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Memory Aid in CONTRACTS.doc

  1. 1. CONTRACTS • Contracts of deposit with the Postal Savings Bank provided that the minor is over 7 years Stages in the life of a contract: of age. 2. Insane or demented persons unless the contract 1. Preparation/Generation was entered into during a lucid interval; 2. Perfection/Birth 3. Deaf-mutes who do not know how to write. 3. Consummation/Death The following may not acquire by purchase, Characteristics of Contracts: (ROMA) even by public or judicial auction, in person of though the mediation of another: 1. Relativity (Art. 1311) 2. Obligatoriness & Consensuality (Art. 1315) 1. the guardian, with respect to the property of his 3. Mutuality (Art. 1308) ward; 4. Autonomy (Art. 1306) 2. agents, with respect to the property whose administration or sale may have been entrusted Stipulation pour Autrui - stipulation in favor of a to them, unless the consent of the principal has 3rd party. been given; 3. executor or administrator, the property of the Requisites: estate under administration; 1. The stipulation must be part, not whole of the 4. public officers and employees, with respect to contract; the properties of the government, its political 2. the contracting parties must have clearly and subdivisions, GOCCs, that are entrusted to deliberately conferred a favor upon a 3rd person; them; 3. the 3rd person must have communicate his 5. judges, justices, prosecuting atty.’s, clerks of acceptance; courts, etc., the property in custogia legis; and 4. neither of the contracting parties bears the legal 6. any other person specially disqualified by law. representation of the 3rd party. Simulation of a contract General Rule: Contracts (except real contracts) are perfected from the moment there is a Kinds of simulation: manifestation of concurrence between the offer and the acceptance regarding the object and the cause. 1. Absolute - no real transaction is intended; Except: Acceptance by letter or telegram which Effect: simulated contract is inexistent. does not bind the offerror except from the time it came to his knowledge. 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 Theories applied to perfection of contracts: necessary requisites. 1. Manifestation theory - the contract is perfected : as to third persons without notice - the from the moment the acceptance is declared or apparent contract is valid on the principle of made; estoppel. 2. Expedition theory - the contract is perfected from the moment the offeree transmits the Effect of: notification of acceptance to the offerror; Absence of cause the contract confers 3. Reception theory - the contract is perfected from no right and the moment that the notification of acceptance is produces no legal in the hands of the offerror; effect 4. Cognition theory - the contract is perfected from Failure of cause does not render the the moment the acceptance comes to the contract void knowledge of the offerror. This is the theory Illegality of cause the contract is null adopted in the Philippines. and void Falsity of cause the contract is void Persons incapacitated to give consent: unless the parties 1. Unemancipated minors; can show that there Except: is another cause • Contracts for necessaries; which is true and lawful • Contracts by guardians or legal Lesion does not invalidate representatives; the contract unless: • Contracts where the minor is estopped to • there is fraud, urge minority through his own mistake or misrepresentation;
  2. 2. undue influence 3. When the agreement is void. • when the parties intended a donation or Classes of Defective Contracts: (RUVI) some other 1. Rescissible contract. 2. Unenforceable Form of Contracts 3. Voidable 4. Void or Inexistent 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 cattle c. Stipulation to pay interest in loans d. Sale of land through an agent (authority must be in writing) e. Partnership to which immovables are contributed f. Stipulation limiting carrier’s liability to less than extra-ordinary diligence g. Contracts of antichresis h. 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. 3. COMPARATIVE TABLE OF DEFECTIVE CONTRACTS: VOID VOIDABLE RESCISSIBLE UNENFORCE- ABLE 1. defect is caused 1. defect is caused 1. defect is caused 1. defect is caused by lack of by vice of consent by injury/ damage by lack of form, essential either to one of authority, or elements or the parties of to a capacity of both illegality 3rd person parties 2. not cured by 2. cured by 2. cured by 2. not cured by prescription prescription prescription prescription 3. cannot be ratified 3. can be ratified 3. need not be 3. can be ratified ratified 4. not binding 4. binding until 4. binding unless 4. binding unless the annulled rescinded defect is raised against enforcement.
