Professional Documents
Culture Documents
Contracts
Contracts
Rescissible Voidable
01 Valid but by reason of Valid until annulled 02
economic injury or damage, unless there has been
may be rescinded ratification
Unenforceable Void
03 Cannot be sued upon or Absolutely null and void, 04
enforced unless ratified no effect at all and cannot
be ratified
RESCISSIBLE CONTRACTS
❖ REQUISITES:
(1) Contract must be validly agreed upon (Article 1380)
(2) There must be lesion or pecuniary prejudice to one of the
parties or to a third person (Article 1381)
(3) Rescission must be based on cases established by law
(Articles 1380, 1381, 1382)
(4) Party asking for rescission must be able to return what he/she
is obliged to restore by reason of the contract (Article 1385, par 1)
(5) Object of the contract must not be legally be in the possession
of third persons who did not act in bad faith (Article 1385, par 2)
(6) Period for filing the action must not have prescribed (Article
1389)
❖ The following are rescissible contracts (Articles 1381 and 1382):
(1) contracts entered into in behalf of wards
(2) contracts agreed upon in representation of absentees
(3) contracts undertaken in fraud of creditors
(4) contracts which refer to things under litigation
(5) other instances
(6) payments made in a state of insolvency
❖ The purchaser in bad faith, who acquired the object of the contract
alienated in fraud of creditors, must return the same of the sale is
rescinded and should it be impossible to return it, due to any cause,
he/she must indemnify the creditor (Article 1388)
❖ Ratification cleanses the contract from all its defects from the moment
it was constituted (Article 1396)
❖ UNAUTHORIZED CONTRACTS
When a person enters into a contract for and in the name of another,
without authority to do so, the contract does not bind the latter, unless
he/she ratifies the same. The agent, who has entered into the contract
in the name of the purported principal, but without authority from
him/her, is liable to third persons upon the contract
❖ STATUTE OF FRAUDS
➢ Meaning: descriptive of statutes which require certain classes of
contracts to be in writing
➢ Purpose: to prevent fraud and perjury in the enforcement of
obligations depending for their evidence upon the unassisted
memory of witnesses by requiring certain enumerated contracts
and transactions to be evidenced by a writing signed by the party
to be charged
➢ The statute does not deprive the parties the right to contract with
respect to matters therein involved, but merely regulates the
formalities of the contract necessary to render it unenforceable.
The statute of frauds, however, simply provides for the manner in
which contracts under it shall be proved. It does not attempt to
make such contracts invalid if not executed in writing but only
makes ineffective the action for specific performance.
➢ The statute of frauds is not applicable to contracts which are
either totally or partially performed
❖ Where contract is not illegal per se but merely prohibited and prohibition is
designed for the protection of the plaintiff, the plaintiff may recover what
he/she has paid or delivered if public policy is enhanced (Article 1416)
❖ In the case of divisible contracts, if the illegal terms can be separated from
the legal ones, the latter may be enforced (Article 1420)