LAW: Unenforceable Contracts

Unenforceable Contracts
Chapter 8 Group 5
Montes, Zoren Jake
Lim, Germaine Rica
Espaol, Alain
Lim, Gladley Mae
Buena, Rica Patricia
Marimon, Divine
Article 1403
The following contracts are
unenforceable, unless they are
ratified:
(1)Those entered into the name of
another person by one who has
been given no authority or legal
representation, or who has acted
beyond his powers;
Article 1403
(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:
Article 1403
(a) An agreement that by its terms is
not to be performed within a year
from the making thereof;
(b) A special promise to answer for the
debt, default, or miscarriage of
another;
(c) An agreement made in consideration
of marriage, other than a mutual
promise to marry;
Article 1403
(d) An agreement for the sale of goods, chattels, or
things in action, at a price not less than Five
hundred pesos, unless the buyer accept and receive
part of such goods and chattels, or the evidences, or
some of them, of such things in action, or pay at the
time some part of the purchase money; but when a
sale is made by auction and entry is made by the
auctioneer in his sales book, at the time of the sale,
of the amount and kind of property sold, terms of
sale, price, names of the purchasers and persons on
whose account the sale is made, it is sufficient
memorandum;
Article 1403
(e) An agreement for the leasing for a
longer period than one year, or for the
sale of real property or of an interest
therein;
(f) A representation as to the credit of
a third person.
Article 1403
(3) Those where both parties are
incapable of giving consent to a
contract.
Unenforceable Contracts
Those that cannot be enforced in
court or sued upon by reason of
certain defects provided by law until
and unless they are ratified
according to law.
Binding force of unenforceable

contracts
While rescissible and voidable
contracts are valid and enforceable
unless they are rescinded or anulled,
unenforceable contracts, although
valid, are unenforceable in court
unless they are cured or ratified.
Once ratified, these contracts may
then be enforceable.
Kinds of unenforceable contracts

Under Article 1403, the following
contracts are unenforceable, unless
they are ratified:
(1) Those entered into in the name of
another by one without, or acting in
excess of, authority;
Kinds of unenforceable contracts

(2) Those that do not comply with the
Statute of Frauds;
(3) Those where both parties are
incapable of giving.
The above contracts indicate the three
types of defects that render them
unenforceable.
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.
They are governed by Article 1317
and the principle of agency.
History of the Statute of Frauds

In 1677, the English Parliament
enacted a statute to counter giving
false testimony in actions founded
on certain kinds of contracts
It has been adopted in modified
form in the Philippines
Statute of Frauds
It made specified contracts
unenforceable unless evidenced in a
prescribed manner by a written
memorandum signed by the party
against whom liability under the
contract was sought to be
enforced.
Purpose of the Statute of Frauds

To prevent fraud
To guard against the mistakes of
honest men by requiring that
certain agreements specified in Art.
1403, No. 2 [a-f], that are
susceptible to fraud must be in
writing; otherwise, are
unenforceable by action in court
Purpose of the Statute of Frauds

Unless the agreement
be in writing, there may
be no palpable evidence
of the intention of the
contracting parties and
the court must perforce
rely upon no other
evidence than the mere
recollection or memory
of witnesses, which is
many times faulty or
unreliable.
Application of the Statute of Frauds

The Statute of Frauds is not applicable in
actions which are neither for damages
because of a violation of a contract, nor
for the specific performance thereof.
Thus, the purchaser of a parcel of land
may prove the oral contract of sale in a
subsequent action for ejectment against
a third person who is in possession of
the property.

It is applicable only to executory
contracts and not to contracts which
are totally or partially performed.
The reason is that partial
performance, like the writing,
furnishes reliable evidence of the
intention of the parties or the
existence of the contract

It is not applicable where the
contract is admitted expressly, or
implied by the failure to deny
specifically its existence, no further
evidence thereof being required in
such case.

It is applicable only to the
agreements enumerated therein.
Thus, an agreement creating an
easement of right of way is not
covered by the Statute since it is not
a sale of real property or of an
interest therein.

It is not applicable where a writing
does not express the true
agreement of the parties. This is so
because the Statute cannot be used
as a shield for fraud or as a means
for the perpetration of it.

