Art. 1756. Obligations; definition
An obligation is a legal relationship whereby a person, called the obligor, is bound to render a performance in
favor of another, called the obligee. Performance may consist of giving, doing, or not doing something.
An obligation is a legal relationship rather than a mere duty to perform
The term obligor is synonymous with the word debtor and the word obligee is synonymous with the word creditor
Obligation to give: to transfer to an obligee-creditor the ownership of a thing, to grant someone a real right in a thing;
such a transfer can take place onerously (involving a return benefit, compensation, or consideration ) or gratuitously…
whenever an obligation is meant to operate an immediate transfer of a real right it is an obligation to give
o In a contract the obligee has the right to demand specific performance, property can be seized in cases of
Obligation to do: requires the debtor-obligor perform some positive act such as physically delivering a thing;
performance of an action on the part of the obligor
o Usually require the personal and exclusive involvement of the obligor. In such instances where the skill,
talent, expertise of the obligor are most important to the obligee, one can speak of a strictly personal
obligation as to the obligor
o The breach of such an obligation will, most likely, not be susceptible of specific performance… usually gives
rise to damages because courts are reluctant to infringe on the personal freedom of the obligor
o If the obligation is not personal the obligee can ask for specific performance and the court at its discretion
may grant it
Obligation not to do: abstain from doing something which, under normal circumstances, he would have a right to do
o A breach of an obligation not to do may entitle the creditor to demand specific performance, damages and in
certain cases the court may authorize the obligee to have the obligor, or a third party, undo what the obligor
has done in violation of his obligation not to do
Obligation of Result: whenever the performance or object of the obligation is so precisely determined as to amount to
a definite result to be achieved. An obligation to give a specific thing and an obligation not to do something would be
obligations of result
o i.e. §2754
o carries with it the presumption that the obligor is at fault whenever the result he was bound to secure has not
been achieved at all or not been achieved within a certain period of time – burden of proof is shifted to the
defendant to prove that a fortuitous, accidental or uncontrollable event prevented him from rendering his
performance as expected
Obligation of Means: an obligor is expected to use the best possible means available to him, or to act with the utmost
care and diligence in the performance of his obligation but without guaranteeing a definite result
o i.e. §§2683, 2894, 2930… a doctor- usually promises to treat a disease and not necessarily to cure it
definitively… to perform obligation according to standards of the profession expected in the
o the obligee-plaintiff will have to carry the burden of proof – he will have to show that the obligor-defendant
didn’t act with all the care and diligence required of a faithful or prudent administrator
Art. 1757. Sources of obligations
Obligations arise from contracts and other declarations of will. They also arise directly from the law, regardless
of a declaration of will, in instances such as wrongful acts, the management of the affairs of another, unjust enrichment
and other acts or facts.
Five formal sources:
o Contracts and other declarations of will – the will of a person is creative of obligations when it meets the requirements
necessary to establish a legal relationship binding an obligor to an obligee
o The law – may impose obligations regardless of any declaration of will or juridical act, or the occurrence of any
juridical fact on the part of an obligor
o Offenses – unlawful, voluntary and intentional acts of man
o Quasi-offenses – aka – quasi-delict – negligence, imprudence or want of skill, lack of intent to cause damage although
the act itself was voluntary in its perpetration
o Quasi-contracts or obligations arising without agreement – uni or bi-lateral, management of the affairs of another,
unjust enrichment/enrichment without cause and payment of a thing not owed
o Juridical act – any manifestation of the will of a person (natural or legal entity) meant to have legal effects; with the
intent to create an obligation; unilateral (donation) or bilateral (sale)
o Such an act is unilateral when the will of one person only is sufficient to create an obligation
o When two persons are each one bound to the other by an expression of their will, the juridical act entered
into is bilateral because two wills have been exchanged to create an obligation
o Juridical fact – an event occurring outside the will of a person which, by itself, brings about legal effects
CLASSIFICATION OF OBLIGATIONS ACCORDING TO THEIR EFFECTS
It is traditional to distinguish natural obligations, which carry fewer legal effects, from civil obligations which carry full legal
Art. 1758. General effects
A. An obligation may give the obligee the right to:
(1) Enforce the performance that the obligor is bound to render;
(2) Enforce performance by causing it to be rendered by another at the obligor's expense;
(3) Recover damages for the obligor's failure to perform, or his defective or delayed performance.
B. An obligation may give the obligor the right to:
(1) Obtain the proper discharge when he has performed in full;
(2) Contest the obligee's actions when the obligation has been extinguished or modified by a legal cause.
Art. 1759. Good faith
Good faith shall govern the conduct of the obligor and the obligee in whatever pertains to the obligation.
o General principle which, as such, ought to guide the jurist in his analysis of the law of obligations
Duty of loyalty
Duty of cooperation
Civil Obligation: Law, custom, juridical acts and facts… create, compose and compel performance; the essential feature of the civil
obligation was, and still is, that the creditor-obligee had or has a right of action to compel the obligor to perform
o In the former civil code it was defined as: a legal tie, which gives the party, which whom it is contracted, the right of
enforcing its performance by the law
Art. 1760. Moral duties that may give rise to a natural obligation
A natural obligation arises from circumstances in which the law implies a particular moral duty to render a
o Although it expresses the existence of a right in a person, it cannot be a ground for an action to have the
natural obligation enforced and there is no prescription
o The creditor-obligee has no right of action against the natural obligor
o N.O. exist somewhere in the conscience of the individual, but more likely in the conscience of the courts
Art. 1761. Effects of a natural obligation
A natural obligation is not enforceable by judicial action. Nevertheless, whatever has been freely performed in
compliance with a natural obligation may not be reclaimed.
A contract made for the performance of a natural obligation is onerous.
o A N.O. because it is defined in part as an obligation necessarily creates a right in an obligee. That right,
however, is deprived of any action for the enforcement of the obligation which is its counterpart
o Freely – a person acting of her own volition without ant compulsion or outside interference
o Error is not a ground for relief - error of the law is no excuse §5
o Is a natural obligation heritable and a part of one’s patrimony? As long as a natural obligation has a monetary
value and represents the extinction of a debt, there is little doubt that it should be heritable, both actively and
passively; it would fall into the patrimonies of both the obligee and the obligor
o Extinguishment of civil obligations
o Can a civil obligation be compensated with a natural obligation? We do not believe that it can for the
reason that a natural obligation is not demandable and it is not enforceable by judicial action
o The same reasoning would not be valid if the parties mutually agreed to a compensation between a
natural obligation, on the one hand, and a civil obligation, on the other hand. §1901 raises no
obstacle to the freedom of contract enjoyed by the parties in this matter and conventional
compensation is but an illustration of such a freedom to contract
Art. 1762. Examples of circumstances giving rise to a natural obligation
Examples of circumstances giving rise to a natural obligation are:
(1) When a civil obligation has been extinguished by prescription or discharged in bankruptcy.
