Defective Contracts

Definition Pano siya naging ganon: Valid until: Cures

Ressicible
Contract that has caused particular 1. Entered by guardians and wards suffer>25% damage Rescinded Prescription
damage to one of the parties or to a third 2. Agreed upon in representation of absentees
person and which for equitable reasons 3. Those undertaken in fraud of creditors
may be set aside. 4. Things under litigation
5. All other contracts specially declared by law to be subject
to rescission

Voidable A contract in which consent of one of the 1. Those where one of the parties is incapable of giving Annulled Prescription
parties is defective, either because of want consent to a contract and
of capacity or because it is vitiated, but 2. Those where the consent is vitiated by mistake, violence, Ratification
which contract is valid until judicially set intimidation, undue influence or fraud.
aside

Unenforceabl A contract that for some reason cannot be 1. Those entered into by one who has no authority or who Ceased/Not Ratification
e enforced, unless ratified in the manner has acted beyond his powers valid talaga
provided by law 2. Those which did not comply with the Statute of Frauds
3. Those where both parties are incapable of giving consent
to a contract.

Void A contract which is an absolute nullity 1. Those where one of the essential requisites of a valid Ceased/Not None
and produces no effect, as if it had never contract as provided for by Art. 1318 of the Civil Code is valid talaga
been executed or entered into totally wanting; and
2.Those whose cause, object or purpose is contrary to law,
morals, good customs, public order or public policy;
3. Those which are absolutely simulated or fictitious;
4. Those whose cause or object did not exist at the time of
the transaction;
5. Those whose object is outside the commerce of men;
6. Those which contemplate an impossible service;
7. Those where the intention of the parties relative to the
principal object of the contract cannot be ascertained;
8. Those expressly prohibited or declared void by law
 Essential Requisites of a Contract
Consent Object Cause

Requisites for Valid Consent 1. Within the commerce of men The law presumes that even if the contract does
1. It must be manifested by the concurrence of 2. Not legally or physically impossible not state a cause, one exists and is lawful; and it
the offer and acceptance 3. In existence or capable of coming into is incumbent on the party impugning the contract
2. The contracting parties must possess the existence to prove the contrary. If the cause is stated in the
necessary legal capacity 4. Determinate or determinable, without the need contract and it is shown to be false, then it is
3. It must be intelligent, free, spontaneous, and of a new contract between the parties incumbent upon the party enforcing the contract
real (not vitiated) 5. A future thing may be the object of a contract. to prove the legality of the cause
Such contract may be interpreted as:

Classifications of Contracts
According to According to Degree According to Parties According to According to Cause According to Name
Perfection of Dependence Obliged equivalence of
prestation

Consensual - Perfected Principal - Can exist Bilateral - Both parties Commutative - When Onerous - Cause has Nominate - with name
by COC (eg. contract on its own are obliged (eg. the undertaking of one valuable obligation (eg.
of sale) contract of sales) party is equal to other sales)
(eg. sales)

Real - Perfected by Accessory - Existence Unilateral - Only one Aleatory - When it Gratuitous - Cause is Innominate - without
COC + Delivery (eg. depends on principal party is obliged (eg. depends upon an purely generosity (eg. name pero may
contract of loan contract contract of donation) uncertain event (eg. donation) common like:
Insurance) Do ut des/Barter (I give
that you may give)
Formal - Perfected by Preparatory - Needed Remuneratory - Do ut facias (I give that
COC + Formalities for the formation of Cause is based on you may do)
required by Law other contract benefits already Facio ut des (I do that
received (eg. you may give)
employment contract) Facio ut facias (I do
that you may do)
 Vices of Consent Requisites:

Mistake 1. The error must be substantial regarding:

● The object of the contract which may be:
○ Mistake as to the identity of the thing (error in corpore)
○ Mistake as to the substance of the thing (error in substantia)
○ Mistake as to the conditions of the thing provided, or
○ Mistake as to the quantity of the thing (error in quantitate)
● The condition which primarily moved or induced one or both parties to enter the contract.
● Identity or qualifications of one of the parties (error in persona), but only if such was the principal cause of the
contract.
2. The error must be excusable
3. The error must be a mistake of fact and not of law.

