Defective Contracts (Online Lecture) 2 Flashcards
UNENFORCEABLE CONTRACTS
what is the defect?
NOT THE VALIDITY
it cannot be enforced in an action before the court
ex. filing case of specific performance, and contract is UNENFORCEABLE, the case will not prosper
there are reasons why tho valid, cannot be enforced.
kinds of unenforceable
- unauthorized contracts
- Contracts that do NOT comply with the statute of frauds
- those where BOTH parties are incapable of giving consent
- if one incapable, voidable
- if both incapable, unenforceable
KINDS OF UNENFORCEABLE >UNAUTHORIZED CONTRACTS (1)
that party acts on behalf of another and is either
a. Without Authority, or
b. Exceeded his Authority
how does the contract look like in UC?
property involved in DOS is a property registered in Juan Dela Cruz
In order of that parcel of land TCT to transferred to Maria, the one who signs the DOS is the registered owner (juan)
suppose tho, juan is abroad and has authorized Pedro.
Pedro, to properly represent Juan, must arm himself with the proper authority, that is, the Special Power of Atty. (SPA)
GPA {v} SPA
General Power of Atty, if authority given to the agent (atty-in-fact) has several functions/authorities
but if specific like (sell property of Juan) then SPA is the proper instrument.
if the instruction is to sell the property and administer other properties, what is needed is GPA
Are these authorized?
[B]
Pedro merely selling the property of Juan De La Cruz,
[C]
Pedro, pretending to be Juan, and tries to sell the land
[D]
agent act in behalf of another but has no special
[E
armed with SPA, the parcel of land is to sell in the amount of 10m, but Pedro sold it for 8m
or authority granted is to sell 10m IN CASH but Pedro did installment of payment
B - is not a situation where one acts in behalf of another because there is no SPA
C - this is not an unauthorized contract, it is VOID as there is no CONSENT to begin with
D - this is not authorized as SPA is needed
E - Party exceeded in his authority when.
thus all are UNEFORCEBABLE (exc the void)
[F]
if a sale involves REAL PROPERTY,
Juan being abroad verbally agreed with Pedro that he can sell this PARCEL OF LAND but it was NOT reduced to writing Pedro’s authority
VOID
Art. 1874. When a sale of a piece of land or any interest therein is through an agent, the authority of the latter shall be in writing; otherwise, the sale shall be VOID
KINDS OF UNENFORCEABLE >UNAUTHORIZED CONTRACTS (2)
[1] intended to prevent fraud & perjury in the enforcement of obligation requiring certain contracts to be in writing
[2] Evidence of contract, therefore, cannot be received without the writing or a secondary evidence of its content [Issue is Admissibility]
[3]
Applicable only to EXECUTORY contracts! this ORAL evidence can be admitted to prove an already PARTIALLY EXECUTED contract
[1]
- in writing because it is easy for people to fabricate an obligation constituted or was assumed by other party, so SOF
[2]
admissibilty hinges WON it is in writing. what is prohibited here is ORAL TESTIMONY/EVIDENCE
- duplicate copy of the contract is secondary evidence of its content
[3]
the requirement that ONLY written instrument can prove the contract in court is applicable if the contract is in its EXECUTORY stage
but if it’s in PARTIALLY EXECUTIVE, then ORAL EVIDENCE CAN BE ADMITTED
Debtor is to build a house of C, after 2 years, there has been no construction.
in a situation where it:
- covered by SOF
- and no written instrument, t
as counsel, what can you advise
- pay the contractor (promisor) any amount as that act will have the legal effect of PARTIALLY EXECUTED
if you want to prove that there was such a contract, VERBALLY STATING or ORALLY stating in court.
note
- once PARTIALLY EXECUTED, outside the scope of SOF
SOF applicable only if the contract has NOT BEEN EXECUTED
Instances Covered by SOF (1403)
(a) An agreement that by its terms is not to be performed within a year from the making thereof;
the promise of debtor is to buiild house for C two years from now.
since obligation is to be performed more than a year from the making, then this is covered by SOF,
in order to enforce that undertaking, there has to be evidence of that undertaking in writing (no specific form but as long as it is in writing)
note
- in fact it need not to be in a public instrument
1403 (2)
(2) Those that do not comply with the Statute of Frauds as set forth in this number. In the following cases an agreement hereafter made shall be unenforceable by action, unless the same, or some note or memorandum, thereof, be in writing, and subscribed by the party charged, or by his agent; evidence, therefore, of the agreement cannot be received without the writing, or a secondary evidence of its contents:
KINDS OF UNENFORCEABLE >UNAUTHORIZED CONTRACTS (2)
[D] if involving REAL PROPERTY, it is applicable ONLY to a perfect “contract OF SALE of real property or interest therein, NOT a mere “right to enter into a contract of sale of real property (e.g. right of first refusal)
[E] ONly the person affected by the contract can interppose the defense, not a third person
[F]
enumeration is EXCLUSIVE
⚠️⚠️⚠️
[G]
not applicable if action is NOT for the purpose of enforcing the contract, i.e. it is NEITHER for
(1) breach of contract, nor
(2) specific performance
[D]
- if issue involves right of first refusal, it is NOT covered, it MUST be sale of real property
1403 (2)(e)
An agreement of the leasing for a longer period than one year, or for the sale of real property or of an interest therein;
- specific to SALE OF REAL PROPERTY. if contract involves not sale but antecdent (like right of first refusal), not covered,
[E]
[F]
[G]
rules under SOF, only relevant if the action is for the purpose of ENFORCING
lee
Verbal testimony is okay ra if u want to prove na ni exist gyud ang contract. If you sue for breach or want performance, and it falla under SOF, then kana dapat in writing na.
