Obligations and Contracts TITLE II Contracts Chapter 8 Unenforceable Contracts Unenforceable contracts cannot be enforced unless first ratified

d in the manner provided by law !escissible and annullable " produce legal effects until they are set aside by a competent court Unenforceable " does #OT produce any effect unless it is ratified $rticle %&'( The following contracts are unenforceable) unless they are ratified* %+ 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 ,+ Those that do not comply with the -tatute of .rauds as set forth in this number+ In the following cases an agreement hereafter made shall be unenforceable by action) unless the same) or some note or memorandum thereof) be in writing) and subscribed by the party charged) or by his agent/ evidence) therefore) of the agreement cannot be received without the writing) or a secondary evidence of its contents+ a+ $n agreement that by its terms is not to be performed within a year from the ma0ing thereof/ b+ $ special promise to answer for the debt) default) or miscarriage of another/ c+ $n agreement made in consideration of marriage) other than a mutual promise to marry/ d+ $n 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 boo0) at the time of the sale) of the amount and 0ind 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+ $n agreement for the leasing for a longer period than one year) or for the sale of real property or of an interest therein/ f+ $ representation to the credit of a third person (+ Those where both parties are incapable of giving consent to a contract

%st paragraph unauthori1ed contracts 2hen one person enters into a contract for an in the name of another) without authority to do so " contract 3OE- #OT bind the person whose name was used without his authority o Unless he ratifies it o The person who enters into a contract without authori1ation to do so is the one bound to the third person Intention of the parties is to bind themselves/ since the person whose name was used cannot be bound) the one who entered into the contract without authority must be ,nd paragraph statue of frauds 4urpose of the -O. is to 4!E5E#T fraud and per6ury in the enforcement of obligations depending on the unassisted memory of witnesses for evidence o 7y re8uiring certain contracts and transactions to be 9evidenced: by a 2!ITI#; signed by the party to be charged+ 5alidity o Cannot be proved without the writing or a memorandum o Under -O. an oral contract of sale of real property <or any oral contract under any of the contracts enumerated= cannot be enforced -uch oral contract cannot also be the basis of an action for damages caused by non performance o -O. does not ma0e contract under it I#5$LI3 if not in writing -O. simply provides for the manner in which contracts under it ->$LL 7E 4!O5E3 ?a0es action for specific performance I#E..ECTI5E Contract E@I-T- and is 5$LI3 but because it is not in the #ECE--$!A .O!? Effect of noncompliance with -O. " no action can be proved unless -O. re8uirement is complied with o Oral evidence of the contract will be eBcluded from trial upon TI?ELA ob6ection If parties do not ma0e ob6ection) they 4E!?IT such contract to be proved orally

$ction to Enforce o -O. applicable to E@ECUTO!A and not to completed or eBecuted contracts o #ot applicable to contracts which are either totally or partially performed !eason* eBecutory contracts are more susceptible to fraud so they need to be written/ eBecuted or partly eBecuted contracts have less ris0 of fraud because then the intention of the parties become apparent by their eBecution $nd eBecution concludes <in most cases= the rights of parties= #OT E#OU;> for a party to allege partial performance/ such partial performance ?U-T 7E 4!O5E3 Either documentary or oral proof <not re8uired that documentary proof of partial performance be presented/ oral may do= o -O. does not prevent one of the parties from proving the true interest and agreement when an issue on this point is raised #ote or ?emorandum o Evidence of the agreement/ used to show intention of the parties o #o particular form of language or instrument is necessary to count as a 9writing: under the -O. o ?eets re8uirements if contains* #ames of the parties Terms and conditions of the agreement 3escription of the sub6ect matter sufficient to render it capable of identification 3ate and place of the ma0ing of the agreement -ignature of the party assuming the obligation o ?ust indicate an $3ECU$TE U#3E!-T$#3I#; of all the essential elements of the entire agreement o ?ay be said to be the CO#T!$CT IT-EL.) eBcept in a certain form , $ 4erformance within % year Contracts that are not to be performed within % year from its ma0ing <as provided in its terms=

In which case the oral proof will be 6ust as binding as if it had been in writing

?a0ing " the day on which the agreement is made/ the time for the period of performance begins to run from the day the contract is entered into o #OT from the time that performance of it is entered To be applicable) must appear that the parties intended that the contract should not be performed within a year o ?ust be an impossibility by the terms of the contract itself by the understanding and intention of the parties to the contract o #ot a natural or physical impossibility Covers all contracts if the time for the .ULL 4E!.O!?$#CE of the contract eBceeds a year) even if the eBcess is so little $pplies only to agreements not be performed on EIT>E! -I3E o $greements to be fully performed on one side within the year are not included #OT covered by -O. under performance within % year* o $greements to be fully performed on one side within the year are not included o #o time is fiBed and there is nothing in the agreement to show it cannot be performed within a year " not covered o 2hen there has been partial performance of contract One of the parties comply within the year even if the contract intends not to be fully performed within a year Other party cannot avoid fulfillment of his part because -O. does not apply to partially performed contracts) only to eBecutory contracts , 7 ;uaranty of anotherDs debt promise to pay for 3E7T) 3E.$ULT or ?I-C$!!I$;E of another) made before liable) purpose* to secure the duty for which the original debtor continues to be liable #eed not state the consideration/ consideration is presumed Test of ;uaranty covered by -O. " if the promise is an original or independent one wherein promisor is 4!I?$!ILA liable) not covered by -O. o If COLL$TE!$L only and promisor is merely a -U!ETA) promise must be in 2!ITI#; because it falls within -O. o 3etermination is a 8uestion of L$2 and of .$CT based on language used and circumstances under which promise was made o 4recise words are not always conclusive

