Unenforceable Contract valid, but cannot be

enforced unless ratified according to law. No legal effect

unless ratified.
Kinds:
a. Unauthorized or insufficient authority. Those
entered into the name of another when:
i.
No authority granted
ii.
Excess of the authority granted
b. Those that do not comply with the Statute of
Frauds. Can be cured when there is
acknowledgement.
Scope of Statute of Frauds
i.
Agreement not to be performed within a
year from making of contract
ii.
Promise to answer for the debt, default,
or miscarriage of another
iii.
Agreement in consideration of marriage
other than mutual promise to marry.
iv.
Agreement for sale of goods, etc.at
price not less than 500
v.
Agreement for leasing for a longer
period than one year
vi.
Agreement for the sale of real property
or of an interest therein
vii.
Representation as to the credit of a third
person
c. Those where both parties are incapable of
giving consent. Can be cured by ratification.

ii.

Those which are absolutely simulated

or fictitious
iii.
Those without cause or object
iv.
Those whose object is outside the
commerce of men
v.
Those which contemplate an impossible
service
vi.
Those where the intention of the parties
cannot b ascertained
b. Contracts expressly prohibited by law
RULES where contract is ILLEGAL
When act
constitute a
criminal offense
Both
partie
s are
in pari
delict
o or
equall
y
guilty

Modes of Ratification
a. Failure to object the presentation of oral
evidence
b. Acceptance of benefits under the contract
Can strangers assail the unenforceable contract?
No. Strangers to a voidable contract cannot
bring action to annul the same contract.

Void Contract produces no effect. This contract is

inexistent.
Characteristics:
a. Produces no effect at all
b. Cannot be ratified
c. The right to set up defense of illegality cannot be
waived
d. Action or defense for the declaration of its
inexistence does not prescribe
e. Defense of illegality is not available to strangers
f. Cannot give rise to a valid contract

Only
one
party
is
guilty

a. The
parties
have no
action
against
each
other
b. Both shall
be
prosecute
d
c. Thing or
price will
be
confiscat
ed in
favor of
governm
ent
Rules above only
applies to the
guilty party

When act does not

constitute a criminal
offense
a. Neither party may
recover what was
given
b. Neither party may
demand
performance

a. Guilty party:
i.
Loses
what he
has given
ii.
Cannot
ask for the
fulfillment
b. Innocent party
i.
May
demand
recovery
of what
was given
ii.
Cannot be
compelled
to comply

Kinds:
a. Contracts lacking the essential requisites or
elements
i.
Principle of Freedom is impaired.
(Cause, object or purpose is contrary to
law etc.)

INSTANCES when one party may ask for RECOVERY

a. Payment of usurious interest

b. When money is paid or property delivered for an
illegal purpose
c. When money is paid or property delivered by an
incapacitated person
d. Agreement which is not illegal per se and the
prohibition is designed for the protection of the
plaintiff
e. Payment of any amount in excess of the
maximum price allowed by law for a particular
commodity or article
f. When services is rendered beyond the
maximum number of hours of labor fixed by law.
Party may demand additional compensation
g. When laborer receives less than the minimum
wage rate set by law
Kinds of contract based
on divisibility
Divisible
Indivisible

Effect of illegality
The whole contract is void
and unenforceable
Illegal ones can be
separated from the legal
portions

Natural Obligations based not on positive law but on

equity and natural law. They do not grant such right of
action to enforce performance. Voluntary performance is
the essence of this obligation pertaining to moral duties.
EXAMPLES OF NATURAL OBLIGATIONS
a. Performance after civil obligation has prescribed
b. Reimbursement of a third person for a debt that
has prescribed
c. Restitution by minor after annulment of contract
d. Delivery by minor of money or fungible thing in
fulfillment of obligation
e. Performance after action to enforce civil
obligation has failed
f. Payment by heir of debt exceeding value of
property inherited
g. Payment of legacy after will has been declared
void