UNENFORCEABLE

CONTRACTS

Are those which cannot be sued upon

or enforced in court, unless
ratified; Thus, it is as if it has no
effect yet.

In one sense therefore, they may be

called, validable.
 Unenforceable Contracts cannot serve as
basis for a suit or action; the courts will
refuse to enforce them and dismiss the
suit.

In a suit founded on an unenforceable

contract, the defendant can interpose its
unenforceability as a defense and ask for
the dismissal of the suit.
 Art. 1403:
Unenforceable contracts may be ratified.
 Ratification means that a person
knowingly and voluntarily adopts or
gives sanction to an unauthorized
or defective act, which would not
be binding upon him.

Ratification may be expressed or

implied. (Art. 1317)
 Art. 1408
Unenforceable contracts cannot be
assailed by third persons.
Three Categories of Unenforceable
Contracts:

Those entered into without or in excess of

authority (Art.1404);
Those that do not comply with the Statute
of Frauds (Art. 1405); or
Those where both contracting parties do
not possess the required legal capacity
(Art. 1407)
 Unauthorized Contracts
(Art. 1404)

Are those entered into in the name of

another person who has no legal
authority or legal representation;

Or who has authority but acted beyond

his powers.
 Unauthorized Contracts are
governed by Article 1317 and the
principles of agency under the
Civil Code .
 Art. 1317
No one may contract in the name o
another without being authorized by the
latter, or unless he has by law a right to
represent him.
A contract entered into in the name of
another by one who has no authority or
legal representation, or who acted beyond
his powers, shall be unenforceable.
 Principle of Agency
If the agent exceeds the scope of his
authority, the agent is personally liable to
the party with whom he has contracted
(Art. 1897), unless ----
The principal ratifies the contract (Art.
1898); or
The other contracting party is aware of the
limits of the agents power. (Art. 1898)
 Who can assail?
By the person whose name the contract
was entered into.
By the owner of the property.

How to cure the defect?

Ratification by the person whose name the
contract was entered into.
 Incapacity of Both Parties
Are those contracts where both parties
are incapable of giving consent to a
contract. (Art. 1407)

If only one of the contracting parties is

incapacitated, the contract is voidable.
(Art. 1391)
 Who can assail?
By the person whose contract is being
enforced or his privies;
Parents or guardians of that person.

How to cure the defect?

Ratification by parents or guardians of the person
against whom the contract is being enforced
By attainment of majority age (in case of minority)
By regaining sanity (in case of insanity)
 Non-compliance with Statute of
Frauds

Contracts covered by the Statute of

Frauds cannot be proven without the
writing or oral evidence, unless the other
party fails to object.
 What is the Statute of Frauds?
Refers to the law which requires certain
contracts or transactions to be put in
writing and signed by the party charged
thereby.
Its purposes is to prevent fraud and
perjury in the enforcement of obligations
depending for their evidence on
unassisted memory of witnesses.
 The following contacts are
unenforceable, unless the
same, or some note or
memorandum thereof, be in
writing, and subscribed by the
party charged, or by his agent:
 An agreement that by its terms is not to
be performed within a year from the
making thereof;

A special promise to answer for the

debt, default, or miscarriage of another;

An agreement made in consideration of

marriage, other than a mutual promise to
marry;
 An agreement for the sale of goods,
chattels or things in action, at a price,
not less than five hundred pesos.

An agreement for the leasing for a longer

period than one year, or for the sale of
real property or of an interest therein;

A representation as to the credit of a

third person.
Inclusio unius est exclusio alterius

The Statute of Frauds is exclusive in

application because it cannot apply to
other contracts not enumerated in the law.
 Who can assail?
By the person whose contract is being
enforced or his privies;

How to cure the defect?

Ratification by the party whom the contract
is being enforced
By failure to object to the presentation of
oral evidence to prove an oral contract or
by accepting the benefits under the
contract