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DEFECTIVE CONTRACTS

Rescissible 1 Defect (Rescission) There is damage or injury to either of the contracting parties or 3rd party Valid and Enforceable unless RESCINDED by Court YES Art 1389: Within 4 years NO Contracting Parties Third Persons who is prejudiced (icludes rep,heirscreditor) Directly only Art 1381: 1. Those which are entered into by guardians whenever the wards whom he represents suffer LESION by more than 1/4 of the value of the thing which are the object thereof 2. Those agreed upon in representation of absentees (1/4) 3. Those undertaken in fraud of creditors when the latter cannot in any manner collect th eclaim 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 litigants or of competent judicial authority. 5. All other contracts specially declared by law to be subject to rescission. Art. 1098 Art. 1189 Art. 1526 Art. 1534 Voidable
(Annulment/Annulability or Relative Nullity)

Vitiation of Consent (MVIFU) Legal Incapacity - 1 party (Defect - Intrinsic) Valid and Enforceable unless ANNULLED by Court YES Art. 1391: Within 4 years Art 1393:YES, express or tacit Convalidation Contracting Parties
(Requisite: 1. Plaintiff has interest,

2 Effect 3 Prescription of Action/Defense 4 Susceptibility of Ratification 5 Who may assail

2. Victim,clean hands) Directly Collaterally Art. 1390 1. Those where parties is incapable of giving consent

6 How can be assailed 7 Sample Contracts:

2. Those where consent is vitiated by M-V-I-UI and F.

Art. 1539 Art. 1542 Art. 1556 Art. 1560 Art. 1567 Art. 1659 Other Examples Art 1382. Payment made in a state of insolvency - rescissible Art 326. Father or mother considered as natural guardian: property is worth > 2k 1. Entered by Guarian (ward) or Legal Rep. (absentee) 2. Ward/Absentee suffered > 1/4 lesion 3. Contract w/o judicial approval 1. (RATIFICATION). Contract tainted with vice for cure 2. Should be effected with the knowledge of the vice 3. (Art 1395). Should be effected by the person entitled by law

8 Requisites:

4. No other legal means for 4. The cause of the nullity or obtaining reparation for the lesion defect should have already disappeared. 5. Person bringing action must be able to return whatever he may be obliged to restore 6. The object must not be legally in the possession of 3rd person - good faith 9 Notes 1383: Action is subsidiary Minor - Contract, must make restitution to the extent that he may have benefited Exception on who can assail: In Fraud of Creditors/Prejudice
Art 1398 . Restitution+Fruits. Price+Interest

Purpose: Reparation of Damages or (GF) - Indemnify for Damages 10 After the action
Art 1385 . Restitution+Fruits. Price+Interest

Indemnify Damages

Indemnify Damages Services: Damanges


Art 1399:Incapacity: No restitution, except insofar he has benefited (Unless he can still return the thing) IF LOST (Defendant) -Fault/Fraud

Fruits+Value of Thing+ Int. from the same (loss) date

IF LOST (Plaintiff) - Fault/Fraud Action for Annul. Extinguished


IF LOST (Defendant) - FORTUITOUS

Value of Thing at time of loss (without interest) IF LOST (Plaintiff) - FORTUITOUS Value of Thing at time of loss Forms of Contracts

simply that no action can unless the requirement is c

- the form required is fo purposes only

Unenforceable Without/Excess Authority Doesn't comply with Statute of Frauds Legal Incapacity - both parties Cannot be enforced by a proper action in Court YES YES
(#2- Failure to Object on Oral Evidence or by acceptance of Benefits)

Void
(Absolute Nullity/Defense of Absolute Nullity)

One or some of the COC is lacking, in FACT or in LAW General Rule, do not produce any legal effect NO NO Contracting Parties Third Persons whose interest is directly affected Directly Collaterally Art. 1409. 1. COP - contrary to L,M,GC,PP,PO 2. CO - doesn't exist 3. O - outside commence of men 4. O - viz intention can't be ascertained 5. Services - Impossible Service 6. Contracts - prohibited by Law 7. Simulated Contracts

Contracting Parties

Directly Collaterally Art. 1403 1. Those entered into in the name of another person by one who has been given NO AUTHORITY or LEGAL REPRESENTATION, or who acted in excess of his powers. 2. Those that do not comply with the Statute of Frauds (In the ff cases an agreement hereafter made shall be unenforceable by action "unless the same, or some note or memo thereof, be in writing, and subscribed by the parties charged or by his agent". Evidence of the agreement cannot be received without in Writing, or a secondary evidence of its contents:) a. Agreement that by its terms is not to be performed within a year from making thereof b. A special promise to answer for the debt, default, or miscarriage of another
( Collateral only, not on Independent or Original)

c. An agreement made in consideration of marriage, other than a mutual promise to marry.


(Marriage Settlements, Donation by reason of Marriage)

d. An agreement for the sale of goods, chattels or things in action, at a price not less than Php 500

e. An agreement for the leasing for a longer period than one year, or for the sale of real property or 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- essentailly a rule of Substantive Law Statute of Frauds - applicable only to contratcts that are EXECUTORY, not to those which have been consumated either totally or partially

Statute of Frauds simply provdies the method by which the contracts enumerated therein may be proved. Effect of non-compliance with the requriement of the statute is simply that no action can be enforced unless the requirement is complied with. - the form required is for evidential purposes only.

Writing 1. Donation 5k up 2. Interest on Loan 3. Sale of Land/interest thru Agent 4. Antichresis (P/I separaate) Public Document 1. Donation - real 2. Partnership - immovable REGISTER 1. Chattel Mortgage 2. Slae/transfer of Large Cattle

Coonvenience, Efficacy of the Contract (Art. 1358)

Must be in PUBLIC DOCUMENT: 1. Acts and contracts which have for their object the creation,transmission, modification or extinguishment or real rights over immovable property

2. The cession, repudiation or renunciation of hereditary rights or those of the conjugal partnership of gains

3. The power to adminsiter property, or any other power which has for its object an act appearing or should appear in a public document, or should prejudice a third person 4. The cession of actions or rights proceeding from an act appearing in a public document

* All other contracts where amount exceeds Php 500 must be in writing, even private ones.