Defective Contracts

Concepcion, Denise G. 1G Obligations and Contracts Comparison of the Different Kinds of Defective Contracts COMPARISON Legal Status Nature of Defect

Can it be ratified?

VOID Does not exist and cannot produce legal effects. Generally, the defect has something to do with the cause or object. The object is illegal, immoral, beyond the commerce of man, inexistent, etc. Cannot be ratified because it does not exist and hence, there is nothing to ratify.

VOIDABLE RESCISSIBLE UNENFORCEABLE Valid, binding and Valid, binding and Valid but cannot be produce legal effects produce legal effects sued in court. unless annulled. unless rescinded, The defect has The defect has The defect has something to do with something to do with something to do with consent. economic damage or the capacity of both Consent is either not lesion. parties, lack of intelligently given or authority of the party not voluntarily or entering into the freely given or not contract or with the consciously or form of the contract. spontaneously given. Can be ratified. Cannot be ratified. Can be ratified. Ratification cleanses Rescission can no Ratification may the contract from all longer be a remedy happen by failure to of its defects. in cases: object to It may be done 1. The party seeking presentation of oral expressly or tacitly. rescission can no evidence or by It may be effected by longer return what he acceptance of benefit the guardian of the received. under such contract incapacitated person. 2. The object is if it is already Ratification already in the partially or totally extinguishes the possession of a third executed such as action to annul the person. when the price is contract. 3. Other legal already partly paid or remedies are when the goods sold

Prescriptive period of legal remedy

Kinds

available. 4. The period to rescind had already prescribed. The legal remedy is The legal remedy is The legal remedy is to have the contract to annul the contract. to rescind the declared “null and This action to annul contract. void”. must be filed in court The action to claim This legal remedy within four years rescission must be does not prescribe. counting from the filed within four years It can be filed time: counting from the anytime in court. 1. Intimidation, time: violence or undue 1. The incapacity of influence ceases the minor ceases. 2. The discovery of 2. The domicile of the the mistake of fraud. absentee is 3. Guardianship discovered. ceases. Article 1409 Article 1390 Article 1381 1. Contracts whose 1. Contracts where 1. Contracts entered cause, object or one of the parties into by guardians purpose is contrary has no legal capacity. whenever their wards to laws, morals, good Exception: suffered lesion of customs and public a. in case of sale of more than ¼ of the order or public policy. necessaries and the value of the things 2. Contracts which buyer is a minor which are the object. are absolutely b. if the 2. Agreed upon in simulated or incapacitated person representation of the fictitious. is partly insane and absentee, if the latter 3. Contracts the he entered into a suffered lesion of object or cause which contract during the more than ¼. do not exist at time time of his lucid 3. Undertaken in

are partially or fully delivered. Inapplicable because unenforceable contracts cannot be sued upon or enforced in court.

Article 1403 1. Both parties are incapacitated. 2. Unauthorized contracts entered into in the name f another person without authority or beyond his authority. 3. Not in writing or covered by the Statutes of Fraud such as: a. verbal sale of land

of the transaction. Exception: for sale, the time of delivery is considered. 4. Object is outside the commerce of man. 5. Contemplate an impossible service. 6. Intention of the parties cannot be ascertained. 7. Expressly prohibited or declared void by law.

interval 2. In case consent is vitiated by violence, intimidation, deceit, error or undue influence. a. Violence or force b. Intimidation or threat or duress c. Deceit or fraud d. Error or mistake e. Undue influence Note: if a contract was entered into reluctantly by a party against his good sense and judgment, the contract would still be perfectly valid.

fraud of creditors if the latter cannot in any other manner collect the claims due. 4. Refer to things under litigation entered into by the defendant without the knowledge of approval of the litigants or of the court. 5. Other contracts declared by law as rescissible.

b. verbal sale of movable price of which is not less than P500. c. lease agreement for a longer period than one year d. agreement by which its term is not to be performed within one year e. a special agreement to answer for the debt of another f. agreement made in consideration of marriage other than mutual promise to marry. g. representation as to the credit of another