March 6, 2013 Unenforceable you cant even bring it to court DEFECTIVE CONTRACTS UNENFORCEABLE Unenforceable contracts are those

se that cannot be enforced in court or sued upon by reason of defects provided by law until and unless they are ratified according to law. The kinds of unenforceable contracts are: 1. Those entered into in the name of another by one without or acting in excess of authority 2. Those that do not comply with the statutes of frauds 3. Those where both parties are incapable of giving consent 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. Statutes of Frauds: This has been enacted not only to prevent fraud but also to guard against the mistakes of honest men by requiring that certain agreements specified must be in writing; otherwise they are unenforceable by action in court. These contracts or agreements, as defined by law, are: 1. An agreement that by its terms is not to be performed within a year from the making thereof 2. A special promise to answer for the debt, default or miscarriage of another 3. An agreement made in consideration of marriage, other than a mutual promise to marry (engagement) 4. An agreement for the sale of goods, chattels or things in action, at a price not less than P500, 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, for the amount and kind of property sold, terms of sale, price, names of the purchaser and the persons and whose account the sale is made, it is sufficient memorandum 5. An agreement for the leasing for a longer period than one year, or for the sale of real property or of an interest therein 6. A representation as to the credit of a third person It must be noted that contracts infringing on the statutes of frauds 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. In a contract where both parties cannot give consent, express or implied ratification by the parents or guardians as the case may be of one of the contracting parties shall give the contract he same effect as if only one them is incapacitated. If by both then the contract is ratified from inception. Unenforceable contracts cannot be assailed by third persons. DEFECTIVE CONTRACTS VOID Void contracts are those, which, because of certain facts, generally do not produce any effect at all. They are inexistent from the beginning. Inexistent contracts are contracts where one or some of the essential The following are inexistent and void from the beginning:

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 (marrying someone in a movie) 3. Those whose cause or object did not exist at the time of the transaction (Im selling you my dragon) 4. Those whose object are outside the commerce of men 5. Those which contemplate an impossible service (physically or legally impossible) 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 These contracts cannot be ratified. Neither can the right to set up the defense of illegality be waived. The action or defense for the declaration of the inexistence of a contract does not prescribe. Where parties are in pari delicto and the object or cause constitutes a crime and they are equally guilty, the parties shall have no action against each other; both shall be prosecuted and the things or price of the contract, such as the effects or instruments of the crime shall be confiscated in favor of the government. Where only one party is guilty or there is no equal guilt, the guilty one will be prosecuted while the innocent one may recover what he has paid and shall not be bound to comply with his promise. Where the contract is illegal but does not constitute a crime and both are in par delicto neither party may recover what he has given by virtue of the contract and neither party may demand performance of the others undertaking. Where only one is guilty, the guilty party loses what he has given by reason of the contract, he cannot ask for fulfillment of the others undertaking, the innocent party may demand what he has given and he cannot be compelled to comply with his promise. Where one party is incapacitated, the courts may, in the interest of justice, allow recovery of money or property delivered by the incapacitated person. Where the agreement is not illegal per se but merely prohibited for the protection of the plaintiff, he may, if public policy CORPORATION CODE GENERAL PROVISIONS The Code is known as the Corporation Code of the Philippines. Its scope is: a. It provides for the incorporation, organization and regulation of private corporations, both stock and non-stock, including educational and religious corporations b. It defines their powers and provides for their dissolution c. It fixed the duties and liabilities of director or trustees and other officers thereof d. It declared the rights and liabilities of stockholders or members e. It prescribes the conditions under which corporations including foreign corporations may transact business f. It provides penalties for violations of the Code g. It repeals all laws and parts of laws in conflict and inconsistent with the Code A corporation is an artificial being created by operation of law, having the right of succession and the powers, attributes and properties expressly authorized by law or incident to its existence. Attributes: a. It is an artificial being b. It is created by operation of law c. it has the right of succession

d. It has only the powers, attributes and properties expressly authorized by law or incident to its existence The corporation as an artificial being A corporation is a legal or juridical person with a personality separate and apart from its individual members or stockholders who, as natural persons, are merged in the corporate body. It is not, in fact, and in reality, a person but the law treats it as though it is a person. The stockholders or members compose the corporation but they are not the corporation. Consequences: a. Corporation is not liable for the debts of stockholders and vice versa. Rule is stockholder can lose only up to the extent of their investment. b. Corporations can own property separate from the stockholders. c. Contracts validly entered into on behalf or in the name of the corporation create rights and liabilities only for the corporation d. A corporation cannot bring a suit on behalf of a stockholder. The opposite though is not always the case such as in derivative suits e. The corporation is not changed by the change in identities of its stockholders The Doctrine of Piercing the Corporate Veil Being a mere creature of the law, a corporation may be allowed to exist solely for lawful purposes but where the fiction or corporation entity is being used as a cloak or cover for fraud or illegality, this fiction will be disregarded and the individuals composing it will be treated as identical. The corporate veil can be pierced if it a) defeats public convenience; b) justifies a wrong, protects a fraud or defends a crime; or c) it is a mere alter ego. Note that creditors of financially troubled corporations benefit when they A Corporation is a Mere Alter Ego if: a. b. c. d. e. f. The parent company owns all of most of the capital stock They have common directors or officers The parent finances the subsidiary The parent subscribes to all the capital stock or incorporates the same The subsidiary has grossly inadequate capital The subsidiary has substantially no business except with the parent or no assets except those conveyed to or by the parent g. The subsidiary is described by the parent as a department or division in its business or financial responsibilities are described to be that of the parents. h. The parent uses the property of the subsidiary i. Their directors and executives of the subsidiary do not act independently in the interest of the subsidiary but take orders from the parent j. The formal legal requirements of the subsidiary are not observed. Corporations as Created by Operation of law: This means that corporations cannot come into existence by mere agreement of the parties as in the case of business partnerships. Right of Success of the Corporation A corporation ha s a capacity of oc Powers, attributes and properties of a corporation A corporation, being a mere creation of the law

Classes of Corporation Stock Corporations: the ordinary business corporation created and operated for the purpose of making a profit which may be distributed in the form of dividends to stockholders on the basis of their invested capital. Non-stock corporations do not issue stock and are created not for profit but for the public good welfare. Public versus Private Corporations