CONTRACTS

Stages in the life of a contract:

1. Preparation/Generation
2. Perfection/Birth
3. Consummation/Death
Characteristics of Contracts: (ROMA)
1. Relativity (Art. 1311)
2. Obligatoriness & Consensuality (Art. 1315)
3. Mutuality (Art. 1308)
4. Autonomy (Art. 1306)
Stipulation pour Autrui - stipulation in favor of a 3rd party.
Requisites:
1. The stipulation must be part, not whole of the contract;
2. the contracting parties must have clearly and deliberately conferred a favor
upon a 3rd person;
3. the 3rd person must have communicate his acceptance;
4. neither of the contracting parties bears the legal representation of the 3rd
party.
General Rule: Contracts (except real contracts) are perfected from the moment th
ere is a manifestation of concurrence between the offer and the acceptance regar
ding the object and the cause.
Except: Acceptance by letter or telegram which does not bind the offerror except
from the time it came to his knowledge.
Theories applied to perfection of contracts:
1. Manifestation theory - the contract is perfected from the moment the accepta
nce is declared or made;
2. Expedition theory - the contract is perfected from the moment the offeree tr
ansmits the notification of acceptance to the offerror;
3. Reception theory - the contract is perfected from the moment that the notifi
cation of acceptance is in the hands of the offerror;
4. Cognition theory - the contract is perfected from the moment the acceptance
comes to the knowledge of the offerror. This is the theory adopted in the Philip
pines.
Persons incapacitated to give consent:
1. Unemancipated minors;
Except:
* Contracts for necessaries;
* Contracts by guardians or legal representatives;
* Contracts where the minor is estopped to urge minority through his own misrepr
esentation;
* Contracts of deposit with the Postal Savings Bank provided that the minor is o
ver 7 years of age.
2. Insane or demented persons unless the contract was entered into during a luc
id interval;
3. Deaf-mutes who do not know how to write.
The following may not acquire by purchase, even by public or judicial auction, i
n person of though the mediation of another:
1. the guardian, with respect to the property of his ward;
2. agents, with respect to the property whose administration or sale may have b
een entrusted to them, unless the consent of the principal has been given;
3. executor or administrator, the property of the estate under administration;
4. public officers and employees, with respect to the properties of the governm
ent, its political subdivisions, GOCCs, that are entrusted to them;
5. judges, justices, prosecuting atty. s, clerks of courts, etc., the property in
custogia legis; and
6. any other person specially disqualified by law.
Simulation of a contract
Kinds of simulation:
1. Absolute - no real transaction is intended;
Effect: simulated contract is inexistent.
2. Relative - the real transaction is hidden;
Effect: the apparent contract is void, but the hidden contract is valid if it is
lawful and has the necessary requisites.
: as to third persons without notice - the apparent contract is valid o
n the principle of estoppel.
Effect of:
Absence
Failure
does
Illegality
Falsity
the contract
notofrender
ofis
cause
confers
cause
the contract
null
void no right
and
unless
voidthe
void
andparties
produces
cannoshow
legal
thateffect
there is another cause whi
ch isnot
does
Lesion trueinvalidate
and lawfulthe contract unless:
* there is fraud, mistake or undue influence
* when the parties intended a donation or some other contract.
Form of Contracts
Rules:
1. Contracts shall be obligatory, in whatever form they may have been entered i
nto, provided all the essential requisites for their validity are present.
2. Contracts must be in a certain form when the law requires that a contract be
in some form to be:
* valid;
* enforceable;
* for the convenience of the parties.
3. The parties may compel each other to reduce the verbal agreements to writing
except:
* Solemn contracts such as the following:
a. Donations of real estate or of movables if exceeding Ps 5,000;
b. Transfer of large cattle
c. Stipulation to pay interest in loans
d. Sale of land through an agent (authority must be in writing)
e. Partnership to which immovables are contributed
f. Stipulation limiting carrier s liability to less than extra-ordinary diligence
g. Contracts of antichresis
h. Sale of vessels
Note: in such case, if the contract is not in writing it is VOID
* Real contracts that require delivery for perfection.