(2) When an obligation has been incurred by a person who, although endowed with discernment, lacks legal
(3) When the universal successors are not bound by a civil obligation to execute the donations and other
dispositions made by a deceased person that are null for want of form.
o This list is only illustrative of the different kinds of natural obligations that may exist
o LA courts are in a position to fill gaps in the law by creating as many natural obligations as they may believe
to exist in the general principles of law or equity and justice
KINDS OF OBLIGATIONS
*Whether or not an obligation can be transferred, inherited, assigned, whether they are a part of one’s patrimony (with
monetary and commercial value); can the obligation be transferred like a thing?
Art. 1763. Definition
A real obligation is a duty correlative and incidental to a real right.
o Real right – right one holds over a thing, whereas a personal right is one a person has to bring an action
against another person
o RR – ownership, real servitude
o Principal real right – vests in their owner the broadest powers of usus, fructus, and abusus because
they bear directly on the very substance of the thing; i.e. the right of ownership
o Accessory real right – they bear on the representative monetary value of a thing rather than on the
thing itself, they are related to a thing and cannot be disassociated from it ; i.e. mortgage, pledge
o Real obligation – those obligations incurred as a result of ownership or possession of a thing burdened by a
real right (-a right in a thing that can be held against the world)
o Based on a thing, must have a thing and a person who can have rights
o An obligation, or a duty, owed to a person who can claim a performance because that person is the holder of
a real right, i.e. a right to make a direct and immediate (fictitiously without the involvement of an intermediary
person) use of a thing; can be held against the world
Art. 1764. Effects of real obligation
A real obligation is transferred to the universal or particular successor who acquires the movable or immovable
thing to which the obligation is attached, without a special provision to that effect.
But a particular successor is not personally bound, unless he assumes the personal obligations of his transferor
with respect to the thing, and he may liberate himself of the real obligation by abandoning the thing.
o A real obligation attaches to a thing – either movable or immovable and are transferred with it without the
need of an express assignment or subrogation
o There can be no obligation unless there is a thing in existence
o The real obligation is transferred with the thing as its accessory
Art. 1765. Heritable obligation
An obligation is heritable when its performance may be enforced by a successor of the obligee or against a
successor of the obligor.
Every obligation is deemed heritable as to all parties, except when the contrary results from the terms or from the
nature of the contract.
A heritable obligation is also transferable between living persons.
o Patrimony: the totality of assets and liabilities which are attached to a person and which can be assigned
monetary value. Only persons, natural or legal, have a patrimony because only persons can incur liabilities
towards others and claim rights against others
o A right can be said to be the active component part of a patrimonial relationship in the sense that the
holder of the right has the benefit of the action against the holder
o An obligation can be said to be the passive side of a patrimonial relationship since the obligor may
wait passively until asked to perform
o There is a presumption that all obligations are heritable – this presumption can be rebutted
o The obligation can be transferred to heirs of both the obligor and the obligee
o Heritable in the broad sense – not just an heir but third persons to whom an obligation can be assigned;
transferable between living persons by juridical acts (inter vivos) as well as mortis causa
Art. 1984. Rights and obligations will pass to successors
Rights and obligations arising from a contract are heritable and assignable unless the law, the terms of the contract
or its nature preclude such effects.
donor - obligor
Unilateral- one obligation
created; it must be accepted in
order to be binding
donee - obligee
Receive the thing; buyer
owes price to seller,
Buyer - obligee/creditor
obligee to transfer the
Bilateral- creates two
obligations; each party
owes to the other an ob. Owes obligation to
transfer the thing to the
Seller - obligor/debtor
obligee; one will will
receive the price
Art. 1766. Strictly personal obligation
An obligation is strictly personal when its performance can be enforced only by the obligee, or only against the
When the performance requires the special skill or qualification of the obligor, the obligation is presumed to be
strictly personal on the part of the obligor. All obligations to perform personal services are presumed to be strictly
personal on the part of the obligor.
When the performance is intended for the benefit of the obligee exclusively, the obligation is strictly personal on
the part of that obligee.
o i.e. care that a doctor provides to a patient; patient (obligee) is the only person who has the doctor’s (obligor)
attention; the patient is the beneficiary of the SPO to him
o when only the obligor can perform and when only the obligee can enforce and it is for their benefit
o an obligation can also be strictly personal as to the obligee where he would be the only party to have an
interest in the performance of the obligation
o Can an obligation be strictly personal as to both parties? Yes, i.e. §98 “married persons owe each other
fidelity, support, and assistance,” each party to the marriage is both “obligee and obligor” of a strictly
MODALITIES AFFECTING OBLIGATIONS
Art. 1777. Express or implied term
A term for the performance of an obligation may be express or it may be implied by the nature of the contract.
Performance of an obligation not subject to a term is due immediately.
o It is not defined in the code; but is commonly referred to as the period of time given to a party (obligor) in
which to perform their obligation
o Time is an event which will occur
o Suspensive Term: suspends or delays the right to demand the performance of an obligation until the term
occurs; as long as the term has not occurred, the performance of the obligation cannot be demanded by the
obligee, even though the obligation itself does exist
o i.e. rent being due on the 1st of the month
o effects while the term is pending – even though performance is delayed the obligation itself is born
and does exist in the sense that it has created rights and obligations in the parties
o The creditor-obligee cannot demand performance of his obligation from his debtor-obligor
in whose favor the term is established. The obligor enjoys the benefit of defense or
exception based on the suspensive term which protects him
o prescription cannot run against the right of action of that creditor
o Should the obligor perform before the occurrence of the term meant to protect him, his
performance will be valid and binding because he is acting in compliance with an existing
obligation *** review this comment in the précis and how it compares to a natural
obligation*** p 34
o In those circumstances where the term is explicitly stipulated in favor of the creditor-obligee,
there will follow, as a legal consequence, that the obligor could not compel his creditor-
obligee to receive his performance before the occurrence of the term
o The law grants to the obligee the means of protecting his right to that performance… §1771
a fortiori ratione
o Mere occurrence of the term that is fixed or clearly determinable automatically puts the
obligor in default, the prescriptive period applicable to the obligee’s right will begin to run
from the time of occurrence of the term
o Extinctive Term: brings an end to the obligation, extinguishes an existing obligation, brings an end to a
binding commitment to perform an obligation… the obligation which existed until then ceases to exist
o i.e. end of a lease term
o Before the happening of the extinctive term, the obligation is immediately enforceable as any pure
and simple obligation would be. The parties may seek enforcement of their rights and be compelled
to perform their duties as they had been bound themselves when entering into their contract
o Has no retroactive effect in the sense that the “past” remains and only the future is concerned
Term can be created by law or judicial decision:
o Conventional Term: a term or certain event expressly or impliedly agreed upon between the parties to a
o Express Conventional Term: specifically stipulated by the parties to an agreement and which requires
that performance take place or end by the date selected or within the period of time upon which the
o Implied Conventional Term: may be reasonably implied from the nature of the contract or the
circumstances. Such an implied term necessarily involves an obligation which cannot be performed
instantaneously and one which would require that the obligor do something over a period of time
o Legal Term: granted or imposed by law, i.e. 2595
o Judicial Term: also called a period of grace, a term granted by a court to a debtor who is sued by his creditor
seeking performance of the obligation. The court may grant or deny this term of grace in consideration of the
particular situation of the debtor
o Interest Protected: since it is meant to delay the performance of an obligation, or extinguish an existing
obligation, it is most likely that a term will be protective of the interests of the obligor who is to perform the
obligation – rebuttable presumption… a term could also exist for the benefit of both parties to a contract
Art. 1778. Term for performance
A term for the performance of an obligation is a period of time either certain or uncertain. It is certain when it is
fixed. It is uncertain when it is not fixed but is determinable either by the intent of the parties or by the occurrence of a
future and certain event. It is also uncertain when it is not determinable, in which case the obligation must be performed
within a reasonable time.
