Void Contract

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VOID

CONTRACT
GROUP 1

Prepared by: Ong, Lominoque, Mabilog, Castillon, Hamdan, Ga-as, Calanza, Mating
Presented by: Ebol, Eijansantos
VOID
Void contracts are those that, because of certain defects,
produce no effect at all. A contract which fails to be
enforceable by law is considered a void contract from the time
when it lacks enforceability.

INEXISTENT
Inexistent contracts refer to agreements which lack one
or some or all of the elements or do not comply with
formalities required by for the existece of a contract.
QUESTIONS VOID
VOID
VALID? NO CONTRACT
BINDING? NO

ENFORCEABLE? NO

MISSING ESSENTIAL
WHY DEFECTIVE?
ELEMENTS

CAN BE RATIFIED? NO

APPLICABLE PROVISIONS? ART.1409

REMEDY TO AVOID? NONE


CHARACTERISTICS
OF VOID CONTRACT
It produces no The action or defense for the
declaration of its inexistence
effect at all. does not prescribe. (Art. 1410)

The defense of illegality is not available


It cannot be ratified. to third persons whose interests are not
directly affected. (Art. 1421)

The right to set up the It cannot give rise to a


defense of illegality
cannot be waived. valid contract. (Art. 1422)
ART 1409. The following
contracts are inexistent and
void from the beginning:
1.) Those whose cause, object or purpose is contrary
to law, morals, good customs, public order or public
policy.
2.) Those which are absolutely simulated or
fictitious.
3.) Those whose cause or object did not exist at the
time of the transaction.
4.) Those whose object is outside the commerce of
men.
ART 1409. The following
contracts are inexistent and
void from the beginning:
5.) Those which contemplate an impossible service.

6.) Those were the intention of the parties relative to


the principal object of the contract cannot be
ascertained.

7.) Those expressly prohibited or declared void by


law.
These contracts cannot be ratified. Neither can the
right to set up the defense or illegality be waived.
1411 PARI DELICTO

WHERE BOTH PARTIES ARE IN PARI


DELICTO, THE FOLLOWING ARE THE
EFFECTS OF A CONTRACT:

ARTICLE
a. The parties shall have no
1411 action against each other

Rules where contract is


b. Both shall be
illegal and the act
constitutes a criminal
prosecuted
offense
c. The price or object shall be
confiscated in favor of the
government
1411 IN DELICTO

WHERE ONLY ONE PARTY


IS GUILTY:
ARTICLE The innocent party may claim
1411 what he has given and shall not
be bound to comply with his
promise.
Rules where contract is
illegal and the act
Example: X sold un licence firearms to Y
constitutes a criminal amounting 10,000. if Y is in good faith believing
offense that the firearms was a legal one, he can claim
the 3,000 to X, or if he did not yet paid X he
shall not be bound to comply with his promise.
X shall be prosecuted and the object sold by
him shall be confiscated.
1412 PARI DELICTO

WHERE BOTH PARTIES ARE IN PARI


DELICTO, THE FOLLOWING ARE

ARTICLE THE EFFECTS OF A CONTRACT:

1412 a. Neither party may recover what


he has given by the virtue of the
contract.
Rules where contract is
illegal but the act does
b. Neither party may demand the
not constitute a criminal
performance of the other's
offense undertaking.
1412 IN DELICTO

WHERE ONLY ONE PARTY IS


GUILTY:
a. The guilty party loses what he
ARTICLE has given by reason of the
contract.
1412 b. The guilty party cannot ask
for the fulfillment of the other's
Rules where contract is undertaking.
illegal but the act does
c. The innocent party may
not constitute a criminal
demand the return of what he
offense has given.

d. The innocent party cannot be


compelled to comply with his
promise.
EXCEPTIONS
IN PARI
DELICTO:
ARTICLE 1415: Recovery by an
Incapacitated person

ARTICLE 1416: Recovery where


contract not illegal per se
Remedies in result to void or inexistent contracts:

Situation Remedies

The party paying the usurious interest can recover the excess of the
Recovery of usurious
maximum allowed under the Usury Law, including interest that have
interest. (Art. 1413)
already been paid.

The innocent party can recover what he has given to the guilty party only if:
1. The contract is for an illegal purpose;
Recovery where contract
2. The contract is repudiated before the purpose has been accomplished
entered is for illegal
or before any damage has been caused to a third party; and,
purpose. (Art. 1414)
3. The court considers that public interest will be subserved by allowing
recover
Recovery can be allowed if one of either guilty parties is incapacitated
Recovery by an and if the interest of justice so demands, regardless if the purpose has
incapacitated person. (Art. not been accomplished or no damage has yet to be caused to a third
1415) party.

Recovery is permitted to both guilty parties, provided:


1. The agreement is not illegal per se but is merely prohibited;
Recovery when contract is 2. The prohibition is designed for the protection of the plaintiff; and,
not illegal per se. (Art. 1416) 3. Public policy would be enhanced by allowing the plaintiff to
recover what he has paid or delivered.

Recovery of amount paid in


Recovery can be made in any excess amount of a given price of any
excess of ceiling price. (Art.
article or commodity fixed by the Ceiling Law.
1417)
Recovery of additional
Compensation for the service rendered beyond the time limit of the
compensation for service
normal work range of eight (8) hours per day, stated by the Labor
rendered beyond time
Code, may be recovered by any employee, but not to the exceptions
limit (Art. 1418)
stated by the Labor Code.

Recovery of amount of If an employee receives less than the minimum wage rate, he can
wage less than minimum still recover the deficiency with legal interest and the employer shall
fixed. (Art. 1419) be criminally liable.
THANK YOU!

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