Cinto, Shaimer April 13, 2019

AC1812-A Atty. Mervin Jay Fernando

Defective Contracts Rescissible Contracts Voidable Contracts Unenforceable Contracts Void/Inexistence Contracts
Definition These are those validity These are those which possess These are those that cannot be These are those which, because
agreed upon because all all the essential requisites of a enforced or given effect in a of certain defects, generally
the essential elements valid contract but one of the court of law or sued upon by produce no effect at all.
exist and, therefore, parties is incapable of giving reason of certain defects They are considered as
legally effective, but in the consent, or consent is vitiated by provided by law until and unless inexistence from its inception or
cases established by law, mistake, violence, intimidation, they are ratified according to from the very beginning. The
the remedy of recission is undue influence, or fraud. law. expression “void contracts” is,
granted in the interest of therefore, a contradiction in
equity. terms. However, the expression
is often loosely used to refer to
an agreement tainted with
illegality.
Summary of Covered Provisions Art. 1380- Meaning of Art. 1390- Meaning if voidable Art. 1403- Meaning of Art. 1409- Meaning of void
Recissible Contracts conracts. Unenforceable contracts. contracts.
Art. 1381- How a contract Art. 1391- Period for filing action Art. 1404- Modes of ratification Art. 1410- Action or defense is
be a Recissible for annulment. under the Statute. imprescriptible.
Art. 1382- Payment in the Art. 1392- Meaning and effect or Art. 1405- Right of a party where Art. 1411- Rules where contract
state of insolvency. ratification. contract enforceable. is illegal and the act constitutes a
Art. 1383- Nature of action Art. 1393- Kinds of Ratification Art. 1407- Unenforceable criminal offense.
for recission. Art. 1394- Ratification affected contracts becomes a voidable Art. 1412- Act does not
Art. 1384- Extent of by the guardian. contract. constitute a criminal offense.
rescission to cover the Art. 1395- Conformity of guilty. Art. 1408- Right of third person Art. 1413- Recovery of usurious
damages. party to ratification not required. to assailed by third person. interest.
Art. 1385- Recission Art. 1396- Effects of Ratification. Art. 1414- Recovery where
created obligation of Art. 1397- Action for the contract entered into for illegal
 mutual restitution. annulment of contracts. purpose.
Art 1386- Contracts Art. 1398- Duty of mutual Art. 1415- Recovery by an
approved by courts. restitution upon annulment incapacitated person.
Art. 1387- Fraud of Art. 1399- Restitution by an Art. 1416- Recovery where
creditor. incapacitated person. contract not illegal per se.
Art. 1388- Liability of Art. 1400- Effects of thing to be Art. 1417- Recovery of amount
purchaser in bad faith. retured. paid in excess of ceiling price.
Art. 1389- Period for filing Art. 1401- Extinguishment of Art. 1418- Recovery of additional
action of rescission. action for annulment. compensation for service
Art. 1402- Restoration in virtue rendered beyond time limit.
of the decree of annulment. Art. 1419- Recovery of amount
of wage less than minimum
fixed.
Art. 1420- Effects of illegality
where contract
indivisible/divisible.
Art. 1421- Person entitled to
raise defense of illegality of
nullity.
Nature of Defect The defect is in its effects, (1) Legal incapacity to give Provided by the law until and Do not comply with formalities
which is either against consent, where one of the unless they are ratified which are essential for the
once of the parties or a parties is incapable of giving according to law. existence of the contract.
third person. consent to the contract; or (2)
Violation of consent, where the
vitiation is done by mistake,
violence, intimidation, undue
influence, or fraud.
Ratification This contract may be The contract may be ratified by The contract may be ratified The contract cannot be ratified.
ratified with subsequent the guardian or the injured party according to law.
consent of the parties. himself provided he is already
capacitated.
Who may question validity The contract may be The contract may be questioned The contract may be questioned The contract may not be
questioned by by the plaintiff and the victim. by one who is a party or privy to questioned by persons whose
Either party or a third the oral contract, not by interests are not directly
party. stranger. affected.
Remedies Rescission Annulment Statute of Frauds No Remedies
Requisites for the Remedy to apply 1. it must fall under 1. it must be serious note, memorandum or writing, None
either Art. 1381 or 2. it must have been subscribed by the party charged
1382 employed by one party or his agent, otherwise, the said
2. the party seeking upon the other contracts shall be enforceable.
rescission must 3. it must have had the
have no other legal effect of inducing one of
means to obtain the parties to enter into
reparation for the
damages suffered 4. it must have resulted in
by him (Art. 1383); damage or injury.
3. the party seeking
rescission must be
able to return
whatever he may
have obtained by
reason of the
contract and
4. The things object
of the contract
must not have
passed legally to a
third person in
good faith.

Example: Y sues Z for the recovery A, who is a minor, sign in the A owes B 10,000 with C as A enter in a contract where A
of necklace that have been check that was given to B. guarantor. C has a special needs to sell Drugs to Z.
sold by Z. promise to answer for the debt
of B in case B fails to pay.