Meaning
Statutory rule defining the invalidity of civil juristic acts that violate mandatory provisions of laws or administrative regulations or run counter to public order and good morals. Validity depends on whether the violated provision is a command of conduct or a command of validity. Under civil code article 153, an act is void if it breaches a mandatory provision, unless the provision itself specifies that the breach does not render the act invalid.
Mandatory Violation
Distinction between different types of regulatory requirements determines the fate of a contract. While many rules prescribe how a business should operate, civil code article 153 specifically targets those that invalidate the legal force of an agreement. If a regulation is merely administrative, such as a requirement to register a branch office, the contract remains valid despite the lack of registration.
When the law intends to prohibit the transaction itself, the court must declare the act void.
Public Policy
Protection of the social and public interest provides a ground for nullity even in the absence of a specific prohibitory statute. Civil code article 153 allows the judiciary to strike down agreements that harm the state or common morality. Application of this principle is reserved for extreme cases where the private agreement threatens the basic social order or the fundamental values of the legal system.
Because public order is a broad concept, courts apply it with caution to avoid undermining the freedom of contract.
Remedial Limit
Consequences of an invalid act involve the restoration of the status quo ante. Parties must return property or provide compensation for losses according to their respective degrees of fault.