o The term consisting in a definite event bound to occur in the course of time, the issue of certainty and
uncertainty of the term can only be raised with respect to the exact date or period of time of occurrence of
the event selected as the term of obligation
o Certain Term: whenever the period of time preceding the occurrence of the event has been fixed
o Uncertain Term: when the period of time preceding the occurrence of the definite event or term “is not fixed
but is determinable either by the intent of the parties or by the occurrence of a future and certain event. It is
also uncertain when it is not determinable, in which case the obligation must be performed within a
o i.e. selecting the timing of a certain person’s death
Art. 1779. Term presumed to benefit the obligor
A term is presumed to benefit the obligor unless the agreement or the circumstances show that it was intended to
benefit the obligee or both parties.
Art. 1780. Renunciation of a term
The party for whose exclusive benefit a term has been established may renounce it.
Art. 1781. Performance before end of term
Although performance cannot be demanded before the term ends, an obligor who has performed voluntarily
before the term ends may not recover the performance.
Art. 1782. If the obligor is insolvent
When the obligation is such that its performance requires the solvency of the obligor, the term is regarded as
nonexistent if the obligor is found to be insolvent.
Art. 1783. Impairment or failure of security
When the obligation is subject to a term and the obligor fails to furnish the promised security, or the security
furnished becomes insufficient, the obligee may require that the obligor, at his option, either perform the obligation
immediately or furnish sufficient security. The obligee may take all lawful measures to preserve his right.
Art. 1784. Term for performance not fixed
When the term for performance of an obligation is not marked by a specific date but is rather a period of time, the
term begins to run on the day after the contract is made, or on the day after the occurrence of the event that marks the
beginning of the term, and it includes the last day of the period.
Art. 1785. Performance on term
Performance on term must be in accordance with the intent of the parties, or with established usage when the
intent cannot be ascertained.
A condition must be understood as an uncertain event which may or may not occur and to which is tied the existence or the
extinction of a bond of law. This conditional obligation is one whose fate is indefinite
Art. 1767. Suspensive and resolutory condition
A conditional obligation is one dependent on an uncertain event.
If the obligation may not be enforced until the uncertain event occurs, the condition is suspensive.
If the obligation may be immediately enforced but will come to an end when the uncertain event occurs, the
condition is resolutory.
o Suspensive condition: an obligation is subjected to a suspensive condition when it may not be enforced until the
uncertain event occurs; it suspends the existence of the obligation between the parties until the uncertain event occurs
and, therefore suspends the enforcement of that same obligation, although the bond of law has been formed, no
obligation is yet in existence
o i.e. an insurance contract on a home
o Resolutory condition: may be immediately enforced but will come to an end when the uncertain event occurs, brings
to an end an existing bond of law
Art. 1768. Expressed and implied conditions
Conditions may be either expressed in a stipulation or implied by the law, the nature of the contract, or the intent
of the parties.
o Expressed: when it is specifically referred to by the parties as they do under §1744
o Implied by law: i.e. §§ 2604, 2605
o Nature of the contract may also imply the existence of a condition, i.e. § 2460
o Implied from intent: whenever the circumstances are clearly indicative of consent
Art. 1769. Unlawful or impossible condition
A suspensive condition that is unlawful or impossible makes the obligation null.
o Review material in the précis p42
Art. 1770. Condition that depends on the whim or the will of the obligor
A suspensive condition that depends solely on the whim of the obligor makes the obligation null.
A resolutory condition that depends solely on the will of the obligor must be fulfilled in good faith.
o Whether suspensive or resolutory – classified under three adjectives: casual, potestative, and mixed
o Casual: event which is totally out of the control of men to bring about; depends on chance and is in no way in the
power or either the creditor or of the debtor; i.e. I will give you my civil code if it rains on Monday
o Potestative: as humans we have some control of a certain event; i.e. it is within my power to threaten you
o Simply potestative: equivalent of a mixed condition, “results of my actions were contingent on another
person acting with me, but I have no control over the other person”
o Absolutely potestative: 100% within the control or power of a person to bring about (such a thing doesn’t
really exist because we don’t live in a vacuum); many circumstances can limit an absolute obligation ; really
o Mixed: combination of the two; accident on the way to work, cant control the accident but you can control how you
are driving… don’t have full control
o ** Whenever a suspensive condition depends solely on the whim of the obligor, the whole obligation would be null;
purely potestative suspensive condition on the part of the obligor the obligation was considered null
o Reasoning: an obligor who would agree to be bound under such a condition would not really be
bound, since he would be in full and arbitrary control of that decision and would merely intend to
deceive the other party
o A contrario sensu: it is proper to say that, whenever a suspensive condition would depend solely on
the whim of the obligee, the obligation would then be valid. The reason is to be found in the fact that
the obligor himself would be bound by his own unilateral promise.
o Whenever a resolutory condition depends solely on the will of the obligor it must be fulfilled in good
Art. 1771. Obligee's right pending condition
The obligee of a conditional obligation, pending fulfillment of the condition, may take all lawful measures to
preserve his right.
o As long as the occurrence of the uncertain event has not taken place, and for whatever length of time its fulfillment is
pending, the suspensive condition prevents the rights and obligations of the parties from coming into existence.
