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DEFECTIVE CONTRACTS

RESCISSIBLE VOIDABLE UNENFORCEABLE VOID


DEFINITION Those which are valid Those which possess Those which cannot Those which lack
but are defective all the essential be enforced by proper absolutely either in
because of injury or elements for validity action in court unless fact or in law one or
damage to either of but the consent is they are ratified some of the
the contracting vitiated either by lack because either: (1) elements essential
parties or to third of legal capacity of they are entered into for its validity.
persons, as a one of the without or in excess of
consequence of contracting parties, authority; (2) they do
which it may be or by mistake, not comply with the
rescinded by means violence, statute of frauds; (3)
of a proper action for intimidation, undue Both contracting
rescission. influence, or fraud parties do not possess
even though there the required legal
may have been no capacity.
damage to the
contracting parties.
ARTICLES IN Art. 1380- 1389 Art. 1390- 1402 Art. 1403- 1408 Art. 1409- 1422
THE CIVIL
CODE
DEFECT/S Defect is caused by Defect is caused by Defect is caused by Defect is caused by
injury/ damage either vice of consent. lack of form, authority, lack of essential
to one of the parties or capacity of both elements or illegality.
or to a third person. parties not cured by
prescription.
EFFECT/S Valid and enforceable Valid and enforceable Cannot be enforced by Do not, as a general
until rescinded by a until annulled by a a proper action in rule produce any
competent court. competent court. court. legal effect.
PRESCRIPTIO Action for rescission Action for annulment Corresponding action Action for the
N OF ACTION may prescribe. or defense or for recovery, if there declaration or nullity
OR DEFENSE annulability may was total or partial or inexistence or
prescribe. performance or the defense of nullity or
unenforceable inexistence does not
contract under No.1 or prescribe.
3 of Art. 1403 may
prescribe.
EFFECT OF Cured by prescription Cured by prescription Not cured by Not cured by
PRESCRIPTIO prescription prescription
N
RATIFICATIO Need not be ratified Can be ratified Can be ratified Cannot be ratified
N
ASSAILABILIT Assailed by a Assailed only by a Assailed only by a Assailed by a
Y contracting party and contracting party. contacting party. contracting party
a third person who is and a third person
prejudiced or whose interest is
damaged by the directly affected.
contract.
HOW Assailed directly only. Assailed directly or Assailed directly or Assailed directly or
CONTRACTS collaterally. collaterally. collaterally.
MAY BE
ASSAILED
REMEDY Rescission Annulment, Ratification Declaration of
Ratification Absolute Nullity or
Inexistence

EXAMPLES (1) Those which are (1) Those where one (1) Those entered into (1) Those whose
entered into by of the parties is the name of another cause, object or
guardians whenever incapable of giving person by one who purpose is contrary
the wards whom they consent to a contract; has been given no to law, morals, good
represent suffer (2) Those where the authority of legal customs, public
lesion by more than consent is vitiated by representation or who order or public
of the value of the mistake, violence, has acted beyond his policy;
things which are the intimidation undue powers; (2) Those which are
object thereof; influence or fraud. (2) Those that so not absolutely simulated
(2)Those agreed upon (Art 1390) comply with the or fictitious;
in representation of Statute of Frauds. The (3) Those whose
absentees, if the following cases an cause or object did
latter suffer the agreement hereafter not exist at the time
lesion stated in the made shall be of the transaction;
preceding number; unenforceable by (4) Those whose
(3)Those undertaken action, unless the object is outside the
in fraud of creditors same or some note or commerce of men;
when the latter memorandum thereof, (5) Those which
cannot in any other be in writing, and contemplate an
manner collect the subscribed by the impossible service;
claims due them; party charged, or by (6) Those where the
(4) Those which refer his agent: a) An intention of the
to things under agreement that by its parties relative to
litigation if they have terms is not to be the principal object
been entered into by performed w/in a year of the contract
the defendant w/o from the making cannot be
the knowledge and thereof; b) A special ascertained;
approval of the promise to answer for (7) Those expressly
litigants or of the debt, default or prohibited or
competent judicial miscarriage of declared void by law;
authority; another; c) An (Art 1409)
(5) All other contracts agreement made in
especially declared consideration of
by law to be subject marriage, other than a
to rescission. (Art mutual promise to
1381) 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 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)

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