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Daniel Group - Unenforceable-Contract
Daniel Group - Unenforceable-Contract
Unenforceable Contracts
ALCOSER, MYRNA
APOSTOL, ROLDAN
BUALAN, JOVENIEL
BULI, GENIE
CABILES, CRISTINE
CUÑADO, DANIEL
UNENFORCEABLE CONTRACT
Legal Definition
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.”[ Article 1403, paragraph 1,
Civil Code] And that “(a) contract entered into in the name of another by one who
has no authority or legal representation, or who has acted beyond his powers, shall
law embodied in our Civil Code that no one may contract in the name of another
without being authorized by the latter, or unless he has by law a right to represent
him.[Art. 1317, Civil Code of the Philippines] A contract entered into in the name
of another by one who has no authority or legal representation, or who has acted
impliedly, by the person on whose behalf it has been executed, before it is revoked
Article 1403 of the same Code also provide. "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
Out of the above given principles, sprung the creation and acceptance of the
authorizes another, called the agent (mandatario), to act for and in his behalf in
transactions with third persons. The essential elements of agency are: there is
consent, express or implied, of the parties to establish the relationship; the object
is the execution of a juridical act in relation to a third person; (Art. 1317, Civil Code
of the Philippines) the agent acts as a representative and not for himself; and the
agent acts within the scope of his authority [ Art. 1868, Civil Code].
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that the court refuses to enforce, unless it is ratified, expressly or impliedly, by the
person on behalf of its that has been executed, before it is revoked by the other
frequently employed. The agreement will be legitimate if the parties follow it, but
unenforceable contracts are valid but imperfect because they cannot be enforced
in courts.
are as follows:
1. Those entered into in the name of another who has been given no control
2. Those that do not obey under the Statute of Frauds (The items covered
another;
price not less than five hundred pesos, unless the buyer accept and
them, of such things in action or pay at the time some part of the
made by the auctioneer in his sales book, at the time of the sale, of
the amount and kind of property sold, terms of sale, price, names of
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sufficient memorandum;
➢ An agreement for the leasing for a longer period than one year.
contract.
money, as long as it is adequate and fairly induces the other party to assent to the
terms. If the contract falls under the Statute of Frauds, as many business contracts
unenforceable. By being on vigilant prior to the signing, you can identify any
possible red flags ahead of time, which can prevent the need for costly court
intervention. Here are some of the most usual issues that can render a contract
unenforceable.
have the capacity to understand the terms of the contract. What makes a
contract unenforceable is when one party does not understand the means
minors (children under the age of 18), mentally ill individuals, or people
under the impact of drugs or alcohol. For example, a person agony from
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mental impairment may lack the capacity to enter into a contract. Even a
person who was intoxicated at the time they signed a contract may not have
the extent to do so. Another typical example is when minors enter into a
action that leaves the party with no other another other than to sign the
party intimidate a lawsuit unless the other party signs. For example, a
Company B's project was commenced and Company A's ship was en route
with the materials, Company A reject to complete the trip unless Company
B agreed to pay a higher price. Company B was enforced to pay the jacked-
up rate because there was no other way to get the material, and not
completing the job might lead to unsustainable losses. The court ultimately
seen that this agreement to raise the price was not enforceable, because it
influence their ability to decide to sign the contract willingly, the agreement
relationship that Person B had with Person A, the resulting contract might
prove excessive influence, Person A would have to show that Person B used
excessive pressure against Person A during the bargaining process and that
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for whatever reason Person A was overly susceptible to the duress tactics or
Person A.
convince the other party to sign the contract. For example, Company A
faulty tells a vendor they will not hire a competing business if they sign the
day and plans to enter into business with them. Company A would have
unenforceable.