It does not declare that contracts
infringing it are void but merely
unenforceable.
The defense of the Statute of Frauds
may be waived.

The defense of the Statute of Frauds
is personal to the parties and cannot
be interposed by strangers to the
contract.
Agreement within the scope of

the Statute of Frauds
Agreements within the scope of the

Statute of Frauds
Statute of frauds requires certain contracts
to be in writing and signed to be enforceable.
-A contract involving an interest in land.
-A contract that by it terms cannot be
performed within one year of execution.
-Collateral contracts to answer for the debt
of another.
-Prenuptial Agreement
-Contracts for sale of goods over P500.00.
Article 1404
Unauthorized contracts are governed
by Article 1317 and the principles of
agency in Title X of this Book
Article 1405
Contracts infringing the Statute of
Frauds, referred to in No. 2, Article
1403, are ratified by the failure to
object to the presentation of oral
evidence to prove the same, or by
the acceptance of benefits under
them.
Modes of Ratification Under the

Statute
By failure to object to the
presentation of oral evidence to
prove the contract. The failure to so
object amounts to a waiver and
makes the contract as binding as if it
has been reduced to writing. The
requirement of a written form is for
evidential purpose only; and
Modes of Ratification Under the

Statute
By acceptance of benefits under the
contract. In this case, the contract is
no longer executory and, therefore,
the Statute does not apply. This rule
is based upon the familiar principle
that one who has enjoyed the
benefits of a transaction should not
be allowed to repudiate its burdens.
Article 1406
When a contract is enforceable under
the Statute of Frauds, and a public
document is necessary for its
registration in the registry of deeds,
the parties may avail themselves of
the right under Article 1357.
Right of a party where contract

enforceable
For the application of this provision,
there must be a valid agreement
and the agreement must not
infringe the Statute of Frauds.
(1) Accordingly, a party to an oral sale

of real property cannot compel the
other to put the contract in a public
document for purposes of registration
because it is unenforceable unless, of
course it has been ratified.
(2) Similarly, the right of one party to

have the other execute a public
document is not available in a
donation of realty when it is in a
private instrument because the
donation is void.
Article 1407
In a contract where both parties are incapable
of giving consent, express or implied
ratification by the parent, or guardian, as the
case may be, of one of the contracting parties
shall give the contract the same effect as if
only one of them were incapacitated.
If a ratification is made by the parents or
guardians, as the case may be, of both
contracting parties, the contract shall be
validated from the inception.
When unenforceable contract

becomes a voidable contract.
Where both parties to a contract are
incapable of giving consent, the
contract is unenforceable.
However, if the parent or guardian,
as the case may be, of either party,
or if one of the parties after attaining
or regaining capacity, ratifies the
contract, it becomes voidable.
When unenforceable contract

becomes a valid contract.
If the ratification is made by the
parents or guardians, as the case
may be, of both contracting parties,
or by both contracting parties after
attaining or regaining capacity, the
contract is validated and its validity
retroacts to the time it was entered.
Article 1408
Unenforceable contracts cannot be
assailed by third persons.
Rights of third person to assail an

unenforceable contract.
Strangers to a voidable contract
cannot bring an action to annul the
same (see Art.1397); neither can
they assail or question a contract
because of its unenforceability.
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Unenforceable Contracts

Binding force of unenforceable

Kinds of unenforceable contracts

Kinds of unenforceable contracts

History of the Statute of Frauds

Purpose of the Statute of Frauds

Purpose of the Statute of Frauds

Application of the Statute of Frauds

Application of the Statute of Frauds

Application of the Statute of Frauds

Application of the Statute of Frauds

Application of the Statute of Frauds

Application of the Statute of Frauds

Application of the Statute of Frauds

Agreement within the scope of

Agreements within the scope of the

Modes of Ratification Under the

Modes of Ratification Under the

Right of a party where contract

(1) Accordingly, a party to an oral sale

(2) Similarly, the right of one party to

When unenforceable contract

When unenforceable contract

Rights of third person to assail an

A VIDEO ABOUT THE STATUTE OF

THANK YOU FOR LISTENING!

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