COMPARISON OF DEFECTIVE CONTRACTS

Kinds of Defective Nature of Contract Basis of Defect Name of Action Persons to File Effect if Successful Prescriptive Period Ratifiability
Contract
Rescissible Contracts
Grounds: Valid, until rescinded and Lesion or financial damage Action for Rescission (NOT 1. the injured party Parties are obliged to Within four (4) years Not applicable. The
1. Those which are entered may be enforced by the a principal remedy but only 2. the heirs of the injured return the things which 1. from the time contract is validly agreed
into be guardians parties concerned. subsidiary  the last and party were the object of the guardianship ceases upon. No basis for
whenever the wards ultimate remedy available 3. creditors, if the contract, together with their 2. from the date of ratification.
whom they represent to he party) transaction is fruits, and the price with its reappearance
suffer lesion by more fraudulent. interests. 3. from the date of
than one-fourth of the registration of the sale
value of the things which (notice to the whole
are the object thereof; world)
2. Those agreed upon in
the representation of
absentees, if the latter
suffer the lesion stated in
no. 1;
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 defendants
without the knowledge
and approval of the
litigants of competent
judicial authority;
5. All other contracts
specially declared by law
to be subject to
rescission.
Voidable Contracts
Grounds: Valid, until annulled Consent Action for annulment Must be a party to the The parties shall restore to Within four (4) years: Can be ratified.
1. Those where one of the contract principally or each other the things which 1. if minority - after TWIN EFFECTS OF
parties is incapable of subsidiarily bound, in have been the subject reaching the age of RATIFICATION:
giving consent to a particular, the party matter of the contract, with majority 1. cleanses the contract
contract. incapacitated or the their fruits, and the price 2. –if intimidation, violence, from all its defect from
2. Those where the innocent party. WHY? The with its interest. or undue influence, from the very beginning
consent is vitiated by party capacitated cannot the time the defect of the (retroactive effect)
mistake, violence, bring an action. (“cannot consent ceases. 2. extinguishes the action
intimidation, undue allege” means cannot make - if mistake or fraud, from to annul a voidable
influence or fraud. a complaint) the time of discovery of contract. WHY? There is
the same. NO more basis of the
action bec. ratification
cleanses all the defects
of the contract.

atty.idamvescolano for business law . culled from the discussion of atty. ernesto mayol. circa 2008.
 Kinds of Defective Nature of Contract Basis of Defect Name of Action Persons to File Effect if Successful Prescriptive Period Ratifiability
Contract
Unenforceable Contracts
Kinds: There is a contract BUT it Lack of: Not applicable. WHY? Bec. Not applicable. WHY? Not applicable. WHY? Not applicable. WHY? Applicable (Art. 1407)
1. Those executed by one can NOT be enforced by 1. authority it is a contract which cannot Same. Same. Same. - ratification by ONE
in the name of another court action. 2. form be enforced by court parent: improves
without any authority or 3. capacity (BOTH action. contract, now
in excess of such parties) VOIDABLE.
authority. - Of BOTH parents: makes
2. Those that do not contract perfectly VALID.
comply with the Statute
of Frauds.
3. Those where both
parties are incapable of
giving consent.
Void Contracts
Grounds: Equivalent to NO contract 1. lack of essential Action for declaration of Any person, whether party - If not yet fulfilled, do not The action to declare the Cannot be ratified. Defense
1. Those whose cause, at all. element nullity or not to the contract, comply. contract inexistent does not of illegality cannot be
object or purpose is 2. the object is unlawful whose interest are directly - If fulfilled, mutually prescribe. (Imprescriptible) waived.
contrary to law, morals, affected by the contract. obliged to return what
good customs, public they have received.
order or public policy; WHY? Void contracts
2. Those which are confers no right, creates
absolutely simulated or no obligation.
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 ascertaines;
7. Those expressly
prohibited or declared
void by law.

atty.idamvescolano for business law . culled from the discussion of atty. ernesto mayol. circa 2008.