Although a juridical act has been formed, it is largely without any effect. The parties must wait for their rights and
obligations to be born, if and when the condition is fulfilled
o A creditor under a suspensive condition cannot demand performance from his obligor since he is only a conditional
creditor and may never become a pure and simple creditor
o Prescription cannot run against the creditor since there is no right yet against which prescription could run
o If there is any financial risk of loss attached to the performance of the conditional obligation that risk is on the party
who is the owner of the thing that perishes while the condition is pending
o As long as the condition is pending, one cannot ignore the fact that a juridical act has been formed, and that there is,
at least, the hope that the suspensive condition will be fulfilled. This hope must be protected since it may have a
monetary value and, as such, be part of the parties’ patrimonies
o An obligation under a resolutory condition is fully in existence as soon as it has been entered into and performances
are due, whether unilaterally or bilaterally. The obligation should be considered, to a large extent, as if it were pure and
o Conduct is retroactive; risk: should the event occur it would wipe out all performance entered into by the parties
Art. 1772. Fault of a party
A condition is regarded as fulfilled when it is not fulfilled because of the fault of a party with an interest contrary
to the fulfillment.
Art. 1773. Time for fulfillment of condition that an event shall occur
If the condition is that an event shall occur within a fixed time and that time elapses without the occurrence of the
event, the condition is considered to have failed.
If no time has been fixed for the occurrence of the event, the condition may be fulfilled within a reasonable time.
Whether or not a time has been fixed, the condition is considered to have failed once it is certain that the event
will not occur.
Art. 1774. Time for fulfillment of condition that an event shall not occur
If the condition is that an event shall not occur within a fixed time, it is considered as fulfilled once that time has
elapsed without the event having occurred.
The condition is regarded as fulfilled whenever it is certain that the event will not occur, whether or not a time has
Art. 1775. Effects retroactive
Fulfillment of a condition has effects that are retroactive to the inception of the obligation. Nevertheless, that
fulfillment does not impair the validity of acts of administration duly performed by a party, nor affect the ownership of
fruits produced while the condition was pending. Likewise, fulfillment of the condition does not impair the right acquired
by third persons while the condition was pending.
o Unless the parties to a conditional juridical act provide otherwise, a condition produces its retroactive effects
automatically, as soon as it happens. This statement means that, fictionally and conceptually, the effects of the
condition date back to the time when the juridical act with the condition was entered into
o As a result, and at the risk of formulating an excessive simplification, what has been done in the meantime while the
condition was pending, and thus before its occurrence, should be undone or, vice-versa, what has not been done
while the condition was pending should have been done
o Some of the effects flowing from the retroactivity of the suspensive condition can be listed as follows… p52
REVIEW EFFECTS… THRU THE END OF THE CHAPTER!!!!
Art. 1776. Contract for continuous or periodic performance
In a contract for continuous or periodic performance, fulfillment of a resolutory condition does not affect the
validity of acts of performance rendered before fulfillment of the condition.
Conjunctive and Alternative Obligations
o An obligor may bind himself to multiple items of performance in such a manner that he cannot be said to have
performed his obligation and extinguished it until all items have been fully carried out. The obligation thereby
created may involve either several different or identical items of performance which are bound in such a way as to
form a universality of things.
o Although each item of performance can be regarded as the object of a separate obligation, it remains that the
obligor is bound to perform them all… a conjunctive obligation is therefore comprised of constituent obligations
o Each obligation may be subjected to a particular legal regime which may vary from one to the other
o Yet the intent of the parties is that each obligation is but a part of a whole which provides the raison d’être of
each of its component parts
Art. 1807. Conjunctive obligation
An obligation is conjunctive when it binds the obligor to multiple items of performance that may be separately
rendered or enforced. In that case, each item is regarded as the object of a separate obligation.
The parties may provide that the failure of the obligor to perform one or more items shall allow the obligee to
demand the immediate performance of all the remaining items.
o The obligor may be in breach of the whole conjunctive obligation itself, and not only of a constituent
obligation, should he fail to perform any one of the items involved and expected of him
o A universality of identical things or items will become the object of a conjunctive obligation when all of these
things or items are distinctively listed or enumerated and still bound together by a connecting link which
brings them all under one single universality
o i.e. paying in installments
Art. 1808. Alternative obligation
An obligation is alternative when an obligor is bound to render only one of two or more items of performance.
o An alternative obligation requires that a choice be made between two or more items of performance so that
the obligor will be released from his obligation whenever he will have carried out one of those items of
o The essence of an alternative obligation is to place two (or more) items of performance on the same plane so
that they are all principle items.
o No single item is an accessory to another
o If the obligation deals with two objects, they are equally due and the performance of either one will be
sufficient to extinguish the whole obligation
o *Watch out for situations where it looks like there is a choice between performances but only one actual
o It is possible to see in an alternative obligation a sort of insurance granted to an obligee-creditor, a kind of
guarantee of payment assuring him that at least one item of performance out of two or more will be conveyed
Art. 1809. Choice belongs to the obligor
When an obligation is alternative, the choice of the item of performance belongs to the obligor unless it has been
expressly or impliedly granted to the obligee.
o Regardless of who has the choice they are required to exercise it in good faith
o Presumption (rebuttable) that the choice belongs to the obligor stems from the civil code tending to favor a
party to an obligation who carries a burden, the burden of performing and who, in general, may be the
weaker of the two parties, the less informed
Art. 1810. Delay in exercising choice
When the party who has the choice does not exercise it after a demand to do so, the other party may choose the
item of performance.
o Party given the benefit of the choice must exercise within term agreed upon or within a reasonable time
o If the obligor is late the obligee can choose – by delaying the obligor has waived the benefit of term which
law grants (for not carrying out obligation in good faith)
Art. 1811. Obligor may not choose part of one item
An obligor may not perform an alternative obligation by rendering as performance a part of one item and a part of
o Whenever the choice of one item of performance has been made by the proper party and in due time, that
item is owed in its entirety
o Once selected, the item becomes the only object of an obligation which, from alternative, has become pure
o The exercise of choice has extinguished the alternative feature of the obligation
o Although a choice must be made between the items, each one remains an entity and is not susceptible of
o The forms and modalities of transfer of ownership of the item will vary according to the nature of the object
selected to be delivered by the obligor
o At what point in time is the right of ownership of an item passed from one party to another?
o Consider the exercise of the choice as tantamount to the occurrence of a suspensive condition (either
potestative or mixed) and to state, therefore, that there ought to be retroactivity of the effects of the
exercise of the choice
Art. 1812. Impossibility or unlawfulness of one item of performance
When the choice belongs to the obligor and one of the items of performance contemplated in the alternative
obligation becomes impossible or unlawful, regardless of the fault of the obligor, he must render one of those that remain.
