AWA-AO, BEA CLARICE A.

AC1812-B

Defective Contracts Rescissible Contracts
Rescissible Contracts are those
validly agreed upon because all
Definition the essential elements exists and
therefore, legally effective, but in
the cases established by law, the
remedy of rescission is granted in
the interest of equity.
Article 1380- Definition of
Rescissible Contracts
Voidable Contracts
Voidable or annullable contracts
are those which possess all the
essential requisites of a valid
contract but one of the parties is
incapable of giving consent, or
consent is vitiated by mistake,
violence, intimidation, undue
influence, or fraud.
Article 1390- Definition of
Voidable Contracts
Unenforceable Contracts
Unenforceable contracts are
those that cannot be enforced or
given effect in a court of law or
sued upon by reason of certain
defects provided by law until and
unless they are ratified according
to law.
Article 1403- Definition of
Unenforceable Contracts
Void and inexistent Contracts
Void contracts are those which,
because of certain defects,
generally produce no effect at all.
Inexistent contract refer to
agreements which lack one or
some elements or do not comply
with formalities.
Article 1409- Definition of Void
Contracts

Summary of Covered Article 1381- Cases of Article 1391- Period for filing Article 1404-1405- Modes of Article 1410- Action or Defense
Provisions Rescissible Contracts action for annulment ratification under the statue is Imprescriptible

Article 1382- Payments made in a Article 1392- Meaning and effect Article 1406- Right of a party Article 1411- Rules where
state of insolvency of Ratification where contract enforceable contract is illegal and the act
constitute a criminal offense
Article 1383- Nature of action of Article 1393- Kinds and Article 1407- When
rescission Requisites of Ratification unenforceable contract becomes a Article 1412- Rules where
void contract; When contract is illegal but the act does
Article 1384- Extent of rescission Article 1394- Who may ratify Unenforceable contract becomes not constitute a criminal offense
a valid contract
Article 1385- Rescission creates Article 1395- Conformity of Article 1413- Recovery of
obligation of mutual restitution; guilty party to ratification not Article 1408- Right of Third usurious interest
obligation of third person to required persons to assail an unenforceable
restore contract Article 1414- Recovery where
Article 1396- Effect of contract entered into for illegal
Article 1386- Contracts Approved Ratification Retroactive purposes
by the courts
Article 1397- Party entitled to Article 1415- Recovery by an
Article 1387- Alienation bring an action to annul; Right of Incapacitated person
presumed in fraud strangers to bring action; Guilty
AWA-AO, BEA CLARICE A.
Article 1388- Liability of
purchaser in bad faith
Article 1389- Period of filing
action for rescission
AC1812-B
party without right to bring action
Article 1398- Duty of mutual
restitution upon annulment
Article 1399- Restitution by an
Incapacitated person
Article 1400- Effect of loss of
Thing to be returned
Article 1401- Extinguishment of
action for annulment
Article 1402- Effect where a
party cannot restore what he is
bound to return
Article 1416- Recovery where
contract not illegal perse;
prohibited sale of land
Article 1417- Recovery of amount
paid in excess of ceiling price
Article 1418- Recovery of
additional compensation for
service rendered beyond time
period
Article 1419- Recovery of amount
of wage less than minimum fixed
Article 1420- Effect of illegality
where contract indivisible/
divisible; Divisible contract
distinguished from divisible
obligation
Article 1421- Persons entitled to
raise defense of illegality or
nullity
Article 1422- Void contract
cannot be novated
AWA-AO, BEA CLARICE A.
AC1812-B

The defect is extrinsic defect Defect is caused by vices of Caused by lack of form, authority Caused by lack of essential
Nature of Defect consisting of an economic consent or capacity of both parties not elements or illegality
damage or lesion. cured by prescription

Cannot be ratified (just for Can be ratified Can be ratified Cannot be ratified
Ratification validation)

Contracting parties, but also a

Who may question validity Prejudice to one of the parties or Only a contracting party Contracting party or aggrieved third person whose interest is
to a third person party directly affected

A personal defense when the

Rescission is a remedy granted by Annulment of Contract plaintiff pursues a specific Declaration of Nullity of the
Remedies law to contracting parties. performance case or complaint Contract
for damages based on breach of
contract.
AWA-AO, BEA CLARICE A.
Requisites for the Remedy to
apply
1. The contract entered into 1. There must be knowledge of
is essentially valid. the reason which renders the
2. There is lesion or contract voidable.
pecuniary prejudice. 2. Such reason must have
3. No other legal remedy. ceased.
4. Object not in legal. 3. The injured party must have
executed an act which implies
an intention to waive his
rights.
AC1812-B
1. Those entered into in the
name of another
2. Those that don’t comply with
the Statute of Fraud.
1. Contracts whose COC,
purpose contrary to law
2. Simulated/Fictitious
3. Contracts w/o COC
4. Contracts prohibited by law

A, already of legal age,
disappeared and was declared an
absentee. B was appointed as his
Example representative. A owned a car
worth ₱4,000,000.00. B sold the
car for a price lower by more than
one-fourth (1/4) of its market
value, to the prejudice of B. A
can ask for the rescission of the
sale.
X offer Y to sell a land. All
documents related to the land
were taken fraudulently by X. If
later on Y realized that B was the
not the true owner, B can
terminate the contract or seek
damages.
On April 15, 2019, J entered into
an oral contract with K for the
construction of K’s house to
begin on April 21, 2019. The
contract must be in writing to be
enforceable.
E sold to F his car and shabu, a
prohibited drug for ₱5,000,000.
The contract is wholly void and
unenforceable because there is
only one consideration for both
the car and the shabu. However,
if the price of the car is separate
from the shabu, the contract,
being divisible, is valid as to the
sale of the car.