1.
There must be, in the beginning, a valid or
To prevent fraud, and not to encourage the
same.
Certain agreements are required to be in
writing so that they may be enforced.
1. Only applies to executory Contracts
2. Action instituted must be for specific
performance or damages
3. Exclusive, it applies only to certain
agreements
4. Defense using SoF may be waived
5. The SoF is a personal defense
6. Contracts infringing the SoF are only
unenforceable
7. The SoF is a rule of Exclusion
8. The SoF does not determine the credibility
of evidence but only its admissibility
9. The SoF does not apply to contracts that
does not express the true agreement of the
parties.
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,
unless the buyer accept and receive part of
such goods and chattels, or the evidences,
or some ofthem, 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
book, at the time of the sale, of the amount
and kind 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
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
A void or inexistent contract is one which has
no force and effect from the very beginning,
as if it had never been entered into, and
which cannot be validated by either by time
or ratification.
This definition includes not only those
contracts in which one of the essential
requisites is totally wanting, but also those
which are declared by positive provision of
law or statute.
A void or inexistent contract is equivalent to
nothing; it is absolutely wanting in civil
effects
1. The contract produces no effect
whatsoever either against or in favor of
anyone; hence it does not create, modify, or
extinguish the juridical relation to which it
refers
2. No action for annulment is necessary,
because the nullity exists ipso jure; a
Characteristics of Void Contracts
judgment of nullity would merely be
declaratory
3. It cannot be confirmed or ratified;
4. If it has been performed, the restoration of
what has been given is in order.
1. Those whose cause, object or purpose is
contrary to law, morals, good customs, public
order or public policy
2. Those which are absolutely simulated or
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 ascertained
7. Those expressly prohibited or declared
void by law.
Unenforceable contracts are 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
thereto.
1. It cannot be enforced by a proper action in
court
2. It may be ratified
3. It cannot be assailed by third person;
Characteristics
4. May only be assailed as a way of defense,
not by direct action;
5. The defect of an unenforceable contract is
of a permanent nature and it will exist as
long as the contract is not duly ratified. The
mere lapse of time cannot give efficacy to
the contract.
Those entered into the name of another
person by one who has been given no
Unauthorized Contracts
authority/legal representation or acted
beyond his powers.
Purpose
Principles
Those that do not comply with the Statute of
Statute of Frauds
Frauds
Kinds of Unenforceable Contracts
Kinds
Those where both parties are incapable of
giving consent to a contract.
voidable contract.
2. There is an economic or financial
prejudice to someone
REQUISITES FOR RECSSION
Rescission of contract creates an obligation
of mutual restitution of the objects of the
When applicable
contract, their fruits, and the price with
interest.
3. Requires Mutual Restitution
1. Creditor did not receive anything from
contract
When not applicable
contract; or
2. Thing already in possession of third
persons in good faith; subject to indemnity
only, if there are two or more alienations –
liability of first infractor.
If no Lesion Valid
With Judicial Approval
If Suffered Lesion by more than 1/4 of its
Rescissible
Acts of Ownership - Affects ownership Judicial approval value
1. Entered into by guardians whenever the Without Judicial Approval
wards whom they represent suffer lesion Two kinds of Contracts
by more than ¼ of value of the property
With Judicial Approval Valid, Regardless of Lesion
Acts of Administration - Involves
Judicial approval
improvement
Without Judicial Approval Rescissible, regardless of Lesion
If no Lesion Valid
With Judicial Approval
Definition
If Suffered Lesion by more than 1/4 of its
Rescissible
Acts of Ownership - Affects ownership Judicial approval value
RESCISSIBLE
2. Agreed upon in representation of Without Judicial Approval
absentees, if absentee suffers lesion by Two kinds of Contracts
more than ¼ of value of property
With Judicial Approval Valid, Regardless of Lesion
Acts of Administration - Involves
Judicial approval
improvement
Without Judicial Approval Rescissible, regardless of Lesion
There must be a credit existing prior to the
constitution of the said fraudulent contract
There must be fraud, or at least, the intent to
commit fraud to the prejudice of the creditor
seeking rescission
Requisites before a Contract Entered into in
Fraud of the Creditors may be Rescinded
VOID There must be fraud, or at least, the intent to
commit fraud to the prejudice of the creditor
seeking rescission
There must be fraud, or at least, the intent to
commit fraud to the prejudice of the creditor
seeking rescission
When a debtor donates his property without
reserving sufficient property to pay all his
Alienation by gratuitous title pre-existing debts, the law presumes that the
gratuitous dispositions are made in fraud of
creditors.
Presumptions of Fraud (Art 1387)
The contract is presumed fraudulent if at the
3. Contracts where rescission is based on
time of alienation, some judgement has been
CONTRACTS THAT MAY BE RESCINDED fraud committed on creditor and cannot
collect the claim due rendered against him, whether it is on appeal
Alienation by onerous title
or has already become final and executory;
Kinds of Void Contracts or some writ of attachment has been issued
against him in any case.
Consideration for the conveyance of the
property is inadequate or fictitious
Transfer was made by the debtor after a suit
hascommenced and during its pending
against him
Sale upon credit by an insolvent debtor
DEFECTIVE Badges of Fraud
Presumption that contracts entered in these
The presence of evidence of large
indebtedness or complete insolvency of the
cases have the intent to defraud Creditors
CONTRACTS debtor
Definition
Transfer of all his property by a debtor when
he is financially embarrassed or insolvent
Transfer is made between father and son,
where there are present some or any of the
above circumstances
Failure of the vendee to take exclusive
possession of the property
4. Contracts where the object involved is the
subject of litigation; contract entered into
by defendant without knowledge or
approval of litigants or judicial authority
5. Payment by an insolvent – on debts which
are not yet due; prejudices the claim of
others
6. Provided for by law/Others
1. Effective until set aside
2. Can be ratified
3. Can be assailed only by the party whose
UNENFORCEABLE Characteristics
consent was defective or his heirs or assigns.
4. A voidable contract, unlike unenforceable
and void contracts may be attacked
indirectly or collaterally, by way of defense
to an action under the contract by way of a
counterclaim.
1. Those where one of the parties is
incapable of giving consent
Kinds of Voidable Contracts
2. Those where the consent is vitiated by
mistake, violence, intimidation, undue
influence or fraud.
VOIDABLE 1. Real party in interest – All who are
principally or subsidiarily liable
Who may institute An Action for Annulment
1. Real party in interest – All who are
principally or subsidiarily liable
1. The contract involved must be voidable
2. Person ratifying must know the reason for
the voidability
Requisites
3. The cause for the voidability must
immediately cease after the ratification
4. Ratification must be express or through an
Ratification act implying a waiver of the action to annul
Guardian
Entered into incapacitated persons
Injured party himself
Persons who may ratify
Ground is mistake Party whose consent was vitiated