CONTRACTS • Contracts of deposit with the Postal

Savings Bank provided that the minor is

Stages in the life of a contract: over 7 years of age.
2. Insane or demented persons unless the contract
1. Preparation/Generation was entered into during a lucid interval;
2. Perfection/Birth 3. Deaf-mutes who do not know how to write.
3. Consummation/Death
The following may not acquire by purchase,
Characteristics of Contracts: (ROMA) even by public or judicial auction, in person
of though the mediation of another:
1. Relativity (Art. 1311)
2. Obligatoriness & Consensuality (Art. 1315) 1. the guardian, with respect to the property of his
3. Mutuality (Art. 1308) ward;
4. Autonomy (Art. 1306) 2. agents, with respect to the property whose
administration or sale may have been entrusted
Stipulation pour Autrui - stipulation in favor of a to them, unless the consent of the principal has
3rd party. been given;
3. executor or administrator, the property of the
Requisites: estate under administration;
1. The stipulation must be part, not whole of the 4. public officers and employees, with respect to
contract; the properties of the government, its political
2. the contracting parties must have clearly and subdivisions, GOCCs, that are entrusted to
deliberately conferred a favor upon a 3rd person; them;
3. the 3rd person must have communicate his 5. judges, justices, prosecuting atty.’s, clerks of
acceptance; courts, etc., the property in custogia legis; and
4. neither of the contracting parties bears the legal 6. any other person specially disqualified by law.
representation of the 3rd party.
Simulation of a contract
General Rule: Contracts (except real contracts)
are perfected from the moment there is a Kinds of simulation:
manifestation of concurrence between the offer and
the acceptance regarding the object and the cause. 1. Absolute - no real transaction is intended;
Except: Acceptance by letter or telegram which Effect: simulated contract is inexistent.
does not bind the offerror except from the time it
came to his knowledge.
2. Relative - the real transaction is hidden;
Effect: the apparent contract is void, but the
hidden contract is valid if it is lawful and has the
Theories applied to perfection of contracts:
necessary requisites.
1. Manifestation theory - the contract is perfected : as to third persons without notice - the
from the moment the acceptance is declared or apparent contract is valid on the principle of
made; estoppel.
2. Expedition theory - the contract is perfected
from the moment the offeree transmits the Effect of:
notification of acceptance to the offerror; Absence of cause the contract confers
3. Reception theory - the contract is perfected from no right and
the moment that the notification of acceptance is produces no legal
in the hands of the offerror; effect
4. Cognition theory - the contract is perfected from Failure of cause does not render the
the moment the acceptance comes to the contract void
knowledge of the offerror. This is the theory Illegality of cause the contract is null
adopted in the Philippines. and void
Falsity of cause the contract is void
Persons incapacitated to give consent: unless the parties
1. Unemancipated minors; can show that there
Except: is another cause
• Contracts for necessaries; which is true and
lawful
• Contracts by guardians or legal
Lesion does not invalidate
representatives;
the contract unless:
• Contracts where the minor is
• there is fraud,
estopped to urge minority through his own
mistake or
misrepresentation;
 undue influence 2. Wills;
• when the parties 3. When the agreement is void.
intended a
donation or
some other Classes of Defective Contracts: (RUVI)
contract. 1. Rescissible
Form of Contracts
2. Unenforceable
3. Voidable
Rules: 4. Void or Inexistent

1. Contracts shall be obligatory, in whatever form

they may have been entered into, provided all
the essential requisites for their validity are
present.
2. Contracts must be in a certain form when the
law requires that a contract be in some form to
be:
• valid;
• enforceable;
• for the convenience of the parties.
3. The parties may compel each other to reduce
the verbal agreements to writing except:
• Solemn contracts such as the
following:
a. Donations of real estate or of movables
if exceeding Ps 5,000;
b. Transfer of large cattle
c. Stipulation to pay interest in loans
d. Sale of land through an agent
(authority must be in writing)
e. Partnership to which immovables are
contributed
f. Stipulation limiting carrier’s liability to
less than extra-ordinary diligence
g. Contracts of antichresis
h. Sale of vessels

Note: in such case, if the contract is not

in writing it is VOID
• Real contracts that require delivery
for perfection.
• In contracts under the Statute of
Frauds where the party sued makes a
timely objection to the absence of a
written memorandum.

