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CONTRACTS
Stages in the life of a contract:
1. Preparation/Generation2. Perfection/Birth3. Consummation/Death
Characteristics of Contracts: (ROMA)
1. R elativity (Art. 1311)2. O bligatoriness & Consensuality (Art. 1315)3. M utuality (Art. 1308)4. A utonomy (Art. 1306)
Stipulation pour Autrui - stipulation in favor of a 3rd party.
Requisites:1. The stipulation must be part, not whole of the
contract;2. the contracting parties must have clearly and
deliberately conferred a favor upon a 3rd person;3. the 3rd person must have communicate his
acceptance;4. neither of the contracting parties bears the legal
representation of the 3rd party.
General Rule: Contracts (except real contracts) are perfected from the moment there is a manifestation of concurrence between the offer and the acceptance regarding the object and the cause.Except: Acceptance by letter or telegram which does not bind the offerror except from the time it came to his knowledge.
Theories applied to perfection of contracts:1. Manifestation theory - the contract is perfected
from the moment the acceptance is declared or made;
2. Expedition theory - the contract is perfected from the moment the offeree transmits the notification of acceptance to the offerror;
3. Reception theory - the contract is perfected from the moment that the notification of acceptance is in the hands of the offerror;
4. Cognition theory - the contract is perfected from the moment the acceptance comes to the knowledge of the offerror. This is the theory adopted in the Philippines.
Persons incapacitated to give consent:1. Unemancipated minors;Except:
Contracts for necessaries; Contracts by guardians or legal
representatives; Contracts where the minor is estopped to
urge minority through his own misrepresentation;
Contracts of deposit with the Postal Savings Bank provided that the minor is over 7 years of age.
2. Insane or demented persons unless the contract was entered into during a lucid interval;
3. Deaf-mutes who do not know how to write.
The following may not acquire by purchase, even by public or judicial auction, in person of though the mediation of another:
1. the guardian, with respect to the property of his ward;
2. agents, with respect to the property whose administration or sale may have been entrusted to them, unless the consent of the principal has been given;
3. executor or administrator, the property of the estate under administration;
4. public officers and employees, with respect to the properties of the government, its political subdivisions, GOCCs, that are entrusted to them;
5. judges, justices, prosecuting atty.’s, clerks of courts, etc., the property in custogia legis; and
6. any other person specially disqualified by law.
Simulation of a contract
Kinds of simulation:
1. Absolute - no real transaction is intended;Effect: simulated contract is inexistent.
2. Relative - the real transaction is hidden;Effect: the apparent contract is void, but the hidden contract is valid if it is lawful and has the necessary requisites. : as to third persons without notice - the apparent contract is valid on the principle of estoppel.
Effect of:Absence of cause the contract confers
no right and produces no legal effect
Failure of cause does not render the contract void
Illegality of cause the contract is null and void
Falsity of cause the contract is void unless the parties can show that there is another cause which is true and lawful
Lesion does not invalidate the contract unless: there is fraud,
mistake or
undue influence when the parties
intended a donation or some other contract.
Form of Contracts
Rules:
1. Contracts shall be obligatory, in whatever form they may have been entered into, provided all the essential requisites for their validity are present.
2. Contracts must be in a certain form when the law requires that a contract be in some form to be: valid; enforceable; for the convenience of the parties.
3. The parties may compel each other to reduce the verbal agreements to writing except: Solemn contracts such as the following:
a. Donations of real estate or of movables if exceeding Ps 5,000;
b. Transfer of large cattlec. Stipulation to pay interest in loansd. Sale of land through an agent
(authority must be in writing)e. Partnership to which immovables are
contributedf. Stipulation limiting carrier’s liability to
less than extra-ordinary diligenceg. Contracts of antichresish. Sale of vessels
Note: in such case, if the contract is not in writing it is VOID Real contracts that require delivery for
perfection. In contracts under the Statute of Frauds
where the party sued makes a timely objection to the absence of a written memorandum.
Reformation of instruments:
Requisites:
1. Meeting of the minds to the contract;2. The true intention is not expressed in the
instrument by reason of mistake, accident, relative simulation, fraud, inequitable conduct (MARFI).
