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DEFECTIVE CONTRACTS

CLASSIFICATIONS OF DEFECTIVE CONTRACTS

RESCISSIBLE Those validly entered into by the


contracting parties, but because of them
resulting to economic damage or lesion
to one of the parties or a third person, or
for having been entered into in fraud of
creditors, or without knowledge and
approval of judicial authority having
custodia legis over the property
involved, or for being specially declared
by law as rescissible may, for equitable
reasons, be rescinded or set aside by
the court

VOIDABLE / ANNULLABLE Those where the consent of one party is


defective either because of incapacity to
give consent to a contract, or where the
consent is vitiated by mistake, violence,
intimidation, undue influence or fraud. In
other words, the consent is vitiated by
any of the vices of consent.

UNENFORCEABLE Those which cannot be enforced in


Court because of the existence of any of
the following reasons: (1) they were
entered into in behalf of another without
authority or in excess of authority, (2)
there is non-compliance with the Statute
of Frauds, and (3) both contracting
parties are incapacitated.

VOID / INEXISTENT Those which produce no legal effect for


they do not exist in the eyes of the law
DISTINCTIONS BETWEEN AND AMONG DEFECTIVE CONTRACTS

DEFECTS

RESCISSIBLE Caused by economic damage/lesion


either to one of the parties or a 3rd
person

VOIDABLE / ANNULLABLE Caused by vices of consent.

UNENFORCEABLE Caused by lack of form, authority or


capacity of both parties not cured by
prescription; Entered into in behalf of
another person without authority or in
excess thereof; non-compliance with
the Statue of Frauds or Incapacity of
both contracting parties to give
consent.

VOID / INEXISTENT Caused by lack of essential elements


or illegality.

DAMAGE / PREJUDICE

RESCISSIBLE There must be damage/lesion or


prejudice to one of the contracting
parties or third person.

VOIDABLE / ANNULLABLE Damage or prejudice to the other party


is not necessary

UNENFORCEABLE Damage or prejudice is not necessary

VOID / INEXISTENT Damage or prejudice is not necessary

EFFECTS

RESCISSIBLE Valid and enforceable until rescinded


by a competent court

VOIDABLE / ANNULLABLE Valid and enforceable until theyre


annulled by a competent court

UNENFORCEABLE Cannot be enforced in court without


proper ratification; Inoperative until
ratified.

VOID / INEXISTENT Valid and enforceable until rescinded


by a competent court.

REMEDY OR ACTION

RESCISSIBLE Rescission or rescissory action

VOIDABLE / ANNULLABLE Annulment of Contract

UNENFORCEABLE A personal defense when the plaintiff


pursues a specific performance case
or complaint for damages based on
breach of contract.

VOID / INEXISTENT Declaration of Nullity of the Contract

NATURE OF ACTION (direct, indirect or collateral attack)

RESCISSIBLE Direct attack only

VOIDABLE / ANNULLABLE Can be attacked both directly and


collaterally where direct action is
needed either in the complaint or as a
counter claim

UNENFORCEABLE Can be attacked both directly and


collaterally; Indirect attack is allowed in
the form of a defense

VOID / INEXISTENT Can be attacked both directly,


indirectly and collaterally

ASSAILABILITY BY THE THIRD PERSON

RESCISSIBLE Contracting parties, but also a third


person who is prejudiced or damaged
by the contract/creditors who are
prejudiced.

VOIDABLE / ANNULLABLE Only a contracting party (principally or


subsidiarily obliged under the contract.)

UNENFORCEABLE Only a contracting party. Third persons


cannot assail

VOID / INEXISTENT Contracting parties, but also a third


person whose interest is directly
affected

RATIFICATION

RESCISSIBLE Susceptible to convalidation but not of


ratification proper

VOIDABLE / ANNULLABLE Susceptible to ratification

UNENFORCEABLE Susceptible to ratification

VOID / INEXISTENT Cannot be ratified

PRESCRIPTION TO DECLARE NULLITY

RESCISSIBLE Action for prescription can prescribe

VOIDABLE / ANNULLABLE Action for annulment or defense of


annulability can prescribe
UNENFORCEABLE Corresponding action for recovery if
there was total or partial performance
of the unenforceable contract under
no. 1 or 3 Art. 1403 of the Civil Code
may prescribe

VOID / INEXISTENT No prescription for a declaration of


nullity, inexistence or defense of nullity
CURATIVE EFFECT OF PRESCRIPTION AND SUSCEPTIBILITY TO
PRESCRIPTION

RESCISSIBLE Can be cured by prescription; Action


for rescission prescribes after four
years

VOIDABLE / ANNULLABLE Can be cured by prescription; Action


for annulment prescribes after four
years

UNENFORCEABLE Cannot be cured by prescription;


Action for recovery or action for
specific performance or for damages,
for breach of contract also prescribe.

VOID / INEXISTENT Cannot cured by prescription; Action


for declaration of nullity or the putting
of the defense of nullity of the contract
does not prescribe