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Questions and Answers
In the first scenario, the contract involving the condominium unit is voidable because of the simulated price.
False
Alfred sold Bruce's mansion for PHP31,000,000.00, which is more than one-fourth (1/4) of its market value.
False
Bruce can request the annulment of the sale of his mansion by Alfred.
True
A is authorized by B to represent him in the sale of the farm to C.
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The contract involving Bruce's mansion would be void if Alfred had sold it for its market value.
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A voidable contract is valid and enforceable until it is annulled by court.
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A rescissible contract is challenged or assailed only by a contracting party and not by third persons.
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Lack of essential elements of a contract and illegality are causes of void contracts.
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A contract that cannot be enforced by a proper action in court is voidable.
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Contracts that are unenforceable can be ratified.
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Voidable contracts need to be ratified to become valid and enforceable.
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Study Notes
Types of Defective Contracts
- A contract with a simulated price (e.g., declared price is lower than actual price) is void.
- A contract made under duress or with a vitiating factor (e.g., pointing a gun to the seller) is voidable and remains valid until annulled.
- A contract that causes injury or damage to one party or a third person (e.g., selling a minor's inherited property at a lower price) is rescissible and remains valid until rescinded by court.
- A contract with a lack of form, authority, or capacity (e.g., unauthorized representation) is unenforceable and cannot be enforced by a proper action in court.
Distinctions between Defective Contracts
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Void contracts:
- Have a defect caused by lack of essential elements or illegality.
- Do not produce any legal effect.
- Can be challenged by a contracting party or a third party.
- Cannot be ratified.
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Voidable contracts:
- Have a defect caused by vice of consent.
- Are valid and enforceable until annulled by court.
- Can be challenged by a contracting party only.
- Can be ratified.
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Rescissible contracts:
- Have a defect caused by injury or damage.
- Are valid and enforceable until rescinded by court.
- Can be challenged by a contracting party and a third person who is prejudiced.
- Can be ratified.
-
Unenforceable contracts:
- Have a defect caused by lack of form, authority, or capacity.
- Cannot be enforced by a proper action in court.
- Can be challenged by a contracting party only.
- Can be ratified.
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Description
Learn the differences between void, voidable, rescissible, and unenforceable contracts based on the causes of defects in each type. Explore how defects can be related to lack of essential elements, illegality, vice of consent, injury or damage, and lack of form, authority, or capacity.