When the choice belongs to the obligee and one of the items of performance becomes impossible or unlawful
without the fault of the obligor, the obligee must choose one of the items that remain. If the impossibility or unlawfulness
is due to the fault of the obligor, the obligee may choose either one of those that remain, or damages for the item of
performance that became impossible or unlawful.
o The risk of loss of one item is for the obligor to bear and since the obligee had not been given the choice he
must accept the performance of the remaining item
o In the case of the second paragraph – the damages may exceed the value of the item destroyed since they are
measured by the loss sustained by the obligee and the profit of which he has been deprived
Art. 1813. Impossibility or unlawfulness of all items of performance
If all of the items of performance contemplated in the alternative obligation become impossible or unlawful
without the obligor's fault, the obligation is extinguished.
o This occurs when items are destroyed by a fortuitous event before the obligor was put in default to exercise
o The whole of the obligation is extinguished regardless of which party had been granted the choice
o The obligor is excused from performance and the obligee must bear the risk of loss of either performance –
because he can no longer demand that the obligor perform – but the obligor bears the financial loss since he
can no longer transfer anything to the obligee
Art. 1814. Obligor's liability for damages
When the choice belongs to the obligor, if all the items of performance contemplated in the alternative obligation
have become impossible and the impossibility of one or more is due to the fault of the obligor, he is liable for the
damages resulting from his failure to render the last item that became impossible.
If the impossibility of one or more items is due to the fault of the obligee, the obligor is not bound to deliver any
of the items that remain.
o If the choice belonged to the obligor – the obligor will owe at least the value of the second item which he
destroyed and, possibly, the profit of which the obligee was derived
o After the destruction of the first item of performance the second one had become pure and simple –
it is as if that remaining obligation had been the only one in existence from the beginning
o If the choice belonged to the obligee – it can be said that the obligee has been prevented from exercising his
choice between the items of performance of the obligations because of the obligor’s fault
o He ought to be given a new choice between the values of the two original items
o Real subrogation: where a thing (value) is substituted to another thing (the original item of
o With destruction by a fortuitous event the obligee should also be granted the additional right to
recede from the contract
o If the choice belonged to the obligor and the impossibility was caused by the fault of the obligee – the
obligor who has, thereby, been deprived of his right to choose between the items may not be compelled to
deliver any remaining item
Facultative Obligations: an obligation is facultative when an obligor owes one particular principle item of performance and when, at
the same time, he may be released of that performance by tendering another item as a substitute item which will take the place of
the principle item of performance
o Characterized by the existence of a principle item which is the only one truly due under the obligation but, to that item the
obligor, at the moment of performing may, of his own volition, substitute another item for his performance
o Examples in the civil code: §§2589, 2591, 234, 2623, 2624
o Distinguished from others
o Alternative v. Facultative: the two kinds of obligations will differ with respect to the risk of loss of an item destroyed
by fortuitous event
o As opposed to an alternative obligation – if the principle object of a facultative obligation is destroyed by a fortuitous
event, no alternate item is owed by the obligor – the substitute or facultative item or object does not enter the realm
of the obligation and cannot be demanded by specific performance
o The legal nature and regime of a facultative obligation are determined by the nature of the principle object of the
o The legal regime of the obligation is defined at the outset as soon as the facultative obligation is formed since only one
item of performance is owed under that obligation (not the case with an alternative obligation)
i.e. §2624: the movable or immovable nature of the obligation is controlled by the immovable or movable
nature of the thing, object of the transaction
o When a facultative obligation exists, it gives the obligor the ability to recede freely and willingly from the contract with
the full knowledge and consent of the obligee. A FO is not a means of pressure in the hands of an obligee to compel
his obligor to perform the principal obligation as stipulated damages can be looked upon
o They can be identified by the combination of the following criteria:
o Gives the obligor the unrestricted freedom to choose between at least two items of performance where one is less
burdensome than the other
o There is different emphasis on the two items; one item is considered as the principal and only object of a primary
obligation (with an alternative obligation they are on the same level)
o The obligee has a right of action for the performance of the primary obligation; the obligee doesn’t have the right to
demand performance of the facultative obligation
o The FO will most often show a more or less important disparity in the values of the items of performance; the
facultative item will bear a value usually inferior to that of the item of the principal performance
Obligations with Multiple Persons
Art. 1786. Several, joint, and solidary obligations
When an obligation binds more than one obligor to one obligee, or binds one obligor to more than one obligee, or
binds more than one obligor to more than one obligee, the obligation may be several, joint, or solidary.
Art. 1787. Several obligations; effects
When each of different obligors owes a separate performance to one obligee, the obligation is several for the
When one obligor owes a separate performance to each of different obligees, the obligation is several for the
A several obligation produces the same effects as a separate obligation owed to each obligee by an obligor or by
each obligor to an obligee.
o This situation is very rare
o “the obligation” – each obligor owes his own performance – separate and distinct performances – each
performance can be subjected to a different legal regime
o Each one of them is independently bound to a separate and distinct performance not owed in any
manner by the other obligors
o If performances are different they are bound separately/severally
o If performance identical it may be a more difficult situation
o Does not require any extensive treatment since a several obligation must be considered as being merely the
gathering under one source of multiple but separate obligations creating as many different bonds of law as
there are parties
o The insolvency of one “several” obligor to perform his obligation can have no impact at all on the
performances of their obligations by other obligors
o The remedies or rights of action of the obligee are particular to each one of the several obligors
Art. 1788. Joint obligations for obligors or obligees
When different obligors owe together just one performance to one obligee, but neither is bound for the whole, the
obligation is joint for the obligors.
When one obligor owes just one performance intended for the common benefit of different obligees, neither of
whom is entitled to the whole performance, the obligation is joint for the obligees.
o In the civil law the term joint has a substantive law meaning
o To be distinguished from common law meaning which is procedural
o Presumption laid down in the law – multiple obligors are bound jointly
o i.e. §§2817 – Partnership Debts; Liability, 1416 – Liability of Universal Successors to creditors
Creditor can demand only his performance from each one of the obligors – no additional burdens on the obligor
o §2600 – lesion in a contract of sale, it is a remedy available to the seller of a immovable
Sells the immovable at less than half the value of it
There is a presumption of error or duress
So you are offered a remedy – you can get immovable or damages (payment of additional price)
Prescription: if the obligee interrupts prescription it is only for the one obligor affected
o No effect on the running of prescription on the other obligors
o §3503 – Solidary obligors (an a contrario argument); this rule doesn’t control for joint obligors – in solidarity
each obligor represents the other – as if there was only one obligor – it is not the rationale behind joint
Default – 1989: “the obligor”, no representation of one obligor by others
If one joint obligor is insolvent the burden of one obligor isn’t shifted from one to another, the obligee doesn’t get his
money** results in loss
Release/remission of debt – mode of extinction of obligation; it is the creditor telling his obligee – your debt is
forgiven, i.e. §1888… obligee extinguishes the obligation and the obligor is gone, he has received a benefit * the debt
is extinguished to that extent
**In La. when an obligee wants to sue his joint obligors – he must sue them separately, unless he obtains joinder
o The obligee should join the obligors in the lawsuit
o Each one must be given the opportunity to defend himself personally (remember that each obligor may have
their own legal regime
Art. 1789. Divisible and indivisible joint obligation
When a joint obligation is divisible, each joint obligor is bound to perform, and each joint obligee is entitled to
receive, only his portion.