* In contracts under the Statute of Frauds where the party sued makes a timely o
bjection to the absence of a written memorandum.
Reformation of instruments:
Requisites:
1. Meeting of the minds to the contract;
2. The true intention is not expressed in the instrument by reason of mistake,
accident, relative simulation, fraud, inequitable conduct (MARFI).
3. Clear and convincing proof of MARFI.
Cases when there can be no reformation:
1. Simple, unconditional donations inter vivos;
2. Wills;
3. When the agreement is void.
Classes of Defective Contracts: (RUVI)
1. Rescissible
2. Unenforceable
3. Voidable
4. Void or Inexistent
COMPARATIVE TABLE OF DEFECTIVE CONTRACTS:
1. defect is caused by lack of essential elements or illegality
UNENFORCE-ABLE
RESCISSIBLE
VOIDABLE
VOID
2. not cured by prescription
3. cannot be ratified
4. not binding
1. defect is caused by vice of consent

2. cured by prescription
3. can be ratified
1. defect
4. bindingisuntil
caused
annulled
by injury/ damage either to one of the parties of to a 3rd p
erson
2. cured by prescription
3. need not be ratified
4. defect
1. bindingisunless
causedrescinded
by lack of form, authority, or capacity of both parties
2. not cured by prescription
3. can be ratified
RESCISSIBLE
4. binding unless
CONTRACTS
the defect is raised against enforcement.
Contracts which may be rescinded:
1. those entered into by guardians where the ward suffers lesion of more than o
f the value of the things which are objects thereof;
2. those agreed upon in representation of absentees, if the latter suffer lesio
n by more than of the value of the things which are subject thereof;
3. those undertaken in fraud of creditors when the latter cannot in any manner
claim what are due them;
4. those which refer to things under litigation if they have been entered into
by the defendant without the knowledge and approval of the litigants and the cou
rt;
5. all other contracts especially declared by law to be subject to rescission;
6. payments made in a state of insolvency on account of obligations not yet enf
orceable;
Circumstances denominated as badges of fraud:
1. consideration of the conveyance is inadequate or fictitious;
2. transfer was made by a debtor after a suit has been begun and while it is pe
nding against him;
3. sale upon credit by an insolvent debtor;
4. transfer of all his property by a debtor when he is financially embarrassed
or insolvent;
5. transfer is made between father and son, where there are present some or any
of the above circumstances;
6. failure of the vendee to take exclusive possession of the property;
Distinctions:
RESOLUTION
RESCISSION
(Art.Action
1. 1191)by the contracting parties even by a 3rd party;
2. based on lesion/fraud of creditors;
3. Action
1. courts only
cannotbygrant
the injured
periodsparty;
for compliance
2. based on non-fulfillment of the obligation;
3. courts may grant periods
VOIDABLE CONTRACTS
Causes of extinction of action to annul:
1. Prescription
* the action must be commenced within 4 years from:
* the time the incapacity ends;
* the time the violence, intimidation or undue influence ends;
* the time the mistake or fraud is discovered.
2. Ratification
* Requisites:
a. there must be knowledge of the reason which renders the contract voidable;
b. such reason must have ceased;
c. the injured party must have executed an act which expressly or impliedly con
veys an intention to waive his right.
3. By loss of the thing which is the object of the contract through fraud or fa
ult of the person who is entitled to annul the contract.
UNENFORCEABLE CONTRACTS
Kinds of unenforceable contracts:
1. those entered into in the name of another by one without or acting in excess
of authority;
2. those where both parties are incapable of giving consent;
3. those which do not comply with the Statute of Frauds.
