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5/14/2018 Oblicon Report - slidepdf.com
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Voidable
ContractsBy:
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- Those contracts in which all the essentialelements for validity are present, although theelement of consent is vitiated either by
a. Lack of legal capacity of one of thecontracting parties or
b. By mistake, violence intimidation, undue
influence or fraud
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1. Attack the validity of the contract
a. direct – by means of proper action
(annulment)
b. indirect–
as a defense (annulability)
2. Convalidate it either by Ratification or
Prescription
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1.Defect consists in the vitiation of consent of
one of the contracting parties
2. Binding until annulled by a competent court
3. Susceptible of convalidation by ratification
or by prescription
4. Defect or voidable character cannot be
invoked by 3rd persons
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The following contracts are voidable or
annullable, even though there may have been
no damage to the contracting parties:
(1) Those where one of the parties is incapableof giving consent to a contract;
(2) Those where the consent is vitiated bymistake, violence, intimidation, undue
influence or fraudThese contacts are binding, unless they are
annulled by a proper action in court. They are
susceptible of ratification.
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1. Those where one of the parties is
incapable of giving consent to a contract;
2. Those where the consent is vitiated by
mistake, violence, intimidation, undue
influence or fraud.
*if the consent is absolutely lacking orsimulated, the contract is inexistent, not
voidable.
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-in relation to Art. 1327-1328 (legal capacity)
Art. 1327. The following cannot give consentto a contract:
(1) Minors(2) Insane or demented persons, and deaf-
mutes who do not know how to write
*one party is incapacitated = voidable
*both are incapacitated= unenforceable
* Consent is given through a guardian/parent
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-no more emancipated minors since the age of
Majority has been raised to 18 years old
- there are five (5) exceptional cases where acontract entered into by a minor may have
all the effects of a valid contract
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1. When the contract is entered by a minor who(constructively not active) misrepresents his age
2. When it involves the sale and delivery of necessaries tothe minor (Arts. 1489 par. 2, NCC)
3. Where it involves a natural obligation and such obligation
fulfilled by the minor, provided that such minor is between18 and 21 years of age (Arts. 1426, 1427, NCC)
4. When it is a marriage settlement or a donation by reasonof marriage, provided that the minor is between 20 and21, if male, or between 18 and 21, if female (Arts. 120,128, NCC)
5. When it is a life, health or accident insurance taken on thelife of the minor, provided that the minor is 18 years old ormore and the beneficiary is the minor’s estate or theminor’s father, mother, husband, wife, child, brother orsister.
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2. When it involves the sale and delivery of
necessaries to the minor (Arts. 1489 par. 2, NCC)
3. Where it involves a natural obligation and such
obligation fulfilled by the minor, provided thatsuch minor is between 18 and 21 years of age
(Arts. 1426, 1427, NCC)
4. When it is a marriage settlement or a donation
by reason of marriage, provided that the minoris between 20 and 21, if male, or between 18
and 21, if female (Arts. 120, 128, NCC)
5. When it is a life, health or accident insurance
taken on the life of the minor, provided that theminor is 18 years old or more and the beneficiary
is the minor’s estate or the minor’s father,
mother, husband, wife, child, brother or sister.
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-those persons at the time of the celebration of
the contract cannot understand the nature and
consequences of the contract at the time of its
execution by reason of any cause affecting his
intellectual or sensitive faculties whetherpermanent or temporary. (includes drunkenness,
or under hypnotic spell)
-contracts entered into during lucid interval is
valid.-monomania or delusion of wealth= not voidable
-mental incapacity is a question of fact which
must be decided by Courts
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-there is no way that the stipulations in the
contract be explained to them to insure that
they understand what they are entering into
-contracts entered by deaf mutes who CAN
write are valid
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1. Married women in cases specified by law (they are qualified for
all acts of civil life except ex. Art 114 of the NCC, consent of husband is necessary before wife can acquire property bygratuitous title except if the property is acquired fromascendants, descendants, parents-in-law and relatives withinthe 4th degree
2. Incompetent persons under Sec. 2 of Rule 92 of the New Rulesof Court
a. Persons suffering from civil interdiction
b. Hospitalized lepers
c. Prodigals
d. Deaf and dumb who are unable to read
e. Those who have unsound mind, even though they have lucidintervals
f. Those who by reason of age, weak mind, other similar cases,cannot, without aid from other, take care of themselves andmanage their property becoming thereby easy prey for deceitand exploitation
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- In relation to Art. 1330-1334
Vices which may vitiate consent (Art. 1330)
1. Vices of the will
a. mistake c. intimidation e. fraud
b. violence d. undue influence2. Vices of declaration
-simulation of contracts
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Art. 1330 is a negative enumeration of the
requisites of consent (Manresa)
1. Intelligent (mistake)
2. Free (violence, intimidation and undueinfluence)
3. Spontaneous (Fraud)4. Real (Simulation of Contracts)
*absence of first three requisites= voidable
*absence of the 4th requisite = either void orvalid (depending upon whether the simulation
is absolute or relative)
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In order that mistake may invalidate
consent, it should refer to the substance of the
thing which is the object of the contract, or to
those conditions which have principally moved
one or both parties to enter into the contract.
