DEFECTIVE CONTRACTS
BASIS RESCISSIBBLE
Origin of Defect Economic damage or lesion to
one of the parties or third
persons; a special declaration
by law that the contract is
subject to rescission (Art.
1380)
Damage or prejudice There must be damage/lesion
or prejudice to one of the
contracting parties or third
persons.
Legal Effect These contracts are valid and
legally enforceable until
judicially rescinded. (Art.
1380)
Remedy Rescission or rescissory action
Nature of Action Must be direct action. Direct action needed either in Indirect attack is allowed in the
Collateral attack is not allowed the complaint or as a counter- form of a defense
claim
1
VOIDABLE UNENFORCEABLE
Where one of the parties is Entered into in the name of
incapable of giving consent to a another person by the one who
contract and where the has been given no authority or
consent is vitiated by mistake, legal representation or acted
violence, intimidation, undue beyond his power; those who do
influence or fraud (Art. 1390) not comply with Statute of
Frauds; and those where both
parties are incapable of giving
consent to a contract. (Art.
1403)
Damage or prejudice to other Damage or prejudice to other
party not necessary. party not necessary.
These contracts are binding, Contracts are inoperative until
unless they are annulled by aratified; There is a contract but it
proper action in court. (Art.cannot be enforced by a
1390) court action. (Art. 1405)
Annulment of contract This is just a personal defense
when plaintiff pursues a specific
performance case or complaint
for damages based on breach of
contract
VOID
Those whose cause, object
or purpose is contrary to
law, morals, good customs,
public order or public
policy; those which are
absolutely simulated or
fictitious; those whose
cause or object did not
exist at the time of the
transaction; those whose
object is outside the
commerce of men; those
which contemplate an
impossible service; those
where the intention of the
parties relative to the
principal object of the
contract cannot be
ascertained; and those
expressly prohibited or
declared void by law.
(Art.1409)
Damage or prejudice to
other party not necessary.
Generally, these contracts
are inexistent and void
from the beginning (Art.
1409)
Declaration of Nullity of
Contract
May be attacked directly or
indirectly
 DEFECTIVE CONTRACTS
Persons who can File Contracting parties or third May be instituted by all who Must be contracting parties; Only by contracting parties
Action party prejudiced by the are thereby obliged principally cannot be assailed by third and third persons whose
contract; exception: creditors or subsidiarily except persons (Art. 1408) interest are directly
who are defrauded (Art. 1385) prejudiced third persons (Art. affected (Art. 1421)
1397)
Susceptibility to Susceptible to convalidation Susceptible to ratification (Art. Susceptible to ratification (Art. Not susceptible to
Ratification but not of ratification proper 1392, Art. 1393) 1405) ratification, neither can the
right to set up the defense
of illegality be waived.
(Art.1409)
Prescriptive Period The action to claim rescission The action for annulment shall Action for recovery, or action for The action or defense for
must be commenced within be brought within four years. In specific performance or for the declaration of the
four years. For persons under cases of intimidation, violence damages for breach of contract, inexistence of contract
guardianship and for or undue influence, from the also prescribe. does not prescribe
absentees, the period of four time the defect of the consent There being no specified period, (Art.1410)
years shall not begin until the ceases. The period shall begin: it could be 10 years if the basis
termination of the former's In case of mistake or fraud, of the action is a written
incapacity, or until the from the time of the discovery contract or 6 years if unwritten.
domicile of the latter is of the same. (Art.1144 and 1145)
known. (Art. 1389) And when the action refers to
contracts entered into by
minors or other incapacitated
persons, from the time the
guardianship ceases. (Art.
1391)