Reformation of instruments:

Requisites:

1. Meeting of the minds to the contract;

2. The true intention is not expressed in the
instrument by reason of mistake, accident,
relative simulation, fraud, inequitable conduct
(MARFI).
3. Clear and convincing proof of MARFI.

Cases when there can be no reformation:

1. Simple, unconditional donations inter vivos;
 COMPARATIVE TABLE OF DEFECTIVE CONTRACTS:

VOID VOIDABLE RESCISSIBLE UNENFORCE-

ABLE
1. defect is caused 1. defect is caused 1. defect is caused 1. defect is caused
by lack of by vice of consent by injury/ damage by lack of form,
essential either to one of authority, or
elements or the parties of to a capacity of both
illegality 3rd person parties
2. not cured by 2. cured by 2. cured by 2. not cured by
prescription prescription prescription prescription
3. cannot be ratified 3. can be ratified 3. need not be 3. can be ratified
ratified
4. not binding 4. binding until 4. binding unless 4. binding unless the
annulled rescinded defect is raised
against
enforcement.
RESCISSIBLE CONTRACTS 1. Prescription
• the action must be commenced
Contracts which may be rescinded: within 4 years from:
• the time the incapacity
1. those entered into by guardians where the ward ends;
suffers lesion of more than ¼ of the value of the • the time the violence,
things which are objects thereof; intimidation or undue influence
2. those agreed upon in representation of ends;
absentees, if the latter suffer lesion by more • the time the mistake or
than ¼ of the value of the things which are fraud is discovered.
subject thereof; 2. Ratification
• Requisites:
3. those undertaken in fraud of creditors when a. there must be knowledge of the
the latter cannot in any manner claim what are reason which renders the contract
due them; voidable;
4. those which refer to things under litigation if they b. such reason must have ceased;
have been entered into by the defendant without c. the injured party must have
the knowledge and approval of the litigants and executed an act which expressly or
the court; impliedly conveys an intention to
5. all other contracts especially declared by law to waive his right.
be subject to rescission; 3. By loss of the thing which is the object of the
6. payments made in a state of insolvency on contract through fraud or fault of the person who
account of obligations not yet enforceable; is entitled to annul the contract.
UNENFORCEABLE CONTRACTS
Circumstances denominated as badges of
fraud: Kinds of unenforceable contracts:
1. those entered into in the name of another by
one without or acting in excess of authority;
1. consideration of the conveyance is inadequate
2. those where both parties are incapable of giving
or fictitious;
consent;
2. transfer was made by a debtor after a suit has 3. those which do not comply with the Statute of
been begun and while it is pending against him; Frauds.
3. sale upon credit by an insolvent debtor;
4. transfer of all his property by a debtor when he Agreements within the scope of the Statute
is financially embarrassed or insolvent; of Frauds:
1. Agreements not to be performed within one year
5. transfer is made between father and son, where from the making thereof;
there are present some or any of the above 2. Promise to answer for the debt, default or
circumstances; miscarriage of another;
6. failure of the vendee to take exclusive 3. Agreement in consideration of marriage other
possession of the property; than a mutual promise to marry;
4. Agreement for the sale of goods, etc. at a price
Distinctions: not less than Ps500.00
5. Contracts of lease for a period longer than one
RESCISSION RESOLUTION year;
(Art. 1191) 6. Agreements for the sale of real property or
1. Action by the 1. Action only by interest therein;
contracting the injured party; 7. Representation as to the credit of a 3rd person.
parties even by
a 3rd party; 2. based on non- Modes of Ratification:
2. based on fulfillment of the 1. For contracts infringing the Statute of Frauds:
lesion/fraud of obligation; • expressly
creditors; 3. courts may grant • impliedly - by failure to object to the
3. courts cannot periods presentation of oral evidence to prove the
grant periods for contract, or by the acceptance of benefits
compliance under the contract.
2. If both parties are incapacitated, ratification by
VOIDABLE CONTRACTS their parents or guardians shall validate the
contract retroactively.
Causes of extinction of action to annul:
VOID OR INEXISTENT CONTRACTS
The following contracts are void:
1. Those whose cause, object or purpose is
contrary to law, morals good customs, public
order or public policy;
2. Those whose object is outside the commerce of
men;
3. Those which contemplate an impossible service;
4. Those where the intention of the parties relative
to the principal object of the contract cannot be
ascertained;
5. Those expressly prohibited or declared void by
law;