  4. 4. RESCISSIBLE CONTRACTS 1. Prescription • the action must be commenced within 4 Contracts which may be rescinded: years from: • the time the incapacity ends; 1. those entered into by guardians where the ward • the time the violence, intimidation or suffers lesion of more than ¼ of the value of the undue influence ends; things which are objects thereof; • the time the mistake or fraud is 2. those agreed upon in representation of discovered. absentees, if the latter suffer lesion by more 2. Ratification than ¼ of the value of the things which are • Requisites: subject thereof; a. there must be knowledge of the reason which renders the contract 3. those undertaken in fraud of creditors when voidable; the latter cannot in any manner claim what are b. such reason must have ceased; due them; c. the injured party must have 4. those which refer to things under litigation if they executed an act which expressly or have been entered into by the defendant without impliedly conveys an intention to the knowledge and approval of the litigants and waive his right. the court; 3. By loss of the thing which is the object of the 5. all other contracts especially declared by law to contract through fraud or fault of the person who be subject to rescission; is entitled to annul the contract. 6. payments made in a state of insolvency on UNENFORCEABLE CONTRACTS account of obligations not yet enforceable; Kinds of unenforceable contracts: Circumstances denominated as badges of 1. those entered into in the name of another by fraud: one without or acting in excess of authority; 2. those where both parties are incapable of giving consent; 1. consideration of the conveyance is inadequate 3. those which do not comply with the Statute of or fictitious; Frauds. 2. transfer was made by a debtor after a suit has been begun and while it is pending against him; Agreements within the scope of the Statute 3. sale upon credit by an insolvent debtor; of Frauds: 4. transfer of all his property by a debtor when he 1. Agreements not to be performed within one year is financially embarrassed or insolvent; from the making thereof; 2. Promise to answer for the debt, default or 5. transfer is made between father and son, where miscarriage of another; there are present some or any of the above 3. Agreement in consideration of marriage other circumstances; than a mutual promise to marry; 6. failure of the vendee to take exclusive 4. Agreement for the sale of goods, etc. at a price possession of the property; not less than Ps500.00 5. Contracts of lease for a period longer than one Distinctions: year; 6. Agreements for the sale of real property or RESCISSION RESOLUTION interest therein; (Art. 1191) 7. Representation as to the credit of a 3rd person. 1. Action by the 1. Action only by contracting the injured party; Modes of Ratification: parties even by 1. For contracts infringing the Statute of Frauds: a 3rd party; 2. based on non- • expressly 2. based on fulfillment of the • impliedly - by failure to object to the lesion/fraud of obligation; presentation of oral evidence to prove the creditors; 3. courts may grant contract, or by the acceptance of benefits 3. courts cannot periods under the contract. grant periods for 2. If both parties are incapacitated, ratification by compliance their parents or guardians shall validate the contract retroactively. VOIDABLE CONTRACTS VOID OR INEXISTENT CONTRACTS Causes of extinction of action to annul: The following contracts are void:
  5. 5. 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.