Agreements within the scope of the Statute of Frauds:
1. Agreements not to be performed within one year from the making thereof;
2. Promise to answer for the debt, default or miscarriage of another;
3. Agreement in consideration of marriage other than a mutual promise to marry;
4. Agreement for the sale of goods, etc. at a price not less than Ps500.00
5. Contracts of lease for a period longer than one year;
6. Agreements for the sale of real property or interest therein;
7. Representation as to the credit of a 3rd person.
Modes of Ratification:
1. For contracts infringing the Statute of Frauds:
* expressly
* impliedly - by failure to object to the presentation of oral evidence to prove
the contract, or by the acceptance of benefits under the contract.
2. If both parties are incapacitated, ratification by their parents or guardian
s shall validate the contract retroactively.
VOID OR INEXISTENT CONTRACTS
The following contracts are void:
1. Those whose cause, object or purpose is contrary to law, morals good customs
, public order or public policy;
2. Those whose object is outside the commerce of men;
3. Those which contemplate an impossible service;
4. Those where the intention of the parties relative to the principal object of
the contract cannot be ascertained;
5. Those expressly prohibited or declared void by law;
The following contracts are inexistent:
1. Those which are absolutely simulated or fictitious;
2. Those whose cause or object did not exist at the time of the transaction.
CONTRACTS Art 1305
ELEMENTS OF A CONTRACT
a. Essential Elements
1.Consent
2.Subject Matter
3.Cause or Consideration
b. Natural Elements- presumed to exist, unless the contrary is stipulated
Ex. Warrants against eviction and against hidden defects
c. Accidental Elements existence of such is dependent on the agreement of the pa
rties.
Classification of Contracts
a. According to perfection or formation
1. Consensual
2. Real-perfected by delivery
3. Formal or Solemn
b. According to cause of equivalence of the value of prestations:
1. Onerous
2. Gratuitous or Lucrative
3. Remunerative
c. According to Importance or dependence of one upon another
1. Principal can stand alone
2. Accessory depends upon the existence of another contract
3. Preparatory here, the parties do not consider the contract as an end by itsel
f, but as a means thru which future transaction or contracts may be made
Ex. Agency, partnership
d. According to the parties obligated
1. Unilateral
2. Bilateral
e. According to their Name or Designation
1. Nominate
2. Innominate
f. According to the risk of fulfillment
1. Commutative
2. Alienatory
g. According to the time of performance or fulfillment
1. Executed- one completed at the time the contract is entered into
2. Executory one where the prestations are to be complied with at some future ti
me
h. According to subject matter
1. Contracts involving things
2. Contracts involving rights or credit
3. Contracts involving services
i. According to obligations imposed and required by law
1. Ordinary
2. Institutional-like contract of marriage
j. According to the evidence required for its proof
1. Those requiring merely oral or parol evidence
2. Those requiring written proof
k. According to the number of persons actually and physically entering into the
contracts
1. Ordinary two parties are represented by different persons
2. Auto Contracts where only one person represents two opposite parties, but in d
ifferent capacities
l. According to the number of persons who participated in the drafting of the co
ntract
1. Ordinary
2. Contract of Adherence
m. According to the nature of the contract
1. Personal
2. Impersonal
STAGES OF A CONTRACT
a. Preparation
b. Perfection
c. Consummation (or death or termination)
Basic Principles or Characteristics of a Contract
a. Freedom to stipulate
b. Obligatory force and compliance in good faith
c. Perfection by mere consent
d. Both parties are mutually bound
e. Relativity
Art 1306 Freedom or autonomy of contract
Art 1307
Four Kinds of Innominate Contracts
a. Du ut des (I give that you may give)
b. Do ut facias (I give that you may do)
c. Facio ut des (I do that you may give)
d. Facio ut facias (I do that you may do)
Art 1308-1310
MUTUALITY OF CONTRACTS
* The validity or fulfillment of a contract cannot be left to the will of one of
the contracting parties.
* The validity or fulfillment may be left to the will of a third person.
* The validity or fulfillment may be left to chance.
Art 1311
This principle stresses the Principle of Relativity.