Remember: All the time include all terms of the contract in writing
(Puerto, J. 2021);
• Unconscionability
how it was formed is so unfair that it would “shock the conscience” if it were
enforced. A contract is not unconscionable just because one party had further
enforceable even though the employer usually has more power to shape the terms
customer.
unenforceable or might just strike the parts it considers unconscionable from the
Courts don’t enforce contracts that agree to anything against the law
or the best interest of the public. For example, courts will not enforce an
meet health and safety code essentials. The purpose of public policy and
whole.
• Mistake
contract unenforceable. For example, the other party may give you the
wrong contract and you do not know until after you sign it. In this
• Impossibility
Impossibility that is the fault of one party generally does not make a
Company A's entire stock of flour before the sale can be finished,
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grounds of impracticality.
Govenrment;
Article 1403. The following contracts are unenforceable, unless they are
ratified:
(1) Those entered into in the name of another person by one who has been
powers;
(2) Those that do not comply with the Statute of Frauds as set forth in this
of another;
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
made by the auctioneer in his sales book, at the time of the sale, of
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the amount and kind of property sold, terms of sale, price, names of
sufficient memorandum;
(e) An agreement of the leasing for a longer period than one year, or
(3) Those where both parties are incapable of giving consent to a contract.
Article 1404.
Article 1405.
to a waiver. Contracts that are infringed in the Statute of Frauds are ratified
enforceable.
If the party in whose favor the statute may be invoked, cross examined the
witness who is testifying on the oral contract, the former is deemed to have waived
The party should promptly object to the presentation of the witness once it
contract. The objection must be invoked during the “offer of the testimony” of the
witness or a motion to dismiss may be filed before answer to the complaint is filed.
Article 1406.
Article 1407.
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
of both contracting parties, the contract shall be validated from the inception. For
example, when Pia heard from a relative that her grandfather will give her special
gems this December through a friend, since she was incapable to receive them
because of the inability to detect colors well, her guardian will be the one to approve
whether or not the item was same as the description that her grandfather.
(see Art. 1397.); neither can they assail a contract because of its
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(2) Those that do not comply with the Statute of Frauds; and
(2) Those that do not comply with the Statute of Frauds; and
(1) Those entered into in the name of another by one without or acting in excess of
authority;
(2) Those that do not comply with the Statute of Frauds; and
(3) Those where both parties are incapable of giving consent. A party to an
excess thereof. The law expressly provides that such a contract cannot be assailed
by a third person.
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Statute of Frauds
classes of contracts to be in writing. This 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. The effect of non-
complied with. Thus, they are included in the provisions of the New Civil Code
ineffective actions for specific performance of the contracts covered by it; it does
not declare them absolutely void and of no effect. As explicitly provided for in the
above-quoted paragraph (2), Article 1403 of the Civil Code, the contracts
concerned are simply "unenforceable" and the requirement that they — or some
note or memorandum thereof — be in writing refers only to the manner they are to
agreement that is reasonably clear and signed by the appropriate parties will
• The written document must contain the essential terms of the contract,
being sought.
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A statute of frauds does not of itself render a contract void. The statute
makes certain contracts “voidable” by one of the parties, in the event that the party
Differences of Contracts
UNENFORCEABLE YES NO NO
VOID NO NO NO
The table above shows that, unenforceable contract’s main difference from
remains valid, there is a chance that the contact will be cured from its defectiveness
such until it is ratified. When a contract is void, by all means, has no effect and
both parties cannot perform nor demand anything since it is an absolute rule that
ratified?
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provisions
avoid
writing, or for the incompetence of both parties, cannot be given effect unless
properly ratified.
• A void contract is one that suffers from the absence of an object or cause and
unenforceable contract through the reason of lack of authority or form and it can
also be ratified in which the difference is the chance to make it fully valid through
• Under the unenforceable and void contracts there was no indicated remedy
to be avoided or invalidate in the first place these two defective contracts have no
Remedy
express or implied. Implied ratification may take the form of accepting and
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System (MWSS) vs. Court of Appeals, 297 SCRA 287, 307 (1998).
➢ Intelligent
➢ Voluntary
➢ Deliberate
RESPONDENTS.
