Rescissible Voidable Unenforceable Void/inexistent

1. Definition Validly agreed upon because
all of the essential elements
exist and therefore, legally
effective, but in cases
established by law, the
remedy of recission is
granted in the interest of
equity
Valid, binding contracts that
can be subsequently annulled
because of want of capacity
or vitiated consent
Cannot be enforced, no legal
effects unless ratified in the
manner provided by law
Have no force and effect from
the very beginning as if it had
never been entered into.
Cannot be validated by time
or ratification; absolute nullity

A contract that has caused a

particular damage to one of
the parties/3rd person and
which for equitable reasons
may be set aside even if valid

Requisites:
1. Contract is
rescissible
2. The party asking for
rescission has no
other legal means to
obtain reparation
3. He is able to return
whatever he may be
obliged to restore if
rescission is granted
4. The object of the
contract has not
passed legally to the
possession of a 3rd
person acting in good
faith
5. The action is brought
within prescriptive
period of 4 years
2. Kinds/Example 1. entered into by (1) Those where one of the (1) Those entered into in (1) Those whose cause,
guardians whenever parties is incapable of giving the name of another object or purpose is contrary
the wards suffer consent to a contract; person by one who to law, morals, good customs,
lesion by more than has been given no public order or public policy;
of things object (2) Those where the consent authority or legal
2. agreed upon in is vitiated by mistake, representation, or (2) Those which are
representation of violence, intimidation, undue who has acted absolutely simulated or
absentee, suffer influence or fraud. beyond his powers; fictitious;
lesion by more than (unauthorized contracts)
 of the value of These contracts are binding, (2) Those that do not comply
things object unless they are annulled by a with the Statute of Frauds as
3. in fraud of creditors proper action in court. They set forth in this number. In the
who cannot collect are susceptible of ratification. following cases an agreement
claims due them hereafter made shall be
4. things under unenforceable by action,
litigation, without unless the same, or some
knowledge and note or memorandum,
approval of plaintiff or thereof, be in writing, and
of competent judicial subscribed by the party
authority charged, or by his agent;
5. specially declared by evidence, therefore, of the
law to be subject of agreement cannot be
rescission 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;
(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.
These contracts cannot be
ratified. Neither can the right
to set up the defense of
illegality be waived.

(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

3. Damage to contracting party
Source of defect or a 3rd party
4. Necessity of The action for rescission is
damage/prejudice subsidiary; it cannot be
instituted except when the
party suffering damage has
no other legal means to
obtain reparation for the
same.
5. Curability by Yes, 4 years
prescription
For guardianship: must start
from termination of
incapacity;
Want of capacity, vitiated
consent
No damage to parties needed
Yes, 4 years
In case of intimidation,
violence, undue influence:
from time defect of consent
ceases
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.
(contracts covered by statute
of frauds)
(2) Those where both
parties are incapable
of giving consent to a
contract.
(contracts executed by
parties who are both
incapable of giving consent to
a contract)
In excess/lack of authority Not only wanting of essential
requisites but also declared
Non-compliance with statute void by provision of law or
of frauds statute
Both parties incapable of
consent
No damage necessary Not necessary but provision
on claiming damages are
present
No. only ratification No. The action or defense for
the declaration of the
inexistence of a contract does
not prescribe.
 Absentee: when domicile is
known In case of mistake or fraud:
from time of discovery
6. Characteristics 1. Their defect consists 1. Their defect consists 1. Cannot be enforced 1. Void from the
in injury or damage in the vitiation of by proper action in beginning
either to one of the consent of one of the court 2. Produces no effect
contracting parties or contracting parties 2. They are susceptible 3. Cannot be confirmed
3rd person of ratification or validated neither
2. They are binding until 3. They cannot be can the right to set up
2. They are valid before they are annulled by assailed by 3rd the defense of
rescission a competent court persons illegality be waived
4. No action for
3. They can be attacked 3. They are susceptible annulment is
directly only and not of convalidation by necessary
collaterally ratification or by 5. If it has been
prescription performed, the
4. They can be attacked restoration of what
only either by a has been given is in
contracting party or order
by a 3rd persons who 6. The action or defense
is injured or for the declaration of
defrauded its illegality or
absolute nullity
5. They can be cannot be waived
validated only by 7. The action or defense
prescription and not for the declaration of
by ratification its illegality or
absolute nullity does
not prescribe
8. The action or defense
for the declaration of
its illegality or
absolute nullity is not
available to 3rd
persons whose
interest are not
directly affected
9. Its invalidity can be
questioned by
anyone affected by it
4. Effects Extent: Rescission shall be Cleanses the contract from all No legal effect No legal effect, no recovery of
only to the extent necessary of its defects from the what has been given for party
to cover the damages moment it was constituted at fault
caused. (retroactive effect) but does
not prejudice rights of 3rd
 Effect: Rescission creates the
obligation to return the things
which were the object of the
contract, together with their
fruits, and the price with its
interest; consequently, it can
be carried out only when he
who demands rescission can
return whatever he may be
obliged to restore.
Neither shall rescission take
place when the things which
are the object of the contract
are legally in the possession
of third persons who did not
act in bad faith.
In this case, indemnity for
damages may be demanded
from the person causing the
loss.
5. Remedy Mutual restitution with fruits
and interests for damages
persons acquired before the
ratification
Mutual restitution of subject
matter, fruits and price with
interest
When one of the parties is
incapacitated: not obliged to
make any restitution except in
so far as it has benefitted him
When the thing is lost through
the fault of the party obliged
to return the same: return
fruits and value of the thing at
the time of loss with interest
from the same date but if due
to fortuitious event: pay the
value of the thing lost but not
fruits and interests.
Annulment/ratification Ratification Action to declare nullity
(extinguishes the action to
annul a voidable contract)

