[SLIDE 1]

ART. 1407. In a contract where both parties are incapable of giving consent, express or
implied ratification by the parent, or guardian, as the case may be, of one of the contracting
parties shall give the contract the same effect as if only one of them were incapacitated.

If ratification is made by the parents or guardians, as the case may be, of both contracting
parties, the contract shall be validated from the inception.

[SLIDE 2]
When unenforceable contract becomes a voidable contract.
- Where both parties to a contract are incapable of giving consent, the contract is
unenforceable. (Art. 1403[3]). However, if the parent or guardian, as the case may be, of
either party, or if one of the parties after attaining or regaining capacity, ratifies the
contract, it becomes voidable.

[SLIDE 3]
When unenforceable contract becomes a valid contract.
- If the ratification is made by the parents or guardians, as the case may be, of both
contracting parties, or by both contracting parties after attaining or regaining capacity,
the contract is validated, and its validity retroacts to the time it was entered into.

[SLIDE 4]
ART. 1408. Unenforceable contracts cannot be assailed by third persons.

Strangers to a voidable contract cannot bring an action to annul the same; neither can they
assail a contract because of its unenforceability.

The benefit of the Statute can only be claimed or waived by one who is a party or privy to the
oral contract, not by a stranger.

[SLIDE 5]
ART. 1317. No one may contract in the name of another without being authorized by the
latter, or unless he has by law a right to represent him.

A contract entered into in the name of another by one who has no authority or legal
representation, or who has acted beyond his powers, shall be enforceable, unless it is
ratified, expressly or impliedly, by the person on whose behalf it has been executed, before it
is revoked by the other contracting party.

[SLIDE 6]
Unauthorized contracts are unenforceable.
- As a general rule, a person is not bound by the contract of another of which he has no
knowledge or to which he has not given his consent.
 - A contract entered into in the name of another by one who has no authority is
unenforceable against the former unless it is ratified by him before it is revoked by the
other contracting party.

[SLIDE 7]
Unauthorized contracts can be cured only by ratification.
The mere lapse of time cannot give efficacy to such a contract.

1. The defect is such that it cannot be cured except by the subsequent ratification (Art.
1405) of the person in whose name the contract was entered into or by his duly
authorized agent and not by any other person not so empowered.
2. The ratification must be clear and express so as not to admit of any doubt or
vagueness.
3. The effects of ratification retroact to the moment of the celebration of the contract.

[SLIDE 8]
When a person bound by the contract of another.
In order that a person may be bound by the contract of another, there are two
requisites:

1. The person entering into the contract must be duly authorized, expressly or impliedly,
by the person in whose name he contracts or he must have, by law, a right to represent
him (like a guardian or an administrator); and
2. He must act within his power. A contract entered into by an agent in excess of his
authority in unenforceable against the principal, but the agent is personally liable to the
party with whom he contracted where such party was not given sufficient notice of the
limits of the powers granted by the principal.

[SLIDE 9]
Article 1878. Special powers of attorney are necessary in the following cases: 

(1) To make such payments as are not usually considered as acts of administration; 

(2) To effect novations which put an end to obligations already in existence at the time
the agency was constituted; 

(3) To compromise, to submit questions to arbitration, to renounce the right to appeal

from a judgment, to waive objections to the venue of an action or to abandon a
prescription already acquired; 

(4) To waive any obligation gratuitously; 

(5) To enter into any contract by which the ownership of an immovable is transmitted
or acquired either gratuitously or for a valuable consideration; 
(6) To make gifts, except customary ones for charity or those made to employees in
the business managed by the agent; 

(7) To loan or borrow money, unless the latter act be urgent and indispensable for the
preservation of the things which are under administration; 

(8) To lease any real property to another person for more than one year; 

(9) To bind the principal to render some service without compensation; 

(10) To bind the principal in a contract of partnership; 

(11) To obligate the principal as a guarantor or surety; 

(12) To create or convey real rights over immovable property; 

(13) To accept or repudiate an inheritance; 

(14) To ratify or recognize obligations contracted before the agency; 

(15) Any other act of strict dominion. (n)