INVALIDITY OF CONTRACT

CASES Mr. Black wants Mr. White to paint his kitchen walls on Christmas morning and he forces Mr. White to sign a contract on it. Will Mr. White have to comply with the contract? A shopkeeper tells the customer that ”these shoes are not available anywhere else” and the customer buys the shoes. However, she soon finds the same kind of shoes in another shop at a cheaper price. Can she get her money back?

INVALIDITY OF A CONTRACT Nullity Contract is originally invalid, null and void Voidability (contestability) Contract becomes valid after a stipulated period of time unless contested within this time Invalidity based on objection Contract remains valid, unless one of the parties makes a plea (allegation) objecting its validity

STRONG GROUNDS FOR INVALIDITY (1) Can be objected even if the other party of the transaction was in good faith Grave duress (28§) When a person has been coerced to a transaction into which a person has been coerced with physical violence or a threat involving imminent danger to life or health In case the coercion was exercised by a third person and the person to whom the transaction was directed was in good faith, the coerced party shall, if he/she wants to invoke the said coercion in relation to the other party, without undue delay after the coercion has ceased notify that party thereof at the risk of the transaction otherwise becoming binding

GOOD FAITH One is in good faith (bona fide) if one Did not know and Should not have known about the circumstances Assumption of good faith Burden of proof is with the one who claims that the other was not in good faith

STRONG GROUNDS FOR INVALIDITY (2) Error in transmission (32.2§) Originally applied when a message was sent by telegram or orally through a messenger and changed during that transmission. When reached the recipient in changed form did not bind the sender even if the recipient was in good faith message message

WEAK GROUNDS FOR INVALIDITY Can be objected only in case the other party is not in good faith Mild duress Coercion by other means than physical violence or a threat involving imminent danger to life or health Fraud inducement Undue influence Advantage is taken of another’s distress, lack of understanding, imprudence or position of dependence on him/her and benefit obviously disproportionate has been acquired or for which there is to be no consideration Mistake in utterance Circumstances incompatible with honour and good faith Simulated transaction Main general clause and adjustment

WHO HAS RIGHT OF PLEA Both parties The mortified party A third party In case the invalidity reason is to protect public interest The mortified party When the invalidity reason is to protect that party A third party When the invalidity endangeres his / her rights