defectivecontractsgroupe3-230827135109-fa8de999 (1).pptx

defectivecontractsgroupe3-230827135109-fa8de999 (1).pptx

1. Defective Contracts Presented by: Jessa Navidad CHAPTER VI

2. TYPES OF DEFECTIVE CONTRACTS VOID/ INEXISTENT UNENFORCEABLE VOIDABLE RESCISSIBLE

3. Objectives At the end of this lesson, the students should be able to: Define the defective contracts. Learn to differentiate the types of defective contracts.

4. Defective contracts are those which failed to meet or partially meet the legal test of validity because: lack some essential element the parties thereto lack the capacity to contract a vice in the consent of one of the parties lesion in certain case

5. VOIDABLE 01 capable of being voided; specifically : capable of being adjudged void.

6. VOIDABLE Voidable contracts are those that possess all the requisites of a valid contract, namely: consent , object certain and consideration , but have a defect or vice because the consent is vitiated by mistake , violence , intimidation , undue influence and fraud , or that one of the contracting parties is incapable of giving consent .

7. Juan threatened Mario to injured him. If Mario wont sell his bike to Juan. So Mario signed the contract to avoid getting hurt.

8. VOIDABLE voidable contract is valid until it is voided in court. Its validity becomes absolute once it is ratified or not annulled within four years

9. Jimmy sold to Bryan (17 y/o) a car. Upon reaching 18 years old, Bryan can avail annulment within 4 years until his last day being 22 years old. VOIDABLE

10. Difference between: RESCISION ANNULMENT Used to invalidate a rescissible contract Used to invalidate a voidable contract Subsidiary remedy Principal remedy Rescission is availed by injured person even if not a party to contract Annulment is availed by parties to a contract

11. 1. Incapacitated persons (upon ceasing of incapacity) 2. Persons whose consent were vitiated Persons who may ask for annulment?

12. 1. When the object of the contract is lost through the fault of the person who may annul the contract 2. When the contract is ratified When annulment cannot proceed?

13. Ratification of Voidable Contracts Ratification can be done orally, in writing, or may be implied.

14. Supposed Susie sold his car to Basilio (minor) in installment. Upon reaching 18 years old, Basilio continued to pay Susie.

15. UNENFORCEABLE (especially of an obligation or law) impossible to enforce. 02

16. WHAT IS UNENFORCEABLE CONTRACTS? A contract is unenforceable when it cannot be sued upon or enforced in court unless it is " ratified "

17. WHAT MAKES A CONTRACT UNENFORCEABLE? 3 CATEGORIES UNDER ARTICLE 1403 ● UNAUTHORIZED CONTRACTS Those entered into in the name of another person by one who has been given no authority or legal representation, or who has acted beyond his powers. ● BOTH PARTIES ARE INCAPACITATED Those where both parties are incapable of giving consent to a contract. ● TRANSACTIONS UNDER STATUTE OF FRAUDS A statute which requires certain types of contracts to be in writing in order to be enforceable.

18. 1. UNAUTHORIZED CONTRACTS Example #1: A,representing himself as agent of P,sold P's land to B. Example #2: A sold P's land to B. Example #3: A, agent of P, sold P's land to B in installments. A is only authorized to sell P's land in cash.

19. 1. UNAUTHORIZED CONTRACTS Example #1: A, representing himself as agent of P, sold P's land to B. Exception: When P "ratified" the sale.

20. 2. BOTH PARTIES ARE INCAPACITATED Example: A, minor, sold his bicycle to B, minor. Exception: If the guardians of both A and B ratified the contract

21. 3. STATUTE OF FRAUDS ● Contracts not to be performed within a year Example: X and Y verbally agreed to form a partnership after 13 months. ● A special promise to answer for the debt, default, or miscarriage of another Example: D is indebted to C. Gorally guaranteed D's debt.

22. 3. STATUTE OF FRAUDS ● Agreement in consideration of marriage Example: Z orally obliged himself to give Y, a piece of land if Y marries his daughter, X. ● Sale of personal property for 500 pesos or more ● Lease of real property for more than 1 year

23. 3. STATUTE OF FRAUDS ● A representation as to the credit of a third person Example: A (insolvent) is in need of cash. A asked B for help. B represented A as having good credit to C who extends a loan to A because of B's representation. ● Sale of real property (Art. 1358) Exception: Partially Executed Contracts

24. VOID OR INEXISTENT 03

25. VOID OR INEXISTENT CONTRACTS A void or inexistent contract is one which is absolutely without legal force and effect. Unlike a voidable or an unenforceable contract, void or inexistent contract is not susceptible of ratification. It is a formal agreement that is effectively illegitimate and unenforceable from the moment it is created.

26. The following contracts are inexistent and void from the beginning: (Art. 1409) (1) Those whose cause, object or purpose is contrary to law, morals, good customs, public order or public policy; (2) Those which are absolutely simulated or fictitious; (3) Those whose cause or object did not exist at the time of the transaction; (4) Those whose object is outside the commerce of (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.

27. ILLEGAL AND CRIMINAL CONTRACTS RULES WHERE CONTRACT IS ILLEGAL AND THE ACT CONSTITUTES A CRIMINAL OFFENSE (Article 1411) A. WHERE BOTH PARTIES ARE IN PARI DELICTO 1. The parties shall have no action against each other. 2. Both shall be prosecuted. 3. The things or the price of the contract, as the effects or instruments of the crime, shall be confiscated in favor of the government.

28. ILLEGAL AND CRIMINAL CONTRACTS For instance: Czarina, Bryan Pogi, and Prench enters a contract to operate online jueteng in Marikina, which is a prohibited game. Supposed they agreed that the capital shall be 500,000php. Pursuant to the contract, and owing to lack cash, Czarina contributed a panel car worth 50,000php and 100k in cash, Bryan contributed his E-bike worth 50K and 100k cash, and Prench contributed in full cash 200k. After 6 months operation, they were discovered by the authorities and their operations stopped.

29. ILLEGAL AND CRIMINAL CONTRACTS B. WHERE ONLY ONE PARTY IS GUILTY (IN DELICTO, BUT NOT IN PARI DELICTO) 1. The guilty party will be prosecuted. 2. The instrument of the crime or object of the contract will be confiscated. 3. The innocent one may claim what he has given; or if he has not yet given anything, he shall not be bound to comply with his promise.

30. ILLEGAL AND CRIMINAL CONTRACTS For Instance: Czarina, a minor, lives in with a married man for a price and he promised to Czarina to give her a house and lot. After a sometime, the authority found out about the contract and the married man being guilty while Czarina which is a minor being innocent all the time.

31. ILLEGAL AND CRIMINAL CONTRACTS (The married man will lose what he has given to Czarina because it will be confiscated then he will also be prosecuted while Czarina may claim what she has given and she shall not be bound to comply with her promise.)

32. Thank you !