WITNESS: “the obligation to sell is based on a contract and X is sell in the amount of 10mil and buyer agreed to pay”10mil.
- what the witness is doing is testifying on the fact of sale, if that is the nature of the testimony, that is NOT COVERED BY SOF
- obect to parole evidence/oral evidence.
ex. plaintiff files SPECIFIC PEROFRMANCE against D, he wants property transfer to him because allegedly the defendant sold it to him. P is testifying such contract exist.
- P is trying to enforce a contract but evidence is VERBAL here, you can object
ex. 2
- testimony on fact of breach of contract,
ex. 3
- statement of the existence of a contract not being enforced or no allegation of breach, it DOES NOT FALL UNDER SOF, evidence ORAL in nature on the existence of that contract is alright
WAIVER OF STATUTE OF FRAUDS
[A] Two ways:
1. failure to timely object to the presentation of oral evidence to prove the agreement
2. Acceptance of benefits under the agreement
[B]
Mere lapse of time (no matter how long) will never amount to ratification
lecture note
important characterisitic of UNENFORCEABLE CONTRACT by reason of SOF, is that it is subject of WAIVER
[A}
1.
During presentation of evidence:
- What is presented is a contract and its evidence is ORAL (❌ don’t object)
- what is presented is a contract and its evidence is ORAL and he used oral evidence to introduce the basis of the breach and specific perofmance (⚠️ OBJECT)
- acceptance of benefits
- partial execution (because there is acceptance of benefits) doesn’t matter how much
[B]
CONTRACTS COVERED BY STATUTE OF FRAUD
[A] Agreements that are not to be performed within (1) one year from making
[B]. Special Promise (subsidiary or collateral, not principal/original) to answer for the debt, default, or miscarriage of another
[C]. agreement by reason of marriage (pre-nuptials and propter nuptias donations) other than “mutual promise to marry”
[2]
SPECIAL PROMISE
somebody promise to pay the obligation of debtor and the commitment is to pay it upon demand (this is a principal undertaking) THIS IS NOT UNDERTAKING IS NOT COVERED
Special Promise: GUARANTOR only pays the C if C has already exhausted the properties of the debtor and properties (excussion en guarantor)
[C]
pre-nuptials and propter nuptias donation (donation by reaso nof marraige) is covered by SOF
WHAT IS NOT COVERED IS mutual promise to marry (NOT UNENFORCEABLE)
ex. sweetheart promise to marry and then breaks the promise. you cannot compel to make do with that promise if it is promise to marry. no specific perforamnce.
CONTRACTS COVERED BY STATUTE OF FRAUD
[D]
Sales of Goods, Chattels, or things in action at a price not less than 500php
[E]
lease for more than (1) year (involving real/personal property)
[F]
sale of realty or interest therein
[G]
representation as to **Credit of a third person (vs. Guaranty)
[D}
what about everytime we go to the supermarket, it is a sale of goods and chattels. almost always the purchase price is more than 500. why is it NOT IN WRITING?
A: not only partially executed but FULLY EXECUTED. not dealing with validity but enforecabilityy
you get the item worth 600, you pay. then it is fully executed, IIRRELEVANT is written evidence of the contract since it is FULLY EXECUTED
[E & F]
must be in writing
[F]
in order to bind 3rd persons if it is a REAL PROPERTY (immovable) it has to be in a public instrument in order to bind 3rd persons and for the purpose of convenience for the transfer
[G]
ex. borrower of a loan is solvent and bank extended loan because of your representation, if so, that represenation to be enforceable must be in writing
in GUARANTEE, gurantor made special promise to pay
VOID & INEXISTENT
VOID & INEXISTENT
Differntiate void from inexistent
in Liguez v. CA
SC defined VOID contract when the elements of the contract are PRESENT but the cause, object or purpose is CONTRARY to laws, morals, good customs, public order or public policy
Contracts are INEXISTENT, when one, some, or all of the elements for validity is/are absolutely lacking
ex.
DOS (1) for shabu, it is technically called VOID because shabu is illegal
DOS (2) that is absolutely simulated stating purchase price is 10mil but in reality, there was no 10mil. Here there is NO ELEMENT OF CONSIDERATION thus an inexistent contract
