DEFECTIVE

CONTRACTS

AS TO NATURE OF
DEFECT

RESCISSIBLE
(Arts 1381 1389)
Economic prejudice
or damage to:
- owner
- 3rd person
- litigant

Contracts in representation of
absentees when latter suffers
lesion of more than 25% of
value of thing

Can generally be
ASSAILED and
CURED by: Injured
Party
EFFECTS:
Mutual restitution

DEFECTIVE
CONTRACTS

VALID
until rescinded

VALID
until rescinded

Contracts entered into by debtor

who is a state of insolvency, i.e.
contracts entered into in fraud
of creditors (Accion Pauliana)

VALID
until rescinded

Contracts which refer to things

in litigation without the
knowledge and approval of
litigants or competent judicial
authority

VALID
until rescinded

All other contracts declared by

law to be subject of rescission
E.g. Art 1098 Partition

VALID
until rescinded

EFFECT
ON
CONTRACT

ASSAILABLE
?
HOW?

AS TO NATURE
OF DEFECT
Want of capacity
- age
- insanity

VOIDABLE
(Arts 1390
1402)
Vitiated consent
EFFECT:
Cleanses defect
of contract
Does not
prejudice right of
3P prior to
ratification
Mutual restitution

Contracts of guardians (acts of

administration) when wards
they represent suffer lesion of
more than 25% of the value of
thing

EFFECT ON
CONTRACT

Consent is vitiated
by:
mistake or error
violence and
intimidation
(duress)
undue influence
fraud,
misrepresentati
on

VALID
until annulled
by court
action

YES. Both
through direct
and collateral
attacks.
Action for
annulment

ASSAILABLE?
HOW?

WHO CAN ASSAIL?

YES but only through DIRECT

action for rescission
No rescission if:
a. plaintiff has other legal means
to obtain reparation (subsidiary)
b. plaintiff cannot return what
must be restored
c. object in the hands of 3rd
persons in good faith
d. Contract approved by court (Art
1386)

YES but only through DIRECT

action for rescission
No rescission if:
a. plaintiff has other legal means
to obtain reparation (subsidiary)
b. plaintiff cannot return what
must be restored
c. object in the hands of 3rd
persons in good faith

WHO CAN ASSAIL?

All who are obliged

principally or subsidiarily
(i.e. guarantors and
sureties)
Incapacitated party; not
the party with capacity
Victim; not the party
who cause the defect

By ward
Or by guardian ad litem
of ward during incapacity
of ward in action against
original guardian

WHEN TO
ASSAIL?
Within 4 years from
gaining (minor) or
regaining (insane)
capacity

CURABLE?
HOW?
YES
By ratification
(Confirmation by
the ward)

WHO CAN
CURE?

WHEN TO
CURE?

By ward

Within 4 years from

(re)gaining capacity

By absentee

Within 4 years from

knowledge of
domicile of absentee

YES
By prescription

By
absentee

Within 4 years from

knowledge of
domicile or
knowledge of
fraudulent contract

By plaintiff-creditor
By heirs of creditor
BY creditors of creditors
injured (accion
subrogatoria) By other
third parties prejudiced
by the contract

Within 4 years from

knowledge of
fraudulent contract

YES
By prescription

By creditor

Within 4 years from

knowledge of
fraudulent contract

By party litigant

Within 4 years from

knowledge of
fraudulent contract

YES
By prescription

By party
litigant

Within 4 years from

knowledge of
fraudulent contract

WHEN TO ASSAIL?
Within 4 years from
cessation of (re)gaining
capacity

Within 4 years from:

- cessation of intimidation,
violence, undue
influence (consensual
defect)
- discovery of mistake or
fraud

CURABLE? HOW?

WHO CAN CURE?

Within 4 years from

cessation of (re)gaining
capacity

YES
By ratification
By prescription
YES
1 By ratification
- Express
- Implied
- (silence or acquiescence, acts
showing approval or adoption
of contract, acceptance and
retention of benefits)
2 By prescription

WHEN TO CURE?

By parties
themselves
By guardian in behalf
of an incapacitated
party during
existence of
incapacity

Within 4 years from:

- cessation of intimidation,
violence, undue influence
(consensual defect)
- discovery of mistake or fraud

DEFECTIVE
CONTRACTS

AS TO NATURE OF
DEFECT
Contract entered into
name of another without
authority or in excess of
authority

UNENFORCEAB
LE
(Arts 1403
1408)

Contracts covered by
Statute of Frauds and not
complying with
requirement of a written
memo

EFFECT ON
CONTRACT

VALID
but cannot be
ENFORCED
by a proper action in
court

VALID
but cannot be
ENFORCED
by a proper action in
court

ASSAILABLE?
HOW?

WHO CAN ASSAIL?

YES.
Not by direct action but by DEFENSE of
unenforceability of contract through
motion to dismiss complaint on the
ground that contract is unenforceable

YES.
Not by direct action but by DEFENSE of
unenforceability of contract either
through:
1. motion to dismiss complaint on the
ground that contract is unenforceable
2. objection to presentation of oral
evidence to prove contract

WHEN TO ASSAIL?

By owner of property

At any time one party

attempts to enforce
contract against the
other through a court
action

CURABLE? HOW?

By ratification

Both parties are legally

incapacitated to act

YES.
Not by direct action but by DEFENSE of
unenforceability of contract through
motion to dismiss complaint on the
ground that contract is unenforceable

By other party
By his privies (heirs,
representatives and
assigns)

At any time one party

attempts to enforce
contract against the
other through a court
action

By failure to object
seasonably to
presentation of oral
evidence

By party against whom

the contract is being
enforced

By acceptance of
benefits under the
contract

By his privies (heirs,

representatives and
assigns)

By parents or
guardians of both
parties

At any time one party

attempts to enforce
contract against the
other through a court
action

By confirmation

Imprescriptible

Cannot be cured

--

Imprescriptible

Cannot be cured

--

Both parties after

(re)gaining capacity to
act

By guardian

VOID or
INEXISTENT
(Arts 1409
1422)

Person in whose name

the contract was
entered into

By acknowledgement By
performance of oral
contract

By other party
VALID
but cannot be
ENFORCED
by a proper action in
court

WHO CAN CURE?

By innocent party

Cause, object or purpose

of contract contrary to
law, good customs,
morals, public order or
public policy (Art 1401,
Par 1)

DOES NOT CREATE

RIGHTS AND CANNOT
IMPOSE OBLIGATION

YES.
By an action for declaration for nullity
By defense of nullity

One or some of essential

requisites of valid
contract lacking in fact or
in law
a. Absolutely simulated
b. Those whose cause or
object did not exist
c. Object outside the
commerce of man
d. Contemplate an
impossible service
e. Where intention of
parties re: principal
object of contract
cannot be ascertained
(Art 1402 Pars 2 to 6)

DOES NOT CREATE

RIGHTS AND CANNOT
IMPOSE OBLIGATION

YES.
By an action for declaration for nullity
By defense of nullity

By 3rd persons whose

interest are directly affected
(If in pari delicto, neither
has an action against each
other)

By any of the contracting

parties
By 3rd persons whose
interests are directly
affected

Contracts expressly
prohibited by law
(Art 1409 Par 7)

DOES NOT CREATE

RIGHTS AND CANNOT
IMPOSE OBLIGATION

YES.
By an action for declaration for nullity
By defense of nullity

By party whose protection

the prohibition of the law is
designed
By 3rd party whose interests
are directly affected

Imprescriptible

Cannot be cured

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