UNIDAD ADMINISTRACIÓN

Concept and Distinctions; An unenforceable contract is one which cannot be enforced unless it is first ratified in the manner provided by law. It is distinguished from the rescissible and the annullable contracts in that the latter two contracts produce legal effects unless they are set aside by a competent court, while the unenforceable contract does not produce any effect unless it is ratified

As regards the degree of defectiveness, voidable or annullable contracts are farther away from absolute nullity than unenforceable contracts. In other words, an unenforceable contract occupies an intermediate ground between the voidable and the void contract

Art. 1403. The following contracts are unenforceable, unless they are ratified:

(1) 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;

(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:

(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;

(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 person on whose account the sale is made, it is a sufficient memorandum;

(e) An agreement of 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.

(3) Those where both parties are incapable of giving consent to (3) Those where both parties are incapable of giving consent to a contract.

a contract.

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Unauthorized Contracts; When a person enters into a contract Unauthorized Contracts; When a person enters into a contract for and in the name of another, without authority to do so, the for and in the name of another, without authority to do so, the contract does not bind the latter, unless he ratifies the same. contract does not bind the latter, unless he ratifies the same. The agent who has entered into the contract in the name of the The agent who has entered into the contract in the name of the purported principal, but without authority from him, is liable to purported principal, but without authority from him, is liable to third persons upon the contract; it must have been the third persons upon the contract; it must have been the intention of the parties to bind someone, and, as the principal intention of the parties to bind someone, and, as the principal was not bound, the agent should be

was not bound, the agent should be

Statute of Frauds; The term “statute of frauds” is descriptive of Statute of Frauds; The term “statute of frauds” is descriptive of statutes which require certain classes of contracts to be statutes which require certain classes of contracts to be inin writing

writing. This statute does not deprive the parties of the right to. This statute does not deprive the parties of the right to contract but merely regulates the formalities of the contract contract but merely regulates the formalities of the contract necessary to render it enforceable

necessary to render it enforceable

The statute does not apply to actions which are neither for The statute does not apply to actions which are neither for specific performance of the contract nor for the violation specific performance of the contract nor for the violation thereof

thereof

Purpose of Statute; The purpose of the statute of frauds is to Purpose of Statute; The purpose of the statute of frauds is to prevent fraud and perjury in the enforcement of obligations prevent fraud and perjury in the enforcement of obligations depending for their evidence upon the unassisted memory of depending for their evidence upon the unassisted memory of witnesses by requiring certain enumerated contracts and witnesses by requiring certain enumerated contracts and transactions to be evidenced by a writing signed by the party to transactions to be evidenced by a writing signed by the party to be charged

be charged

Action to Enforce; The statute of frauds has been uniformly Action to Enforce; The statute of frauds has been uniformly interpreted to be applicable to executory and not to completed interpreted to be applicable to executory and not to completed or executed contracts. Performance of the contract takes it out or executed contracts. Performance of the contract takes it out of the operation of the statute

of the operation of the statute

The statute of frauds is not applicable to contracts which are The statute of frauds is not applicable to contracts which are either totally or partially performed, on the theory that there is either totally or partially performed, on the theory that there is a wide field for the commission of frauds in executory contracts a wide field for the commission of frauds in executory contracts which can only be prevented by requiring them to be in writing, which can only be prevented by requiring them to be in writing, a fact which is reduced to a minimum in executed contracts a fact which is reduced to a minimum in executed contracts because the intention of the parties becomes apparent by their because the intention of the parties becomes apparent by their execution, and execution concludes, in most cases, the rights of execution, and execution concludes, in most cases, the rights of parties

parties

Performance Within One Year; Contracts that by their

Performance Within One Year; Contracts that by their terms areterms are not to be performed within one year from the making thereof, not to be performed within one year from the making thereof, must be in writing. The “making” of an agreement, for the must be in writing. The “making” of an agreement, for the purpose of determining whether or not the period for purpose of determining whether or not the period for performance brings the agreement within the statute of frauds, performance brings the agreement within the statute of frauds, means the day on which the agreement is made, and the time means the day on which the agreement is made, and the time begins to run from the day the contract is entered into, and not begins to run from the day the contract is entered into, and not from the time that performance of it is entered upon

from the time that performance of it is entered upon

The broad view is that the statute of frauds applies only to The broad view is that the statute of frauds applies only to agreements not to be performed on either side within a year agreements not to be performed on either side within a year from the making thereof. Agreements to be fully performed on from the making thereof. Agreements to be fully performed on one side within the year are taken out of the operation of the one side within the year are taken out of the operation of the statute

statute In

In Hernandez v. Court of AppealsHernandez v. Court of Appeals, 160 SCRA 821, the Court said:, 160 SCRA 821, the Court said: “The Statute of

