Nullity and annulability are among the most confusing concepts of Civil Law since they are frequently used with imprecision. These concepts are the equivalent in the Spanish legal vocabulary to the English void and voidable. The distinction between void and voidable is often of great practical importance. Whenever technical accuracy is required, void can be properly applied only to those provisions that are of no effect whatsoever, those that are an absolute nullity. Voidable means that a contract or covenant is valid until annulled, capable of being affirmed or rejected at the option of one of the parties. This term describes a valid act that may be voided rather than an invalid act that may be ratified.
This way are distinguished the Nullity (radical void) of the Annulability (Voidable or relative void). A cause of Nullity is the imperfection of the contract that prevents it from producing effects, radical void. The annulability is a defect derived, essentially, from vices in the capacity or will that substantiates a legal action that, if properly executed, destroys the act with retroactive force.
When the contract lacks some essential element of the legal act that makes it lack legal existence, we are faced with a case of Void Contract ; When the contract takes place in breach of a legal mandate or prohibition, this is a Voidable Contract.
If the contract is vitiated with a legal defect that may motivate the legal action for annulment or voidance, we are faced with voidable contract (relative nullity or annulability).
1. Void contract causes
In Spanish civil law, the contract is considered to be null and void in the following cases:
A) When one of the essential elements of the contract (established by Art.1261 Spanish Civil Code) is missing. That is to say:
a. when valid consent is lacking.
b. when there are two separate and autonomous wills.
c. when there is no object of the contract or is undetermined or unlawful.
d. when the cause does not exist or is unlawful.
B) When the contract has been concluded in contravention of a legal mandate or prohibition based on reasons of public order.-
The vices of habitability of the property lead to the nullity of the contract, due to lack of valid consent of the buyer. It is indifferent if there is not a fraudulent mood of the seller. The annulment is retroactive.
Some cases of a void contract are:
– When a property is sold by a seller, who has no power of disposal over it, since it does not belong to him, and nobody can convey what he does not have.
– If a property or real estate is conveyed by one of the co-owners since it is necessary the consent of all of them to decide the sale.
2. Effects of a void contract
The void contract, as a result of a radical cause of nullity, has no legal effect whatsoever. As it does not produce effects, in principle, it is not necessary that it be challenged or that its nullity be declared in court; But as it provokes an appearance of reality it is necessary to destroy that appearance. That is why the nullity action is exercised.
The legal challenge can be made by anyone with interest in the matter, whether parties or third parties.
In certain cases, it is also accepted that the nullity may be considered ex officio, but whenever it refers to covenants or clauses that are illegal, contrary to morality and public order constituting a crime. Likewise, it is possible the declaration of nullity ex officio in the case of acts that are null and void in law, contrary to the law.
The null contract cannot be confirmed nor has a healing prescription. If despite its total inefficiency, it has been run, it must replenish things to their state at the time of the celebration.
Once the nullity of an obligation has been declared, the contracting parties must mutually reimburse each other what has been the subject of the contract, with its results, and the price with interest, applicable both to nullity and annulability.
The obligation to give back derives from the law and not from the annulled contract, so it does not need an express request, can be declared directly by the judge. As long as one of the parties does not make the return that corresponds to him, the other cannot be compelled to perform on his part what is his responsibility. The nullity reaches the businesses that are in a situation of dependence of the declared null.
Special effects of the illicit nature of the object or the cause.
The obligation of restitution has exceptions: in cases in which the cause and object of the contract constitutes a felony or misdemeanour, or is simply unlawful, and both are a culprit, or only one, of the contracting parties.
A) When the act constitutes an offence or misdemeanour.
If it is common to both parties, they lack all legal action among themselves, and the prosecutor proceeds against both. If there is only a felony or misdemeanour of a part, the non-guilty can claim what he had given, and he is not obliged to fulfil what he had promised.
B) When the fact does not constitute crime or fault, the following rules apply:
– if it is the fault of both, neither can repeat what he has given by contract nor claim the fulfilment of what the other has offered.
– When it is the fault of only one of them, the culprit can not claim the return nor ask the other party to comply. The non-guilty party can claim what he has given, without obligation to fulfil what he has offered.
Effects of the judicial declaration of nullity against third parties.
