UNENFORCEABLE

CONTRACTS
GROUP 4 - BLT 1-C
Article 1403
Definition and binding force of unenforceable contracts

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.

While rescissible and voidable contracts are valid and enforceable unless they are
rescinded or annulled, unenforced contracts, although valid, are unenforceable in court
unless they are cured or ratified. Once they are ratified, these contracts may then be
enforceable
Article 1403
The following contracts are
unenforceable, unless they are ratified:
(1)Those entered into in the name of another
person by one who has been given no
authority or legal representation, or who has
acted beyond his powers;

(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.
Article 1403
Meaning of unauthorized contracts

Unauthorized contracts are those entered

into in the name of another person by one
who has been given no authority or legal
representation or who has acted beyond his
powers
 Bumanlag
vs. Alzalte

Whether or not the lawyer who

signed a compromise agreement
on behalf of his client without the
consent of the latter is void?
 Bumanlag
vs. Alzalte

Answer: No, it is
Whether or not the lawyer who not void, however,
signed a compromise agreement it is unenforceable
on behalf of his client without the and may therefore
consent of the latter is void? ratified by the
client.
Statute of Frauds
is descriptive of those laws,
statutes, or provisions which
require certain agreements to be
in writing before they can be
enforced in a judicial action
Statute of Frauds
Purpose: to prevent fraud and
perjury in the enforcement of
obligations depending for their
evidence on 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
Applications:
Writing: does not ·It is NOT applicable in actions which are neither
require to be in a for damages because of a violation of a contract
formal written
·It is only applicable to executory contracts and
document
not to contracts which are totally executed or
partly executory.
·It does NOT declare that contracts infringing it
are void but merely unenforceable
It is only applicable to the agreements
enumerated within the scope of the Statute of
Frauds
Mr. Knee-Whang owns a 5-hectare land in Brgy. Ko. In 2022, Mr. Tam-Bukh
claimed ownership over the said property by virtue of an oral sale between
him and Whang. Yet, the property is not transferred in Bukh’s name, instead,
Whang gave the duplicate of the title. Nonetheless, Mr. Tam-Bukh paid the
realty taxes.

In 2050, Knee-Whang died, and his heir executed a Deed of Adjudication of

the property and sought to register the land to his name. In doing so, he
needs to retrieve the certificate of title from Mr. Tam-Bukh, but he refused to
do so.
Question: Was there a valid sale of real property between Mr. Knee-Whang and Mr.
Tam-Bukh?
Question: Was there a valid sale of real property between Mr. Knee-Whang and Mr.
Tam-Bukh?

Answer: Yes, there was a valid sale of real property between the two parties. An executed
oral sale of real property is valid and binding among the parties.
Question: Was there a valid sale of real property between Mr. Knee-Whang and Mr.
Tam-Bukh?

Answer: Yes, there was a valid sale of real property between the two parties. An executed
oral sale of real property is valid and binding among the parties.

Question: But, according to the Article 1403, a covered transaction must be reduced in
writing, otherwise unenforceable. To put it simple, the sale of real property must be
evidenced by a written document as an oral sale of immovable property is unenforceable. Is
the Statute of Frauds applicable on this issue?
Question: Was there a valid sale of real property between Mr. Knee-Whang and Mr.
Tam-Bukh?

Answer: Yes, there was a valid sale of real property between the two parties. An executed
oral sale of real property is valid and binding among the parties.

Question: But, according to the Article 1403, a covered transaction must be reduced in
writing, otherwise unenforceable. To put it simple, the sale of real property must be
evidenced by a written document as an oral sale of immovable property is unenforceable. Is
the Statute of Frauds applicable on this issue?

Answer: No, because a sale of real property, though not consigned in a public instrument
or formal writing, is, nevertheless, valid and binding among the parties. Moreover, the
Statute of Fraud is only applicable to completely executory contracts. And on this case,
the verbal sale between the two men had been executed. So, the Statute of Fraud is
inapplicable.
 To be enforceable, a contract does not have to be in writing.