  6. 6. 2. Executory – one where the prestations are to be complied with at some future time h. According to subject matter CONTRACTS 1. Contracts involving things 2. Contracts involving rights or credit Art 1305 3. Contracts involving services ELEMENTS OF A CONTRACT i. According to obligations imposed and required by law 1. Ordinary a. Essential Elements 2. Institutional-like contract of marriage 1.Consent 2.Subject Matter j. According to the evidence required for its proof 3.Cause or Consideration 1. Those requiring merely oral or parol evidence b. Natural Elements- presumed to exist, unless the 2. Those requiring written proof contrary is stipulated k. According to the number of persons actually and Ex. Warrants against eviction and against hidden physically entering into the contracts defects 1. Ordinary – two parties are represented by different persons c. Accidental Elements – existence of such is dependent 2. Auto Contracts –where only one person on the agreement of the parties. represents two opposite parties, but in different capacities Classification of Contracts a. According to perfection or formation l. According to the number of persons who participated 1. Consensual in the drafting of the contract 2. Real-perfected by delivery 1. Ordinary 3. Formal or Solemn 2. Contract of Adherence b. According to cause of equivalence of the value of m. According to the nature of the contract prestations: 1. Personal 1. Onerous 2. Impersonal 2. Gratuitous or Lucrative 3. Remunerative STAGES OF A CONTRACT a. Preparation c. According to Importance or dependence of one upon b. Perfection another c. Consummation (or death or termination) 1. Principal – can stand alone 2. Accessory – depends upon the existence of Basic Principles or Characteristics of a Contract another contract a. Freedom to stipulate 3. Preparatory – here, the parties do not b. Obligatory force and compliance in good faith consider the contract as an end by itself, but c. Perfection by mere consent as a means thru which future transaction or d. Both parties are mutually bound contracts may be made e. Relativity Ex. Agency, partnership d. According to the parties obligated Art 1306 – Freedom or autonomy of contract 1. Unilateral 2. Bilateral Art 1307 e. According to their Name or Designation 1. Nominate Four Kinds of Innominate Contracts 2. Innominate a. Du ut des (I give that you may give) b. Do ut facias (I give that you may do) f. According to the risk of fulfillment c. Facio ut des (I do that you may give) 1. Commutative d. Facio ut facias (I do that you may do) 2. Alienatory g. According to the time of performance or fulfillment Art 1308-1310 1. Executed- one completed at the time the contract is entered into MUTUALITY OF CONTRACTS
  7. 7. • The validity or fulfillment of a contract cannot be left to Art 1318 the will of one of the contracting parties. Requisites of Contracts • The validity or fulfillment may be left to the will of a a. Consent (Art 1319-46) third person. b. Object (Art 1347-1349) • The validity or fulfillment may be left to chance. c. Cause (Art 1350-55) Art 1311 Art 1319 Definition of Consent This principle stresses the Principle of Relativity. -Art 1319,first paragraph Contracts are generally effective only between the parties, their assigns and their heirs. Requisite of Consent a. There must be two or more parties Exceptions: b. The parties must be capable or incapacitated a. Where the obligation arising from the contract are not c. There must be no vitiation of consent transmissible by their nature, by stipulation, or by d. There must be no conflict between what was provision of law. expressly declared and what was really intended b. Where there is stipulation pour atrui (a stipulation in e. The intent must be declared properly favor of a third party) c. Where a third person induces another to violate his Requisites for the meeting of minds contract a. An offer that must be certain d. Where, in some cases, third persons may be b. And an acceptance must be unqualified and absolute adversely affected by a contract where they did not participate. • Concurrence of offer and acceptance (Art 1319-26) e. Where the law authorizes the creditor to sue on a • Legal capacity of contracting parties (Art 1327-29) contract entered into by his debtor. • Characteristics of Consent (Art 1330-46) Art 1312 Art 1320 A real right binds the property over which it is Forms of Acceptance exercised. Exception to the general rule that a contract binds only the parties. Art 1322 Acceptance of an Offer made thru an agent Art 1313 Right of defrauded creditor. Art 1323 Other instances when the offer becomes ineffective a. When the offeree expressly or impliedly rejects the Art 1314 offer Requisites before a third person in this article can be held for b. When the offer is accepted with qualification or damages condition a. Existence of a valid contract c. When before acceptance is communicated, the b. Knowledge on the part of the third person of the subject matter becomes illegal or impossible existence of the contract d. When the period of time given to the offeree within c. Interference by the third person without legal which he must signify his acceptance has already justification or excuse lapsed e. When the offer is rejected in due tome Art 1315-1316 Perfection of contracts Art 1324 Option Contract Option- it is a contract granting a person the privilege to buy or Art 1317 not to buy certain objects at anytime within the agreed period at Requisites for a Person to Contract in the Name of Another a fixed price a. He must be duly authorized (expressly or impliedly) b. Or he must have by law a right to represent him Perfection of Option c. Or the contract must be subsequently ratified When there is a meeting of minds on the option Art 1325-1326
  8. 8. If the advertisement contains all the specific particular Art 1335-1336 needed in a contract, it is a definite offer. Violation refer to physical coercion If important details are left out, the advertisement is Intimidation refers to moral coercion not a definite offer, but a mere invitation to make an offer. Requisites for violence to vitiate consent Art 1327 in relation to Art 1329 a. Employment of serious or irresistible force Who cannot give consent. b. It must have been the reason why the contract was entered into Art 1328 Voidable contracts by reason of incapacity Requisites for intimidation to vitiate consent a. Reasonable and well-grounded fear Art 1330 b. Of an imminent and grave evil This article enumerates causes or vices of consent. c. Upon his person, property, or upon the person of property of his spouse, descendents or ascendants Art 1331 in relation to Art 1333 d. It must have been the reason why the contract was Mistake entered into It is a false belief about something. e. The threat must be an unjust act, an actionable wrong Requisites for mistake to vitiate consent Art 1337 a. Object of the contract Requisites for undue influence to vitiate consent b. The condition which principally proved or induced one a. Improper advantage of the parties b. Power over the will of another c. Identify or qualifications, but only if such was the c. Deprivation of the latter’s will of a reasonable freedom principal cause of the contract. of choice d. The error must be excusable e. The error must be a mistake of fact Art 1338-1341 Kinds of Fraud Kinds of Mistake a. Fraud in the celebration of the contract a. Mistake as to the object 1. Dolo Causante or causal 1. Mistake as the identity of the thing fraud (Art 1338) 2. Mistake as to the substance of the thing 2. Dolo Incidente of incidental 3. Mistake as to the conditions of the thing fraud 4. Mistake as to the quantity of the thing b. Fraud in the performance of the obligations stipulated b. Mistake as to person in the contract 1. Mistake must be either with regards to the identify or with regard to the qualification of Requisites of Dolo Causante one of the contracting parties a. The fraud must be material and serious 2. Such identity or qualification must have b. The fraud must have been employed by one been the principal consideration for the of the contracting parties, because if both celebration of the contract committed fraud, the contract would remain valid c. There must be a deliberate intent to deceive Art 1332 to induce Burden of proof in case of mistake d. The other party must have relied on the untrue statement, and must himself not be Art 1333 guilty of negligence in ascertaining the truth Effect of knowledge of risk Art 1342-1344 Art 1334 Speaks about misrepresentation Mistake of Law Art 1345-1346 Is that which arises from an ignorance of some Simulation provision of law, or from an erroneous interpretation of its meaning, or from an erroneous conclusion as to the legal effect Simulation of a Contract defined of the agreement, on the part of one of the parties. It is the process of intentionally deceiving others by producing the appearance of a contract that really Requisites: does not exist (absolute simulation) a. There must be mutual error Or which is different from the true agreement relative b. The error must refer to the legal effect of the simulation. agreement c. The real purpose of the parties is frustrated Kinds a. Absolute; Effect; the contract is void
  9. 9. b. Relative; Effect; the parties are bound to the real Art 1356 or true agreement except- Meaning of form of contracts a. If the contract should prejudice third -Refers to the manner in which a contract is executed persons or manifested b. Or if the purpose is contrary to law, morals, public order, policy or good Rules regarding from of contracts (Art 1356) customs Art 1357-1358 Principles regarding formalities for the efficacy of a contract Requisites a. Art 1357 and Art 1358 do not require the execution of a. An outward declaration of will difference from the will a contract either in a public or private instrument in of the parties order to validate enforce it but only to ensure its b. The false appearance must have been intended by efficacy, so after its existence has been admitted, the mutual agreement party bound may be compelled to execute the c. The purpose is to deceive third persons necessary document b. Even where the contract has not been reduced to the Art 1347-1349 required form, it is still valid and binding as far as the Objects (Subject Matter) of a contract parties are concerned - A thing or a service c. From the moment one of the contracting parties invokes the provisions of Art 1357 and 1358by means Requisites of a proper action, the effect is to place the existence a. The thing or service must be within the commerce of of the contract in issue, which must be resolved by the man ordinary rules of evidence b. Must be transmissible d. Art 1357 does not require that the action to compel c. Must not be contrary to law, morals, good customs, the execution of the necessary document must public order, or public policy precede the action upon the contract d. Must not be impossible e. However, although the provisions of Art 1357 in e. Must be determinate as to its kind or determinate connection with those of Art 1358, do not operate without the need of a new contract or agreement against the validity of the contract nor the validity of the acts voluntarily performed by the parties for the CAUSE OF CONTRACTS fulfillment thereof, yet from the moments when any of Art 1350 the contracting parties invokes said provisions, it is “Cause” defined evident that under them the execution of the required -It is the essential and impelling reason why a party document must precede the determination of the assumes an obligation other obligations derived from the contract Art 1351 Motive – is the purely personal or private reason which a party has in entering into a contract CHAPTER 4 Motive vs. Cause REFORMATION OF INSTRUMENT Motive a. May vary although he enters into the same kind of Reformation – is that remedy by means of which a written contract instrument is amended or rectified so as to express or b. May be unknown to the other conform to the real agreement or intention of the parties c. The presence of motive when by reason of mistake, fraud, or inequitable contract, or accident the instrument fails to express such agreement Cause or intention. a. Always the same b. Always known c. Cannot cure the absence of cause Requisites for reformation a. There is a meeting of minds of the parties to the Art 1352-1355 contract Requisites for cause b. The written instrument does not express the true a. It must be present agreement or intention of the parties b. It must be true c. The failure to express the true intentions is due to c. It must be lawful mistake, fraud, inequitable conduct or accident d. The facts upon which relief by way of reformation of the instrument is sought are put in issue by the CHAPTER 3 pleadings e. There is clear and convincing evidence of the FORM OF CONTRACTS mistake, fraud, inequitable conduct, or accident Reformation vs. Annulment
  10. 10. In reformation, there has been a meeting of the minds of the parties, hence, a contract exists while in annulment, there Art 1385 has been none, the consent of one of the parties being vitiated Effects of rescission by mistake, etc. Art 1324 Art 1360-69 Prescription Art 1360 Rule in case of conflict VOIDABLE CONTRACTS Art 1366 Instances when reformation is not allowed Definition -Are those which possess all the essential requisites of a valid contract but one of the parties is incapable of giving CHAPTER 5 consent, or consent is vitiated by mistake, violence, intimidation, undue influence, or fraud INTERPRETATION OF A CONTRACT Characteristics Art 1370 a. Their defect consist in the vitiation of consent of one Definition of interpretation of contract of the contracting parties -Is the determination of the meaning of the terms or b. They are binding until they are annulled by competent words used by the parties in their contract court c. They are susceptible of convalidation by ratification or Art 1371-79 (provisions) by prescription Kinds of defective contracts Voidable vs. Rescissible Contracts a. Rescissible (Art 1380-89) b. Voidable (Art 1390-1402) Voidable c. Unenforceable (Art 1403-1408) a. Defect is intrinsic d. Void or Inexistent (Art 1409-1422) b. Contract is voidable even if there is no damage or prejudice Art 1381 in relation to Art 1382 c. Annulability of the contract is based on law Meaning of rescissible contracts d. Susceptible of ratification -Those validly agreed upon because all the essential e. The causes of annulment elements exists but in some cases established by law, the The causes of rescission remedy of rescission is granted in the interest of equity Rescissible Requisites of rescission a. Defect is extrinsic a. The contracts must be validly agreed upon b. Contract is not rescissible id there is no damage or b. There must be lesion or pecuniary prejudice to one of prejudice the parties or to a third person c. Rescissibility of the contract is based on equity c. The rescission must be based upon a case especially d. Not susceptible of ratification provided by law e. Are different form d. There must be no other legal remedy to obtain reparation of the damages e. The party asking for rescission must be able to return Art 1390 what he is obliged to restore by reason of the contract Voidable contracts f. The object of the contract must not legally g. The object of the contract must not legally be in the Art 1391 possession of third persons who did not act in bad Prescription faith h. The period for filing the action of rescission must have not prescribed Art 1392-96 Meaning of Rescission Concept of Ratification -Remedy granted by law to the contracting parties and -By virtue of which efficacy is given to a contract sometimes even to third persons in order to secure reparation of which suffers from a vice of curable nullity damages caused by them by a valid contract, by means of the restoration of things to their condition in which they were prior to Requisites for ratification the celebration of the said contract. a. The contract should be tainted with a vice which is susceptible of being cured
