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    Oblic

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    of 4

    REFORMATION OF CONTRACTS

    ----- DEFINITION -----


    Article 1359
    When, there having been a meeting of the minds of the parties to a contract, their tru intention is not
    expressed in the instrument purporting to embody the agreement, by reason of mistake, fraud,
    unequitable conduct or accident, one of the parties may ask for the reformation of the instrument to
    the end that such true intention may be expressed.
    If mistake, fraud, inequitable conduct, or accident has prevented a meeting of the minds of the
    parties, the proper remedy id not reformation of the instrument but annulment of the contract.

    REQUISITES FOR REFORMATION


    1. There is a meeting of the minds of the parties to the contract
    2. The written instrument does not express the true intention of the parties
    3. The failure to express the true intention is due to mistake, fraud, unequitable conduct, or
    accident
    4. The facts upon which relief by the way of reformation of the instrument is sought are put issue
    by the pleadings
    5. There is clear and convincing evidence of the mistake, fraud, unequitable conduct, or accident.

    REFORMATION VS ANNULMENT
    In reformation, there has been a meeting of the minds, hence a contract exists. In the contrary,
    annulment has no meeting of the minds and the consent of one party is being vitiated by mistake.

    Contracts that cannot be reformed. (1366)


    1. Simple donations inter vivos wherein no condition is imposed.
    -A donation made during the lifetime of a person.
    2. Wills
    - Upon the death of the testator, the right to reformation is lost
    3. When the real agreement is void.
    -When the real agreement is void, then there is nothing to be reformed.

    When a person cannot seek reformation.


    A party who enforces instrument representing the contract cannot subsequently ask for its
    reformation. (1367)

    Who may seek reformation?


    Reformation may be ordered at the instance of either party or his successors in interest, if the mistake
    was mutual; otherwise, upon petition of the injured party, or his heirs and assigns. (1368)
    RESCISSIBLE CONTRACTS
    ----- DEFINITION ------
    Article 1380
    Contracts validly agreed upon may be rescinded in the cases established by law
    REQUISITES OF RESCISSION
    1. The contract must be validly agreed upon
    2. There must be lesion or pecuniary prejudice to one of the parties or to a third person
    3. The rescission must be based upon a case especially provided by law
    4. There must be no other legal remedy to obtain reparation for the damage
    5. The party asking for rescission must be able to return what he is obliged to restore by the reason
    of the contract
    6. The object of the contract must not legally be on the possession of third persons who did not act
    in bad faith
    7. The period for filing the action for rescission must not have prescribed

    ----- WHAT ARE THE CONTRACTS THAT ARE CONSIDERED RESCISSIBLE -----
    Article 1381
    The following contracts are rescissible:
    1. Those which are entered into by guardians whenever the wards whom they represent suffer
    lesion by mote that one fourth of the value of the things which are the object thereof
    2. Those agreed upon in the representation of the absentees, if the latter suffer the lesion stated
    in the preceding number
    3. Those undertaken in fraud of creditors when the latter cannot in any other manner collect the
    claims due them
    4. Those which refer to things under litigation if they have been entered into by the defendant
    without the knowledge and approval of the litigations or of the competent judicial authority
    5. All other contracts specially declared by law to be subject to rescission

    ----- GROUNDS OF A CONTRACT TO BE CONSIDERED AS RESCISSIBLE -----


    RESCISSION UNDER 1380
    1. Based on lesion or fraud of creditors
    2. Instituted by a contracting party or by third person
    3. Courts are not granted the power by which party is to comply
    4. Non fulfillment is not essential
    RESCISSION UNDER 1191
    1. Based on non-performance
    2. Instituted by the injured party in a contract
    3. Courts may grant a term or period for a party to comply
    4. Non-fulfillment is essential
    ----- PRESCRIPTIVE PERIOD OF A RESCISSIBLE CONTRACTS ------
    Article 1389.
    “The action to claim rescission must be commenced within four years.
    For persons under guardianship and for absentees, the period of four years shall not begin until the
    termination of the former’s incapacity, or until the domicile of the latter is known”
    Persons entitled to bring action are:
    1. Injured party or the defrauded creditor;
    2. His heirs, assignes, or successors in interest; or
    3. The creditors of the above entitled to subrogation

    UNENFORCEABLE CONTRACTS
    Article 1403. The following contracts are unenforceable, unless they are ratified:
    (1) Those entered into in the name of another person by one who has been given no authority or legal
    representation, or who has acted beyond his powers;
    (2) Those that do not comply with the Statute of Frauds as set forth in this number. In the following
    cases an agreement hereafter made shall be unenforceable by action, unless the same, or some note
    or memorandum, thereof, be in writing, and subscribed by the party charged, or by his agent;
    evidence, therefore, of the agreement cannot be received without the writing, or secondary evidence
    of its contents:
    (a) An agreement that by its terms is not to be performed within a year from the making thereof;
    (b) A special promise to answer for the debt, default, or miscarriage of another;
    (c) An agreement made in consideration of marriage, other than a mutual promise to marry;
    (d) An agreement for the sale of goods, chattels or things in action, at a price not less than five
    hundred pesos, unless the buyer accept and receive part of such goods and chattels, or the evidences,
    or some of them, of such things in action or pay at the time some part of the purchase money; but
    when a sale is made by auction and entry is made by the auctioneer in his sales book, at the time of
    the sale, of the amount and kind of property sold, terms of sale, price, names of the purchasers and
    person on whose account the sale is made, it is a sufficient memorandum;
    (e) An agreement of the leasing for a longer period than one year, or for the sale of real property or of
    an interest therein;
    (f) A representation as to the credit of a third person.
    (3) Those where both parties are incapable of giving consent to a contract

    ----- STATUTE OF FRAUDS -----


    According to the Statute of Frauds, certain contracts must be in writing to be considered enforceable.
    The reason for the statute of frauds is to render those contracts, those mentioned in article 1403
    number 2 from a to f, unenforceable if they are not in writing, in order to prevent fraud. If you do not put
    these contracts in writing and instead enter into them orally, it might perpetuate fraud. Because man’s
    memory is faulty, we may forget the terms of the contracts or the agreement that the parties agreed, so
    the law provides the Statute of Frauds, which specifies that contracts must be in writing.

    A. An agreement that by its terms is not to be performed within a year from the making
    thereof;
    B. A Promise to answer for the debt, default or miscarriage of another.
    C. An agreement made in consideration of marriage, other than a mutual promise to marry.
    D. An agreement for sale of goods, etc. at a price not less than five hundred pesos.
    E. An agreement for the leasing for a longer period than one year, or for the sale of real
    property or of an interest therein
    F. A representation as to the credit of a third person.

    RATIFICATION UNDER STATUTE


    1. By failure to object the presentation of oral evidence to prove contract
    2. By acceptance of benefits under the contract.

    RIGT OF A PARTY WHERE CONTRACT IS UNENFORCEABLE


    1. A party to an oral sale of real property cannot compel the other to put the contract in a public
    document for purposes of registration because it is unenforceable unless, of course, it has been
    ratified
    2. The right of one party to have the other execute a public document is not available in a donation
    of realty when it is in a private instrument because the donation is void.

    Prescriptive Periods of Unenforceable

    Statute of Frauds Violations: Actions based on contracts falling under the Statute of Frauds typically
    have a prescriptive period of six (6) years.

    Illegality: Actions to declare the contract unenforceable due to illegality would generally be subject to
    the general rules of prescription (Art.1144), which is typically ten (10) years for actions not specifically
    covered by other laws.

    Undue Influence: The prescriptive period might vary depending on when the undue influence was
    discovered or should have been discovered.

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