Kenneth T.

Soriano
Obligations and Contract

September 30, 2015

4 Classes of Defective Contracts:

1. Rescissible contracts which is a contract that has caused a particular damage to one of the parties or to a 3 rd person and which for equitable reasons
may be set aside even if it is valid.
2. Voidable contracts which is a contract in which the consent of one party is defective, either because of want of capacity or because it is vitiated, but
which contract is valid until set aside by the competent court.
3. Unenforceable Contracts which is a contract that for some reason cannot be enforced, unless it is ratified in the manner provided by law
4. Void or Inexistent Contracts which is an absolute nullity and produces no effect, as if it had never been executed or entered into.
As to defect:

As to effect:

RESCISSIBLE

There is damage or
injury either to one of
the
contracting
parties or to third
persons.

Considered valid and

enforceable until they
are rescinded by a
competent court

VOIDABLE

There is vitiation of
consent
or
legal
incapacity of one of
the
contracting
parties.
The
contract
is
entered into in excess
or
without
any
authority, or does not
comply
with
the
Statute of Frauds, or
both
contracting
parties are legally
incapacitated

Considered valid and

enforceable until they
are annulled by a
competent court

UNENFORCEABL
E

Cannot be enforced
by a proper action in
court

As
to
prescriptibility of
action
or
defense:
The
action
for
rescission
may
prescribe

As
susceptibility
ratification:

to
of

As to who may
assail contracts

As to how contracts
may be assailed

Not susceptible of
ratification

May be assailed not

only by a contracting
party but even by a
3rd person who is
prejudiced
or
damaged
by
the
contract
Can be assailed only
by a contracting party

May
be
assailed
directly only, and not
collaterally

The
action
for
annulment or the
defense
of
annulability
may
prescribe.
The corresponding
action for recovery,
if there was total or
partial performance
of
the
unenforceable
contract under No.
1 or No. 3 of Art.
1403,
may
prescribe

Susceptible

May be assailed only

by a contracting party

May
be
assailed
directly or collaterally

Susceptible

May
be
assailed
directly or collaterally

VOID
INEXISTENT

OR

One or more of the

essential requisites of
a valid contract are
lacking either in fact
or law

As a general rule, do
not produce any legal
effect

The
action
for
declaration
of
nullity
or
inexistence or the
defense of nullity or
inexistence
does
not prescribed

Not susceptible

May be assailed
not
only
by
a
contracting
party
but even by a 3rd
person
whose
interest is directly
affected

May
be
assailed
directly or collaterally

Characteristics of Rescissible Contracts

1. Their defect constitutes in injury or damage either to one of the
contracting parties or to 3rd persons
2. Before rescission, they are valid and therefore, legally effective
3. They can be attacked directly only, and not collaterally
4. They can be attacked only either by a contracting party or by a 3 rd
person who is injured or defrauded
5. They are susceptible of convalidation only by prescription and not by
ratification

Characteristics of Voidable Contracts

1. Their defect consists in the vitiation of consent of one of the
contracting parties
2. They are binding until they are annulled by a competent court
3. They are susceptible of convalidation by ratification or by prescription
4. Their defect or voidable character cannot be invoked by 3rd persons

Characteristics of Void Contract

1. They produce no effect whatsoever either against or in favor of anyone
2. No action for annulment is necessary. Their nullity exists eo ipso and
therefore any judgment of nullity is merely declaratory.
3. They can neither be confirmed nor ratified.
4. If performance is made, restoration of what has been delivered is
required, except when the pari delicto rule is applicable.
5. The right to set up the defense of nullity cannot be waived.
6. The action or defense of nullity does not prescribe.
7. The defense of nullity may be invoked by anyone against whom the
effects of the contract are asserted.

Characteristics of Unenforceable Contracts:

1. Cannot be enforced by proper action.
2. Susceptible of ratification.
3. Cannot be assailed by 3rd persons.