PART ONE: RESCISIBLE CONTRACTS

1. Description- It is a valid contract, however a party suffering from either (a.) lesion or
(b.) inequity may have the right to go to court to reverse the lesion or the inequity.
Lesion is an economic inequity.

For purposes of rescission the lesion must be at least 25% of the value of the
property.

2. Kinds of Rescissible Contracts (K)

2.1.Under Art. 1381.

a. Contracts entered into by guardian in behalf of their ward, where the ward suffers
lesion of at least 25%. (Unless the contract was approved by the courts [Art
1386])

b. Contracts entered in behalf of absentees wherein because of the contract the

absentees suffer a lesion of at least 25%.(Unless the contract was approved by the
courts [Art 1386])

c. Contracts undertaken in fraud of creditors when the latter cannot in any manner
collect the claims due.

-When a debtor alienates his property by gratuitous title is presumed to be

fraudulent of the debtor did not reserve sufficient property to cover all debts. (Art
1387).

- In cases where the alienation is by onerous title, it is presumed fraudulent

when the debtor alienates property after a judgment has been rendered against
him or that a writ of attachment has been issued (Ibid).
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d. K’s whose objects are under litigation and sold without the authority of the courts.

e. Other instances granted by law. (Example: An heir suffering lesion on account of

a partition. (Art. 1098) .

2.2. Payments made in a state of insolvency for obligations to whose fulfillment the
debtor could not be compelled at the time they were made (cf. Art. 1382)

3. Nature of Action for Rescission-

 - Any action is a subsidiary. The parties must exhaust all action to repair the lesion
or the inequity . Only if the lesion or the inequity cannot be repaired will there be
an action to rescind the contract. (cf. Art. 1383, 1384)

- When rescission is granted , it creates the obligation of mutual restitution . In

other words, once rescission is granted, the parties must return to each other what
they received from However if the object is already in the hands of an innocent
third party, restitution will not be allowed. The party who caused the alienation to
a third party will be liable for damages (cf. Art. 1385)

4. Who may institute the action- The party suffering from lesion or inequity or their
legal representatives.

5. Period to commence rescission- The action must be commenced within 4 years. For
absentees or persons under guardianship, the action must be commenced in 4 years
from the removal of the disability. In cases of minors, the action must be commenced
within 4 years from the end of minority (i.e. before the 22nd birthday).

6. Is there a cure for a rescisible contract?- May be cured by RATIFICATION. Failure

to file an action within the four (4) year period will preclude any action.

-The person to ratify is the person who was the victim of the lesion or inequity.

PART TWO : VOIDABLE CONTRACTS

1. Description- It is contract wherein there is a defect in the CONSENT of one of the

parties. It is valid till annulled by the proper court.(See last par. Art. 1390).

2. Kinds of Voidable Contracts- (cf. Art. 1390)

a. Those where one of the parties is incapable of giving consent. One of the parties
is either a MINOR, INSANE, or is a DEAF MUTE who does not know how to
write. (cf. Art. 1327) . (Note: If BOTH parties are incapable of giving consent,
the contract is not voidable. IT IT UNENFORCEABLE).

b. When there is a VICE OF CONSENT (i.e. defect of consent) because of

MISTAKE (see Art. 1331, 1332, 1333 , 1334) , VIOLENCE (Art. 1335) ,
INTIMIDATION (Art. 1336) , UNDUE INFLUENCE (Art. 1337) , or FRAUD
(Art. 1338—Fraud must be Causal fraud in order to Void the contract. Incidental
fraud will not void a contract.).
3. Nature of Action- An action to avoid a contract is to an action to declare that the
contract was void from the beginning. When a judgment is passed voiding a contract,
a legal fiction is created that the contract never existed at all.

-In case of annulment, the parties must restore to each other what they received by
virtue of the contract, except in cases provided for by law. (cf. Art. 1398).

- In obligation to render service, the value of the service shall be the basis of the
action. (cf. Art. 1398)

4. Who can commence the action? –

-The party to the contract suffering from the incapacity or the party whose consent
was obtained by force, intimidation, undue influence or fraud.

- A person who is capacitated cannot raise the incapacity of the other. An action
cannot be raised by the party who is responsible for the force, intimidation or the
undue influence (Art. 1397).

5. Period to commence the action-

- 4 years from the time the violence, intimidation or undue influence disappears.
- In case of fraud or mistake, four years from the discovery of the fraud or mistake.
- When the contract was entered into by a minor or an incapacitated person, four
(4) years from the time incapacity ceases. (In case of minors, up to their 22 nd
birthday).
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6. Is there a cure for a voidable contract?

-A voidable contract may be ratified. Lapse of the four year period to commence an
action will bar any action.

- The person to ratify is the person whose consent was defective.

PART THREE: VOID CONTRACTS

1. Description – Void contracts are contracts without any effect at all. It is an inexistent
contract because its object or subject cannot be an object or the subject of a contract.

2. Kinds of void contracts-

- Those whose object, cause or purpose is contrary to law, morals , good customs ,
public order or public policy.
- Contracts which are absolutely simulated.
 - Those whose objects or cause did not exist at the time of the trnsaction.
- Those whose objects are outside the commerce of men.
- When the contract contemplates an impossible service.
- Those where the intention of the parties relative to the object cannot be
ascertained.
- Those contracts expressly prohibited by law. (Ex. Donation to a paramour; sale
between husband and wife when there is no marriage settlement)
3. Nature of Action- There is no need to go to court to claim that a contract is void.

-When the contract is divisible and the illegal terms could be seperated, the other
provisions may be enforced.
4. Who can commence an action? – There is no need to commence an action. If you are
a party to a void contract, you simply raise the fact that it is void to escape
performance..

5. Period to commence action? – Any time. The right to institute an action will never
lapse.

6. Is there a cure? There is no cure.

PART FOUR: UNENFORCEABLE CONTRACTS

1. Description – A valid contract which cannot be enforced by court action unless it is

ratified. (cf. Art. 1403, par. 1).

2. Kinds of unenforceable contracts –

-Those entered into in the name of another by one without authority or one who acted
in excess of authority.
- Those that do not comply with the Statute of Fraud. (Unless there is a failure to
raise an objection at the proper time).
- Those where BOTH PARTIES are incapable of giving consent. (Note if only one
party is incapable of giving consent, the contract is VOIDABLE).

3. Nature of Action

- There is no need to file an action. If an action is filed, the respondent could simply
raise the fact that the contract is unenforceable (as a defense).
- In case that the contract violates the statute of fraud, a party can object at the
proper moment that evidence to prove the contract is being introduced.

4. Who can commence action?-

No person can enforce by court action this type of contract.

5. Period to commence action- Not applicable.

6. Is there a cure? –Ratification. In cases where both parties are incapable of giving
consent, their parents or guardians should ratify the contract. (Art. 1407). In cases
where the agent exceeded his authority, the principal is the one who should ratify the
contract.

-For contracts violating the Statute of Fraud. Ratification may be made by executing
the contract in writing.