When a joint obligation is indivisible, joint obligors or obligees are subject to the rules governing solidary
obligors or solidary obligees.
Sources of Solidarity
When reading below make sure to keep §1796 (and the comments) in mind where it states that solidarity is not
presumed; i.e. §§2910,3045; since it imposes a risk on the obligee and a burden on the obligor
o CC offers several examples of passive solidarity imposed by law – two different categories
o One instance is built on the presumed intent of the parties bound solidarily – the law simply presumes that
these parties want or would agree to be bound in solido if given the opportunity to express their intent; i.e.
o A second category of cases of legal solidarity can be said to find its rationale in a form of penalty to be
imposed on obligors because of their joint participation in a wrongful act; i.e. 2324-A
o A contract is the law between the parties and, within the limitations or authorizations set by the law, these parties may
renounce rights granted merely for the protection of private interests
o The contractual stipulation of solidarity need not be couched in express or formal terms – the inclusion, in a contract,
of specific concepts such as in solido or solidarity is not necessary as long as the parties’ intent can be properly
interpreted by a court as disclosing their willingness to be bound solidarily
o *** Where a definite ambiguity exists or a doubt arises as to whether a contractual obligation should be characterized
as solidary or not, the presumption that the obligation is joint should control
o *** Solidarity being an exception to the common standard type of obligations with multiple persons, that exception
should be construed narrowly and strictly so as to allow the principle of joint obligations to prevail since it conveys
the presumed intent of the parties that they are unwilling to take on more than their virile share unless they consent to
Art. 1790. Solidary obligations for obligees
An obligation is solidary for the obligees when it gives each obligee the right to demand the whole performance
from the common obligor.
o Solidarity must be understood both as a legal fictions and as a practical necessity
o It is a bar to the division of an obligation as a result of a particular feature attached to the bond of law binding
together multiple persons
o Active solidarity: multiple obligees; effects – rare in actual practice
o Risk: when one obligee receives payment he has received for all *other obligees may be at risk of not getting
o §§1790, 1791 – each one of the solidary obligees is vested with the right to demand performance of the whole
obligation and to receive the same whole performance from the obligor
o When the performance has been rendered the obligation is extinguished and the obligor is released;
even though the benefit of the obligation is to be divided among the multiple obligees
o Should a solidary obligee interrupt prescription of the action against the obligor, the other solidary
obligees will benefit from such an action
o Reasoning a pari ratione– should a solidary obligee put an obligor into default the benefit of this action
will be shared with the other solidary obligees - damages for delay in performance will be owed to all
the solidary obligees
o Should the obligor be sued by one solidary obligee or should he have been put in default by one of
them, the obligor would no longer have the right to choose which obligee would receive his
performance (§1791 – obligor can choose)
o Creates a type of implied mandate between the obligees - so that each one is presumed to represent the
others and to act on behalf of the others
o No single solidary obligee can act to the detriment of the others; each one should be held
accountable for the damages that may result from the non-performance of his duty
o A solidary obligee acting alone may only remit his portion of the debt, the obligor remaining bound
to the other solidary obligees for the balance… a solidary obligee acting alone may not novate the
entire debt without the consent of his co-solidary obligees
o Novation being the extinguishment of an existing obligation by the substitution of an new
one, each solidary obligee might suffer a prejudice if such a novation in toto by one of them
o Obligee can only novate his share but not the totality of the debt
o In their internal and horizontal relationship, the solidary obligees cease to be solidary to become joint obligees
o Each obligee is entitled to a virile share of the payment, and that share will be equal to the others unless either
the parties have provided otherwise or the circumstances dictate differently
o Passive solidarity: multiple obligors – personal bond between the obligee and each one of his solidary obligors
o Burden: since liable for totality it doesn’t matter if others can perform
o Obligee can sue all obligors in the same lawsuit – to avoid not receiving performance from one obligor
o Two different levels of relationships between the parties involved must be analyzed; there is first of all a
vertical relationship binding the multiple solidary obligors to the obligee and secondly, there is a horizontal
relationship creating rights and duties among the solidary obligors themselves
o Vertical effects and its consequences
o §1795 – as opposed to a simple surety or a joint obligor a solidary obligor may not plead the benefit
of division – solidary obligors waive the right to demand that the obligee-creditor should divide his
action so as to obtain from each obligor only his virile share of the debt; h/e he has the benefit of a
o The legal regime of one obligor may arise from a source other than the sources of the solidarity of
his co-obligors – a different legal regime may be created for each bond of solidarity
o If the obligee doesn’t receive full performance from one obligor he has the right to demand full
performance or the balance from any other solidary-obligor because only the whole performance will
release from liability
o Solidarity is not indivisibility, i.e. should one obligor in solido die before the performance of the
obligations, his heirs together, and not each one individually, will jointly owe the performance of the
obligation formerly owed by the deceased
o §§1799, 1800 should a solidary obligor be put in default the other solidary obligors themselves will
thereby be put in default (this assumes identical legal regimes and a lack of strictly personal defenses)
o A variety of defenses can exist depending on the legal regime
o Common defenses, mixed, partly common, and partly personal, principal obligor/surety
relationship and strictly personal defenses – descriptions on page 65 of the précis
o Horizontal effects and its consequences
o Once the obligee has received the full performance of the obligation from one of the solidary
obligors, the benefit of solidarity disappears with the extinction of the debt
o Solidarity is not heritable – the nonheritability of the benefit of solidarity from the obligee by the
solidary obligor who performed means that there will take place a distribution of the debt among the
former solidary obligors who have now become joint obligors
o The solidary obligor who extinguished the debt is entitled to a right of contribution against his co-
debtors but he must divide his action so that he can demand from each one of them no more than
their share or virile portion
o There may exist some exceptions to an equal distribution:
o By agreement or stipulation
o By judgment of a court
o Under §1800 an obligor in solido who is at fault in not performance his obligation will be the
only one ultimately liable for the damages he may have caused to the obligee
o Right of contribution: each obligor should bear his full share of the debt but no more; the solidary
obligor who extinguished the obligation is entitled to a personal action to enforce his right of
contribution against his co-solidary obligors which should include interest (§3014); this is justified by
the concept of legal subrogation §1826-A
o The risk of insolvency is to be spread proportionately among the obligors; by their personal
contractual relationship, the obligee-creditor and the solidary obligor in whose favor solidarity has
been renounced may not increase the burden or the virile share of the remaining obligors §1806
o Consider the parties as being fictitiously one and the same person on account of the personal link that has been
established between them; each is presumed to represent the other
o Example of solidarity: §2324 – Liability as solidary or joint and divisible obligation
Art. 1791. Extinction of obligation by performance
Before a solidary obligee brings action for performance, the obligor may extinguish the obligation by rendering
performance to any of the solidary obligees.
