered said element absent.

o Cause, object or purpose is contrary to law, morals, good customs (lack of OBJECT)

o Simulated or fictitious/ fake contracts (lack of CONSENT-consent given is to a fake contract)

o Object did not exists at the time of the transaction (lack of OBJECT)o Object outside the commerce of men (lack of OBJECT, ie. We cannot sell

roads, rivers, seas)o Contemplates an impossible service (lack of OBJECT)o Contracts declared void by law

NOTES: Rescissible, Voidable and Unenforceable contracts may be ratified or validated, by curing

the effect or irregularity.

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