RESCISSIBLE CONTRACTS

RESCISSIBLE CONTRACTS – Those which have caused a particular economic damage either to one of the parties or to a 3rd person and which may be set aside even if valid. It may be set aside in whole or in part, to the extent of the damage caused'

REQUISITES:
a. Contract must be rescissible

(1) Under art 1381:
i. Contracts entered into by persons exercising fiduciary capacity
(a) Entered into by guardian whenever ward suffers damage by more than 1/4 of value of object
(b) Agreed upon in representation of absentees, if absentee suffers lesion by more than ¼ of value of property
(c) Contracts where rescission is based on fraud committed on creditor (accion pauliana)
(d) Objects of litigation; contract entered into by defendant w/o knowledge or approval of litigants or judicial authority
(e) Payment by an insolvent – on debts w/c are not yet due; prejudices claim of others
(f) Provided for by law - art 1526, 1534, 1538, 1539, 1542, 1556, 1560, 1567 and 1659

ii.Under art 1382 - Payments made in a state of insolvency

b. Plaintiff has no other means to obtain reparation

b. Plaintiff must be able to return whatever he may be obliged to return due to rescission

c. The things must not have been passed to 3rd parties who did not act in bad faith

d. It must be made within the prescribed period

OBLIGATION CREATED BY THE RESCISSION OF THE CONTRACT:

Mutual Restitution
1. Things w/c are the objects of the contract & their fruits

2. Price with interest

Note: Mutual restitution N.A. when:

1. creditor did not receive anything from contract

2. thing already in possession of party in good faith; subject to indemnity only; if there are 2 or more alienations – liability of 1st infractor