Mistake as to the identity or qualification of
one of the parties will vitiate consent only when
such identity or qualifications have been the
principal cause of the contract.A simple mistake of account shall give rise
to its correction.
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-wrong conception of a thing and the lack of
knowledge with respect to a thing
-mistake should refer to the substance of the thing which isthe object of the contract, or to those conditions whichhave principally moved one or both parties to enter into
the contract (Art. 1331)1. mistake as to object
▪ identity of the thing (error in corpore)
▪ substance of the thing (error in substantia)
▪ conditions of the thing (provided such condition principally
moved one or both of the parties to enter into the contract)▪ quantity of the thing (error in quantitate)
2. mistake as to person
▪ name of a person.; identity of a person (effect is
voidable contract); qualification of a person
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-when one or both of the contracting parties
arrive at an erroneous conclusion regarding
the interpretation of a question of law or the
legal effects of a certain act or transaction
General Rule: Only Mistake of Fact which will
vitiate consent renders the contract
voidable. A Mistake of Law does not renderthe contract voidable because of the
principle that ignorance of the law does not
excuse anyone from compliance therewith.
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When one of the parties is unable to read or if
the contract is in a language not understood by
him, and mistake or fraud is alleged, the
person enforcing the contract must show that
the terms thereof have been fully explained tothe former.
Ex. Plaintiff cannot read and write, signed with across a document which she thought was apromise to pay certain expenses whichdefendant had an absolute deed of sale of 2parcels of land and carabao, the document isvoidable, for if she truly understood thecontents, she would not have accepted
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Art. 1332 was intended for the protection of aparty to a contract who is at the disadvantage due
to his illiteracy, ignorance, mental weakness orother handicap. It contemplates a situationwherein a contract has been entered into, butconsent of one of the parties is vitiated by mistakeor fraud committed by the other contracting party.
Mistake, to invalidate consent, must refer to thesubstance of the thing which is the object of thecontract. Fraud, is present when, through insidiouswords or machination of one of the contractingparties, the other is induced to enter into acontract which, without them, he would not haveagreed.
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Art. 1333 There is no mistake if the partyalleging it knew the doubt, contingency orrisk affecting the object of the contract.
Art. 1334 Mutual error as to the legal effect of an agreement when the real purpose of theparties is frustrated, may vitiate consent.
General Rule: Mistake of Law will not vitiateconsent
Exception: Art. 1334 mutual error
Requisites: (1) mistake must be with respectto the legal effect of the agreement;(2)mistake must be mutual; (3) real purposeof the parties have been frustrated
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Ex. (Art. 1334)
A is an heir in the estate of B, his deceased
father. A sold his share to C, which isindicated as his inheritance in the last will
and testament of his father. A and C believed
that the sale is valid. However, the will was
denied probate. Thus, the property cannotpass ownership because A is not yet the
owner. Sale is voidable due to the parties
mutual error as to the legal effect of their
agreement.
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Art. 1335 There is violence when in order to wrest consent,
serious or irresistible force is employed.
There is intimidation when one of the contracting parties
is compelled by a reasonable and well-grounded fear of an
imminent and grave evil upon his person or property, or
upon the person or property of his spouse, descendants or
ascendants, to give his consent.
To determine the degree of the intimidation, the age, sex
and condition of the person shall be borne in mind.
A threat to enforce one’s claim through competent
authority, if the claim is just or legal, does not vitiate
consent.