Contracts are generally effective only between the parties, their assign
s and their heirs.
Exceptions:
a. Where the obligation arising from the contract are not transmissible by their
nature, by stipulation, or by provision of law.
b. Where there is stipulation pour atrui (a stipulation in favor of a third part
y)
c. Where a third person induces another to violate his contract
d. Where, in some cases, third persons may be adversely affected by a contract w
here they did not participate.
e. Where the law authorizes the creditor to sue on a contract entered into by hi
s debtor.
Art 1312
A real right binds the property over which it is exercised.
Exception to the general rule that a contract binds only the parties.
Art 1313 Right of defrauded creditor.
Art 1314
Requisites before a third person in this article can be held for damages
a. Existence of a valid contract
b. Knowledge on the part of the third person of the existence of the contract
c. Interference by the third person without legal justification or excuse
Art 1315-1316 Perfection of contracts
Art 1317
Requisites for a Person to Contract in the Name of Another
a. He must be duly authorized (expressly or impliedly)
b. Or he must have by law a right to represent him
c. Or the contract must be subsequently ratified
Art 1318
Requisites of Contracts
a. Consent (Art 1319-46)
b. Object (Art 1347-1349)
c. Cause (Art 1350-55)
Art 1319
Definition of Consent
-Art 1319,first paragraph
Requisite of Consent
a. There must be two or more parties
b. The parties must be capable or incapacitated
c. There must be no vitiation of consent
d. There must be no conflict between what was expressly declared and what was re
ally intended
e. The intent must be declared properly
Requisites for the meeting of minds
a. An offer that must be certain
b. And an acceptance must be unqualified and absolute
* Concurrence of offer and acceptance (Art 1319-26)
* Legal capacity of contracting parties (Art 1327-29)
* Characteristics of Consent (Art 1330-46)
Art 1320 Forms of Acceptance
Art 1322
Acceptance of an Offer made thru an agent
Art 1323
Other instances when the offer becomes ineffective
a. When the offeree expressly or impliedly rejects the offer
b. When the offer is accepted with qualification or condition
c. When before acceptance is communicated, the subject matter becomes illegal or
impossible
d. When the period of time given to the offeree within which he must signify his
acceptance has already lapsed
e. When the offer is rejected in due tome
Art 1324
Option Contract
Option- it is a contract granting a person the privilege to buy or not to buy ce
rtain objects at anytime within the agreed period at a fixed price
Perfection of Option
When there is a meeting of minds on the option
Art 1325-1326
If the advertisement contains all the specific particular needed in a co
ntract, it is a definite offer.
If important details are left out, the advertisement is not a definite o
ffer, but a mere invitation to make an offer.
Art 1327 in relation to Art 1329
Who cannot give consent.
Art 1328
Voidable contracts by reason of incapacity
Art 1330
This article enumerates causes or vices of consent.
Art 1331 in relation to Art 1333
Mistake
It is a false belief about something.
Requisites for mistake to vitiate consent
a. Object of the contract
b. The condition which principally proved or induced one of the parties
c. Identify or qualifications, but only if such was the principal cause of the c
ontract.
d. The error must be excusable
e. The error must be a mistake of fact
Kinds of Mistake
a. Mistake as to the object
1. Mistake as the identity of the thing
2. Mistake as to the substance of the thing
3. Mistake as to the conditions of the thing
4. Mistake as to the quantity of the thing
b. Mistake as to person
1. Mistake must be either with regards to the identify or with regard to the qua
lification of one of the contracting parties
2. Such identity or qualification must have been the principal consideration for
the celebration of the contract
Art 1332 Burden of proof in case of mistake
Art 1333 Effect of knowledge of risk
Art 1334
Mistake of Law
Is that which arises from an ignorance of some provision of law, or from
an erroneous interpretation of its meaning, or from an erroneous conclusion as
to the legal effect of the agreement, on the part of one of the parties.