Art. 1792. Remission by one obligee
Remission of debt by one solidary obligee releases the obligor but only for the portion of that obligee.
Art. 1793. Interruption of prescription
Any act that interrupts prescription for one of the solidary obligees benefits all the others.
Art. 1794. Solidary obligation for obligors
An obligation is solidary for the obligors when each obligor is liable for the whole performance. A performance
rendered by one of the solidary obligors relieves the others of liability toward the obligee.
Art. 1795. Solidary obligor may not request division; action against one obligor after action against another
An obligee, at his choice, may demand the whole performance from any of his solidary obligors. A solidary
obligor may not request division of the debt.
Unless the obligation is extinguished, an obligee may institute action against any of his solidary obligors even
after institution of action against another solidary obligor.
Art. 1796. Solidarity not presumed
Solidarity of obligation shall not be presumed. A solidary obligation arises from a clear expression of the parties'
intent or from the law.
o The far-reaching, harsh and aleatory effects of solidarity are the reason why the solidarity of obligations shall not be
Art. 1797. Solidary obligation arising from different sources
An obligation may be solidary though it derives from a different source for each obligor.
o i.e. one party can be bound solidarily on account of a contract whereas the another solidary obligor could be bound
for the same obligation because of an existing legal disposition
Art. 1798. Obligation subject to condition or term
An obligation may be solidary though for one of the obligors it is subject to a condition or term.
Art. 1799. Interruption of prescription
The interruption of prescription against one solidary obligor is effective against all solidary obligors and their
Art. 1800. Solidary liability for damages
A failure to perform a solidary obligation through the fault of one obligor renders all the obligors solidarily liable
for the resulting damages. In that case, the obligors not at fault have their remedy against the obligor at fault.
Art. 1801. Defenses that solidary obligor may raise
A solidary obligor may raise against the obligee defenses that arise from the nature of the obligation, or that are
personal to him, or that are common to all the solidary obligors. He may not raise a defense that is personal to another
Art. 1802. Renunciation of solidarity
Renunciation of solidarity by the obligee in favor of one or more of his obligors must be express. An obligee who
receives a partial performance from an obligor separately preserves the solidary obligation against all his obligors after
deduction of that partial performance.
Art. 1803. Remission of debt to or transaction or compromise with one obligor
Remission of debt by the obligee in favor of one obligor, or a transaction or compromise between the obligee and
one obligor, benefits the other solidary obligors in the amount of the portion of that obligor.
Surrender to one solidary obligor of the instrument evidencing the obligation gives rise to a presumption that the
remission of debt was intended for the benefit of all the solidary obligors.
o For a discussion on this topic – P 68-69 in the précis
Art. 1804. Liability of solidary obligors between themselves
Among solidary obligors, each is liable for his virile portion. If the obligation arises from a contract or quasi-
contract, virile portions are equal in the absence of agreement or judgment to the contrary. If the obligation arises from
an offense or quasi-offense, a virile portion is proportionate to the fault of each obligor.
A solidary obligor who has rendered the whole performance, though subrogated to the right of the obligee, may
claim from the other obligors no more than the virile portion of each.
If the circumstances giving rise to the solidary obligation concern only one of the obligors, that obligor is liable
for the whole to the other obligors who are then considered only as his sureties.
Art. 1805. Enforcement of contribution
A party sued on an obligation that would be solidary if it exists may seek to enforce contribution against any
solidary co-obligor by making him a third party defendant according to the rules of procedure, whether or not that third
party has been initially sued, and whether the party seeking to enforce contribution admits or denies liability on the
obligation alleged by plaintiff.
Art. 1806. Insolvency of a solidary obligor
A loss arising from the insolvency of a solidary obligor must be borne by the other solidary obligors in proportion
to their portion.
Any obligor in whose favor solidarity has been renounced must nevertheless contribute to make up for the loss.
Divisible and Indivisible Obligations
Art. 1815. Divisible and indivisible obligation
An obligation is divisible when the object of the performance is susceptible of division.
An obligation is indivisible when the object of the performance, because of its nature or because of the intent of
the parties, is not susceptible of division.
Obligor can perform each item of the performance separate from the other
o Effects of Divisible Obligations:
§ 1816 – MUST be considered indivisible
§1817 assuming that the item of performance is divisible by nature!!!
Heirs of the owner of the horse, each one will have to deliver the whole horse, heirs
will owe the mortgage indivisibly
o By nature:
Seller of horse agrees to sell to one buyer – the horse by nature is indivisible in its delivery –
the whole horse must be delivered
Parties by their intent can transform a divisible obligation into an indivisible one; money
loaned is divisible, but loaner says money must be paid in a lump sum with interest
How about the right of ownership over the horse? It can be divided, co owners – owners in
in-division; all of the co-owners are required to perform indivisibly the full delivery
Buy 100 bushels out of 1000…won’t become owner until they are removed from the entire
quantity – if they are destroyed prior to passing to new owner the original owner bears the
risk of loss… selling something that is not divided yet and you don’t bear the risk of loss
I sell you 1/3 of the totality of the bushels of wheat – sold a right/abstraction, you become
owner as soon as we enter into the sale you become owner and you bear the risk of loss and
not the seller… sold something divisible so you bear the risk
K for the performance of services: to determine the nature of the performance; Levasseur
had an ob to teach three times a week , cant make it indivisible because you cant teach it all
Building a house, contractor is given 9 months – if nothing is said in the K what is the
nature of the obligation? Can the parties by intent make the performance indivisible and
what are the legal consequences (obligations of means and results – helps distinguish…)
What does the owner have in mind? The whole house? Four walls? Frame? Slab? Owner
probably has in mind an obligation of result – which is indivisible!!! How about the builder –
ob of means – his performing of services when the sun shines when subcontractors are
available, very likely that he will view it as divisible; likely that a court will side with the
owner because they contracted for a house and not a slab
Prevailing intent of the owner
o By Law:
Best example is the mortgage – the security given over the whole house, mortgagee has a
mortgage over the whole house; the second mortgagee also has a mortgage over the whole
house, but only after the first- if there is anything left, they do not divide
Servitude: you have servitude over every inch of the path not portions of it
Effects of Indivisibility: §1819 and 2nd paragraph of §1815
o No benefit of division when the object of performance is indivisible
o §1789: where as solidarity focuses on parties, Focus on item of performance
Solidarity is not heritable
But indivisibility can be inherited when the item of performance is indivisible… combine
solidarity with indivisibility – you plan ahead and guarantee heritability
Passive Indivisibility: each joint obligor (because we’re talking about persons) owes the whole thing, if one is
sued to perform he must perform the whole thing there is no benefit of division, the only right available is to
ask for a dilatory exception (the same one a solidary obligor can bring in
Art. 1816. Effect of divisible obligation between single obligor and obligee
When there is only one obligor and only one obligee, a divisible obligation must be performed as if it were
o Fictitiously indivisible
o If there are multiple obligors the presumption no longer applies and they are presumed to be bound jointly
o But this presumption also can be defeated if the thing is indivisible
Art. 1817. Effects of divisible obligation among successors
A divisible obligation must be divided among successors of the obligor or of the obligee.
