Justin V. Torres 1G

DEFECTIVE CONTRACTS

RESCISSIBLE VOIDABLE UNENFORCEABLE VOIDDEFINITION Those which

are valid but are defective because of injury or damage to either of the contracting parties or to third persons, as a consequence of which it may be rescinded by means of a proper action for rescission.

Those which possess all the essential elements for validity but the consent is vitiated either by lack of legal capacity of one of the contracting parties, or by mistake, violence, intimidation, undue influence, or fraud even though there may have been no damage to the contracting parties.

Those which cannot be enforced by proper action in court unless they are ratified because either: (1) they are entered into without or in excess of authority; (2) they do not comply with the statute of frauds; (3) Both contracting parties do not possess the required legal capacity.

Those which lack absolutely either in fact or in law one or some of the elements essential for its validity.

ARTICLES IN THE CIVIL CODE

Art. 1380- 1389

Art. 1390- 1402

Art. 1403- 1408 Art. 1409- 1422

DEFECT/S Defect is caused by injury/ damage either to one of the parties or to a third person.

Defect is caused by vice of consent.

Defect is caused by lack of form, authority, or capacity of both parties not cured by prescription.

Defect is caused by lack of essential elements or illegality.

EFFECT/S Valid and enforceable until rescinded by

Valid and enforceable until annulled by a

Cannot be enforced by a proper action in court.

Do not, as a general rule produce any legal effect.

a competent court.

competent court.

PRESCRIPTION OF ACTION OR DEFENSE

Action for rescission may prescribe.

Action for annulment or defense or annulability may prescribe.

Corresponding action for recovery, if there was total or partial performance or the unenforceable contract under No.1 or 3 of Art. 1403 may prescribe.

Action for the declaration or nullity or inexistence or defense of nullity or inexistence does not prescribe.

EFFECT OF PRESCRIPTION

Cured by prescription

Cured by prescription

Not cured by prescription

Not cured by prescription

RATIFICATION Need not be ratified

Can be ratified Can be ratified Cannot be ratified

ASSAILABILITY Assailed by a contracting party and a third person who is prejudiced or damaged by the contract.

Assailed only by a contracting party.

Assailed only by a contacting party.

Assailed by a contracting party and a third person whose interest is directly affected.

HOW CONTRACTS MAY BE ASSAILED

Assailed directly only.

Assailed directly or collaterally.

Assailed directly or collaterally.

Assailed directly or collaterally.

REMEDY Rescission Annulment, Ratification

Ratification Declaration of Absolute Nullity or Inexistence

EXAMPLES (1) Those which are entered into by guardians whenever the wards whom they represent suffer lesion by more than ¼ of the value of the things which are the object

(1) Those where one of the parties is incapable of giving consent to a contract; (2) Those where the consent is vitiated by mistake, violence, intimidation undue

(1) Those entered into the name of another person by one who has been given no authority of legal representation or who has acted beyond his powers;(2) Those that so not comply with the Statute of Frauds. The following cases an agreement

(1) Those whose cause, object or purpose is contrary to law, morals, good customs, public order or public policy;(2) Those which are absolutely simulated or fictitious; (3) Those

thereof;(2)Those agreed upon in representation of absentees, if the latter suffer the lesion stated in the preceding number;(3)Those undertaken in fraud of creditors when the latter cannot in any other manner collect the claims due them;(4) Those which refer to things under litigation if they have been entered into by the defendant w/o the knowledge and approval of the litigants or of competent judicial authority;(5) All other contracts especially declared by law to be subject to

influence or fraud. (Art 1390)

hereafter made shall be unenforceable by action, unless the same or some note or memorandum thereof, be in writing, and subscribed by the party charged, or by his agent: a) An agreement that by its terms is not to be performed w/in a year from the making thereof; b) A special promise to answer for the debt, default or miscarriage of another; c) An agreement made in consideration of marriage, other than a mutual promise to marry; d) An agreement for the sale of goods, chattels or things in action at a price less than P500, unless the buyer accept and receive part if such goods and chattels, or the evidences or some of them, but when a sale is made by auction and entry is made by the auctioneer in his sales book, it is a sufficient memorandum; e) An agreement for the leasing for a

whose cause or object did not exist at the time of the transaction;(4) Those whose object is outside the commerce of men;(5) Those which contemplate an impossible service;(6) Those where the intention of the parties relative to the principal object of the contract cannot be ascertained;(7) Those expressly prohibited or declared void by law;(Art 1409)

rescission. (Art 1381)

longer period than 1 year or for the sale of real property or of an interest therein; f) A representation as to the credit of third person.(3) Those where both parties are incapable of giving consent to a contract.(Art 1403)