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A contract entered into by the defendant without the knowledge and approval of the litigants is always considered subject to rescission.
True
According to the law, all contracts can potentially be rescissible.
False
If a person demanding rescission is unable to return what they are obliged to restore, rescission cannot be granted.
True
For a contract to be voidable, both parties must have given consent to it.
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Contracts where consent is vitiated by mistake, violence, intimidation, undue influence, or fraud are always considered voidable.
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A contract involving the sale of a farm can be rescissible if the wards represented by guardians suffer lesion by more than one-fourth of the value of the property.
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Contracts agreed upon in representation of absentees are not rescissible if the absentees suffer the lesion mentioned in the law.
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If a contract is undertaken in fraud of creditors and they cannot collect their claims in any other way, it is considered void.
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Contracts where the debtor alienates property by gratuitous title are always fraudulent and presumed void.
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Alienations by onerous title are presumed fraudulent only when made by individuals with outstanding judgments against them.
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Rescission requires judicial permission to rescind, except when the contract itself has a resolute provision for cancellation in case of breach.
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In the example given, A was not in default in delivering the property purchased by B.
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Damages can only be incurred if there is fraud involved and cannot be due to negligence or delay.
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If both parties have committed a breach of obligation, the liability of the first infractor cannot be tempered by the courts.
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The Mortgage Law allows for rescission of contracts without the need for judicial permission.
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The power to rescind obligations is not implied in reciprocal ones.
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The injured party can only choose between the fulfillment and rescission of the obligation, without the possibility of seeking rescission if fulfillment becomes impossible later on.
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In the example given, A, who purchased the property from B, can no longer choose rescission plus damages when fulfilling the obligation of full payment has become impossible due to insolvency.
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If a void contract is assailed by one of the contracting parties in court, the court will always decree the rescission claimed without any consideration for just cause.
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Rescissible contracts can never be rescinded by the injured party, even if fulfillment becomes impossible later on.
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Study Notes
Rescissible Contracts
- Contracts that refer to things under litigation, entered into by the defendant without the knowledge and approval of the litigants or of competent judicial authority, are rescissible.
- Contracts specially declared by law to be subject to rescission are also rescissible.
- A contract of sale entered into in violation of a right of 1st refusal of another person is valid but rescissible.
Requisites of Rescission
- The contract must be rescissible under Art. 1381 and 1382.
- The party asking for rescission must have no other legal means to obtain reparation for the damages suffered.
- The person demanding rescission must be able to return whatever they may be obliged to restore if rescission is granted.
- The things which are the object of the contract must not have passed legally to the possession of a third person acting in good faith.
- The action must be brought within four (4) years.
Voidable Contracts
- Contracts where one of the parties is incapable of giving consent are voidable.
- Contracts where the consent is vitiated by mistake, violence, intimidation, undue influence, or fraud are also voidable.
Rescissible Contracts under Art. 1481
- Contracts entered into by guardians that result in lesion of more than one-fourth of the value of the things which are the object thereof are rescissible.
- Contracts agreed upon in representation of absentees, if the latter suffer lesion, are also rescissible.
- Contracts undertaken in fraud of creditors when the latter cannot in any other manner collect the claims due them are rescissible.
Damages
- The obligor is liable for damages in cases of fraud, negligence, delay, and contravention of the tenor of the obligation.
- In case both parties have committed a breach of the obligation, the liability of the first infractor shall be equitably tempered by the courts.
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Description
Test your knowledge on property rescission in contracts, including the requirements for rescission, judicial permissions needed, and examples of breach leading to rescission. Explore the legal aspects of cancelling obligations in contracts.