  11. 11. b. The confirmation should be effected by the person a. An unenforceable contract cannot be enforced by a who is entitled to do so under the law proper action in court, while a voidable contract can c. It should be effected with knowledge of the vice or be enforced, unless it is annulled defect of the contract b. The causes for the unenforceable character of the d. The cause of the nullity or defect should have already former are different from the causes for the voidable disappeared character of the latter Art 1397 in relation to Art 1391 STATUTE OF FRAUDS -Who and when may an action for annulment of contract be instituted Purpose -Not only to prevent fraud but also to guard against Art 1398-99 the mistakes of honest men by requiring that certain agreement specified must be in writing. Effects of annulment Application Art 1400-02 a. Not applicable in actions which are neither for - Effect pf failure to make restitution damages because of a violation of a contract, nor for -Where loss is due to fault of plaintiff the specific performance thereof -Where loss is due to fault of defendant b. Applicable only to executory contracts and not to -Where loss is due to fortuitous event contracts which are totally or partially performed c. Not applicable where the contract is admittedly expressly, or impliedly by the failure to deny CHAPTER 8 specifically its existence, no further evidence thereof being required in such case. UNENFORCEABLE CONTRACTS d. Applicable only to the agreements enumerated therein e. Not applicable where a writing does not express the true agreement of the parties Meaning of unenforceable contracts f. It does not declare the contracts infringing it are void -Those that san not be enforced in court or sued upon but merely unenforceable by reason of defects provided by law until and unless they are g. The defense of the statute of frauds may be waived ratified according to law. h. The defense of the statute of frauds is personal to the parties and cannot be enforced by strangers to the Kinds: contract a. Those entered into in the name of another by one without or acting in excess of authority Effect of Non-Compliance b. Those that do not comply with the statute of fraud -The contract or agreement is unenforceable by action c. Those where both parties are incapacitated of giving consent Ratification of Unenforceable Contracts Either by: a. the failure of object to the presentation of oral Unauthorized contracts existence to prove the same -Those entered into in the name of another person by c. The acceptance of benefits under them one who has been given no authority or legal representation on who has acted beyond his powers. Art 1404-1408 (provisions) Characteristics of Unenforceable Contracts a. They can not be enforced by a proper action in court b. They are susceptible of ratification CHAPTER 9 c. They can not be assailed by third persons Unenforceable vs. Rescissible VOID OR INEXISTENT CONTRACTS a. An unenforceable contract cannot be enforced by a proper action in court, while a rescissible contract can Void Contracts be enforced, unless it is rescinded -Those, which of certain defects generally produce no b. The causes for the unenforceable character of the effect at all former are different from the causes fro the rescissible character of the latter Inexistent Contracts c. The former is susceptible of ratification, while the -Refer to agreements which lack one or some or all latter is not the elements or do not comply with the formalities which are d. The former cannot be assailed by third persons, while essential for the existence of a contract the latter may be assailed by third persons who are prejudiced Characteristics of a Void or Inexistent Contracts a. Generally, it produces no effect Unenforceable vs. Voidable b. It cannot be ratified
  12. 12. c. The right to set up the defense of legality cannot be waived d. The action or defense for the declaration of its inexistence does not prescribe e. The defense of illegality is not available to third persons whose interests are not directly affected f. It cannot give rise to a valid contract Art 1410 -Imprescriptibility of void or inexistent contract Art 1411-1412 Where both parties are in pari delicto a. The parties shall have no action against each other b. Both shall be prosecuted c. 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 delicto Art 1413-1419