MODULE 4.

0 LAW001
Topic 4.1 Kinds of Defective Contracts
DEFECTIVE CONTRACTS
1. RESCISSIBLE CONTRACTS
      -- are those validly agreed upon because all the essential elements exist, and therefore, legally effective, but in
the cases established by law, the remedy of rescission is granted in the interest of equity.
  Article 1381. The following contracts are rescissible:
1.  Those which are entered into by guardians whenever the wards whom they represent suffer lesion by more
than one-fourth of the value of the things which are the object thereof;
2. Those agreed upon in representation of absentee, 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 litigants or of competent judicial authority; 
5. All other contracts specially declared by law to be subject to rescission.
 
2.  VOIDABLE CONTRACTS
   -- are those which possess all the essential requisites of a valid contract but one of the parties are incapable of
giving consent, or consent is vitiated by mistake, violence, intimidation, undue influence, or fraud.
 
   Kinds of voidable contracts:
   A contract otherwise legal in object and operation is voidable because of a defect caused by either:
     a.] Legal incapacity to give consent, where one of the parties is incapable of giving consent to the contract; or
    b.] Violation of consent, where the vitiation is done by mistake, violence, intimidation, undue influence, or fraud.
 
3. UNENFORCEABLE CONTRACTS
  -- are those that cannot be enforced or given effect in a court of law or sued upon by reason of certain defects
provided by law until and unless they are ratified according to law.
 
 Kinds of unenforceable contracts (Article 1403):
1.    those entered into in the name of another by one without, or acting in excess of, authority;
2. those that do not comply with the Statute of Frauds; and 
3. those where both parties are incapable of giving consent to a contract.
 
4.  VOID OR INEXISTENT CONTRACTS
   -- are those which, because of certain defects, generally produce no effect at all.
     Inexistent contracts refer to agreements which lack one or some or all of the essential elements or do not comply
with formalities which are essential for the existence of a contract. 
 
Article 1409. The following contracts are inexistent or void from the beginning:
1.  Those whose cause, object or purpose is contrary to law, morals, good customs, public order or public
policy;
2. Those which are absolutely simulated or fictitious;
3. Those whose objector cause did not exist at the time  of the transaction;
4. Those whose object is outside the commerce of men;
5. Those which contemplate an impossible service;
6. Those where the intention of the parties relative to the principal object of the contract cannot be
ascertained;
 7. Those expressly prohibited or declared void by law.

4.2 Natural Obligations

NATURAL OBLIGATIONS
-- are not based on positive law but on equity and natural law; do not grant a right or action to enforce their
performance but after voluntary fulfillment by the obligor, they authorize the retention of what has been delivered or
rendered by reason thereof.

Civil Obligations vs. Natural Obligations

1.] Civil Obligations arise from law, contracts, quasi-contracts, delicts and quasi-delicts; while natural obligations
are based not on positive law but on equity and natural law; and

2.] Civil Obligations give a right of action in courts of justice to compel their performance or fulfilment; while
natural obligations for not grant such right of action to enforce their performance.