CHAP 6 (contracts) Flashcards
Rescissible contracats
Those VALIDLY AGREED upon because ALL THE ESSENTIAL ELEMENTS EXIST and, therefore, LEGALLY EFFECTIVE, but in CASES ESTABLISHED BY LAW, the REMEDY OF RESCISSION is granted in the INTEREST OF EQUITY
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 they were PRIOR TO THE CELEBRATION OF SAID CONTRACT
Requisites of a RESCISSION
- The contract must be validly agreed upon
- There must be lesion or pecuniary prejudice or damage to one of the parties or to a third person
- The rescission must be based upon a case especially provided by law
- There must be no other legal remedy to obtain reparation for the damage
- The party asking for rescission must be able to return what he is obliged to restore by reason of the contract
- The object of the contract must not legally be in the possession of third persons who did not act in bad faith
- The period for filing the action for rescission must not have prescribed.
cases of rescissible contracts
- Contracts entered into in BEHALF OF WARDS
- Contracts agreed upon in REPRESENTATION OF ABSENTEES
- Contracts undertaken in FRAUD OF CREDITORS
- Contracts which refer to THINGS UNDER LITIGATION
- Other instances
requisites of Contracts which refer to THINGS UNDER LITIGATION
- There must be an EXISTING CREDIT PRIOR TO THE CONTRACT to be rescinded, although it is not yet demandable
- There must be FRAUD on the part of the DEBTOR which may be presumed or proved
- The CREDITOR CANNOT RECOVER HIS CREDIT in any other manner, it NOT BEING REQUIRED that the debtor be INSOLVENT
Ward
A PERSON under GUARDIANSHIP by reason of SOME INCAPACITY
Absentee
Person who DISAPPEARS from his DOMICILE his WHEREABOUTS BEING UNKNOWN, and WITHOUT LEAVING AN AGENT TO ADMINISTER HIS PROPERTY
Fraud of creditors
gives rise to a RESCISSION of the OFFENDING CONTRACT
when the court declares a contract rescinded, parties must return to each other
- Object of the contract with its fruits
- The price thereof with legal interest
When rescission NOT ALLOWED
- The remedy of rescission cannot be availed of if the party who demands rescission CANNOT RETURN what he is obliged to restore under the contract
- Neither shall rescission take place if the property is LEGALLY IN THE POSSESSION OF A THIRD PERSON WHO ACTED IN GOOD FAITH
Exceptions for the general rule that action to claim rescission must be commenced WITHIN FOUR YEARS from the DATE THE CONTRACT WAS ENTERED INTO
- Persons under guardianship:
- Period shall begin from the TERMINATION OF INCAPACITY - absentees:
- Time THE DOMICILE IS KNOWN
Persons ENTITLED TO BRING ACTION
- The INJURED PARTY of the DEFRAUDED CREDITOR
- The HEIRS, ASSIGNS, or SUCCESSORS in interest
- The CREDITORS of the above ENTITLED TO SUBROGATION
When ALIENATION PRESUMED in FRAUD OF CREDITORS
- Alienation by GRATUITOUS TITLE
- Alienation by ONEROUS TITLE
Circumstances denominated as BADGES OF FRAUD
- The fact that the consideration of the conveyance is fictitious or inadequate
- A transfer made by a debtor after suit has begun and while it is pending against him
- A sale upon credit by an insolvency debtor
- The transfer of all of his property by a debtor, especially when he is insolvent or greatly embarrassed financially
- The fact that the transfer is made between father and son, when there are present some or any of the above circumstances
- The failure of the vendee to take exclusive possession of all the property
- It was known to the vendee that the vendor had no properties other than that sold to him
