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CONTRACTS
REFORMATION OF INSTRUMENTS
*REFORMATION- is a remedy allowed by law by means of which a written instrument is
amended to express the real intention of parties if the instrument fails to
express such.
REQUISITES: 1. must be a meeting of the minds of parties (consent).
2. true intention is not expressed in the instrument
3. failure due to mistake, fraud, inequitable conduct or accident.
4. there must be a clear and convincing evidence of fraud, mistake,
inequitable conduct of accident.
5. the facts upon which relief by way of reformation of the instrument is
sought are put in issue by the pleadings.
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CONTRACTS
MUTUAL MISTAKE- is mistake of fact that is common to both parties of the instrument
which cause failure of the instrument to express their true intention.
REQUISITES OF MUTUAL MISTAKE:
1.
2.
3.
4.
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DEFECTIVE CONTRACTS
*4 KINDS OF DEFECTIVE CONTRACTS:
1. Rescissible contracts
2. Voidable contracts
3. Unenforceable contracts
4. Void or inexistent contracts
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RESCISSIBLE CONTRACTS
RESCISSIBLE CONTRACTS- those validly agreed upon because all the essential elements
exist and, therefore, legally effective
*RESCISSION- a remedy granted by law to the contracting parties and sometimes event to third
persons in order to secure reparation of damages caused them by a valid
contract.
REQUISITES OF RESCISSION:
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VOIDABLE CONTRACTS
CONTRACTS
REQUISITES OF RATIFICATION:
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For IMPLIED: 1. There must be knowledge of the reason which renders the contract
voidable.
2. Such reason must have ceased.
3. The injured party must have executed an act which necessarily implies
an intention to waive his rights.
For EXPRESS: Same as implied but the former is effected expressly.
WHO MAY RATIFY:
For INCAPACITATED PERSONS:
1. The guardian
2. The injured party provided he is
already capacitated
For REASON OF VICES OF THE WILL:
1. The party whose consent is
vitiated
WHO MAY APPLY FOR ACTION OF ANNULMENT:
1. The plaintiff must have an interest in the contract.
2. The victim and not the party responsible for the defect.
*RESTITUTION = Restoration
LOSS OF THE THING BY THRU THE FAULT OF THE PERSON WHO HAS RIGHT
TO ANNUL:
1. If lost WITHOUT THE FAULT =
obligation extinguished
2. If lost WITH THE FAULT =
obligation not extinguished but converted into indemnity for damages
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UNENFORCEABLE CONTRACTS
UNENFORCEABLE CONTRACTS- those contracts that cannot be enforce or given effect in
a court of law or sued upon by reason of certain defects
until and unless they are ratified
KINDS OF UNENFORCEABLE CONTRACTS:
1. those entered into 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
3. those where both parties are incapable of giving
consent.
UNAUTHORIZED CONTRACTS- those entered into the name of another person by one who
has been given authority or legal representation of who has
acted beyond his powers.
STATUTE OF FRAUDS
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CONTRACTS
1. Cannot apply if action is nor for damage because of violation of agreement or for specific
performance
2. Exclusive= applicable only to the agreement enumerated therein
3. Applies only to executor contracts
4. Contracts not valid but merely unenforceable
5. Personal defense
6. Concerns admissibility of evidence, not credibility
7. May be waived
CONTRACTS
If the parent or guardian of either party or if one of the parties after regaining capacity,
ratifies the contract
If the ratification is made by the parents or guardians of both parties or by both parties
after regaining capacity, the contract is validated and retroacts to the time it was entered.
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Does not
VOID OR INEXISTENT CONTRACTS prescribe
VOID CONTRACTS- void because of certain defects, generally produce no effect at all.
INEXISTENT CONTRACTS- agreements which lack one or some or all of the elements, or do
not comply with formalities which are essential for the existence of a contract.
CHARACTERISTICS:
1. No force or effect
2. Cannot be ratified
3. Right to set up the defense of illegality cannot be waived
4. Defense for the declaration of its inexistence does not prescribe
5. Defense of illegality not available to 3rd person
6. Cannot give rise to a valid contract.
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CONTRACTS
KINDS OF RECOVERY
1. RECOVERY BY AN INCAPACITATED PERSON
- Exception to In Pari Delicto in contracts that constitutes criminal offense
- Not necessary that illegal purpose has been accomplished
- allowed when interest of justice so demands
2. RECOVERY WHERE CONTRACT NOT ILLEGAL PER SE
- Exception to In Pari Delicto in contracts that constitutes criminal offense
Will be provided if the following requisites are present:
1. Agreement is not illegal per se but merely
prohibited
2. Prohibition is designed for the protection
of the plaintiff
3. Court considers that public policy will be
promoted by allowing recovery
3. RECOVERY OF AMOUNT PAID IN EXCESS OF CEILING PRICE
- provided by ceiling law
- determined by authority of law, as by Executive Order
- PURPOSE= to curb the evils of profiteering or black marketing
4. RECOVERY OF ADDITIONAL COMPENSATION FOR SERVICE RENDERED
BEYOND TIME LIMIT
- governed by labor code
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