Contract Invalidity and Annulment: Causes and Effects
Contract Invalidity or Annulment: Legal Concept
Characteristics and Causes
Doctrine and jurisprudence establish annulment as a protective measure for specific interests. Only the holder of these interests is entitled to exercise the corresponding action, not anyone with a legitimate interest. These interests are those of the contracting party who seeks annulment under the law.
The Civil Code does not explicitly state the reasons for requesting contract annulment. However, they can be inferred from its provisions (sections 1301 and 1302). These reasons include:
- Minority
- Disability
- Mistake
- Violence or intimidation
- Fraud
Lack of spousal consent, when necessary, is also a cause for annulment. Voidable contracts have legal impact from their perfection but are provisional. They cease to exist and are considered non-existent ab initio if judicially declared invalid. The court ruling will require a return to the status quo before the contract’s conclusion.
Right of Action
Right of action lies solely with the principal or subsidiary (e.g., guarantor) under the contract. Legitimizing passive applies to those who were party to the contested contract, are not seeking annulment, and those who derive their rights from the contract in question.
Effects of Annulment
Annulment has the same effect as absolute invalidity, with two exceptions:
- Articles 1305 and 1306 of the Civil Code do not govern.
- When revocation stems from the minority or incapacity of one party, the minor or incompetent is not required to restore everything, but only what enriched them with the thing or price received, as per Article 1304 of the Civil Code. If not paid in that form, it should not be restored. The mere admission of things into the assets of the minor or incompetent is not sufficient. Proof of enrichment is the responsibility of the capable party.
Deadline for Bringing Proceedings
The action of nullity has an exercise period of 4 years, as provided in Article 1301 of the Civil Code. This is a time limit, not a limitation, because the action seeks modification of a legal situation. This time limit is computed according to these standards (section 1301 of the Civil Code):
- In cases of intimidation or violence: from the day they stopped.
- In cases of error, fraud, or misrepresentation: from the consummation of the contract (fulfillment of all obligations).
- In the case of contracts concluded by minors or incapacitated persons: from when they leave custody.
Jurisprudence consistently holds that annulment must necessarily be requested via legal action.
Confirmation of the Contract
Confirmation is a declaration of will by the party entitled to bring an action for annulment, validating the contract. This extinguishes the action for annulment (Article 1309 of the Civil Code). There are several types:
- Express Confirmation: A simple statement of intent to validate. Our Civil Code does not require any special form.
- Tacit Confirmation: Performed through conclusive conduct. Article 1311 of the Civil Code states that tacit confirmation occurs when an action implies a necessary renunciation of the annulment action.
For confirmation to be effective, the confirmer must be aware of the cause of nullity, and that cause must have ceased. Confirmation purifies the contract’s vices from the time of its conclusion (Article 1313 of the Civil Code), making the effects permanent and retroactive.