Kinds of

Defective
Contracts
Part 3
UNENFORCEABLE CONTRACTS
• 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 given no authority or legal representation, or who has acted beyond his
powers;

• (2) Those that do not comply with the Statute of Frauds 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) An agreement that by its terms is not to be performed within a year from the making thereof;
(b) A special promise to answer for the debt, default, or miscarriage of another;

• (c) An agreement made in consideration of marriage, other than a mutual promise to marry;

• (d) 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 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 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;

• (e) An agreement of the leasing for a longer period than one year, or for the sale of real property or of an interest therein;

• (f) A representation as to the credit of a third person.

• (3) Those where both parties are incapable of giving consent to a contract.
• ARTICLE 1404
• Unauthorized contracts are governed by Article 1317 and the principles of agency in
Title X of this Book.
• ARTICLE 1405
• Contracts infringing the Statute of Frauds, referred to in No. 2 of Article 1403, are ratified
by the failure to object to the presentation of oral evidence to prove the same, or by the
acceptance of benefit under them.
• ARTICLE 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.
• ARTICLE 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.
• ARTICLE 1408
• Unenforceable contracts cannot be assailed by third persons.
Kinds:

• a. Unauthorized or No sufficient authority – entered into in the name of another when:

• i. No authority conferred
• ii. In excess of authority conferred ( ultra vires)

• b. Curable by Ratification - Both parties incapable of giving consent -2 minor or 2 insane persons
• c. Curable by Acknowledgment - Failure to comply with Statute of Frauds
• i. Agreement to be performed within a year after making contract
• ii. Special promise to answer for debt, default or miscarriage of another
• iii. Agreement made in consideration of promise to marry
• iv. Agreement for sale of goods, chattels or things in action at price not less than 500; exception: auction when recorded sale in
sales book
• v. Agreement for lease of property for more than one year and sale of real property regardless of price
• vi. Representation as to credit of another
TWO WAYS OF CURING UNENFORCEABLE
CONTRACTS:
• a. Failure of defendant to object in time, to the presentation of
parole evidence in court, the defect of unenforceability is cured
• b. Acceptance of benefits under the contract. If there is
performance in either part and there is acceptance of
performance, it takes it out of unenforceable contracts; also
estoppel sets in by accepting performance, the defect is waived