Requisites:
a. There must be mutual error
b. The error must refer to the legal effect of the agreement
c. The real purpose of the parties is frustrated
Art 1335-1336
Violation refer to physical coercion
Intimidation refers to moral coercion
Requisites for violence to vitiate consent
a. Employment of serious or irresistible force
b. It must have been the reason why the contract was entered into
Requisites for intimidation to vitiate consent
a. Reasonable and well-grounded fear
b. Of an imminent and grave evil
c. Upon his person, property, or upon the person of property of his spouse, desc
endents or ascendants
d. It must have been the reason why the contract was entered into
e. The threat must be an unjust act, an actionable wrong
Art 1337
Requisites for undue influence to vitiate consent
a. Improper advantage
b. Power over the will of another
c. Deprivation of the latter s will of a reasonable freedom of choice
Art 1338-1341
Kinds of Fraud
a. Fraud in the celebration of the contract
1. Dolo Causante or causal fraud (Art 1338)
2. Dolo Incidente of incidental fraud
b. Fraud in the performance of the obligations stipulated in the contract
Requisites of Dolo Causante
a. The fraud must be material and serious
b. The fraud must have been employed by one of the contracting parties, because
if both committed fraud, the contract would remain valid
c. There must be a deliberate intent to deceive to induce
d. The other party must have relied on the untrue statement, and must himself no
t be guilty of negligence in ascertaining the truth
Art 1342-1344 Speaks about misrepresentation
Art 1345-1346 Simulation
Simulation of a Contract defined
It is the process of intentionally deceiving others by producing the appearance
of a contract that really does not exist (absolute simulation)
Or which is different from the true agreement relative simulation.
Kinds
a. Absolute; Effect; the contract is void
b. Relative; Effect; the parties are bound to the real or true agreement except-
a. If the contract should prejudice third persons
b. Or if the purpose is contrary to law, morals, public order, policy or good cu
stoms
Requisites
a. An outward declaration of will difference from the will of the parties
b. The false appearance must have been intended by mutual agreement
c. The purpose is to deceive third persons
Art 1347-1349
Objects (Subject Matter) of a contract
- A thing or a service
Requisites
a. The thing or service must be within the commerce of man
b. Must be transmissible
c. Must not be contrary to law, morals, good customs, public order, or public po
licy
d. Must not be impossible
e. Must be determinate as to its kind or determinate without the need of a new c
ontract or agreement
CAUSE OF CONTRACTS
Art 1350
Cause defined
-It is the essential and impelling reason why a party assumes an obligat
ion
Art 1351
Motive is the purely personal or private reason which a party has in entering in
to a contract
Motive vs. Cause
Motive
a. May vary although he enters into the same kind of contract
b. May be unknown to the other
c. The presence of motive
Cause
a. Always the same
b. Always known
c. Cannot cure the absence of cause
Art 1352-1355
Requisites for cause
a. It must be present
b. It must be true
c. It must be lawful
CHAPTER 3 FORM OF CONTRACTS
Art 1356
Meaning of form of contracts
-Refers to the manner in which a contract is executed or manifested
Rules regarding from of contracts (Art 1356)
Art 1357-1358
Principles regarding formalities for the efficacy of a contract
a. Art 1357 and Art 1358 do not require the execution of a contract either in a
public or private instrument in order to validate enforce it but only to ensure
its efficacy, so after its existence has been admitted, the party bound may be c
ompelled to execute the necessary document
b. Even where the contract has not been reduced to the required form, it is stil
l valid and binding as far as the parties are concerned
c. From the moment one of the contracting parties invokes the provisions of Art
1357 and 1358by means of a proper action, the effect is to place the existence o
f the contract in issue, which must be resolved by the ordinary rules of evidenc
e
d. Art 1357 does not require that the action to compel the execution of the nece
ssary document must precede the action upon the contract
e. However, although the provisions of Art 1357 in connection with those of Art
1358, do not operate against the validity of the contract nor the validity of th
e acts voluntarily performed by the parties for the fulfillment thereof, yet fro
m the moments when any of the contracting parties invokes said provisions, it is
evident that under them the execution of the required document must precede the
determination of the other obligations derived from the contract
CHAPTER 4 REFORMATION OF INSTRUMENT
Reformation is that remedy by means of which a written instrument is amended or
rectified so as to express or conform to the real agreement or intention of the
parties when by reason of mistake, fraud, or inequitable contract, or accident t
he instrument fails to express such agreement or intention.