Art. 1336 Violence or intimidation shall annul the obligation,although it may have been employed by a third person who
did not take part in the contract
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-Use of irresistible force
Requisites:
1. Force employed to wrest consent must be
serious or irresistible2. It must be the determining cause for the
party upon whom it is employed in entering
into the contract
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Compelling by reasonable and well grounded fear of animminent or grave evil upon his person, property, or upon the person or property of his spouse,descendants, or ascendants
Requisites:1. one of the contracting parties is compelled
to give consent by a reasonable and well
grounded fear of an evil
2. the evil must be imminent and grave
3. the evil must be unjust
4. the evil must be the determining cause for
the party upon whom it is employed in entering into thecontract
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•Actual, serious,possible of
realization, andthat the actor canstill carry out histhreat
Character of Intimidation
•Age,
•Sex
•Condition of theperson
Determination
of the degreeof intimidation
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• External-physicalcompulsion (Castan)
• Prevents the expression
of the will substituting itwith a material actdictated by another
Violence
• Internal-moralcompulsion (Castan)
• Influences the will
inhibiting it in such a waythat the expressiontherefore is apparentlythat of a person who hasfreely given his consent
Intimidation
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-Does not vitiate consent
-Contract would still be perfectly valid and not
voidable
Vitiated Consent vs. Relunctant Consent
(Martinez vs. Hongkong and Shanghai Bank)
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There is undue influence when a person takes
improper advantage of his power over the
will of another, depriving the latter of a
reasonable freedom of choice. The following
circumstances shall be considered: the
confidential, family, spiritual, and other
relations between the parties, or the fact
that the person alleged to have been unduly
influenced was suffering from mental
weakness, or was ignorant or in financial
distress
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-taking improper advantage of one's powerover the will of another, depriving the latterof a reasonable freedom of choice.
Test:
WON the influence exerted has overpoweredor subjugated the mind of a contractingparty as to destroy his free agency, makinghim express the will of another rather than
his own.Thing to be considered:
-confidential, spiritual, family, and other
elations between parties
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-There is fraud when, through insidious words
or machinations of one of the contracting
parties, the other is induced to enter into a
contract which, without them, he would not
have agreed to.
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- insidious words or machinations employed by oneof the contracting parties in order to induce theother to enter into a contract, which, withoutthem, he would not have agreed to.
Requisites:1. insidious words
2. insidious words must be serious
3. insidious words must have induced the other
party to enter into the contract – such fraudmust be the principal or causal inducement orconsideration for the consent of the other party.
4. fraud should not have been employed by both of
the contracting parties or by third persons
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• Fraud in the perfection of the contract
• Employed in securing theconsent of the other party
Art. 1338,
Civil Code
• Fraud in the performance
of the obligation• Fraud employed by the
obligor in the performanceof a pre-existing obligation
Art. 1770-1171,Civil Code
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• Casual fraud
• Deceptions or misrepresentation of a serious character employed byone party and without it, the otherparty would not have entered intothe agreement (Art. 1338)
• Effect is VIODABLE
Dolo
cuasante
• Incidental Fraud
• Deceptions or misrepresentationNOT of a serious characteremployed by one party and withoutit, the other party WOULD STILLhave entered into the agreement
• Effect is LIABILITY for damages
Doloincidente
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- Failure to disclose facts, when there is a
duty to reveal them, as when the parties are
bound by confidential relations, constitutes
fraud
- Effect: Fraud
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- The usual exaggerations in trade, when the
other party had an opportunity to know the
facts, are not in themselves fraudulent.
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- A mere expression of an opinion does not
signify fraud, unless made by an expert and
the other party has relied on the former’s
special knowledge.
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- Misrepresentation by a third person does not
vitiate consent, unless such
misrepresentation has created substantial
mistake and the same is mutual.
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Art. 1343 Misrepresentation made in good
faith is not fraudulent but may constitute
error
Art. 1344 In order that fraud may make acontract voidable, it should be serious and
should not have been employed by both
contracting parties.
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- The action for annulment shall be broughtwithin four years.
- This period shall begin: In cases of intimidation, violence or undue influence,
from the time the defect of the consentceases.
- In case of mistake or fraud, from the time of the discovery of the same.
- And when the action refers to contractsentered into by minors or otherincapacitated person, from the time theguardianship ceases.
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