MARQUEZ, LYRA HASTINE C.

OCTOBER 16, 2019

BSA1102-1M / MWF / 6:00-7:00 PROF. DAMMANG

DEFECTIVE CONTRACTS
C O N T R A C T S

RESCISSIBLE VOIDABLE UNENFORCEABLE VOID / INEXISTENT

valid until annulled; has all

essential requisites but because
of defect or one of the parties is valid but cannot compel its
incapable of giving consent, execution or enforced in court
valid until rescinded; has all contract may be annulled. unless ratified; no effect now but
essential requisites but because may take effect upon no effect at all; cannot be
of injury / damage to one of the contract is one in which the ratification; extrinsic defect; ratified / validated.
parties, the contract may be consent of one party is defective, produce legal effects only after
rescinded. either because of want of ratified; applies to executory intrinsic defect; valid until
capacity, or because consent is contracts; action for specific annulled; defect is due to vice of
DEFINITION contract is one, which, though vitiated - in which must be the performance when one party consent or legal incapacity.
possessing all the essential substance of the thing, the wants to enforce the contract to
requisites of contracts, has principal conditions of the compel the other party. contract is one which suffers
caused a particular economic contract; the identity or from absence of object or cause
damage either to one of the qualifications of one of the contract is one that, for lack of and is therefore an absolute
contracting parties or to a third parties when such constituted authority or of the required nullity and produces no effect.
person. the principal cause of the writing, or for incompetence of
contract; or the legal effect of the both parties, cannot be given
agreement, if the error is mutual effect unless properly ratified. 
and results in the frustration of
the parties’ purpose.
 • must be rescissible / valid.
• there is lesion / pecuniary
prejudice.
• no other legal remedy.
• object not in legal possession
of another.
• period to file. • knowledge of the reason why
the contract is voidable.
• it must fall under either Art. • injured part must have
1381 or 1382. executed an act which implies
• the party seeking rescission his waiver. • those entered into in the name • contracts whose consensual
must have no other legal of another. purpose is contrary to law.
means to obtain reparation for • dolo causante: 1) it must be • those do not comply with the • simulated / fictitious.
REQUISITES damages suffered by him (Art. serious. 2) it must have been Statue of Fraud. • contracts without consent.
1383). employed by one party upon • those wherein both parties are • contract prohibited by law.
• the party seeking rescission the other. 3) it must have had incapable of giving.
must be able to return the effect of inducing one of
whatever he may have the parties to enter into the
obtained by reason of the contract. 4) it must have
contract (Art. 1385, par. 1); resulted in damage or injury.
and;
• the things object of the
contract must not have passed
legally to a third person in
good faith (Art. 1385, pars. 2
and 3).
 Article 1381

• lesion or prejudice Article 1403

a) entered into by
guardians /
representatives • those entered into in the name
of another by one without, or
whenever the wards /
acting in excess, of authority.
absentees whom they
represent suffer lesion • those who do not comply with
the Statute of Frauds (must
by more than 1⁄4 of the
appear in writing signed by the Article 1409
value of the thing.
party charged).
b) partition of inheritance
where an heir suffers • agreement not to be performed • contracts whose cause, object
within one year from the or purpose is contrary to law,
lesion of at least 1⁄4 of
making thereof. etc.
the share to which he is
Article 1390 • promise to answer for the • simulated / fictitious.
entitled.
debt, default or miscarriage of • those without cause or object.
• those where one of the parties another. • contracts whose object is
• fraud or bad faith is incapable of giving consent
a) those undertaken in • agreement in consideration of outside the commerce of men.
GROUNDS • those where the consent is marriage other than a mutual • contracts which contemplate
fraud of creditors when
vitiated by mistake, violence, promise to marry. an impossible service.
the latter cannot in any
intimidation, undue influence, • agreement for sale of goods, • the intention of the parties
other manner collect the
fraud. chattels or things in action, at relative the object can’t be
claims due to them.
a price not less than five ascertained.
b) those which refer to
hundred pesos. • contracts expressly
things under litigation if
they have been entered • agreement for leasing for a prohibited / declared void by
longer period than one year. the law.
into by the defendant
without the knowledge • agreement for the sale of real
property or an interest therein.
and approval of the
litigants or the • representation as to the credit
of a third person.
competent court.
• those where both parties are
incapable of giving.
• special cases governed by
special provisions (Arts. 1189,
1191, 1526, 1534, 1538, 1542,
1556, 1560, 1567, and 1659)

without or in excess of authority, absolute lack either in fact or in

damage or injury to one of the vitiation of consent or one of the or does not comply with the law of one, some, or all essential
DEFECTS parties or to a third person. parties is incapacitated. Statute of Frauds, or both requisites of a contract;
parties are incapacitated. prohibited by law.
 CANNOT be enforced by court
VALID until rescinded. VALID until annulled. DO NOT produce effects.
EFFECT action.

within 4 years (Article 1391)

from date of capacity; from the
date force, intimidation or
undue influence ceases; from the
within 4 years (Article 1389) date error or fraud was
no prescription. no prescription (Article 1410).
PRESCRIPTION from date of contract. discovered.

if the the action prescribed, the

contract can no longer be set
aside.

declaration of absolute nullity or

annulment; ratification cured by ratification.
REMEDIES rescission.
confirmation.
inexistence.

cannot be ratified.
RATIFICATION may be ratified. may be ratified. cannot be ratified.

Bruce’s parents died. He

inherited their mansion worth Mary bought a house from Pete
₱40,000,000.00. Bruce was still using a written purchase and
a minor so Alfred was appointed Sol was intimidated into signing sale agreement. After taking A contract that was between an
as his guardian. Later, Alfred a contract on March 12, 2012. possession, Mary discovers a illegal drug dealer and an illegal
sold the mansion on behalf of The intimidation continued until small leak in a pipe in the crawl drug supplier to purchase a
October 16, 2014. From what space of the house, but does not specified amount of drugs for a
Bruce for ₱29,000,000.00. In
time should the four year period take any action against Pete for specified amount. Either one of
this case, Alfred sold the
EXAMPLES mansion for a price lower by
of annulment takes place? From four years. The court decided the parties could void the
October 16, 2014, the time the that the contract was contract since there is no lawful
more than one-fourth (1/4) of
intimidation ceased. unenforceable because of Mary’s objective and hence missing one
its market value, to the prejudice
of Bruce. Bruce can ask for the delay, even though the Statute of of the elements of a valid
rescission of the sale. Limitations had not expired. The contract.
court ruling was based on the
Doctrine of Laches.

- fin -