The following contracts are inexistent:

1. Those which are absolutely simulated or
fictitious;
2. Those whose cause or object did not exist at the
time of the transaction.
 2. Alienatory

g. According to the time of performance

or fulfillment
1. Executed- one completed at the
time the contract is entered
CONTRACTS into
2. Executory – one where the
Art 1305 prestations are to be complied
with at some future time
ELEMENTS OF A CONTRACT
h. According to subject matter
a. Essential Elements 1. Contracts involving things
1.Consent 2. Contracts involving rights or
2.Subject Matter credit
3.Cause or Consideration 3. Contracts involving services

b. Natural Elements- presumed to exist, i. According to obligations imposed and

unless the contrary is stipulated required by law
1. Ordinary
Ex. Warrants against eviction and 2. Institutional-like contract of
against hidden defects marriage

c. Accidental Elements – existence of j. According to the evidence required for

such is dependent on the agreement its proof
of the parties. 1. Those requiring merely oral or
parol evidence
Classification of Contracts 2. Those requiring written proof
a. According to perfection or formation
1. Consensual k. According to the number of persons
2. Real-perfected by delivery actually and physically entering into
3. Formal or Solemn the contracts
1. Ordinary – two parties are
b. According to cause of equivalence of represented by different
the value of prestations: persons
1. Onerous 2. Auto Contracts –where only one
2. Gratuitous or Lucrative person represents two opposite
3. Remunerative parties, but in different
capacities
c. According to Importance or
dependence of one upon another l. According to the number of persons
1. Principal – can stand alone who participated in the drafting of the
2. Accessory – depends upon the contract
existence of another contract 1. Ordinary
3. Preparatory – here, the parties 2. Contract of Adherence
do not consider the contract as
an end by itself, but as a means m. According to the nature of the contract
thru which future transaction or 1. Personal
contracts may be made 2. Impersonal
Ex. Agency, partnership
STAGES OF A CONTRACT
d. According to the parties obligated a. Preparation
1. Unilateral b. Perfection
2. Bilateral c. Consummation (or death or
termination)
e. According to their Name or
Designation Basic Principles or Characteristics of a
1. Nominate Contract
2. Innominate a. Freedom to stipulate
b. Obligatory force and compliance in
f. According to the risk of fulfillment good faith
1. Commutative c. Perfection by mere consent
 d. Both parties are mutually bound Art 1313
e. Relativity Right of defrauded creditor.

