CHAP 7 (contracts)

Question 1

Voidable or Annullable contracts

Answer 1

Those which POSSESS ALL THE ESSENTIAL REQUISITES OF A VALID CONTRACTS] but ONE OF THE PARTIES is INCAPABLE OF GIVING CONSENT, or CONSENT IS VITIATED BY MISTAKE, VIOLENCE, INTIMIDATION, UNDUE INFLUENCE, or FRAUD

Question 2

Annulment

Answer 2

REMEDY provided by law, for REASON OF PUBLIC INTEREST, for the DECLARATION OF THE INEFFICACY OF A CONTRACT based on a DEFECT OR VICE in the CONSENT OF ONE OF THE CONTRACTING PARTIES in order to RESTORE THEM to their ORIGINAL POSITION in which they were BEFORE THE CONTRACT WAS EXECUTED

Question 3

Kinds of VOIDABLE CONTRACTS

Answer 3

1. LEGAL INCAPACITY TO GIVE CONSENT
2. VIOLATION OF CONSENT

Question 4

Period for filing action for ANNULMENT

Answer 4

1. In cases of INTIMIDATION, VIOLENCE, or UNDUE INFLUENCE
   - From the time the intimidation, etc. CEASES
2. In case of MISTAKE or FRAUD
   - From the time it is DISCOVERED
3. In the case of CONTRACTS ENTERED INTO BY MINORS or INCAPACITATED PERSONS
   - From the time GUARDIANSHIP CEASES

Question 5

Ratification

Answer 5

ONE VOLUNTARILY ADOPTS OR APPROVES some DEFECTIVE OR UNAUTHORIZED ACT OR CONTRACT which, without his subsequent approval or consent, WOULD NOT BE BINDING ON HIM. It indicates an INTENTION ON THE PART OF THE RATIFIER to be BOUND TO THE PROVISIONS OF THE CONTRACT

Question 6

Effect of ratification

Answer 6

CLEANSES THE CONTRACT from all of its DEFECTS from the moment it was constituted. Contract becomes VALID. Thus, the action to annul is EXTINGUISHED

Question 7

Kinds of RATIFICATION

Answer 7

1. Express
2. Implied or tacit

Question 8

Express ratification

Answer 8

MANIFESTED IN WORDS or IN WRITING

Question 9

Implied or tacit ratification

Answer 9

MAY TAKE DIVERSE FORMS, such as by SILENCE OR ACQUIESCENCE; by ACTS SHOWING ADOPTION OR APPROVAL of the contract; or by ACCEPTANCE AND RETENTION OF BENEFITS FLOWING THEREFROM

Question 10

requisites of implied ratification

Answer 10

1. There must be KNOWLEDGE OF THE REASON which RENDERS THE CONTRACT VOIDABLE
2. Such reason MUST HAVE CEASED
3. The INJURED PARTY must have EXECUTED AN ACT which NECESSARILY IMPLIED AN INTENTION TO WAIVE HIS RIGHT

Question 11

requisites of express ratification

Answer 11

1. There must be KNOWLEDGE OF THE REASON which RENDERS THE CONTRACT VOIDABLE
2. Such reason MUST HAVE CEASED
3. The INJURED PARTY must have EXECUTED AN ACT which NECESSARILY EXPRESS AN INTENTION TO WAIVE HIS RIGHT

Question 12

Who may RATIFY

Answer 12

A contract entered into by an incapacitated person may be ratified by:
- the guardian; or
- the injured party himself, provided, he is already capacitated.

(2) In case the contract is voidable on the ground of mistake, etc., ratification can be made by the party whose consent is vitiated.

Question 13

Party ENTITLED TO BRING AN ACTION TO ANNUL

Answer 13

1. The PLAINTIFF must have an INTEREST IN THE CONTRACT
2. The VICTIM and NOT THE PARTY RESPONSIBLE FOR THE DEFECT is the person who must assert the same

Question 14

Duty of MUTUAL RESTITUTION upon ANNULMENT

Answer 14

(1) If the contract is annulled, the parties, as a general rule, must restore to each other

a. the subject matter of the contract with its fruits (see Art. 544, et seq.) and
b. the price thereof with legal interest.

(2) In personal obligations, where the service had already been rendered, the value thereof with the corresponding interest, is the basis for damages (par. 2.) recoverable from the party benefited by the service

Question 15

Effect of LOSS OF THING to be RETURNED

Answer 15

1. If the thing to be returned is lost WITHOUT THE FAULT of the person obliged to make restitution (defendant), there is no more obligation to return such thing.
2. If it is lost THROUGH HIS FAULT, his obligation is not extinguished but is converted into an indemnity for damages consisting of the value of the thing at the time of the loss with interest from the same date and the fruits received from the time the thing was given to him to the time of its loss.

Question 16

Extinguishment of action for annulment

Answer 16

1. If the person, who has a right to institute an action for annulment (Art. 1397.), will not be able to restore the thing which he may be obliged to return in case the contract is annulled because such thing is lost through his fraud or fault, his right to have the contract annulled is extinguished. The action for annulment shall be extinguished only if the loss is through the fault or fraud of the plaintiff.
2. Under the second paragraph, the right of action is based upon the incapacity of any one of the contracting parties. Whether the right of action is based upon incapacity or not, the rule is the same.