• Michael Dizon

Invalidity of Contract in the Philippines: Grounds for Annulment

A chapter I wrote with JJ Disini on "Invalidity of Contract in the Philippines: Grounds for Annulment Based on Defects of Intellect and Will" has been published in the book Studies in the Contract Laws of Asia IV: Invalidity. Below is an abstract:

The chapter explains the Philippine laws and rules on invalidity of contracts. Under Philippine law, a voidable contract is a particular kind of defective contract that is invalid because of a defect in consent. A party’s consent may be impaired due to erroneous belief (mistake or fraud) or reprehensible conduct (violence, intimidation, or undue influence). Mistake is generally understood to be a false belief or notion about something that is material to the contract. On its part, fraud is committed through the use of insidious words or machinations to induce another party to enter into a contract. Violence involves the use of serious or irresistible force to compel a party’s consent, whereas intimation is carried out through threats or actions that produce a reasonable and well-grounded fear of an imminent and grave evil on the part of the other party. Undue influence is present when a party takes improper advantage of his or her power over the will of another. A voidable contract is subject to an action for annulment. But, prior to annulment, a voidable contract is valid and binding and produces legal effects. A voidable contact may also be ratified by the injured party, and this would cleanse the contract of its defect. When a court annuls a voidable contract, the parties are subject to a number of duties including the obligation of mutual restitution.

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