Art 1306 – Freedom or autonomy of contract Art 1314

Requisites before a third person in this article
can be held for damages
Art 1307
a. Existence of a valid contract
b. Knowledge on the part of the third
Four Kinds of Innominate Contracts person of the existence of the contract
a. Du ut des (I give that you may give) c. Interference by the third person
b. Do ut facias (I give that you may do) without legal justification or excuse
c. Facio ut des (I do that you may give)
d. Facio ut facias (I do that you may do)
Art 1315-1316
Perfection of contracts
Art 1308-1310

MUTUALITY OF CONTRACTS Art 1317

• The validity or fulfillment of a contract
Requisites for a Person to Contract in
cannot be left to the will of one of the
the Name of Another
contracting parties.
a. He must be duly authorized (expressly
• The validity or fulfillment may be left or impliedly)
to the will of a third person. b. Or he must have by law a right to
• The validity or fulfillment may be left represent him
to chance. c. Or the contract must be subsequently
ratified

Art 1311
Art 1318
This principle stresses the Principle of Requisites of Contracts
Relativity. a. Consent (Art 1319-46)
Contracts are generally effective only b. Object (Art 1347-1349)
between the parties, their assigns and their c. Cause (Art 1350-55)
heirs.

Exceptions: Art 1319

a. Where the obligation arising from the
Definition of Consent
contract are not transmissible by their
nature, by stipulation, or by provision -Art 1319,first paragraph
of law.
b. Where there is stipulation pour atrui (a Requisite of Consent
a. There must be two or more parties
stipulation in favor of a third party)
c. Where a third person induces another b. The parties must be capable or
incapacitated
to violate his contract
d. Where, in some cases, third persons c. There must be no vitiation of consent
d. There must be no conflict between
may be adversely affected by a
contract where they did not what was expressly declared and what
was really intended
participate.
e. Where the law authorizes the creditor e. The intent must be declared properly
to sue on a contract entered into by
his debtor. Requisites for the meeting of minds
a. An offer that must be certain
b. And an acceptance must be
unqualified and absolute
Art 1312
A real right binds the property over • Concurrence of offer and acceptance
which it is exercised. (Art 1319-26)
Exception to the general rule that a
• Legal capacity of contracting parties
contract binds only the parties.
(Art 1327-29)
 • Characteristics of Consent (Art 1330- Mistake
46) It is a false belief about something.

Requisites for mistake to vitiate consent

Art 1320 a. Object of the contract
Forms of Acceptance b. The condition which principally proved
or induced one of the parties
c. Identify or qualifications, but only if
Art 1322 such was the principal cause of the
contract.
Acceptance of an Offer made thru an d. The error must be excusable
agent e. The error must be a mistake of fact

Kinds of Mistake
Art 1323 a. Mistake as to the object
Other instances when the offer becomes 1. Mistake as the identity of the
ineffective thing
a. When the offeree expressly or 2. Mistake as to the substance of
impliedly rejects the offer the thing
b. When the offer is accepted with 3. Mistake as to the conditions of
qualification or condition the thing
c. When before acceptance is 4. Mistake as to the quantity of
communicated, the subject matter the thing
becomes illegal or impossible
d. When the period of time given to the b. Mistake as to person
offeree within which he must signify 1. Mistake must be either with
his acceptance has already lapsed regards to the identify or with
e. When the offer is rejected in due regard to the qualification of
tome one of the contracting parties
2. Such identity or qualification
must have been the principal
Art 1324 consideration for the
Option Contract celebration of the contract
Option- it is a contract granting a person the
privilege to buy or not to buy certain objects
at anytime within the agreed period at a fixed Art 1332
price Burden of proof in case of mistake

