KINDS OF DEFECTIVE CONTRACTS:

1. RESCISSIBLE CONTRACTS - they are valid because all the essential requisites of a contract exist but by
reason of economic injury or damage to one of the parties or to third persons, such as creditors, the
contract may be rescinded. There is no defect at all but by reason of some external facts, its
enforcement would cause injustice. The remedy of rescission is granted in the interest of equity.

RESCISSION - remedy granted by law to the contracting parties and sometimes even to third persons in
order to secure reparation of damages caused them by a valid contract, by means of restoration of
things to their condition in which they were prior to the celebration of said contract

NOTE: ART. 1381 enumerates those contracts which are rescissible

2. VOIDABLE/ANNULLABLE CONTRACTS - valid until annulled unless there has been ratification. The
defect is caused by vice of consent. They possess all the essential requisites of a valid contract but one of
the parties is incapable of giving consent or consent is vitiated by mistake, violence, intimidation, undue
influence or fraud. Once ratified, they become absolutely valid and can no longer be annulled.

ANNULMENT - remedy provided by law, for reason of public interest, for the declaration of the
inefficiency of a contract based on a defect or vice in the consent of one of the contracting parties in
order to restore them to their original position in which they were before the contract was executed.

NOTE: ART. 1390 enumerates those contracts which are voidable

3. UNENFORCEABLE CONTRACTS - cannot be sued upon or enforced unless they are ratified. They are
those that cannot be enforced in court or sued upon by reason of certain defects provided by law until
and unless they are ratified according to law. While rescissible and voidable contracts are valid and
enforceable in court unless they are rescinded or annulled, unenforceable contracts, although valid, are
unenforceable in court unless they are cured or ratified. Once ratified, these contracts may then be
enforceable. Unauthorized contracts are those entered in the name of another person by one who has
been given no authority or legal representation or one who has acted beyond his powers.

NOTE: ART. 1403 enumerates those contracts which are unenforceable.

STATUTE OF FRAUD - law that has been enacted by the English Parliament which has now been carried
and adopted in more or less modified form in the Philippines which requires certain contracts to be in
writing to be enforceable by action in court.

4. VOID OR INEXISTENT CONTRACTS - they are absolutely null and void, have no effect at all and cannot
be ratified.

Void contracts - those which because of certain defects generally produces no effect at all.

Inexistent contracts - refer to agreements which lack one or some or all of the elements which are
essential for the existence of a contract.

NOTE: ART. 1409 enumerates those contracts which are void or inexistent.

ART. 1410 The action or defense for the declaration of the existence of a contract does not prescribe. If
a contract is void, a party thereto can always bring a court action to declare it void or inexistent and a
party against whom a void contract is sought to be enforced can always raise the defense of nullity,
despite the passage of time.