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reasons, be rescinded or set aside by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RESCISSIBLE Valid and enforceable until rescinded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VOID / INEXISTENT Valid and enforceable until rescinded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