Perfection of Option Art 1333

When there is a meeting of minds on Effect of knowledge of risk
the option
Art 1334
Art 1325-1326
If the advertisement contains all the Mistake of Law
specific particular needed in a contract, it is a Is that which arises from an ignorance
definite offer. of some provision of law, or from an
If important details are left out, the erroneous interpretation of its meaning, or
advertisement is not a definite offer, but a from an erroneous conclusion as to the legal
mere invitation to make an offer. effect of the agreement, on the part of one of
the parties.
Art 1327 in relation to Art 1329
Who cannot give consent. Requisites:
a. There must be mutual error
Art 1328 b. The error must refer to the legal effect
Voidable contracts by reason of of the agreement
incapacity c. The real purpose of the parties is
frustrated
Art 1330
This article enumerates causes or Art 1335-1336
vices of consent. Violation refer to physical coercion
Intimidation refers to moral coercion
Art 1331 in relation to Art 1333
Requisites for violence to vitiate consent It is the process of intentionally
a. Employment of serious or irresistible deceiving others by producing the
force appearance of a contract that really
b. It must have been the reason why the does not exist (absolute simulation)
contract was entered into Or which is different from the true
agreement relative simulation.
Requisites for intimidation to vitiate consent
a. Reasonable and well-grounded fear Kinds
b. Of an imminent and grave evil a. Absolute; Effect; the contract is
c. Upon his person, property, or upon the void
person of property of his spouse, b. Relative; Effect; the parties are
descendents or ascendants bound to the real or true
d. It must have been the reason why the agreement except-
contract was entered into a. If the contract should
e. The threat must be an unjust act, an prejudice third persons
actionable wrong b. Or if the purpose is contrary
to law, morals, public order,
Art 1337 policy or good customs
Requisites for undue influence to vitiate
consent Requisites
a. Improper advantage a. An outward declaration of will
b. Power over the will of another difference from the will of the parties
c. Deprivation of the latter’s will of a b. The false appearance must have been
reasonable freedom of choice intended by mutual agreement
c. The purpose is to deceive third
Art 1338-1341 persons
Kinds of Fraud
a. Fraud in the celebration of the Art 1347-1349
contract Objects (Subject Matter) of a contract
1. Dolo Causante or - A thing or a service
causal fraud (Art
1338) Requisites
2. Dolo Incidente of a. The thing or service must be within the
incidental fraud commerce of man
b. Must be transmissible
b. Fraud in the performance of the c. Must not be contrary to law, morals,
obligations stipulated in the contract good customs, public order, or public
policy
Requisites of Dolo Causante d. Must not be impossible
a. The fraud must be material and e. Must be determinate as to its kind or
serious determinate without the need of a new
b. The fraud must have been contract or agreement
employed by one of the
contracting parties, because if CAUSE OF CONTRACTS
both committed fraud, the Art 1350
contract would remain valid “Cause” defined
c. There must be a deliberate -It is the essential and impelling
intent to deceive to induce reason why a party assumes an obligation
d. The other party must have
relied on the untrue statement, Art 1351
and must himself not be guilty Motive – is the purely personal or private
of negligence in ascertaining reason which a party has in entering into a
the truth contract

Art 1342-1344 Motive vs. Cause

Speaks about misrepresentation Motive
a. May vary although he enters into the
Art 1345-1346 same kind of contract
Simulation b. May be unknown to the other
c. The presence of motive
Simulation of a Contract defined
Cause
 a. Always the same
b. Always known CHAPTER 4
c. Cannot cure the absence of cause
REFORMATION OF INSTRUMENT
Art 1352-1355
Requisites for cause Reformation – is that remedy by means of
a. It must be present which a written instrument is amended or
b. It must be true rectified so as to express or conform to
c. It must be lawful the real agreement or intention of the
parties when by reason of mistake, fraud,
or inequitable contract, or accident the
CHAPTER 3 instrument fails to express such
agreement or intention.
FORM OF CONTRACTS