Requisites for reformation
a. There is a meeting of minds of the parties to the contract
b. The written instrument does not express the true agreement or intention of th
e parties
c. The failure to express the true intentions is due to mistake, fraud, inequita
ble conduct or accident
d. The facts upon which relief by way of reformation of the instrument is sought
 are put in issue by the pleadings
e. There is clear and convincing evidence of the mistake, fraud, inequitable con
duct, or accident
Reformation vs. Annulment
In reformation, there has been a meeting of the minds of the parties, he
nce, a contract exists while in annulment, there has been none, the consent of o
ne of the parties being vitiated by mistake, etc.
Art 1360-69
Art 1360 Rule in case of conflict
Art 1366 Instances when reformation is not allowed
CHAPTER 5 INTERPRETATION OF A CONTRACT
Art 1370
Definition of interpretation of contract
-Is the determination of the meaning of the terms or words used by the p
arties in their contract
Art 1371-79 (provisions)
Kinds of defective contracts
a. Rescissible (Art 1380-89)
b. Voidable (Art 1390-1402)
c. Unenforceable (Art 1403-1408)
d. Void or Inexistent (Art 1409-1422)
Art 1381 in relation to Art 1382
Meaning of rescissible contracts
-Those validly agreed upon because all the essential elements exists but
in some cases established by law, the remedy of rescission is granted in the in
terest of equity
Requisites of rescission
a. The contracts must be validly agreed upon
b. There must be lesion or pecuniary prejudice to one of the parties or to a thi
rd person
c. The rescission must be based upon a case especially provided by law
d. There must be no other legal remedy to obtain reparation of the damages
e. The party asking for rescission must be able to return what he is obliged to
restore by reason of the contract
f. The object of the contract must not legally
g. The object of the contract must not legally be in the possession of third per
sons who did not act in bad faith
h. The period for filing the action of rescission must have not prescribed
Meaning of Rescission
-Remedy granted by law to the contracting parties and sometimes even to
third persons in order to secure reparation of damages caused by them by a valid
contract, by means of the restoration of things to their condition in which the
y were prior to the celebration of the said contract.
Art 1385 Effects of rescission
Art 1324 Prescription
VOIDABLE CONTRACTS
Definition
-Are those which possess all the essential requisites of a valid contrac
t but one of the parties is incapable of giving consent, or consent is vitiated
by mistake, violence, intimidation, undue influence, or fraud
Characteristics
a. Their defect consist in the vitiation of consent of one of the contracting pa
rties
b. They are binding until they are annulled by competent court
c. They are susceptible of convalidation by ratification or by prescription
Voidable vs. Rescissible Contracts
Voidable
a. Defect is intrinsic
b. Contract is voidable even if there is no damage or prejudice
c. Annulability of the contract is based on law
d. Susceptible of ratification
e. The causes of annulment
The causes of rescission
Rescissible
a. Defect is extrinsic
b. Contract is not rescissible id there is no damage or prejudice
c. Rescissibility of the contract is based on equity
d. Not susceptible of ratification
e. Are different form
Art 1390 Voidable contracts
Art 1391 Prescription
Art 1392-96
Concept of Ratification
-By virtue of which efficacy is given to a contract which suffers from a
vice of curable nullity
Requisites for ratification
a. The contract should be tainted with a vice which is susceptible of being cure
d
b. The confirmation should be effected by the person who is entitled to do so un
der the law
c. It should be effected with knowledge of the vice or defect of the contract
d. The cause of the nullity or defect should have already disappeared
Art 1397 in relation to Art 1391
-Who and when may an action for annulment of contract be instituted
Art 1398-99
Effects of annulment
Art 1400-02
- Effect pf failure to make restitution
-Where loss is due to fault of plaintiff
-Where loss is due to fault of defendant
-Where loss is due to fortuitous event
CHAPTER 8 UNENFORCEABLE CONTRACTS
Meaning of unenforceable contracts
-Those that san not be enforced in court or sued upon by reason of defec
ts provided by law until and unless they are ratified according to law.