Article 1403 In fact, most contracts made orally are legally enforceable.
However, there are agreements which fall within the scope of
Agreements within the Statute of Frauds enumerated below, which are not
the scope of the legally enforceable in court although valid, unless the same
be in writing. In other words, if either party refused to comply
Statute of Frauds with their agreement, the same could not be enforced.

(1) Agreement not to be performed with one (1) year from the
making thereof.

-Any agreement that cannot be performed and completed

within one year, per its terms, is subject to the Statute of
Frauds.
 Example:

Article 1403 On October 10, 2014, S entered into an oral contract with B
Agreements within for the construction of B’s house to begin on October 20,
the scope of the 2015. The contract must be in writing to be enforceable.
In order that this provision to be applicable, it must appear
Statute of Frauds that the parties intended when they made the contract that
it should not be performed within a year from the date the
contracts is entered into by the parties; and not from the
date it is to be effective. A contract within the Statue if the
time for the full performance of the contract exceeds a year,
although the excess is ever so little.
Article 1403
Agreements within (2) Promise to answer for the debt, default, or miscarriage
the scope of the of another.
Statute of Frauds
-Promise to Answer for the Debt, Default, or Miscarriage of
Another Law and Legal Definition Promise to answer for the
debt, default, or miscarriage of another is an undertaking by
a person not before liable, for the purpose of securing or
performing the same duty for which the original debtor
continues to be liable.
Article 1403 Example:
D owes C P50,000 with G as guarantor. Here, G has a
Agreements within special promise to answer the debt of D in case D fails to
the scope of the pay the same. This promise is unenforceable it is writing
Statute of Frauds signed by G.

In the same example, if the promise of G is to pay C what D

owes him (C), G’s promise, even if verbally made, is
enforceable as it is not a collateral “promise to answer for
the debt, default, or miscarriage of another.” This type of
agreement is suretyship under which the surety binds himself
directly and primarily responsible with the principal debtor
on the original contract.
 (3) Agreement in consideration of marriage other than
mutual promise to marry.

Article 1403 -A statute of frauds which provides that contracts made in

Agreements within consideration of marriage, other than a mutual promise to
marry, are invalid unless the same, or some memorandum
the scope of the
thereof, be in writing and subscribed by the party to be
Statute of Frauds charged, or his agent, does not mean that no oral agreement
made in consideration of marriage, other than a mutual
promise to marry, can ever exist for any purpose

Example:

Emma and James are engaged to be married in six months.

They have found their dream wedding venue, but there is a
high demand for bookings during the wedding season. The
venue owner, Mr. Johnson, requires them to enter into an
agreement in consideration of their upcoming marriage.
 (4) Agreement for sale of goods, etc. at price not less than

Article 1403 P500.00

Agreements within -Sale of goods, chattels or things in action, at a price not less
the scope of the than Five hundred pesos, must be in writing, unless there is
partial delivery or partial payment.
Statute of Frauds
Examples:
(1) S and B mutually promised to sell and buy a piano at a
price of P12,000.

(2) If S denies a contract of sale of goods worth P500 but B

claims the price is only P450 (which is less than P500), oral
evidence of the sale is admissible in as much as the true
agreement claimed is not covered by the Statute.
 (5) Agreement for leasing for a longer period than one (1)
year.
Article 1403
Example:
Agreements within R agreed to lease his house to E for two (2) years. Again,
the scope of the this agreement must appear in writing to be enforceable
Statute of Frauds unless it is partially executed.

(6) Agreement for the sale of real property or of an interest

therein.

Examples:

(a) S orally sold his land or his right of usufruct in said land to
B. This agreement is also unenforceable unless it has been
partially executed.
Article 1403
Agreements within (b) S agreed in a private document to sell his land to B. The
the scope of the document was given to B who lost it. May B prove the
agreement by oral evidence?
Statute of Frauds
Yes. Here, what is to be proved is not an oral but a written
contract of sale. It is necessary, however, that B first present
proof that the written agreement really existed.
Article 1403 (7) Representation as to the credit of a third person.