Intimidation 1. One party is compelled to give his consent by a reasonable and well-grounded fear of an evil;
2. The evil must be imminent and grave;
3. The evil must be upon his person, property, spouse, descendants or ascendants; and
4. The evil must be unjust

Violence Requires the employment of physical force. Under Article 1335, to make consent defective, the force employed must
either be serious or irresistible. In either case, consent is not free

Undue influence When a person takes improper advantage of his power over the will of another, depriving the latter of a reasonable
freedom of choice [Art. 1337, Civil Code].
Requisites:
1. Improper advantage
2. Power over the will of another
3. Deprivation of the latter’s will of a reasonable freedom of choice

Fraud 1. It must be made in bad faith

2. One party must have employed fraud or insidious words or machinations
3. Damage or injury resulted to the other party
4. It must have been serious
5. It induced the other party to enter into a contract
6. It must have been employed by one contracting party upon the other and not employed by both contracting parties nor
by third persons.
 Persons incapacitated to give consent
Exceptions

Minors 1. Where necessaries are sold or delivered

2. Where the minor actively misrepresents his age (estoppel) Note: There is no estoppel if the minority was known by the other party, and
there was no active misrepresentation on the part of the minors
3. When it involves a natural obligation, and such obligation is fulfilled voluntarily by the minor
4. Contracts entered into by guardians or legal representatives
5. When upon reaching the age of majority they ratify the same
6. When a minor opens a savings account without the assistance of his parents, provided that the minor is at least seven
(7) years old and can read and write.

Insane or demented persons Unless they contract during a lucid interval

Deaf-mutes Unless they know how to read and write.

STATUTE OF FRAUDS (e) An agreement of the leasing for a longer period than Lapse of the time stated in the offer without acceptance
one year, or for the sale of real property or of an interest being conveyed
(a) An agreement that by its terms is not to be performed therein; Revocation of the offer before learning of acceptance
within a year from the making thereof; Supervening illegality before acceptance
(f) A representation as to the credit of a third person.
(b) A special promise to answer for the debt, default, or Requisites of Acceptance
miscarriage of another; Invitation to Make Offers (Advertisements) Unqualified and unconditional, i.e. it must conform with
Business Advertisements of things for sale are NOT all the terms of the offer [Art. 1319, Civil Code].
(c) An agreement made in consideration of marriage, definite offers, but just invitations to make an offer, Directed and communicated to the offeror and learned
other than a mutual promise to marry; UNLESS the contrary appears [Art. 1325, Civil Code]. by him [Art. 1319, Civil Code]. If made through an
agent, the offer is accepted from the time the acceptance
(d) An agreement for the sale of goods, chattels or Advertisements for bidders are invitations to make is communicated to such agent [Art. 1322, Civil Code].
things in action, at a price not less than five hundred proposals, the advertiser is NOT bound to accept the Made within the proper time
pesos, unless the buyer accept and receive part of such lowest or highest bid; UNLESS the contrary appears. May be express/implied, but is not presumed [Art 1320,
goods and chattels, or the evidences, or some of them, of [Art. 1326, Civil Code]. Civil Code]. Time, place and manner of acceptance may
such things in action or pay at the time some part of the be fixed by offeror [Art 1321, Civil Code].
purchase money; but when a sale is made by auction and Termination of Offer
entry is made by the auctioneer in his sales book, at the Rejection by the offeree Cognition Theory (Practiced in PH)
time of the sale, of the amount and kind of property Incapacity (death, civil interdiction, insanity, or Acceptance made by letter or telegram does not bind the
sold, terms of sale, price, names of the purchasers and insolvency) of the offeror or offeree before acceptance is offeror except from the time it came to his knowledge.
person on whose account the sale is made, it is a conveyed The contract, in such a case, is presumed to have been
sufficient memorandum; Submission of a counter-offer entered into in the place where the offer was made