3. Clear and convincing proof of MARFI.
Cases when there can be no reformation:1. Simple, unconditional donations inter vivos;2. Wills;
3. When the agreement is void.
Classes of Defective Contracts: (RUVI)1. R escissible2. U nenforceable3. V oidable4. Void or Inexistent
COMPARATIVE TABLE OF DEFECTIVE CONTRACTS:
VOID VOIDABLE RESCISSIBLE UNENFORCE-ABLE
1. defect is caused by lack of essential elements or illegality
2. not cured by prescription
3. cannot be ratified
4. not binding
1. defect is caused by vice of consent
2. cured by prescription
3. can be ratified
4. binding until annulled
1. defect is caused by injury/ damage either to one of the parties of to a 3rd person
2. cured by prescription
3. need not be ratified
4. binding unless rescinded
1. defect is caused by lack of form, authority, or capacity of both parties
2. not cured by prescription
3. can be ratified
4. binding unless the defect is raised against enforcement.
RESCISSIBLE CONTRACTS
Contracts which may be rescinded:
1. those entered into by guardians where the ward suffers lesion of more than ¼ of the value of the things which are objects thereof;
2. those agreed upon in representation of absentees, if the latter suffer lesion by more than ¼ of the value of the things which are subject thereof;
3. those undertaken in fraud of creditors when the latter cannot in any manner claim what are due them;
4. those which refer to things under litigation if they have been entered into by the defendant without the knowledge and approval of the litigants and the court;
5. all other contracts especially declared by law to be subject to rescission;6. payments made in a state of insolvency on account of obligations not yet enforceable;
Circumstances denominated as badges of fraud:
1. consideration of the conveyance is inadequate or fictitious;2. transfer was made by a debtor after a suit has been begun and while it is pending against him;3. sale upon credit by an insolvent debtor;4. transfer of all his property by a debtor when he is financially embarrassed or insolvent;
5. transfer is made between father and son, where there are present some or any of the above circumstances;6. failure of the vendee to take exclusive possession of the property;
Distinctions:
RESCISSION RESOLUTION (Art. 1191)
1. Action by the contracting parties even by a 3rd party;
2. based on lesion/fraud of creditors;
3. courts cannot grant periods for compliance
1. Action only by the injured party;
2. based on non-fulfillment of the obligation;
3. courts may grant periods
VOIDABLE CONTRACTS
Causes of extinction of action to annul:1. Prescription
the action must be commenced within 4 years from: the time the incapacity ends; the time the violence, intimidation or undue influence ends; the time the mistake or fraud is discovered.
2. Ratification Requisites:
a. there must be knowledge of the reason which renders the contract voidable;b. such reason must have ceased;
c. the injured party must have executed an act which expressly or impliedly conveys an intention to waive his right.
3. By loss of the thing which is the object of the contract through fraud or fault of the person who is entitled to annul the contract.
UNENFORCEABLE CONTRACTS
Kinds of unenforceable contracts:1. those entered into in the name of another by one without or acting in excess of authority;2. those where both parties are incapable of giving consent;3. those which do not comply with the Statute of Frauds.
Agreements within the scope of the Statute of Frauds:1. Agreements not to be performed within one year from the making thereof;2. Promise to answer for the debt, default or miscarriage of another;3. Agreement in consideration of marriage other than a mutual promise to marry;4. Agreement for the sale of goods, etc. at a price not less than Ps500.005. Contracts of lease for a period longer than one year;6. Agreements for the sale of real property or interest therein;7. Representation as to the credit of a 3rd person.
Modes of Ratification:1. For contracts infringing the Statute of Frauds:
expressly impliedly - by failure to object to the presentation of oral evidence to prove the contract, or by the
acceptance of benefits under the contract.2. If both parties are incapacitated, ratification by their parents or guardians shall validate the contract
retroactively.
VOID OR INEXISTENT CONTRACTS
The following contracts are void:1. Those whose cause, object or purpose is contrary to law, morals good customs, public order or public policy;2. Those whose object is outside the commerce of men;3. Those which contemplate an impossible service;4. Those where the intention of the parties relative to the principal object of the contract cannot be ascertained;5. Those expressly prohibited or declared void by law;
The following contracts are inexistent:1. Those which are absolutely simulated or fictitious;2. Those whose cause or object did not exist at the time of the transaction.
CONTRACTS
Art 1305
ELEMENTS OF A CONTRACT
a. Essential Elements 1.Consent 2.Subject Matter 3.Cause or Consideration
b. Natural Elements- presumed to exist, unless the contrary is stipulated
Ex. Warrants against eviction and against hidden defects
c. Accidental Elements – existence of such is dependent on the agreement of the parties.
