Defective contracts fall into four categories of increasing gravity. Rescissible contracts are valid and binding but may be rescinded due to economic prejudice or lesion (for example, contracts entered into in fraud of creditors, or those causing lesion to wards or absentees); rescission is a subsidiary remedy and the action prescribes. Voidable (annullable) contracts are valid until annulled; they suffer from a vice of consent (mistake, violence, intimidation, undue influence, or fraud) or from the incapacity of one party (such as a minor); they can be ratified, which cures the defect, and the action to annul prescribes in four years. Unenforceable contracts cannot be enforced by court action unless ratified; they include those that fail the Statute of Frauds (certain contracts not in writing), those entered by one without authority or in excess of authority, and those where both parties are incapable of giving consent; they can be ratified. Void or inexistent contracts produce no effect at all — they are absolutely null, cannot be ratified, and the defense of nullity does not prescribe; examples include contracts with an illegal cause or object, those absolutely simulated, and those contrary to law, morals, or public policy. So the four differ in whether the contract is valid, whether it can be ratified, and whether the action or defense prescribes.
Four Degrees of Defect
- Rescissible — valid but rescindable for lesion/prejudice (e.g., fraud of creditors); subsidiary, prescribes;
- Voidable — valid until annulled; vice of consent or incapacity; ratifiable; annul in 4 years.
Unenforceable and Void
- Unenforceable — cannot be enforced unless ratified (Statute of Frauds, no/excess authority, both incapable); and
- Void/inexistent — no effect at all, cannot be ratified, defense of nullity does not prescribe (illegal cause/object, simulated, contrary to law).
The Key Questions
They differ on: is the contract valid? can it be ratified? does the action/defense prescribe?
Practical Takeaways
- Rescissible and voidable contracts are valid until set aside; voidable ones can be ratified;
- Unenforceable ones need ratification to be enforced;
- Void contracts are null from the start and imprescriptible.
Frequently Asked Questions
What are the kinds of defective contracts? Rescissible (valid but rescindable for lesion), voidable (valid until annulled for a vice of consent or incapacity), unenforceable (cannot be enforced unless ratified), and void (no effect at all, cannot be ratified).
Which defective contracts can be ratified? Voidable and unenforceable contracts can be ratified, which cures the defect. Rescissible contracts are valid but rescindable, and void contracts cannot be ratified.
Does the defect in a void contract prescribe? No. A void or inexistent contract produces no effect, cannot be ratified, and the defense of nullity does not prescribe. It may be raised at any time.
What is an example of a void contract? A contract with an illegal cause or object, one that is absolutely simulated, or one contrary to law, morals, good customs, public order, or public policy.
This commentary is for general informational purposes only and does not constitute legal advice. For guidance specific to your situation, please consult a licensed attorney.
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