Short answer. A defect in the contract at the moment it was made, not something that happened later. Article 1409 lists seven: an unlawful cause or purpose, absolute simulation, a cause or object that did not exist, an object outside the commerce of men, an impossible service, an unascertainable object, and contracts a law prohibits.

What the law says

(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; (5) Those which contemplate an impossible service;

Civil Code, Article 1409 — Void or Inexistent Contracts. Read the full provision →

What the law says

(6) Those where 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.

Civil Code, Article 1409 — Void or Inexistent Contracts. Read the full provision →

The defect has to exist on day one

Article 1409 of the Civil Code calls these contracts inexistent and void from the beginning, and the phrase is doing real work. Nullity is judged by the state of affairs when the agreement was made, not by what went wrong afterwards. A contract that was sound when signed and became impossible or unprofitable later is not void; that is a question of breach, of loss of the thing due, or of the parties' remedies. Conversely, a contract that was defective at the outset stays void no matter how smoothly it has been performed since, and no matter how much both sides have relied on it.

Nothing to sell, and nothing that can be sold

Three of the grounds go to the subject matter: Those whose cause or object did not exist at the time of the transaction; Those whose object is outside the commerce of men; Those which contemplate an impossible service;. The first covers an agreement over a thing that had already been destroyed or had never come into being. The second covers what cannot lawfully be the object of private dealings at all — public property devoted to public use, and things the law removes from commerce. The third covers an undertaking that is impossible in itself, as opposed to one merely difficult, expensive, or beyond this particular party's means.

When nobody can say what was agreed, or a statute says no

The remaining two grounds are Those where the intention of the parties relative to the principal object of the contract cannot be ascertained; Those expressly prohibited or declared void by law. The first is not about an ambiguous clause — courts interpret ambiguity. It is about a document from which even the principal object cannot be worked out, so there is nothing to enforce. The second is the widest and the easiest to miss, because it sends you outside the Civil Code entirely: special statutes declare particular transactions void, and an agreement can be perfectly balanced, fully consented to and still fall under one of them.

There is no deadline, and often no recovery either

Two consequences follow that surprise people on both sides. Under Article 1410, the action or defence for the declaration of the inexistence of a contract does not prescribe, so a void agreement can be attacked however many years have passed. But winning that point does not always mean getting your money back. Where the nullity comes from an unlawful cause and both parties were equally at fault, Articles 1411 and 1412 generally leave them where they stand — neither may recover what he gave, and neither may demand performance. The party who thinks nullity is a route to restitution frequently finds it is only a route out.

Cases citing this provision

These Supreme Court decisions cite the provision above. We list them so you can read them yourself; the summaries of what each decided are not ours to give.

Related provisions

Note. Statute text quoted on this page is reproduced from the official enactment and is linked to the full provision. The explanation around it is general legal information from Vivas & Nobles Law Office, not legal advice. Whether it applies to your situation depends on facts only a lawyer reviewing them can assess.