Classification of Contractsa. According to perfection or formation
1. Consensual2. Real-perfected by delivery3. Formal or Solemn
b. According to cause of equivalence of the value of prestations:1. Onerous2. Gratuitous or Lucrative3. Remunerative
c. According to Importance or dependence of one upon another1. Principal – can stand alone2. Accessory – depends upon the existence of another contract3. Preparatory – here, the parties do not consider the contract as an end by itself, but as a means thru which future
transaction or contracts may be madeEx. Agency, partnership
d. According to the parties obligated1. Unilateral
2. Bilateral
e. According to their Name or Designation1. Nominate2. Innominate
f. According to the risk of fulfillment1. Commutative2. Alienatory
g. According to the time of performance or fulfillment1. Executed- one completed at the time the contract is entered into2. Executory – one where the prestations are to be complied with at some future time
h. According to subject matter1. Contracts involving things2. Contracts involving rights or credit3. Contracts involving services
i. According to obligations imposed and required by law1. Ordinary2. Institutional-like contract of marriage
j. According to the evidence required for its proof1. Those requiring merely oral or parol evidence2. Those requiring written proof
k. According to the number of persons actually and physically entering into the contracts1. Ordinary – two parties are represented by different persons2. Auto Contracts –where only one person represents two opposite parties, but in different capacities
l. According to the number of persons who participated in the drafting of the contract1. Ordinary2. Contract of Adherence
m. According to the nature of the contract1. Personal2. Impersonal
STAGES OF A CONTRACTa. Preparationb. Perfectionc. Consummation (or death or termination)
Basic Principles or Characteristics of a Contracta. Freedom to stipulateb. Obligatory force and compliance in good faithc. Perfection by mere consentd. Both parties are mutually bounde. Relativity
Art 1306 – Freedom or autonomy of contract
Art 1307
Four Kinds of Innominate Contractsa. Du ut des (I give that you may give)b. Do ut facias (I give that you may do)c. Facio ut des (I do that you may give)d. Facio ut facias (I do that you may do)
Art 1308-1310
MUTUALITY OF CONTRACTS
The validity or fulfillment of a contract cannot be left to the will of one of the contracting parties. The validity or fulfillment may be left to the will of a third person. The validity or fulfillment may be left to chance.
Art 1311
This principle stresses the Principle of Relativity.Contracts are generally effective only between the parties, their assigns and their heirs.
Exceptions:a. Where the obligation arising from the contract are not transmissible by their nature, by stipulation, or by provision of law.b. Where there is stipulation pour atrui (a stipulation in favor of a third party)c. Where a third person induces another to violate his contractd. Where, in some cases, third persons may be adversely affected by a contract where they did not participate.e. Where the law authorizes the creditor to sue on a contract entered into by his debtor.
Art 1312A real right binds the property over which it is exercised.Exception to the general rule that a contract binds only the parties.
Art 1313Right of defrauded creditor.
Art 1314Requisites before a third person in this article can be held for damages
a. Existence of a valid contractb. Knowledge on the part of the third person of the existence of the contractc. Interference by the third person without legal justification or excuse
Art 1315-1316Perfection of contracts
Art 1317Requisites for a Person to Contract in the Name of Another
a. He must be duly authorized (expressly or impliedly)b. Or he must have by law a right to represent himc. Or the contract must be subsequently ratified
Art 1318Requisites of Contracts
a. Consent (Art 1319-46)b. Object (Art 1347-1349)c. Cause (Art 1350-55)
Art 1319Definition of Consent
-Art 1319,first paragraph
Requisite of Consenta. There must be two or more partiesb. The parties must be capable or incapacitatedc. There must be no vitiation of consentd. There must be no conflict between what was expressly declared and what was really intendede. The intent must be declared properly
Requisites for the meeting of minds
a. An offer that must be certainb. And an acceptance must be unqualified and absolute
Concurrence of offer and acceptance (Art 1319-26) Legal capacity of contracting parties (Art 1327-29) Characteristics of Consent (Art 1330-46)
Art 1320Forms of Acceptance
Art 1322Acceptance of an Offer made thru an agent
Art 1323Other instances when the offer becomes ineffective
a. When the offeree expressly or impliedly rejects the offerb. When the offer is accepted with qualification or conditionc. When before acceptance is communicated, the subject matter becomes illegal or impossibled. When the period of time given to the offeree within which he must signify his acceptance has already lapsede. When the offer is rejected in due tome
Art 1324Option ContractOption- it is a contract granting a person the privilege to buy or not to buy certain objects at anytime within the agreed period at a fixed price
Perfection of OptionWhen there is a meeting of minds on the option
Art 1325-1326If the advertisement contains all the specific particular needed in a contract, it is a definite offer.If important details are left out, the advertisement is not a definite offer, but a mere invitation to make an offer.