Kinds:
a. Those entered into in the name of another by one without or acting in excess
of authority
b. Those that do not comply with the statute of fraud
c. Those where both parties are incapacitated of giving consent
Unauthorized contracts
-Those entered into in the name of another person by one who has been gi
ven no authority or legal representation on who has acted beyond his powers.
Characteristics of Unenforceable Contracts
a. They can not be enforced by a proper action in court
b. They are susceptible of ratification
c. They can not be assailed by third persons
Unenforceable vs. Rescissible
a. An unenforceable contract cannot be enforced by a proper action in court, whi
le a rescissible contract can be enforced, unless it is rescinded
b. The causes for the unenforceable character of the former are different from t
he causes fro the rescissible character of the latter
c. The former is susceptible of ratification, while the latter is not
d. The former cannot be assailed by third persons, while the latter may be assai
led by third persons who are prejudiced
Unenforceable vs. Voidable
a. An unenforceable contract cannot be enforced by a proper action in court, whi
le a voidable contract can be enforced, unless it is annulled
b. The causes for the unenforceable character of the former are different from t
he causes for the voidable character of the latter
STATUTE OF FRAUDS
Purpose
-Not only to prevent fraud but also to guard against the mistakes of hon
est men by requiring that certain agreement specified must be in writing.
Application
a. Not applicable in actions which are neither for damages because of a violatio
n of a contract, nor for the specific performance thereof
b. Applicable only to executory contracts and not to contracts which are totally
or partially performed
c. Not applicable where the contract is admittedly expressly, or impliedly by th
e failure to deny specifically its existence, no further evidence thereof being
required in such case.
d. Applicable only to the agreements enumerated therein
e. Not applicable where a writing does not express the true agreement of the par
ties
f. It does not declare the contracts infringing it are void but merely unenforce
able
g. The defense of the statute of frauds may be waived
h. The defense of the statute of frauds is personal to the parties and cannot be
enforced by strangers to the contract
Effect of Non-Compliance
-The contract or agreement is unenforceable by action
Ratification of Unenforceable Contracts
Either by: a. the failure of object to the presentation of oral existence to pro
ve the same
c. The acceptance of benefits under them
Art 1404-1408 (provisions)
CHAPTER 9 VOID OR INEXISTENT CONTRACTS
Void Contracts
-Those, which of certain defects generally produce no effect at all
Inexistent Contracts
-Refer to agreements which lack one or some or all the elements or do no
t comply with the formalities which are essential for the existence of a contrac
t
Characteristics of a Void or Inexistent Contracts
a. Generally, it produces no effect
b. It cannot be ratified
c. The right to set up the defense of legality cannot be waived
d. The action or defense for the declaration of its inexistence does not prescri
be
e. The defense of illegality is not available to third persons whose interests a
re not directly affected
f. It cannot give rise to a valid contract
Art 1410 -Imprescriptibility of void or inexistent contract
Art 1411-1412
Where both parties are in pari delicto
a. The parties shall have no action against each other
b. Both shall be prosecuted
c. The things or the price of the contract, as the effects of the crime shall be
confiscated in favor of the government
Where only one party is guilty
-The rule in paragraph 1 of Art 1411 applies only to the guilty party or
the more guilty party
Exceptions to the principle of pari delicto
Art 1413-1419
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Contracts Law