“The Statute of Frauds finds no application to this case. NotFrauds finds no application to this case. Not every agreement ‘affecting land’ must be put in writing to every agreement ‘affecting land’ must be put in writing to attain enforceability. Under the Statute of Frauds, Article attain enforceability. Under the Statute of Frauds, Article 1403(2) (e) of the Civil Code, such formality is only required of 1403(2) (e) of the Civil Code, such formality is only required of

contracts involving leases for longer than one year, or for the contracts involving leases for longer than one year, or for the sale of real property or of an interest therein.

sale of real property or of an interest therein. ““ In

In Vda. De Espina v. AbayaVda. De Espina v. Abaya, 196 SCRA 312, the Court said:, 196 SCRA 312, the Court said: “Anent the issue of oral partition, We sustain the validity of said “Anent the issue of oral partition, We sustain the validity of said partition. "An agreement of partition may be made orally or in partition. "An agreement of partition may be made orally or in writing. An oral agreement for the partition of the property writing. An oral agreement for the partition of the property owned in common is valid and enforceable upon the parties. owned in common is valid and enforceable upon the parties. The Statute of Frauds has no operation in this kind of The Statute of Frauds has no operation in this kind of agreements, for partition is not a conveyance of property but agreements, for partition is not a conveyance of property but simply a segregation and designation of the part of the simply a segregation and designation of the part of the property which belong to the co-owners." (Tolentino, property which belong to the co-owners." (Tolentino, Commentaries and Jurisprudence on the Civil Code of the Commentaries and Jurisprudence on the Civil Code of the Philippines

Philippines, Vol. II, 1983 Edition, 182-183 citing Hernandez v., Vol. II, 1983 Edition, 182-183 citing Hernandez v. Andal, et. al., G.R. No. L275, March 29, 1957)”

Andal, et. al., G.R. No. L275, March 29, 1957)”

Partial performance, however, removes the contract from the Partial performance, however, removes the contract from the operation of the statute

operation of the statute

Guaranty of Another’s Debt; A promis

Guaranty of Another’s Debt; A promise to answer for the debt,e to answer for the debt, default, or miscarriage of another has been defined as an default, or miscarriage of another has been defined as an undertaking by a person, not before liable, for the purpose of undertaking by a person, not before liable, for the purpose of securing or performing the same duty for which the original securing or performing the same duty for which the original debtor continues to be liable

debtor continues to be liable

To bring a promise within the operation of the statute, there To bring a promise within the operation of the statute, there must be a debt or obligation of one other than the promisor for must be a debt or obligation of one other than the promisor for whose default the latter undertakes to be responsible

whose default the latter undertakes to be responsible

The test as to whether a promise is within the statute has been The test as to whether a promise is within the statute has been said to lie in the answer to the question whether the promise is said to lie in the answer to the question whether the promise is an original or a collateral one. If the promise is an original or an an original or a collateral one. If the promise is an original or an independent one, that is, if the promisor becomes thereby independent one, that is, if the promisor becomes thereby primarily liable for the payment of the debt, the promise is not primarily liable for the payment of the debt, the promise is not within the statute. But on the other hand, if the promise is within the statute. But on the other hand, if the promise is collateral to the agreement of another and the promisor collateral to the agreement of another and the promisor becomes thereby merely a surety, the promise must be in becomes thereby merely a surety, the promise must be in writing

writing

In Consideration of Marriage; It is well-settled that any verbal In Consideration of Marriage; It is well-settled that any verbal executory promise or agreement other than mutual promise to executory promise or agreement other than mutual promise to marry, made in consideration of marriage, is embraced within marry, made in consideration of marriage, is embraced within the provisions of the statute of frauds requiring that the provisions of the statute of frauds requiring that agreements made upon consideration of marriage should be in agreements made upon consideration of marriage should be in writing, and signed by the party to