, C In Consideration of ?arriage covers $LL verbal eBecutory promises or agreements made in consideration of marriage) OT>E! T>$# ?UTU$L promises TO ?$!!A #ot covered* o 2hen marriage is mere incidental and not the end attained by the agreement o Even when marriage is the consideration 7UT there are other $33ITIO#$L considerations -U..ICIE#T TO -U44O!T an O!$L agreement $pplicable also to T>I!3 persons promising something to one of the parties contemplating marriage o 7ut only parties contemplating marriage can sue each other for breach of mutual promise to marry) #OT the third partyEpromisor , 3 -ale of 4ersonal 4roperty Covers both T$#;I7LE and I#T$#;I7LE personal property sold for a price #OT LE-- T>$# 4F'' <F'' and up= Oral -ale of goods at 4F'' and up is unenforceable and cannot be made basis of an action for recovery of purchase price or for damages for breach -eparable Clause o To fall under -O. price of property must be 4F'' and up o If there are several articles which -E4$!$TELA 3O #OT have a price of 4F'' each) but when aggregated) have a total price eBceeding 4F'') then must determine if contract is inseparable or several If inseparable or total " -O. apples and must be in writing even if there are some articles less than 4F'' If seperable " each ta0en separately 4artial 3elivery or 4ayment removes contract from -O.* o 2hen buyer !ECEI5E- and $CCE4T- at least 4$!T of goods) chattels and things in action sold at price of 4F'' and up o 2hen $T T>E TI?E O. -$LE or $T T>E TI?E O. ?$GI#; T>E CO#T!$CT) buyer has given partial payment of the purchase price 4ayment afterwards still covered by -O. , E Lease or -ale of !ealty covers lease period for ?O!E T>$# % year and sale of real property/ includes supplemental lease

3oes not forbid oral evidence to prove a consummated sale or lease of real property o 7ecause -O. refers only to E@ECUTO!A contracts) not to eBecuted -O. not applicable when* o There has been partial payment of the purchase price o 7uyer is already in possession $greement Ememorandum to sell land must -U..ICIE#TLA 3E-C!I7E the land .or $greementEmemorandum of lease) must 3E-I;#$TE LE#;T> of the term and time when it is to begin , . !epresentation of Credit of T>I!3 person ?ust be in writing so that it is enforceable as to the person who made representation if it turns out to be false or incorrect 3OE- not cover contracts entered into to deceive others/ -O. not meant to protect wrongdoers o ?ust protect persons who honestly and in good faith ma0e assurances respecting the credit or standing of another (rd paragraph 7OT> parties incapacitated " ma0es contract unenforceable #either party can enforce unless ratified !atification of only O#E " converts contract to a 5OI3$7LE contract o 2hich can be voided by the party who has not ratified+ 4arty who has not ratified has the O4TIO# to* Enforce contract against one who ratified/ O! $s0 for annulment based on his incapacity $rticle %&'& Unauthori1ed contracts are governed by article %(%H and the principles of agency in Title @ of this 7oo0 %(%H contract entered into in the name of another without authority or legal rep or who acted beyond his powers shall be unenforceable U#LE-- ratified eBpressly or impliedly by person in whose behalf it is eBecuted 7E.O!E it is revo0ed by other contracting party 3oes not cover illegal acts EB+ -urviving spouse sells with right to repurchase the entire con6ugal partnership property

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5alid only up to the one half of the surviving spouse but I#5$LI3 as to the one half of the heirs because such sale of the half belonging to the heirs is illegal $n action brought by that surviving parent is #OT deemed a ratification of the illegal sale