Agreements within Example:

the scope of the
Statute of Frauds D is seeking a loan from C. T represents to C that D is
solvent and has a good credit reputation. Relying upon this
representation, C extends a loan to D who, actually, is
insolvent.

The representation of T, which was made to induce the

extension of credit to D, must be in writing to be enforceable.
Here, there is no promise by T to answer for the debt of D.
Note that there is no agreement involved.
 Article 1404
Unauthorized contracts are governed by Article
1317 and the principles of agency in Title X of
this Book. (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.)
Article 1405
Contracts infringing the Statute of Frauds, referred to in No. 2
of Article 1403, are ratified by the failure to object to the
presentation of oral evidence to prove the same, or by the
acceptance of benefits under them.
 The ratification of contracts infringing the Statute of Frauds
may be effected in two ways:
Article 1405 (1) by failure to object to the presentation of oral evidence to
Modes of prove the contract. The failure to so object amounts to a waiver
and makes the contract as binding as if it had been reduced to
ratification under
writing. Cross-examination of a witness testifying orally on the
the Statute. contract with respect to matters inadmissible under the Statute
amounts to failure to object; and

(2) by acceptance of benefits under the contract. In this case,

the contract is no longer executory, and, therefore, the Statute
does not apply. This rule is based upon the familiar principle
that one who has enjoyed the benefits of a transaction should
not be allowed to repudiate its burdens. It is also an indication
of a party’s consent to the contract when he accepts partial
payment or delivery of the thing sold thereby precluding him
from rejecting its binding effect.
Article 1406

When a contract is enforceable under the Statute of Frauds, and a public document is
necessary for its registration in the registry of deeds, the parties may avail themselves of the
right under article 1357.

Example:
A sale of realty in a private instrument is not valid and enforceable; hence a public document
may be executed so that the sale could not be registered. An oral sale of real property is not
enforceable; hence, one party cannot compel the other to execute the public document.
However, if said oral sale of real poetry has been ratified then it is now both valid and
enforceable, and a public documentary may be made so that the sale can be registered.
Article 1406

It must be stressed here that the right of one party to have the other to execute the public
documents needed for convenience in registration, is given only when the contract is both valid
and enforceable.

Example: An oral sale of real property is not enforceable; hence, one party cannot compel the
other party to execute the public document. However, if said oral sales of real property have
been ratified, then it is now valid and enforceable, and a public document may be made so
that the sale can be registered
Article 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, one of the contracting parties
shall give the contract the same effects 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.
 Article 1407
In cases where minors agreed to contracts without the knowledge of their parents or guardians, the
contract can be transformed into voidable contracts. If both parties are incapacitated to give
consent, the contract may be unenforceable but can be ratified.

Example:
When Pia heard from a relative that her grandfather will give her special gems this December
through a friend since she was incapable of receiving them because of her inability to detect colors
well, her guardian will be the one to approve whether or not the item was the same as the
description that her grandfather.
Article 1408
Unenforceable contracts cannot be
attacked by third parties.
A person who concludes a contract that is void cannot
bring an action to abolish it or contest the
unenforceability of the contract. Benefits of this law may
only be claimed or waived by the parties or trespassers
of an oral contract; they may not be claimed by
strangers, and a revocation action may also be brought
by a third party.
Article 1408
When a contract is unenforceable, it essentially means
that it cannot be enforced by a court of law. This can
happen for a variety of reasons, such as when the
contract violates a law, goes against public policy, or
involves fraud or mistake.
In the case of unenforceable contracts, Article 1408 of
the Civil Code of the Philippines still applies. If a party
breaches an unenforceable contract, the other party
may still be entitled to damages. However, the type and
amount of damages awarded may differ from those in
cases involving enforceable contracts.
Article 1408
It's important to note that if a contract is deemed
unenforceable, it may be declared null and void,
meaning that it has no legal effect. In such cases, the
parties are typically released from their obligations
under the contract, and any damages awarded may be
limited or non-existent.
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