Art 1327 in relation to Art 1329Who cannot give consent.
Art 1328Voidable contracts by reason of incapacity
Art 1330This article enumerates causes or vices of consent.
Art 1331 in relation to Art 1333Mistake
It is a false belief about something.
Requisites for mistake to vitiate consenta. Object of the contractb. The condition which principally proved or induced one of the partiesc. Identify or qualifications, but only if such was the principal cause of the contract.d. The error must be excusablee. The error must be a mistake of fact
Kinds of Mistakea. Mistake as to the object
1. Mistake as the identity of the thing2. Mistake as to the substance of the thing3. Mistake as to the conditions of the thing4. Mistake as to the quantity of the thing
b. Mistake as to person1. Mistake must be either with regards to the identify or with regard to the qualification of one of the contracting parties
2. Such identity or qualification must have been the principal consideration for the celebration of the contract
Art 1332Burden of proof in case of mistake
Art 1333Effect of knowledge of risk
Art 1334
Mistake of LawIs that which arises from an ignorance of some provision of law, or from an erroneous interpretation of its meaning, or from an
erroneous conclusion as to the legal effect of the agreement, on the part of one of the parties.
Requisites:a. There must be mutual errorb. The error must refer to the legal effect of the agreementc. The real purpose of the parties is frustrated
Art 1335-1336Violation refer to physical coercionIntimidation refers to moral coercion
Requisites for violence to vitiate consenta. Employment of serious or irresistible forceb. It must have been the reason why the contract was entered into
Requisites for intimidation to vitiate consenta. Reasonable and well-grounded fearb. Of an imminent and grave evilc. Upon his person, property, or upon the person of property of his spouse, descendents or ascendantsd. It must have been the reason why the contract was entered intoe. The threat must be an unjust act, an actionable wrong
Art 1337Requisites for undue influence to vitiate consent
a. Improper advantageb. Power over the will of anotherc. Deprivation of the latter’s will of a reasonable freedom of choice
Art 1338-1341Kinds of Fraud
a. Fraud in the celebration of the contract1. Dolo Causante or causal fraud (Art 1338)2. Dolo Incidente of incidental fraud
b. Fraud in the performance of the obligations stipulated in the contract
Requisites of Dolo Causantea. The fraud must be material and seriousb. The fraud must have been employed by one of the contracting parties, because if both committed fraud, the contract
would remain validc. There must be a deliberate intent to deceive to induced. The other party must have relied on the untrue statement, and must himself not be guilty of negligence in ascertaining
the truth
Art 1342-1344Speaks about misrepresentation
Art 1345-1346Simulation
Simulation of a Contract definedIt is the process of intentionally deceiving others by producing the appearance of a contract that really does not exist (absolute simulation)Or which is different from the true agreement relative simulation.