Art 1356 Requisites for reformation

Meaning of form of contracts a. There is a meeting of minds of the
-Refers to the manner in which a parties to the contract
contract is executed or manifested b. The written instrument does not
express the true agreement or
Rules regarding from of contracts (Art 1356) intention of the parties
Art 1357-1358 c. The failure to express the true
Principles regarding formalities for the intentions is due to mistake, fraud,
efficacy of a contract inequitable conduct or accident
a. Art 1357 and Art 1358 do not require d. The facts upon which relief by way of
the execution of a contract either in a reformation of the instrument is
public or private instrument in order to sought are put in issue by the
validate enforce it but only to ensure pleadings
its efficacy, so after its existence has e. There is clear and convincing evidence
been admitted, the party bound may of the mistake, fraud, inequitable
be compelled to execute the conduct, or accident
necessary document
b. Even where the contract has not been Reformation vs. Annulment
reduced to the required form, it is still In reformation, there has been a
valid and binding as far as the parties meeting of the minds of the parties, hence, a
are concerned contract exists while in annulment, there has
c. From the moment one of the been none, the consent of one of the parties
contracting parties invokes the being vitiated by mistake, etc.
provisions of Art 1357 and 1358by
means of a proper action, the effect is
to place the existence of the contract Art 1360-69
in issue, which must be resolved by
the ordinary rules of evidence Art 1360
d. Art 1357 does not require that the Rule in case of conflict
action to compel the execution of the
necessary document must precede the Art 1366
action upon the contract Instances when reformation is not
e. However, although the provisions of allowed
Art 1357 in connection with those of
Art 1358, do not operate against the
validity of the contract nor the validity CHAPTER 5
of the acts voluntarily performed by
the parties for the fulfillment thereof, INTERPRETATION OF A CONTRACT
yet from the moments when any of the
contracting parties invokes said Art 1370
provisions, it is evident that under Definition of interpretation of contract
them the execution of the required -Is the determination of the meaning
document must precede the of the terms or words used by the parties in
determination of the other obligations their contract
derived from the contract
Art 1371-79 (provisions)
Kinds of defective contracts Characteristics
a. Rescissible (Art 1380-89) a. Their defect consist in the vitiation of
b. Voidable (Art 1390-1402) consent of one of the contracting
c. Unenforceable (Art 1403-1408) parties
d. Void or Inexistent (Art 1409-1422) b. They are binding until they are
annulled by competent court
Art 1381 in relation to Art 1382 c. They are susceptible of convalidation
Meaning of rescissible contracts by ratification or by prescription
-Those validly agreed upon because all
the essential elements exists but in some Voidable vs. Rescissible Contracts
cases established by law, the remedy of
rescission is granted in the interest of equity Voidable
a. Defect is intrinsic
Requisites of rescission b. Contract is voidable even if there is no
a. The contracts must be validly agreed damage or prejudice
upon c. Annulability of the contract is based on
b. There must be lesion or pecuniary law
prejudice to one of the parties or to a d. Susceptible of ratification
third person e. The causes of annulment
c. The rescission must be based upon a The causes of rescission
case especially provided by law
d. There must be no other legal remedy Rescissible
to obtain reparation of the damages a. Defect is extrinsic
e. The party asking for rescission must b. Contract is not rescissible id there is
be able to return what he is obliged to no damage or prejudice
restore by reason of the contract c. Rescissibility of the contract is based
f. The object of the contract must not on equity
legally d. Not susceptible of ratification
g. The object of the contract must not e. Are different form
legally be in the possession of third
persons who did not act in bad faith
h. The period for filing the action of Art 1390
rescission must have not prescribed Voidable contracts
Meaning of Rescission Art 1391
-Remedy granted by law to the Prescription
contracting parties and sometimes even to
third persons in order to secure reparation of
damages caused by them by a valid contract, Art 1392-96
by means of the restoration of things to their
condition in which they were prior to the Concept of Ratification
celebration of the said contract. -By virtue of which efficacy is given to
a contract which suffers from a vice of curable
nullity
Art 1385
Effects of rescission Requisites for ratification
a. The contract should be tainted with a
vice which is susceptible of being
Art 1324 cured
Prescription b. The confirmation should be effected by
the person who is entitled to do so
under the law
c. It should be effected with knowledge
VOIDABLE CONTRACTS of the vice or defect of the contract
d. The cause of the nullity or defect
Definition should have already disappeared
-Are those which possess all the
essential requisites of a valid contract but one Art 1397 in relation to Art 1391
of the parties is incapable of giving consent, -Who and when may an action for
or consent is vitiated by mistake, violence, annulment of contract be instituted
intimidation, undue influence, or fraud
Art 1398-99 a. An unenforceable contract cannot be
enforced by a proper action in court,
Effects of annulment while a voidable contract can be
enforced, unless it is annulled
Art 1400-02 b. The causes for the unenforceable
- Effect pf failure to make restitution character of the former are different
-Where loss is due to fault of plaintiff from the causes for the voidable
-Where loss is due to fault of defendant character of the latter
-Where loss is due to fortuitous event
STATUTE OF FRAUDS