This is a case of an attorney-in-fact, Simeon Rallos, who after the death of his
principal, Concepcion Rallos, sold the latter's undivided share in a parcel of land
pursuant to a special power of attorney which the principal had executed in his
favor. The administrator of the estate of the deceased principal went to court to
have the sale declared unenforceable and to recover the disposed share. The trial
court granted the relief prayed for, but upon appeal, the Court of Appeals upheld
Concepcion and Gerundia both surnamed Rallos were sisters and registered
co-owners of a parcel of land known as Lot No. 5983 of the Cadastral Survey of
Cebu covered by Transfer Certificate of Title No. 11118 of the Registry of Cebu. On
April 21, 1954, the sisters executed a special power of attorney in favor of their
brother, Simeon Rallos, authorizing him to sell for and in their behalf lot 5983. On
March 3, 1955, Concepcion Rallos died. On September 12, 1955, Simeon Rallos sold
the undivided shares of his sisters Concepcion and Gerundia in lot 5983 to Felix
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Go Chan & Sons Realty Corporation for the sum of P10,686.90. The deed of sale
was registered in the Registry of Deeds of Cebu, TCT No. 11118 was cancelled, and
a new Transfer Certificate of Title No. 12989 was issued in the name of the vendee.
ISSUE/S:
After trial, the court a quo rendered judgment with the following dispositive
portion:
(1) Declaring the deed of sale, Exh. 'C', null and void insofar as the one-half pro-
indiviso share of Concepcion Rallos in the property in question, - Lot 5983 of the
(2) Ordering the Register of Deeds of Cebu City to cancel Transfer Certificate of
Title No. 12989 covering Lot 5983 and to issue in lieu thereof another in the names
(3) Ordering Felix Go Chan & Sons Realty Corporation to deliver the possession of
Simeon Rallos, to pay to plaintiff in concept of reasonable attorney's fees the sum
of P1,000.00; and
(5) Ordering both defendants to pay the costs jointly and severally.
Simeon Rallos, to pay to defendant Felix Go Chan & Sons Realty Corporation the
sum of P5,343.45, representing the price of one-half (1/2) share of lot 5983;
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Simeon Rallos, to pay in concept of reasonable attorney's fees to Felix Go Chan &
Holding’s:
It is a basic axiom in civil law embodied in our Civil Code that no one may
contract in the name of 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 has acted
impliedly, by the person on whose behalf it has been executed, before it is revoked
by the other contracting party. Article 1403 of the same Code also provides:
"ART. 1403. The following contracts are unenforceable, unless they are ratified:
"(1) 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." Out of
the above given principles, sprung the creation and acceptance of the relationship
of agency whereby one party, called the principal (mandante), authorizes another,
called the agent (mandatario), to act for and in his behalf in transactions with third
persons. The essential elements of agency are: (1) there is consent, express or
implied, of the parties to establish the relationship; (2) the object is the execution
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of a juridical act in relation to a third person; (3) the agent acts as a representative
and not for himself; and (4) the agent acts within the scope of his authority.
authority of the agent to act emanates from the powers granted to him by his
principal; his act is the act of the principal if done within the scope of the authority.
Qui facit per alium facit per se. "He who acts through another acts himself."
2. There are various ways of extinguishing agency, but here We are concerned only
with one cause-death of the principal. Paragraph 3 of Art. 1919 of the Civil Code
which was taken from Art. 1709 of the Spanish Civil Code provides:
"3. By the death, civil interdiction, insanity or insolvency of the principal or of the
agent."
By reason of the very nature of the relationship between principal and agent,
agency is extinguished by the death of the principal or of the agent. This is the law
in this jurisdiction.[8]
appellate court, and We affirm en toto the judgment rendered by then Hon.
Amador E. Gomez of the Court of First Instance of Cebu, with costs against
SO ORDERED.
In this case;
The sale of the land was declared unenforceable by the supreme court lead by Chief
Justice Teehanke.
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References: