Rescissible contracts

Recent questions

• What are recessible contracts?

  Recessible contracts are agreements that can be legally rescinded under specific conditions. According to Article 1381, these contracts are valid but come with the stipulation that a legal basis for rescission must exist. If no law permits rescission, then it cannot be claimed as a right or remedy. The concept is illustrated in the case of Cinco versus Jose and Hernandez, which highlights that rescission is justified only when there is a violation of terms or damage incurred. Thus, recessible contracts provide a framework for parties to seek relief when certain legal criteria are met.

• How does insolvency affect contracts?

  Insolvency significantly impacts the validity of contracts, as outlined in Article 1382. When a debtor is declared insolvent, any payments made for obligations that cannot be fulfilled at that time are subject to rescission. This means that contracts entered into during a debtor's insolvency are considered invalid. Furthermore, individuals who have been declared insolvent are prohibited from entering into new contracts for a period of two years following their declaration. This legal framework aims to protect creditors and ensure that debtors do not engage in agreements that they cannot honor.

• What is the process for rescission?

  The process for rescission is governed by Article 1383, which states that the action for rescission is subsidiary and can only be pursued after all other legal remedies for damages have been exhausted. This means that a party seeking rescission must first attempt to resolve the issue through other means before resorting to rescission. Additionally, the extent of rescission is limited to covering the damages incurred, emphasizing that the existence of damage is a crucial element for rescission under Article 1385. If a party is unable to return what they gained from the contract, the rescission claim will not succeed.

• What is the time limit for claiming rescission?

  The time limit for claiming rescission is specified in Article 1389, which states that the action must be initiated within four years; otherwise, the right to claim rescission is extinguished. This four-year period is crucial for ensuring that parties act promptly in seeking legal remedies. For individuals under guardianship or absentees, the four-year period begins only after their capacity is restored or known. This provision ensures that those affected by the contract have a fair opportunity to seek rescission once they are able to do so, thereby protecting their legal rights.

• What happens if damages are not proven?

  If damages are not proven, the claim for rescission will fail, as highlighted in Article 1385. The existence of damage is a necessary element for rescission, meaning that without evidence of harm or violation of contract terms, a party cannot successfully seek rescission. This requirement underscores the importance of demonstrating that a breach has occurred and that the party seeking rescission has suffered as a result. If a party cannot return what they gained from the contract, it further complicates the rescission process, as the law typically requires that the parties be restored to their original positions before the contract was executed.