Contract ClassificationBasis of DefectStatus of the ContractLegal EffectsPrescriptive PeriodRatifiability A. RescissibleThere is damage or injury either to one of the contracting parties or to a third person. Valid Considered valid and enforceable until they are rescinded by a competent court. The action for prescription may prescribe. NO 1. Contracts entered into in behalf of wards 2. Contracts agreed upon in representation of absentees 3. Contracts undertaken in fraud of creditors a. existing credit prior to the contract to be rescinded b. fraud on the part of the debtor c. creditor cannot recover his credit in any other manner 4.
Contracts which refer to things under litigation 5. All other contracts specially declared by law to be subject to rescission B. VoidableThere is vitiation of consent or legal incapacity of one of the contracting parties. ValidConsidered valid and enforceable until they are annulled by a competent court. The action for annulment or the defense of annulability may prescribe. YES 1. Contracts signed without capacity 2. Contracts signed without mutual assent C. UnforceableThe contract is entered into in excess or without any authority, or does not comply with the Statute of Frauds, or both contracting parties are legally incapacitated.
ValidCannot be enforced by a proper action in court. 1. Those entered into in 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 as set forth in this number. In the following cases an agreement hereafter made shall be unenforceable by action, unless the same, or some note or memorandum, thereof, be in writing, and subscribed by the party charged, or by his agent. 3. Those where both parties are incapable of giving consent to a contract.