DEFECTIVE CONTRACTS

RESCISSIBLE VOIDABLE UNENFORCEABLE VOID

STATUS Valid and enforceable Valid and enforceable until Valid but cannot be enforced Inexistent
annulled or sued upon
GROUNDS 1. Ward – more than ¼ 1. One of the parties is 1. unauthorized contracts – 1. Object , cause or purpose is
2. Absentee – more than ¼ incapable of giving consent; lack or excess of authority contrary to law, etc.
3. Fraud of creditors 2. VIMFU (Violence, 2. Failure to comply with the 2. Absolutely simulated
4. Things under litigation Intimidation, Mistake, Fraud, Statute of Frauds: contracts
5. Other instances declared Undue influence)  agreement not to be 3. Cause or object did not
by law performed within 1 exist at the time of the
 partition – co-heir year from the making transaction
receives a thing thereof 4. Object is outside the
whose value is less  promise to answer commerce of men
by at least ¼ for the debt, default 5. Contemplates an
 buyer – real estate or miscarriage of impossible service
lacks area of at another 6. Principal object cannot be
least 1/10  agreement in ascertained
- consideration of 7. Expressly declared void by
marriage other than law
mutual promise to  Future inheritance
marry  Sale between
 agreement for sale of spouses
goods, etc. at a price  Purchase by
not less than 500 persons disqualified
 Agreement for by law
leasing for a longer  Donation between
period than one year spouses during
 Agreement for the marriage, etc.
sale of real property
or of an interest
 therein
 Representation as to
the credit of a third
person
3. Both parties are
incapacitated
REMEDY Rescission 1. Annulment Ratification None
 Subsidiary  Mutual  Execute a written  But if the contract is
 Only to the extent restitution (fruits contract divisible, the valid portion
necessary to cover the and interest) of the contract will not be
damages caused except that affected.
 Mutual restitution (fruits incapacitated
and interest) person is not
 Only when the party who oblige to restore
demands for rescission can unless insofar as
return the object he has been
 No third person is benefited by the
prejudiced thing or price
 Damages only if rescission received by him
is not feasible  Guilty party
cannot bring the
action

2. Ratification

PARTY TO BRING THE 1. The injured party or the 1. the incapacitated 1. the parties Any person directly affected by the
ACTION defrauded creditor person after themselves after contract
2. The heirs, assigns, or attaining / regaining attaining / regaining
successors in interest; or capacity capacity
3. The creditors of the above 2. the injured party in 2. the parents
 entitled to subrogation. case of VIMFU /guardians
 ratification by the
parent / guardian of
one of the parties –
VOIDABLE
 Ratification by the
parents / guardians
of both – VALID
FROM THE
INCEPTION
PRESCRIPTIVE PERIOD General Rule: 4 years from the 4 years from: Imprescriptible Imprescriptible
date the contract was entered
into 1. The time the
guardianship ceases
Exceptions: (Incapacity)
1. Minor / incapacitated – 2. The time of discovery
from the termination of (mistake, fraud)
incapacity 3. The time the defect
2. Absentee – from the time of consent ceases
the domicile is known (intimidation, Undue
influence)

- Atty. Far DC