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Unenforceable contracts are contracts that cannot be sued upon or enforced in court unless ratified. The three main categories of unenforceable contracts are: 1) those entered into without authority, 2) those that do not comply with the statute of frauds requiring certain contracts to be in writing, and 3) those where both parties lack legal capacity. Unenforceable contracts can be ratified by the parties to make them enforceable.
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Unenforceable Contracts, Obligations and Contracts
Unenforceable contracts are contracts that cannot be sued upon or enforced in court unless ratified. The three main categories of unenforceable contracts are: 1) those entered into without authority, 2) those that do not comply with the statute of frauds requiring certain contracts to be in writing, and 3) those where both parties lack legal capacity. Unenforceable contracts can be ratified by the parties to make them enforceable.
Unenforceable contracts are contracts that cannot be sued upon or enforced in court unless ratified. The three main categories of unenforceable contracts are: 1) those entered into without authority, 2) those that do not comply with the statute of frauds requiring certain contracts to be in writing, and 3) those where both parties lack legal capacity. Unenforceable contracts can be ratified by the parties to make them enforceable.
or enforced in court, unless ratified; Thus, it is as if it has no effect yet.
In one sense therefore, they may be
called, validable. Unenforceable Contracts cannot serve as basis for a suit or action; the courts will refuse to enforce them and dismiss the suit.
In a suit founded on an unenforceable
contract, the defendant can interpose its unenforceability as a defense and ask for the dismissal of the suit. Art. 1403: Unenforceable contracts may be ratified. Ratification means that a person knowingly and voluntarily adopts or gives sanction to an unauthorized or defective act, which would not be binding upon him.
Ratification may be expressed or
implied. (Art. 1317) Art. 1408 Unenforceable contracts cannot be assailed by third persons. Three Categories of Unenforceable Contracts:
Those entered into without or in excess of
authority (Art.1404); Those that do not comply with the Statute of Frauds (Art. 1405); or Those where both contracting parties do not possess the required legal capacity (Art. 1407) Unauthorized Contracts (Art. 1404)
Are those entered into in the name of
another person who has no legal authority or legal representation;
Or who has authority but acted beyond
his powers. Unauthorized Contracts are governed by Article 1317 and the principles of agency under the Civil Code . Art. 1317 No one may contract in the name o another without being authorized by the latter, or unless he has by law a right to represent him. A contract entered into in the name of another by one who has no authority or legal representation, or who acted beyond his powers, shall be unenforceable. Principle of Agency If the agent exceeds the scope of his authority, the agent is personally liable to the party with whom he has contracted (Art. 1897), unless ---- The principal ratifies the contract (Art. 1898); or The other contracting party is aware of the limits of the agents power. (Art. 1898) Who can assail? By the person whose name the contract was entered into. By the owner of the property.
How to cure the defect?
Ratification by the person whose name the contract was entered into. Incapacity of Both Parties Are those contracts where both parties are incapable of giving consent to a contract. (Art. 1407)
If only one of the contracting parties is
incapacitated, the contract is voidable. (Art. 1391) Who can assail? By the person whose contract is being enforced or his privies; Parents or guardians of that person.
How to cure the defect?
Ratification by parents or guardians of the person against whom the contract is being enforced By attainment of majority age (in case of minority) By regaining sanity (in case of insanity) Non-compliance with Statute of Frauds
Contracts covered by the Statute of
Frauds cannot be proven without the writing or oral evidence, unless the other party fails to object. What is the Statute of Frauds? Refers to the law which requires certain contracts or transactions to be put in writing and signed by the party charged thereby. Its purposes is to prevent fraud and perjury in the enforcement of obligations depending for their evidence on unassisted memory of witnesses. The following contacts are unenforceable, unless the same, or some note or memorandum thereof, be in writing, and subscribed by the party charged, or by his agent: An agreement that by its terms is not to be performed within a year from the making thereof;
A special promise to answer for the
debt, default, or miscarriage of another;
An agreement made in consideration of
marriage, other than a mutual promise to marry; An agreement for the sale of goods, chattels or things in action, at a price, not less than five hundred pesos.
An agreement for the leasing for a longer
period than one year, or for the sale of real property or of an interest therein;
A representation as to the credit of a
third person. Inclusio unius est exclusio alterius
The Statute of Frauds is exclusive in
application because it cannot apply to other contracts not enumerated in the law. Who can assail? By the person whose contract is being enforced or his privies;
How to cure the defect?
Ratification by the party whom the contract is being enforced By failure to object to the presentation of oral evidence to prove an oral contract or by accepting the benefits under the contract