Kindsa. Absolute; Effect; the contract is voidb. Relative; Effect; the parties are bound to the real or true agreement except-
a. If the contract should prejudice third personsb. Or if the purpose is contrary to law, morals, public order, policy or good customs
Requisitesa. An outward declaration of will difference from the will of the partiesb. The false appearance must have been intended by mutual agreementc. The purpose is to deceive third persons
Art 1347-1349Objects (Subject Matter) of a contract
- A thing or a service
Requisitesa. The thing or service must be within the commerce of man b. Must be transmissiblec. Must not be contrary to law, morals, good customs, public order, or public policyd. Must not be impossiblee. Must be determinate as to its kind or determinate without the need of a new contract or agreement
CAUSE OF CONTRACTSArt 1350“Cause” defined
-It is the essential and impelling reason why a party assumes an obligation
Art 1351Motive – is the purely personal or private reason which a party has in entering into a contract
Motive vs. CauseMotive
a. May vary although he enters into the same kind of contractb. May be unknown to the otherc. The presence of motive
Causea. Always the sameb. Always knownc. Cannot cure the absence of cause
Art 1352-1355Requisites for cause
a. It must be presentb. It must be truec. It must be lawful
CHAPTER 3
FORM OF CONTRACTS
Art 1356Meaning of form of contracts
-Refers to the manner in which a contract is executed or manifested
Rules regarding from of contracts (Art 1356)Art 1357-1358Principles regarding formalities for the efficacy of a contract
a. Art 1357 and Art 1358 do not require the execution of a contract either in a public or private instrument in order to validate enforce it but only to ensure its efficacy, so after its existence has been admitted, the party bound may be compelled to execute the necessary document
b. Even where the contract has not been reduced to the required form, it is still valid and binding as far as the parties are concerned
c. From the moment one of the contracting parties invokes the provisions of Art 1357 and 1358by means of a proper action, the effect is to place the existence of the contract in issue, which must be resolved by the ordinary rules of evidence
d. Art 1357 does not require that the action to compel the execution of the necessary document must precede the action upon the contract
e. However, although the provisions of Art 1357 in connection with those of Art 1358, do not operate against the validity of the contract nor the validity of the acts voluntarily performed by the parties for the fulfillment thereof, yet from the moments when any of the contracting parties invokes said provisions, it is evident that under them the execution of the required document must precede the determination of the other obligations derived from the contract
CHAPTER 4
REFORMATION OF INSTRUMENT
Reformation – is that remedy by means of which a written instrument is amended or rectified so as to express or conform to the real agreement or intention of the parties when by reason of mistake, fraud, or inequitable contract, or accident the instrument fails to express such agreement or intention.
Requisites for reformationa. There is a meeting of minds of the parties to the contractb. The written instrument does not express the true agreement or intention of the partiesc. The failure to express the true intentions is due to mistake, fraud, inequitable conduct or accidentd. The facts upon which relief by way of reformation of the instrument is sought are put in issue by the pleadingse. There is clear and convincing evidence of the mistake, fraud, inequitable conduct, or accident
Reformation vs. AnnulmentIn reformation, there has been a meeting of the minds of the parties, hence, a contract exists while in annulment, there has been
none, the consent of one of the parties being vitiated by mistake, etc.
Art 1360-69
Art 1360Rule in case of conflict
Art 1366Instances when reformation is not allowed
CHAPTER 5
INTERPRETATION OF A CONTRACT
Art 1370Definition of interpretation of contract
-Is the determination of the meaning of the terms or words used by the parties in their contract
Art 1371-79 (provisions)
Kinds of defective contractsa. Rescissible (Art 1380-89)b. Voidable (Art 1390-1402)c. Unenforceable (Art 1403-1408)d. Void or Inexistent (Art 1409-1422)
Art 1381 in relation to Art 1382Meaning of rescissible contracts
-Those validly agreed upon because all the essential elements exists but in some cases established by law, the remedy of rescission is granted in the interest of equity
Requisites of rescissiona. The contracts must be validly agreed uponb. There must be lesion or pecuniary prejudice to one of the parties or to a third personc. The rescission must be based upon a case especially provided by lawd. There must be no other legal remedy to obtain reparation of the damagese. The party asking for rescission must be able to return what he is obliged to restore by reason of the contractf. The object of the contract must not legally
g. The object of the contract must not legally be in the possession of third persons who did not act in bad faithh. The period for filing the action of rescission must have not prescribed
Meaning of Rescission-Remedy granted by law to the contracting parties and sometimes even to third persons in order to secure reparation of
damages caused by them by a valid contract, by means of the restoration of things to their condition in which they were prior to the celebration of the said contract.
