CHAP 9 (contracts) Flashcards
Void contracts
Those which because of CERTAIN DEFECTS, generally produce NO EFFECT AT ALL
Considered as INEXISTENT from its inception or from the very beginning
Inexistent contracts
Agreements which LACK ONE OR SOME OR ALL OF THE ELEMENTS or DO NOT COMPLY WITH FORMALITIES which are essential for the existence of a contract
Characteristics of a void or inexistent contract
- Generally, it produces NO FORCE and EFFECT whatsoever
- It CANNOT BE RATIFIED
- The RIGHT TO SET UP THE DEFENSE OF ILLEGALITY CANNOT BE WAIVED
- The ACTION OR DEFENSE FOR THE DECLARATION OF ITS INEXISTENT DOES NOT PRESCRIBE
- The DEFENSE OF ILLEGALITY IS NOT AVAILABLE TO THIRD PERSONS WHOSE INTERESTS ARE NOT DIRECTLY AFFECTED
- It CANNOT GIVE RISE TO A VALID CONTRACT
Instances of void or inexistent contracts
- Contracts whose cause, object, or purpose is contrary to law
- Contracts which are absolutely simulated or fictitious
- Contracts without cause or object
- Contracts whose object is outside the commerce of men
- Contracts which contemplate an impossible service
- Contracts where the intention of the parties relative to the object cannot be ascertained
- Contracts expressly prohibited or declared void by law
Rules where contract is illegal and t6he act constitutes a criminal offense
- Where BOTH parties are in pari delicto
- Where only ONE party is guilty
Effects of a contract whose cause or object constitutes a criminal offense and both parties are in pari delicto, that is, equally guilty
- The parties shall have no action against each other
- Both shall be prosecuted; and
- The things or the price of the contract, as the effects or instruments of the crime, shall be confiscated in favor of the government.
Rules where contract illegal but the act does not constitute a criminal offense
- Where both parties are in pari delicto
- Where only one party is guilty
- Where both parties are in pari delicto
a. Neither party may recover what he has given by virtue of the contract
b. Neither party may demand the performance of the other’s undertaking - Where only one party is guilty
a. The guilt party loses what he has given by reason of the contract
b. The guilty party cannot ask for the fulfillment of the other’s undertaking
c. The innocent party may demand the return of what he has given
d. The innocent party cannot be compelled to comply with his promise
Requisites for the RECOVERY where contract entered into for illegal purpose
- The contract is for an illegal purpose;
- The contract is repudiated before the purpose has been accomplished or before any damage has been caused to a third person; and
- The court considers that public interest will be subserved by allowing recovery.
Recovery where contract not illegal per se
- The agreement is NOT ILLEGAL PER SE but is MERELY PROHIBITED
- The PROHIBITION is designed for the protection of the plaintiff
- Public policy would be enhanced by allowing the plaintiff to recover what he has paid or delivered
Ceiling law
A STATUTE FIXING the MAXIMUM PRICE of any article or commodity
Its PURPOSE is to CURB THE EVILS of PROFITTERING OR BLACK MARKETING
Labor Code
- Presidential Decree No. 442
- Sets forth that the NORMAL HOURS OF WORK of any employee shall NOT EXCEED EIGHT HOURS A DAY
Presidential Decree No. 442 or Labor Code does not apply to
- Government employees
- Managerial employees
- field personnel
- Members of the family of the employers who are dependent upon him for support
- Domestic helpers
- Persons in the personal service of another
- workers who are paid by results
Effect of illegality where contract is INDIVISIBLE/DIVISIBLE
- Where the consideration is entire and single, the contract is indivisible (or entire) so that if part of such consideration is illegal, the whole contract is void and unenforceable.
- Where the contract is divisible (or severable) that is, the consideration is made up of several parts, and the illegal ones can be separated from the legal portions, without doing violence to the intention of the parties, the latter may be enforced. This rule, however, is subject to the contrary intention of the parties.
