Unenforceable Contracts

Those contracts which cannot be enforced by action or complaint, unless they have been
ratified by the party or parties who did not give consent. (Art 1403, NCC)

IBIG SABIHIN ETO YUNG MGA KONTRATA NA DI PWEDENG IPATUPAD, MALIBAN NA

LAMANG KUNG ETO AY PINAGTIBAY NG PARTIES NA DI NAGBIGAY NG PAHINTULOT.

What are unenforceable contracts?

A: The following contracts are unenforceable unless they are ratified:

1. Those entered into without or in excess of authority;

WALANG CONSENT OR WALANG KAPANGYARIHAN.

2. Those that do not comply with the Statute of Frauds i.e., are not in writing nor subscribed
by the party charged or by his agent; or

DI NAKASULAT

3. Those where both contracting parties are incapable of giving consent.

WALANG KAKAYANG MAGBIGAY NG PAHINTULOT

What is unauthorized contracts?

Those entered into in the name of another person by one who has given no authority or legal
representative or acted beyond his powers.

Art.1317. No one may contract in the name of another without being authorized by the latter,
or unless he has the by a law a right to represent him.

What is Statute of Frauds?

The Statute of Frauds [Article 1403, (2)] requires certain contracts enumerated therein to be
evidenced by some note or memorandum in order to be enforceable.

The term "Statute of Frauds" is descriptive of statutes which require certain classes of
contracts to be in writing.

The Statute does not deprive the parties of the right to contract with respect to the matters
therein involved, but merely regulates the formalities of the contract necessary to render it
enforceable.

Note: The Statute of Frauds applies only to executory contracts, not to those that are partially
or completely fulfilled.

Fundamentals principle of Statute of Frauds.

1. It only applies to executory contracts and not partially or completely executed.

2. It cannot apply if the action is neither for damages because violation of an agreement nor
for the specific performance of said agreement.

3. The defense of the statute of frauds may be waived.

4. It is personal defense, cannot be assailed by the third person.

5. Contract infringing the statute of frauds are not void, but merely unenforceable.

What are the contracts or agreements covered by the Statute of Frauds?

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;

4. An agreement for the sale of goods, chattels or things in action, at a price not lower that
500 pesos,

5. An agreement for the leasing for a longer period than one year, or

6. An agreement for the sale of real property or of an interest therein;

7. A representation to the credit of a third person

Mode of ratification under the statute of fraud.

1. by failure to object to the presentation of oral evidence to prove the contract.

2. by acceptance of benefits under the contract.

Art. 1406. When a contract is enforceable under the Statute of Frauds, and a public
document is necessary for its registration in the Registry of Deeds, the parties may avail
themselves of the right under Article 1357.

When unenforceable contract becomes voidable contract.

Art. 1407. In a contract where both parties are incapable of giving consent, express 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.

When unenforceable contract becomes valid contract.

Art. 1396. Ratification cleanses the contract from all its defects from the moment it was
constituted

Art. 1408. Unenforceable contracts cannot be assailed by third persons.

Right of third persons to assail an unenforceable contract.

Strangers to a voidable contract cannot bring an action to annul the same.

Art. 1397. The action for the annulment of contracts may be instituted by all who are
thereby obliged principally or subsidiarily. However, persons who are capable cannot allege
the incapacity of those with whom they contracted; nor can those who exerted intimidation,
violence, or undue influence, or employed fraud, or caused mistake base their action upon
these flaws of the contract.