CHAPTER 8 Purpose
-Not only to prevent fraud but also to
UNENFORCEABLE CONTRACTS guard against the mistakes of honest men by
requiring that certain agreement specified
must be in writing.
Meaning of unenforceable contracts
-Those that san not be enforced in
Application
court or sued upon by reason of defects
a. Not applicable in actions which are
provided by law until and unless they are
neither for damages because of a
ratified according to law.
violation of a contract, nor for the
specific performance thereof
Kinds:
b. Applicable only to executory contracts
a. Those entered into in the name of
and not to contracts which are totally
another by one without or acting in
or partially performed
excess of authority
c. Not applicable where the contract is
b. Those that do not comply with the
admittedly expressly, or impliedly by
statute of fraud
the failure to deny specifically its
c. Those where both parties are
existence, no further evidence thereof
incapacitated of giving consent
being required in such case.
d. Applicable only to the agreements
Unauthorized contracts
enumerated therein
-Those entered into in the name of
e. Not applicable where a writing does
another person by one who has been given no
not express the true agreement of the
authority or legal representation on who has
parties
acted beyond his powers.
f. It does not declare the contracts
infringing it are void but merely
Characteristics of Unenforceable Contracts
unenforceable
a. They can not be enforced by a proper
g. The defense of the statute of frauds
action in court
may be waived
b. They are susceptible of ratification
h. The defense of the statute of frauds is
c. They can not be assailed by third
personal to the parties and cannot be
persons
enforced by strangers to the contract
Unenforceable vs. Rescissible
Effect of Non-Compliance
a. An unenforceable contract cannot be
-The contract or agreement is
enforced by a proper action in court,
unenforceable by action
while a rescissible contract can be
enforced, unless it is rescinded
Ratification of Unenforceable Contracts
b. The causes for the unenforceable
Either by: a. the failure of object to the
character of the former are different
presentation of oral existence to prove the
from the causes fro the rescissible
same
character of the latter
c. The acceptance of benefits under
c. The former is susceptible of
them
ratification, while the latter is not
d. The former cannot be assailed by third
Art 1404-1408 (provisions)
persons, while the latter may be
assailed by third persons who are
prejudiced
CHAPTER 9
Unenforceable vs. Voidable

VOID OR INEXISTENT CONTRACTS

Void Contracts
-Those, which of certain defects
generally produce no effect at all

Inexistent Contracts
-Refer to agreements which lack one
or some or all the elements or do not comply
with the formalities which are essential for
the existence of a contract

Characteristics of a Void or Inexistent

Contracts
a. Generally, it produces no effect
b. It cannot be ratified
c. The right to set up the defense of
legality cannot be waived
d. The action or defense for the
declaration of its inexistence does not
prescribe
e. The defense of illegality is not
available to third persons whose
interests are not directly affected
f. It cannot give rise to a valid contract

Art 1410
-Imprescriptibility of void or inexistent
contract

Art 1411-1412
Where both parties are in pari delicto
a. The parties shall have no action
against each other
b. Both shall be prosecuted
c. The things or the price of the contract,
as the effects of the crime shall be
confiscated in favor of the government

Where only one party is guilty

-The rule in paragraph 1 of Art 1411
applies only to the guilty party or the more
guilty party
Exceptions to the principle of pari delicto
Art 1413-1419