$rticle %&'8 Unenforceable contracts cannot be assailed by third persons 3efense is 4E!-O#$L to the party to the agreement $#3 their reps Li0e minority) fraud) mista0e) and other similar defenses which may be asserted or waived by the affected party Chapter J 5oid or IneBistent Contracts $rticle %&'J The following contracts are ineBistent and void from the beginning* %+ Those whose cause) ob6ect or purpose is contrary to law) morals) good customs) public order and public policy ,+ Those which are absolutely simulated or fictitious (+ Those whose cause or ob6ect did not eBist at the time of the transaction &+ Those whose ob6ect is outside the commerce of men F+ Those which contemplate an impossible service/ I+ Those where the intention of the parties relative to the principal ob6ect of the contract cannot be ascertained H+ Those eBpressly prohibited or declared void by law These contracts cannot be ratified+ #either can the right to set up the defense of illegality be waived+ 5oid or ineBistent contracts no force and effect from the beginning as if it has never been entered into cannot be validated by time or by ratification includes* o contracts wherein one of the essential re8uisites is lac0ing o those declared void by law 5OI3 3efect " intrinsic #ullity is based on L$2 and 4U7LIC I#TE!E-T If no action is ta0en to set it aside) produces no effects $ction to declare nullity #E5E! 4!E-C!I7E!E-CI--I7LE 3efect " effect <damage= on parties or third party #ullity is based on e8uity and private interest If no action is ta0en) !E?$I#5$LI3 and produces effects $ction to rescind 4!E-C!I7Ein & years

Covers the instance when the mother assumed obligations left by her husband <in her behalf and in behalf of her children some of whom were minors then= 3eemed ratified when the children who reached ma6ority did not impugn validity of the contract made by their mother in their minority $rticle %&'F Contracts infringing the -tatute of .rauds referred to in #o+ , of article %&'( ) are ratified by the failure to ob6ect to the presentation of oral evidence to prove the same) or by the acceptance of benefits under them+ If the parties do not ma0e an ob6ection to the admissibility of oral evidence during trial " deemed as permitting such contract to be proved orally and the contract will then become binding as if it had been reduced in writing $cceptance of 7enefits ma0es the contract 9eBecuted: and not longer 6ust 9eBecutory: $rticle %&'I 2hen a contract is enforceable under the -tatue of .rauds) and a public document is necessary for its registration in the !egistry of 3eeds) the parties may avail themselves of the right under $rticle %(FH %(FH if law re8uires a document or other special form) contracting parties may CO?4EL each other to observe such form) once the contract is 4E!.ECTE3+ !ight may be eBercised simultaneously with action upon the contract n $rticle %&'H In a contract where both parties are incapable of giving consent) eBpress or implied ratification by the parent) or guardian) as the case may be) of one of the contracting parties shall give the contract the same effect as if only one of them were incapacitated+ If ratification is made by the parents or guardians) as the case may be) of both contracting parties) the contract shall be validated from the inception

5OI3 U#E#.OCE$7LE 7OT> cannot be made basis of action to enforce compliance Can never be ratified and can be ratified and thereafter enforced enforced There is no contract There is a contract but cannot be enforced unless ratified 5OI3 IneBistent because O#E of the essential re8uisites is lac0ingEwanting either* in law in fact declared void by statute #O contract/ only the appearance 4roduces #O E..ECT even if not set aside by direct action 5OI3$7LE Essential elements present but consent is defective because there is either a lac0 of capacity or it was vitiated by error) mista0e) violence) intimidation) undue influence or fraud 5$LI3 until set aside 5alidity may be assailed O#LA be a party to the contract and in an action for that purpose <never by (rd person= #ullity can be set against a party of the contract

2hen it has already been fulfilled action is #ECE--$!A to declare ineBistence of a void contract o court must declare absolute nullity decree restitution o court 6udgment retroact to the day when contract was entered into when void contract still .ULLA eBecutory o no need for action to declare nullity I. any party brings action to enforce) the other can simply set up nullity as a defense !atification ?$A ta0e the form of a new contract+ If the causes of nullity has ceased to eBist) they cannot impair the validity of the new contract Illegal at the time of original contract may have already become lawful by the time of the second contract -ervice which was impossible may have become possible $rticle %&%' The action or defense for the declaration of the ineBistence of a contract does not prescribe+ 3efect is incurable 4ermanent) cannot be cured by ratification or by prescription #ature of action #o need for an action to set aside a void contract $ction to 3ECL$!E non eBistence and in the same action) plaintiff may recover what he has given by virtue of the contract 4ower to as0 for declaration of non eBistence C$##OT 7E $--I;#E3 $rticle %&%% 2hen the nullity proceeds from the illegality of the cause or ob6ect of the contract) and the act constitutes a criminal offense) both parties being in pari delicto) they shall have no action against each other) and both shall be prosecuted+ ?oreover) the provisions of the 4enal code relative to the disposal of effects or instruments of a crime shall be applicable to the things or the price of the contract+ This rule shall be applicable when only one of the parties is guilty/ but the innocent one may claim what he has given) and shall not be bound to comply with his promise+

#ullity can be asserted against anyone who claims a right arising from it and his successors not protected by law #ever susceptible of ratification $ction to declare nullity never prescribes

Can be perfectly valid after ratification $ction for annulment prescribes after & yeears

Characteristics %+ produces no effect/ does not Create) ?odify or EBtinguish the 6uridical relation to which it refers ,+ nullity eBists ipso 6ure #o action for annulment necessary/ 6udgment would be merely declaratory (+ cannot be confirmed or ratified &+ if it has been performed) restoration of what has been given is in order parties affected any person who is being asserted against by the 6uridical effects of the contract $ction on contract