Art 1385Effects of rescission
Art 1324Prescription
VOIDABLE CONTRACTS
Definition-Are those which possess all the essential requisites of a valid contract but one of the parties is incapable of giving consent, or
consent is vitiated by mistake, violence, intimidation, undue influence, or fraud
Characteristicsa. Their defect consist in the vitiation of consent of one of the contracting partiesb. They are binding until they are annulled by competent courtc. They are susceptible of convalidation by ratification or by prescription
Voidable vs. Rescissible Contracts
Voidablea. Defect is intrinsicb. Contract is voidable even if there is no damage or prejudicec. Annulability of the contract is based on lawd. Susceptible of ratificatione. The causes of annulment
The causes of rescission
Rescissiblea. Defect is extrinsicb. Contract is not rescissible id there is no damage or prejudicec. Rescissibility of the contract is based on equityd. Not susceptible of ratification e. Are different form
Art 1390Voidable contracts
Art 1391Prescription
Art 1392-96
Concept of Ratification-By virtue of which efficacy is given to a contract which suffers from a vice of curable nullity
Requisites for ratificationa. The contract should be tainted with a vice which is susceptible of being curedb. The confirmation should be effected by the person who is entitled to do so under the lawc. It should be effected with knowledge of the vice or defect of the contractd. The cause of the nullity or defect should have already disappeared
Art 1397 in relation to Art 1391-Who and when may an action for annulment of contract be instituted
Art 1398-99
Effects of annulment
Art 1400-02- Effect pf failure to make restitution-Where loss is due to fault of plaintiff-Where loss is due to fault of defendant-Where loss is due to fortuitous event
CHAPTER 8
UNENFORCEABLE CONTRACTS
Meaning of unenforceable contracts-Those that san not be enforced in court or sued upon by reason of defects provided by law until and unless they are ratified
according to law.
Kinds:a. Those entered into in the name of another by one without or acting in excess of authorityb. Those that do not comply with the statute of fraudc. Those where both parties are incapacitated of giving consent
Unauthorized contracts-Those entered into in the name of another person by one who has been given no authority or legal representation on who has
acted beyond his powers.
Characteristics of Unenforceable Contractsa. They can not be enforced by a proper action in courtb. They are susceptible of ratificationc. They can not be assailed by third persons
Unenforceable vs. Rescissiblea. An unenforceable contract cannot be enforced by a proper action in court, while a rescissible contract can be enforced, unless it
is rescindedb. The causes for the unenforceable character of the former are different from the causes fro the rescissible character of the latterc. The former is susceptible of ratification, while the latter is notd. The former cannot be assailed by third persons, while the latter may be assailed by third persons who are prejudiced
Unenforceable vs. Voidablea. An unenforceable contract cannot be enforced by a proper action in court, while a voidable contract can be enforced, unless it is
annulledb. The causes for the unenforceable character of the former are different from the causes for the voidable character of the latter
STATUTE OF FRAUDS
Purpose-Not only to prevent fraud but also to guard against the mistakes of honest men by requiring that certain agreement specified
must be in writing.
Applicationa. Not applicable in actions which are neither for damages because of a violation of a contract, nor for the specific performance
thereofb. Applicable only to executory contracts and not to contracts which are totally or partially performedc. Not applicable where the contract is admittedly expressly, or impliedly by the failure to deny specifically its existence, no further
evidence thereof being required in such case.d. Applicable only to the agreements enumerated thereine. Not applicable where a writing does not express the true agreement of the partiesf. It does not declare the contracts infringing it are void but merely unenforceableg. The defense of the statute of frauds may be waivedh. The defense of the statute of frauds is personal to the parties and cannot be enforced by strangers to the contract
Effect of Non-Compliance-The contract or agreement is unenforceable by action
Ratification of Unenforceable Contracts
Either by: a. the failure of object to the presentation of oral existence to prove the samec. The acceptance of benefits under them
Art 1404-1408 (provisions)
CHAPTER 9
VOID OR INEXISTENT CONTRACTS
Void Contracts-Those, which of certain defects generally produce no effect at all
Inexistent Contracts-Refer to agreements which lack one or some or all the elements or do not comply with the formalities which are essential for the
existence of a contract
Characteristics of a Void or Inexistent Contractsa. Generally, it produces no effectb. It cannot be ratifiedc. The right to set up the defense of legality cannot be waivedd. The action or defense for the declaration of its inexistence does not prescribee. The defense of illegality is not available to third persons whose interests are not directly affectedf. It cannot give rise to a valid contract
Art 1410-Imprescriptibility of void or inexistent contract
Art 1411-1412Where both parties are in pari delicto
a. The parties shall have no action against each otherb. Both shall be prosecutedc. The things or the price of the contract, as the effects of the crime shall be confiscated in favor of the government
Where only one party is guilty-The rule in paragraph 1 of Art 1411 applies only to the guilty party or the more guilty party
Exceptions to the principle of pari delictoArt 1413-1419