NATURE OF CONTRACT

RESCISSIBLE Valid and enforceable until rescinded by a competent court

VOIDABLE Valid and enforceable until annulled by a competent court

UNENFORCEABLE There is a contract but the same cannot be enforced by a proper action in court.

WHO CAN BRING ACTION

PRESCRIPTION

Injured party Contracting party who are Contracting Parties principally and subsidiary liable Third person who is prejudiced or damaged by Successors-in-interest or privies the contract (defrauded creditors). Heirs or successors-ininterest Creditors of the heirs or successors-in-interest by virtue of Art.1177 (accion subrogatoria) Art. 1389. The action to claim Art. 1391. The action for annulment Article 1403 Par. 1 and 3 may prescribe, if there was rescission must be commenced shall be brought within four years. total or partial performance. within four years. This period shall begin: For persons under guardianship and In cases of intimidation, Par. 2 (Statute of Frauds) not cured by prescription. for absentees, the period of four violence or undue influence, years shall not begin until the from the time the defect of the termination of the former's consent ceases. incapacity, or until the domicile of In case of mistake or fraud, the latter is known. (1299) from the time of the discovery of the same. And when the action refers to contracts entered into by minors or other incapacitated persons, from the time the guardianship ceases. (1301a) BY ESTOPPEL Art. 1393. Ratification may be effected expressly or tacitly. It is understood that there is a tacit ratification if, with knowledge of the reason which renders the contract voidable and such reason having ceased, the person who has a right to invoke it should execute an act which necessarily implies an intention to waive his right. (1311a)

VOID GR: do not produce any legal effect. Inexistent from the beginning; NO CONTRACT AT ALL Anyone whose interest is directly affected.

Imprescriptible

RATIFICATION

Art. 1405. Contracts infringing the Statute of Frauds, CANNOT BE RATIFIED 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 benefit under them.

GROUNDS

(1) Those which are entered into by guardians whenever the wards whom they represent suffer lesion by more than one-fourth of the value of the things which are the object thereof; (2) Those agreed upon in representation of absentees, if the latter suffer the lesion stated in the preceding number; (3) Those undertaken in fraud of creditors when the latter cannot in any other manner collect the claims due them; (4) Those which refer to things under litigation if they have been entered into by the defendant without the knowledge and approval of the litigants or of competent judicial authority; (5) All other contracts specially declared by law to be subject to rescission. (1291a) Art. 1382. Payments made in a state of insolvency for obligations to whose fulfillment the debtor could not be compelled at the time they were effected, are also rescissible. (1292) Assailed directly only Defect is caused by lesion injury or damage either to one of the parties or to a third person

(1) Those where one of the parties is incapable of giving consent to a contract; (2) Those where the consent is vitiated by mistake, violence, intimidation, undue influence or fraud. These contracts are binding, unless they are annulled by a proper action in court. They are susceptible of ratification. (n)

(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 as set forth in this number. (a) An agreement that by its terms is not to be performed within a year from the making thereof; (b) A special promise to answer for the debt, default, or miscarriage of another; (c) An agreement made in consideration of marriage, other than a mutual promise to marry; (d) An agreement for the sale of goods, chattels or things in action, at a price not less than five hundred pesos, unless the buyer accept and receive part of such goods and chattels, or the evidences, or some of them, of such things in action or pay at the time some part of the purchase money; but when a sale is made by auction and entry is made by the auctioneer in his sales book, at the time of the sale, of the amount and kind of property sold, terms of sale, price, names of the purchasers and person on whose account the sale is made, it is a sufficient memorandum; (e) An agreement of the leasing for a longer period than one year, or for the sale of real property or of an interest therein; (f) A representation as to the credit of a third person. (3) Those where both parties are incapable of giving consent to a contract.

(1) Those whose cause, object or purpose is contrary to law, morals, good customs, public order or public policy; (2) Those which are absolutely simulated or fictitious; (3) Those whose cause or object did not exist at the time of the transaction; (4) Those whose object is outside the commerce of men; (5) Those which contemplate an impossible service; (6) Those where the intention of the parties relative to the principal object of the contract cannot be ascertained; (7) Those expressly prohibited or declared void by law.

Assailed directly or collaterally Defect is caused by vice of consent

Assailed directly or collaterally Assailed directly or collaterally Defect is caused by lack of form, authority, or Defect is caused by lack of capacity o both parties not cured by prescription. essential elements or illegality

Prepared by: Joanie Charmaine B. Hernandez Didin E. Melecio