Ch. 11 - Voidable Contracts Flashcards
(Art. 1390) The following contracts are voidable and annullable, even though there may have been no damage to the contracting parties
- Those where one of the parties is incapable of giving consent to a contract;
- Those where the consent is vitiated by mistake, violence, intimidation, undue influence or fraud
(Art. 1390) Voidable or annullable contracts are binding, unless
they are annulled by a proper action in court. They are susceptible of ratification
What are voidable or annullable contracts?
are existent, valid, and binding, although they can be annulled because of want of capacity or vitiated consent of one of the parties, but before annulment, they are effective and obligatory between parties. Hence, it is valid until it is set aside and its validity may be assailed only in an action for that purpose. They can be confirmed or ratified.
Extinguish void and voidable contracts
A void contract is one which has no force and effect from the very beginning. Hence, it is as if it has never been entered into and cannot be validated either by passage of time or by ratification. A voidable or annullable contract is one where one of the parties is incapable of giving consent or where the consent is vitiated by mistake, violence, intimidation, undue influence or fraud.
The action for annulment of voidable contracts must be brought within
4 years from the time of intimidation, violence, or undue influence ceases, or 4 years from the time of the discovery of the mistake or fraud
What is ratification?
is defined as the act or means by virtue of which efficacy is given to a contract which suffers from a vice of curable nullity
What are the requisites of ratification or confirmation?
- The contract should be tainted with a vice which is susceptible of being cured
- The confirmation should be effected by the person who is entitled to do so under the law
- It should be effected with the knowledge of the reason which renders the contract voidable
- The reason which renders the contract voidable should have already disappeared
What is the basis for annulment
The vitiated consent or incapacity to consent
What is the basis for rescission
The lesion (damage)
What is the defect in rescission
External or Extrinsic
What is the defect on annulment
Intrinsic (in the meeting of the minds)
What is the action for rescission
Subsidiary
What is the action for annulment
Principal
The plaintiff for rescission may be
a party or a third person
The plaintiff for annulment may be
must be a party to the contract (whether bound principally or subsidiarily)
To prevent rescission, ratification is
not required
To prevent annulment, ratification is
required
(Art. 1391) 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
- And when the action refers to contracts entered into by minors or other incapacitated persons, from the time guardianship ceases
(Art. 1392) Ratification extinguishes
the action to annul a voidable contract
What are the effects of ratification?
- The action to annul a voidable contract is extinguished; hence, the contract becomes valid
- The contract is cleansed of its defect from the beginning
(Art. 1393) Ratification may be effected
expressly or tacitly
(Art. 1393) It is understood that there is a tacit ratification if,
with knowledge of the reason which renders the contract voidable and such reason having ceased, the person who has the right to invoke it should execute an act which necessarily implies an intention to waive his right
(Art. 1394) Ratification may be effected by
the guardian of the incapacitated person
(Art. 1395) Ratification does not require the
conformity of the contracting party who has no right to bring the action for annulment
(Art. 1396) Ratification cleanses the contract from
all its defects from the moment it was constituted
(Art. 1396) Ratification has _____________ effect
Retroactive
(Art. 1397) The action for the annulment of contracts may be instituted by all who are thereby obliged principally or subsidiarily. However,
persons who are capable cannot allege the incapacity of those whom they contracted; nor can those who exerted intimidation, violence, or undue influence, or employed fraud, or caused mistake base their action upon these flaws of the contact
(Art. 1397) The general rule is, the action for the annulment of contracts may be instituted by all who are thereby obliged principally or subsidiarily. What are the requisites?
- The plaintiff must have an interest in the contract; and
- The action must be brought by the victim and not the party responsible for the defect
What is the exception to the rule in Art. 1397
The court held that person who is not obliged principally or subsidiarily in a contract may exercise an action for nullity of a contract if he is prejudiced in his rights with respect to one of the contracting parties, and can show the detriment which could positively result to him from the contract in which he had no intervention.
(Art. 1398) An obligation having been annulled, the contracting parties shall
restore to each other the things which have been the subject matter of the contract, with their fruits, and the price with its interest, except in cases provided by law
(Art. 1398) An obligation having been annulled, and its an obligation to render service, the contracting parties shall
restore to each other the things which have been the subject matter of the contract, in this case of rendering service, the value thereof shall be the basis for damages
(Art. 1399) When the defect of the contract consists in the capacity of one of the parties, the incapacitated person is
not obliged to make any restitution except insofar as he has been benefited by the thing or price received by him
(Art. 1400) Whenever the person obliged by the decree of annulment to return the thing can not do so because it has been lost through his fault, he shall
return the fruits received and the value of the thing at the time of the loss, with interest from the same date
(Art. 1401) The action for annulment of the contracts shall be extinguished when
the thing which is the object thereof is lost through the fraud or fault of the person who has a right to institute the proceedings
(Art. 1401) If the right of action is based upon the incapacity of any one of the contracting parties, the loss of the thing shall
not be an obstacle to the success of the action, unless said loss took place through the fraud or fault of the plaintiff
(Art. 1402) As long as one of the contracting parties does not restore what in virtue of the decree of annulment he is bound to return, the other cannot
be compelled to comply with what is incumbent upon him