6. Nature of action Rescission/direct Can be directed or as a
defense to an action
enforcing the
same/annulment
7. Who may file action Injured person, heirs of these All who are obliged principally
(in remedy) persons, their creditors or subsidiary
Requisites of annulment:
1. Interest in the
contract there must
be legal capacity
2. Victim and not the
party responsible for
the defect
Ratification, direct action
Only contracting parties.
Cannot be assailed by 3rd
persons.
pari delicto, they shall have
Declaration of nullity
When the nullity proceeds
from the illegality of the cause
or object of the contract, and
the act constitutes a criminal
offense, both parties being in
no action against each other,
and both shall be prosecuted.
Moreover, the provisions of
the Penal Code relative to the
disposal of effects or
instruments of a crime shall
be applicable to the things or
the price of the contract.
 This rule shall be applicable
when only one of the parties
is guilty; but the innocent one
may claim what he has given,
and shall not be bound to
comply with his promise.

If the act in which the

unlawful or forbidden cause
consists does not constitute a
criminal offense, the following
rules shall be observed:

(1) When the fault is on the

part of both contracting
parties, neither may recover
what he has given by virtue of
the contract, or demand the
performance of the other's
undertaking;

(3) When only one of the

contracting parties is
at fault, he cannot
recover what he has
given by reason of
the contract, or ask
for the fulfillment of
what has been
promised him. The
other, who is not at
fault, may demand
the return of what he
has given without any
obligation to comply
his promise.x

Not available to 3rd persons

8. Susceptibility to Cannot Yes, requisites: Yes Cannot be ratified
ratification 1. Contract is
voidable/annullable Unauthorized contracts are
2. Ratification is made governed by Article 1317 and
with knowledge of the the principles of agency in
cause for nullity Title X of this Book.
 3. At the time of
ratification, the cause
of nullity has already
ceased to exist
Forms:
1. Express/implied
2. By parties
themselves or by the
guardian in behalf of
incapacitated person
Effects:
1. Action to annul is
extinguished
2. The contract is
cleansed retroactively
from all its defects
from the time it was
constituted
9. Prescriptive period 4 years The action for annulment
shall be brought within four
years.
This period shall begin:
In cases of intimidation,
violence or undue influence:
from the time the defect of the
consent ceases.
In case of mistake or fraud:
from the time of the discovery
of the same.
Incapacity: from the time
guardianship ceases
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.
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.
none Does not prescribe