writing, and signed by the party to be charged therewithbe charged therewith Representation as to Credit; A representation made by a Representation as to Credit; A representation made by a stranger to the contract with the intent that the person for stranger to the contract with the intent that the person for whom it is made should obtain credit thereby, must be in whom it is made should obtain credit thereby, must be in writing in order to be a basis of an action for damages against writing in order to be a basis of an action for damages against the party who made the representation, if this turns out to be the party who made the representation, if this turns out to be false or incorrect

false or incorrect

Parties Incapacitated; Where both the contracting parties do Parties Incapacitated; Where both the contracting parties do not have the capacity to consent, the contract is unenforceable. not have the capacity to consent, the contract is unenforceable. Neither party or his representative can enforce the contract Neither party or his representative can enforce the contract unless it has been previously ratified. The ratification by one unless it has been previously ratified. The ratification by one party, however, converts the contract into a voidable party, however, converts the contract into a voidable contract

contract——voidable at the option of the party who has notvoidable at the option of the party who has not ratified; the latter, therefore, can enforce the contract against ratified; the latter, therefore, can enforce the contract against the party who has already ratified. Or, instead of enforcing the the party who has already ratified. Or, instead of enforcing the contract, the party who has not ratified it may ask for contract, the party who has not ratified it may ask for annulment in the ground of his incapacity

annulment in the ground of his incapacity  ________  ________

Art. 1404. Unauthorized contracts are governed by Article 1317 Art. 1404. Unauthorized contracts are governed by Article 1317 and the principles of agency in Title X of this Book.

and the principles of agency in Title X of this Book.  ________

 ________

Ratification Validates Contract; The sale of property made by a Ratification Validates Contract; The sale of property made by a person without authority of the owner is null and void in the person without authority of the owner is null and void in the beginning, but afterwards it becomes perfectly valid and is beginning, but afterwards it becomes perfectly valid and is cured of the defects of nullity which it bore at its execution by cured of the defects of nullity which it bore at its execution by the ratification solemnly made by the said owner upon his the ratification solemnly made by the said owner upon his stating under oath in court that he himself consented to the stating under oath in court that he himself consented to the former’s making the said sale

former’s making the said sale

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Art. 1405. Contracts infringing the Statute of Frauds, referred to Art. 1405. Contracts infringing the Statute of Frauds, referred to in No. 2 of Article 1403, are ratified by the failure to object to in No. 2 of Article 1403, are ratified by the failure to object to the presentation of oral evidence to prove the same, or by the the presentation of oral evidence to prove the same, or by the acceptance of benefit under them.

acceptance of benefit under them.  ________  ________

Failure of Object; If the parties to the action, during the trial, Failure of Object; If the parties to the action, during the trial, make no objection to the admissibility of oral evidence to make no objection to the admissibility of oral evidence to support a contract covered by the statute of frauds, and support a contract covered by the statute of frauds, and thereby permit such contract to be proved orally, it will be just thereby permit such contract to be proved orally, it will be just as binding upon the parties as if it had been reduced to writing as binding upon the parties as if it had been reduced to writing Acceptance of Benefits; The statute of frauds cannot be Acceptance of Benefits; The statute of frauds cannot be invoked when the contract has already been partly executed; it invoked when the contract has already been partly executed; it applies only to executory contracts

applies only to executory contracts  ________  ________

Art. 1406. When a contract is enforceable under the Statute of Art. 1406. When a contract is enforceable under the Statute of Frauds, and a public document is necessary for its registration Frauds, and a public document is necessary for its registration in the Registry of Deeds, the parties may avail themselves of in the Registry of Deeds, the parties may avail themselves of the right under Article 1357.

the right under Article 1357.

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Art. 1407. In a contract where both parties are incapable of Art. 1407. In a contract where both parties are incapable of giving consent, express or implied ratification by the parent, or giving consent, express or implied ratification by the parent, or guardian, as the case may be, of one of the contracting parties 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 shall give the contract the same effect as if only one of them were incapacitated.

were incapacitated.

If ratification is made by the parents or guardians, as the case If ratification is made by the parents or guardians, as the case may be, of both contracting parties, the contract shall be