DEFECTIVE CONTRACTSAS TO NATURE OF DEFECTEFFECT ON CONTRACTASSAILABLE?HOW?WHO CAN ASSAIL?WHEN TO ASSAIL?CURABLE? HOW?WHO CAN CURE?WHEN TO CURE?

RESCISSIBLE(Arts 1381 1389)

Economic prejudice or damage to:- owner - 3rd person - litigant

Can generally be ASSAILED and CURED by: Injured Party

EFFECTS:Mutual restitution

Contracts of guardians (acts of administration) when wards they represent suffer lesion of more than 25% of the value of thingVALIDuntil rescindedYES but only through DIRECT action for rescissionNo rescission if:a. plaintiff has other legal means to obtain reparation (subsidiary)b. plaintiff cannot return what must be restoredc. object in the hands of 3rd persons in good faithd. Contract approved by court (Art 1386) By ward

Or by guardian ad litem of ward during incapacity of ward in action against original guardianWithin 4 years from gaining (minor) or regaining (insane) capacity YESBy ratification(Confirmation by the ward)By wardWithin 4 years from (re)gaining capacity

Contracts in representation of absentees when latter suffers lesion of more than 25% of value of thingVALIDuntil rescindedBy absenteeWithin 4 years from knowledge of domicile of absenteeYESBy prescriptionBy absenteeWithin 4 years from knowledge of domicile or knowledge of fraudulent contract

Contracts entered into by debtor who is a state of insolvency, i.e. contracts entered into in fraud of creditors (Accion Pauliana)VALIDuntil rescindedYES but only through DIRECT action for rescissionNo rescission if:a. plaintiff has other legal means to obtain reparation (subsidiary)b. plaintiff cannot return what must be restoredc. object in the hands of 3rd persons in good faithBy plaintiff-creditor By heirs of creditor BY creditors of creditors injured (accion subrogatoria) By other third parties prejudiced by the contractWithin 4 years from knowledge of fraudulent contractYESBy prescriptionBy creditorWithin 4 years from knowledge of fraudulent contract

Contracts which refer to things in litigation without the knowledge and approval of litigants or competent judicial authorityVALIDuntil rescindedBy party litigantWithin 4 years from knowledge of fraudulent contractYESBy prescriptionBy party litigantWithin 4 years from knowledge of fraudulent contract

All other contracts declared by law to be subject of rescission E.g. Art 1098 Partition VALIDuntil rescinded

DEFECTIVE CONTRACTSAS TO NATURE OF DEFECTEFFECT ON CONTRACTASSAILABLE?HOW?WHO CAN ASSAIL?WHEN TO ASSAIL?CURABLE? HOW?WHO CAN CURE?WHEN TO CURE?

VOIDABLE(Arts 1390 1402)Vitiated consent

EFFECT: Cleanses defect of contractDoes not prejudice right of 3P prior to ratification Mutual restitution

Want of capacity- age- insanity VALIDuntil annulled by court actionYES. Both through direct and collateral attacks.

Action for annulmentAll who are obliged principally or subsidiarily (i.e. guarantors and sureties)

Incapacitated party; not the party with capacity

Victim; not the party who cause the defectWithin 4 years from cessation of (re)gaining capacityYESBy ratification By prescriptionBy parties themselves

By guardian in behalf of an incapacitated party during existence of incapacityWithin 4 years from cessation of (re)gaining capacity

Consent is vitiated by: mistake or error violence and intimidation (duress) undue influence fraud, misrepresentationWithin 4 years from: cessation of intimidation, violence, undue influence (consensual defect) discovery of mistake or fraudYES1 By ratification Express Implied (silence or acquiescence, acts showing approval or adoption of contract, acceptance and retention of benefits)

2 By prescriptionWithin 4 years from: cessation of intimidation, violence, undue influence (consensual defect) discovery of mistake or fraud

DEFECTIVE CONTRACTSAS TO NATURE OF DEFECTEFFECT ON CONTRACTASSAILABLE?HOW?WHO CAN ASSAIL?WHEN TO ASSAIL?CURABLE? HOW?WHO CAN CURE?

UNENFORCEABLE(Arts 1403 1408)Contract entered into name of another without authority or in excess of authority VALIDbut cannot be ENFORCEDby a proper action in courtYES.Not by direct action but by DEFENSE of unenforceability of contract through motion to dismiss complaint on the ground that contract is unenforceableBy owner of propertyAt any time one party attempts to enforce contract against the other through a court action By ratification Person in whose name the contract was entered into

Contracts covered by Statute of Frauds and not complying with requirement of a written memoVALIDbut cannot be ENFORCEDby a proper action in courtYES.Not by direct action but by DEFENSE of unenforceability of contract either through:1. motion to dismiss complaint on the ground that contract is unenforceable2. objection to presentation of oral evidence to prove contractBy other party

By his privies (heirs, representatives and assigns) At any time one party attempts to enforce contract against the other through a court actionBy acknowledgement By performance of oral contract

By failure to object seasonably to presentation of oral evidence

By acceptance of benefits under the contractBy party against whom the contract is being enforced

Both parties are legally incapacitated to actVALIDbut cannot be ENFORCEDby a proper action in courtYES.Not by direct action but by DEFENSE of unenforceability of contract through motion to dismiss complaint on the ground that contract is unenforceableBy other party

By his privies (heirs, representatives and assigns)

By guardian At any time one party attempts to enforce contract against the other through a court actionBy confirmation By parents or guardians of both parties

Both parties after (re)gaining capacity to act

VOID or INEXISTENT(Arts 1409 1422)

Cause, object or purpose of contract contrary to law, good customs, morals, public order or public policy (Art 1401, Par 1)DOES NOT CREATE RIGHTS AND CANNOT IMPOSE OBLIGATIONYES. By an action for declaration for nullity By defense of nullity By innocent party By 3rd persons whose interest are directly affected(If in pari delicto, neither has an action against each other) Imprescriptible Cannot be cured--

One or some of essential requisites of valid contract lacking in fact or in lawa. Absolutely simulatedb. Those whose cause or object did not existc. Object outside the commerce of man d. Contemplate an impossible servicee. Where intention of parties re: principal object of contract cannot be ascertained (Art 1402 Pars 2 to 6)DOES NOT CREATE RIGHTS AND CANNOT IMPOSE OBLIGATIONYES. By an action for declaration for nullity By defense of nullity By any of the contracting parties By 3rd persons whose interests are directly affectedImprescriptibleCannot be cured--

Contracts expressly prohibited by law (Art 1409 Par 7)DOES NOT CREATE RIGHTS AND CANNOT IMPOSE OBLIGATIONYES. By an action for declaration for nullity By defense of nullity By party whose protection the prohibition of the law is designedBy 3rd party whose interests are directly affectedImprescriptibleCannot be cured--