Chapter 8 Unenforceable Contracts Contracts that cannot be sued or enforced unless ratified; thus, it is as if they have no EFFECT yet.

Kinds of Unenforceable Contracts: a. b. c. Unauthrized contract (par.1, Art. 1403) Those that fail to comply with the Statue of Frauds (par.2, Art.1403) Those where both parties are incapable of giving consent to a contract (par.3, Art. 1403)

Art. 1403 Par.1: talks about a person who has no LEGAL AUTHORITY to alienate a thing, alienates it to another will not be enforceable. NOTE: mere lapse of time is not the ratification required by law for it to be enforced. Three kinds of person who has no authority: 1. 2. 3. One who has no authority to give: Example: Neighbor A sells the house of neighbor B without his consent, this cannot be enforced because A has no authority to sell his neighbors possession. One who has legal representation but no legal authority: Example: A mother sold his sons car without his consent, the son was 21 yrs old at that time. This cannot be enforced because she exceeds her capacity as a legal representor by selling a possession which belongs to a person NOT A MINOR. One who has acted beyond his authority: Example: A utility personnel entered into a cleaning service contract of another company in behalf of his company. This cannot be enforced because he exceeds his authority as a utility personnel, who has no authority to make business with other companies.

Par.2: NOTE: that a contract can be done orally and in writing, to be enforced under the law the burden of proof lies on the part of the person enforcing the contract. Paragraph 2 talks about the Statue of Frauds, it means that for some contracts to be enforceable and has the force of law it needs to be in writing. This is to prevention frauds and discouraging it. BASIC PRINCIPLES: - Applies to EXECUTORY contracts meaning that both side of the party has not done their part in the contract yet, but if one party has done a PARTIAL or COMPLETED his part in the obligation then it would be prejudice to that party to not comply to his part even there is no contract. Example: A offered his car to B for 100,000 pesos, B gave 25,000 as partial payment. NOTE that this was an oral contract between two parties. A refuse to sell the car and invoke STATUE OF FRAUD, there was no contract. Is A contention correct? Answer NO, because their partial payment and this will prejudice the right of B. AGAIN in the case above there was no down payment and A refuse to sell the car. Can B enforce the agreement? ANS. No because this is one of the contracts needs to be in writing. - Statue cannot apply if the action is neither for damages because of the violation of an agreement nor for the specific performance of said agreement. Explain: if the contract was in verbal and the action is not to enforce the said contract but the improvements and performance then statue of frauds cannot be invoke. Example: A lease a house FOR MORE THAN ONE YEAR and did some improvements, his contract was parol (oral) contract. At the end of his contract the owner wants to increase his rent. Owner invoke status of frauds for the contracts needs to be in writing, this will not be a proper defense when A is reimbursing for the IMPROVEMENTS he made during his lease. - The Statute of Frauds is exclusive, that is, it applies only to the agreement or contracts enumerated therein. (Cannot invoke to be in writing) a. loan is not one of those enumerated in the statute of frauds. b. less than 500 is not included c. wills and testaments and the formalities which surrounds their execution are governed by separate and specificprovisions of law. d. promise to marry is not governed by this statute. - The DEFENSE of statue of frauds may be waived: -when the party has the right to object and did not so, then it is deemed waived. - two ways : a. timely failure to object to the presentation of evidence to prove the oral agreement. b. acceptance of benefits under them. - The statute of Frauds is a personal defense, that is, an agreement infringing it cannot be assailed by third persons. EXPLAIN: if the right is not yet transferred (delivered) to person A, then A cannot have the right of the thing yet and he is deemed a third person or persons. Example: A in oral agreement will buy this book from B, until A has not paid and B delivered the book, he is not yet vested the right to do anything with the book. If C is holding the book, A cannot compel C to give it to him because he is a third person in party.

- the statute of frauds is not void merely unenforceable at the moment. - the statute of frauds does not determine the credibility or the weight of evidence. It merely concerns itself with the admissibility thereof. - the statute of frauds does not apply if it is claimed that the contract does not express the true nature agreement of the parties. As long as the true or real agreement is not COVERED by the statute of frauds, it is provable by oral evidence. SIX SPECIFIC AGREEMENTS mention in sub-paragraphs of ART.1403, par.2. (MUST BE IN WRITING) 1. An Agreement that by its terms is not to be performed within a year from the making thereof. EXPLAIN: when the terms of contract is more than ONE YEAR then it should be in writing. But if any changes of a said contract more than one year CAME before than one year then it can still be done. Example: A made oral agreement with B to clean his car for the next 3 years. Then A stop cleaning after two days, B can compel the remaining days for the year to be enforced because it still under one year but more than that it has to be in writing. 2. A special promise to answer for debt, default, or miscarriage of another. EXPLAIN: if someone is going to be take another persons liability it muse be in writin g. (legal dapat and realistic) 3. An agreement made in consideration of marriage other than a mutual promise to marry. EXPLAIN: For purpose of property or possession distribution ENTERING into a marriage. 4. An agreement for the sale of goods, chattels, or things in action, at a price not LESS THAN FIVE HUNDRED PESOS unless there is a PARTIAL or COMPLETE payment or service by the other party. 5. An agreement for the leasing for a longer period than one year, or for the sale of real property or of an interest therein. 6. A representation as to the credit of third person. EXPLAIN: Any person guarantying another MUST BE IN WRITING. PAR 3. BOTH PATIES ARE INCAPABLE TO GIVE CONSENT. ART 1404. Self explanatory na ito just relate to 1317 of the same title of the book. ART. 1405. Contracts that are not unenforceable can be enforced due to: a. b. failure to object to the presentation of oral evidense. Acceptance of benefits under them

ART. 1406. relate to Art 1357, for public documents convience in registration, it must be VALID and ENFORCEABLE. EXPLAIN: ones an oral agreement been ratified then it is VALID to be Enforced then public documents can be made to be registered. ART. 1407. EXPLAIN: if both parties are incapable of giving consent entered into a contract and after awhile one of the partys guardian consented then it is presumed that only one of them were encapacitated. ( self-explanatory na po ito) If both parties guardian gave consent then it is deemed it valid from INCEPTION (beginni ng). ART. 1408. STRANGERS ARE NOT A PROPER PARTY TO RATIFY THE UNENFORCEABLE CONTRACTS.