The nullity action, in spite of being of a personal nature, may prejudice third parties whose rights are affected by the business declared void. The third party acquirer must also return the thing when it is sued and not acquired by purchase and in good faith. If the third party is protected, by having acquired by title of purchase and in good faith, the one who sold the thing will have to restore the value.
The term for the exercise of the legal action of nullity.
The legal action for declaration of nullity is not subject to a time limit and is considered an imprescriptible legal action. The lapse of time can not validate it. Instead, the restitution of things given under contract void is subject to normal limitation period for personal actions, five years (art.1964 CC).
The opposition in a court of a legal exception of nullity.
The nullity can also be enforced by opposing a legal exception against the claimant, based on a null contract. The exception of nullity is, as the action of nullity, imprescriptible.
The nullity exception is not applicable in cases of annulability. Therefore, annulability can only be enforced by the exercise of annulability or counterclaim.
2. Causes of a Voidable Contract
The causes of annulability in Spanish civil law are as follows:
A.- Vices of consent.
It can be a result of violence, intimidation, error, or deceit. For the error to invalidate the contract, it is necessary that:
A) affects the object of the contract or the conditions and agreements that led to its conclusion,
B) that the injured party is not the culprit,
C) that this error is justifiable, because if it is not, it does not vitiate the consent, and
D) that there is a relationship between the error and the intended purpose of the contract.
B.- False cause.
The falsity of the cause is equivalent to its non-existence unless it conceals another true and lawful cause.
C.- Failure of legal capacity to act, which does not imply lack of consent.
This is the case of a contract concluded by a person legally incapable of acting, or by a person who has limited capacity to act.
D.- Lack of consent or confirmation of the other spouse.
When a spouse needs the consent of the other to act, or needs confirmation of what has been done.
a. Sale of property by one of the spouses without consent of the other: The purchase is not null and void, but simply annullable at the request of the spouse who did not consent. If the cancellation action is not exercised, the contract is fully valid and binding.
b. Sale of property of a minor without judicial authorization: can be annulled. The minor himself or herself may bring an action for annulment within four years after reaching the age of consent.
E.- Legal Action for annullability
Deadline for exercise before the courts.
This action lasts four years, a period that begins to run:
– in cases of intimidation or violence, when it has ceased.
– in cases of error, fraud or falsity, since the conclusion of the contract.
– in a contract concluded by a minor or incapacitated person, from the moment the guardianship ends.
– where the consent of the other spouse is needed, since the dissolution of marriage, unless the act is known before.
This action may be exercised by those principally and subsidiarily bound by the contract. A capable person cannot claim incapacity of the person with whom he hires. Those who cause intimidation or violence and those who act with deceit or cause error can not claim these vices of the contract.
The contract granted by a minor or incapacitated person may be annulled by his / her representative; And when the consent of the other spouse is required, at the request of the spouse.
Passively legitimated is the other contracting party or successors.
5. Effects of Annulability
– Until the contract is cancelled, it has all the effects of a valid act. Once declared void, it ceases to produce effects. When the contract is already null and void, its consequences disappear. If the contract has not been consummated the parties are free. If it is consumed, the parties are bound to repay each other what they have received by it.
Extinction of the Annulability
Occurs by lapse of four years, by confirmation of the annullable act, or by loss of the object of the contract when it occurs by fraud or negligence of the person who can exercise this action (CC art.1314).
Exceptions to restitution.
– When the party obliged to pay restitution can not return the thing because it has been lost, he must return the fruits received and the value that the thing had when it was lost, with interest from the same date (CC art.1307);
– as long as one of the contractors does not return what he received, the other party can not be forced to comply the restitution(CC art.1308);
– If the nullity is caused by the incapacity, the incapacitated person is obliged to return only what he or she benefited from the thing or price that he received (CC art.1304).
6. Confirmation of voidable contracts.
The confirmation eliminates the vices that had the contract. The annullable contract can be corrected, as a result of the waiver of the nullity action made by who could invoke the vice or defect of the contract. Only contracts can be cancelled in which the elements of CC art.1261 are given.
Confirmation may be express or tacit. It is tacit when the cause of nullity has ceased, and the one who can invoke the action performs an act that means the will to confirm.