Each successor of the obligor is liable only for his share of a divisible obligation.
Each successor of the obligee is entitled only to his share of a divisible obligation.
Art. 1818. Effects of indivisible obligations between more than one obligor or obligee
An indivisible obligation with more than one obligor or obligee is subject to the rules governing solidary
o Effects of indivisibility
o Each joint obligor owes the whole thing
o The obligee can demand performance from any of the obligors
o If the obligee interrupts prescription with one of the obligors it is interrupted for all the obligors
o Indivisibility is a benefit vested in the obligee (presumption)
o Default – solidary obligors fall under the rule that putting in default of one is putting in default of
all… but can it be said that the joint obligors that they represent each other? Arguments can be said
both way – but since we apply the rules of solidarity (a pari materia) putting one in default puts the
others in default (but you can reason contrario sensu and say that what is said about solidarity doesn’t
apply to indivisibility)
Art. 1819. Effect of indivisible obligation among successors
An indivisible obligation may not be divided among the successors of the obligor or of the obligee, who are thus
subject to the rules governing solidary obligors or solidary obligees.
o Indivisibility is heritable, because the thing is indivisible in its performance any heir of an obligor will also be
bound indivisibly for that performance
Art. 1820. Solidarity is not indivisibility
A stipulation of solidarity does not make an obligation indivisible.
o Issue related to the thing, the object of the ob, the performance that an obligor must deliver, do or not do
o Solidarity has benefits that indivisibility has and vice versa
o Solidarity is not presumed, it has to be expressed unless the law so states
o But indivisibility can be imposed, i.e. indivisibility by the law of nature
o Indivisibility of performance ceases to exist when the object of performance indivisible by nature ceases to
The obligee will lose the benefit of indivisibility, now they are presumed to be bound jointly (joint
obligors… Indivisibility doesn’t carry over to the thing substituted
o Unless we apply to indivisibility the same rules we have for solidarity – if one solidary obligor causes the
destruction of thing by his own fault, damages will be owed and the obligee can demand them from any of
the solidary obligors (and they can seek redress among themselves) a pari materia can be applied to
o Solidarity doesn’t prevent the division of a debt between the heirs of an obligor; it is not heritable, so the
heirs are joint obligors
o Obligee should always provide in a contract even when there is only one obligor they should always provide
for solidarity and indivisibility
§1566 – POTESTATIVE!!! If the condition is potestative…§1767 is there anywhere in this article the word
Conventional Obligations or Contracts
Art. 1906. Definition of contract
A contract is an agreement by two or more parties whereby obligations are created, modified, or extinguished.
Definitions confine; so this is strange
It is an exchange of will and consent between at least two or more parties; as a result obligations can be created….
THE NEXT SET OF ARTICLES SHOULD BE READ TWO BY TWO…
Art. 1907. Unilateral contracts
A contract is unilateral when the party who accepts the obligation of the other does not assume a reciprocal
Common law: mode of formation, expression of will on behalf of one party
o Party carries out a physical action – that action carries out acceptance
Civil law: unilateral juridical acts; unilateral contracts as well… creating an obligation on one side
o Contract is a juridical act – that contract (expression of two wills) creates an obligation on one side only; the
party on the other side does not assume a reciprocal obligation
Loan and donation
One party promises to pay the other a sum or money if the other will do or forebear to do something….
Unilateral: One way street – A owes an obligation to B and B accepts performance of that obligation from A
o Donation – donee agrees to accept and owe nothing
o Different than the common law definition of a unilateral contract… content of the contract
o Physical performance of an act which will bind the party that expresses consent – the other parties… refers to
formation of the contract
o §2926 Deposit – purely potestative resolutory condition – why is it unilateral? That depositing is the
formation of the K before that there is no contract – the physical depositing is the contract there is no obligation
?(before the deposit you may have a promise)
o Loan – there is no loan until the bank puts the money into your account – before that there are just
promises… obligation of the lender? Nothing just to wait for the borrower to return the money
Art. 1908. Bilateral or synallagmatic contracts
A contract is bilateral, or synallagmatic, when the parties obligate themselves reciprocally, so that the obligation
of each party is correlative to the obligation of the other.
(Correlative - so related that each implies or complements the other)
What did they agree to? Create an obligation or create two obligations?
Bilateral: two way street – A sells to B a car/thing and B pays the price; A is the obligor of the obligation to deliver the
car and B is the obligor of the obligation to deliver the price - isolate the obligation in regards to the direction they
o Obligations created on both sides
o K of lease and sale
o Difference in the number of obligations created
o Can a unilateral K by the intent of the parties be transformed into a bilateral contract – yes! A donation with
§1559 (3); 1565… you can attach to a unilateral k such conditions/duties so as to change the nature of the
o Renumerative donations?
Why is there a distinction between them?
o Exceptio non adimpleti contractus… §1911 comment (c) … exception of non performance of the contract –
only possible in bilateral contracts where the obligations are reciprocal/correlative
If one party isn’t willing to perform the other party can raise the exception
i.e. lease: if lesfsor doesn’t repair the premises then the lessee can withhold payment of the rent
exception isn’t available in a unilateral contract – donee doesn’t owe anything to the donor so there is
no justification for the remedy;
o default – unilateral, there is no reason to put a party in default
***These classifications aren’t exclusive!!!! Guidelines to start reasoning!!!! The will of the parties can borrow
from many places – to make up the parties own contract
Art. 1909. Onerous contracts
A contract is onerous when each of the parties obtains an advantage in exchange for his obligation.
Sale: buyer owes price and seller owes thing of value, price comes out of the buyers patrimony and the thing comes
out of the sellers patrimony
Onerous means that there is a burden
Gratuitous legal effects:
Gratuitous and onerous can be very different
o K of marriage? Onerous or gratuitous? Marriage itself and not the regime is likely a gratuitous contract
Can you argue error as to the person whom the groom married? i.e. as a vice of consent
Courts don’t like error as to the k of marriage (as to the person) – too easy to argue
o K of donation? In the mind of the donor is the status/consideration of the donee (a donor doesn’t just give
away to just anyone) but a particular “person”
Error as to the person in a gratuitous contract is more common than in an onerous (in an onerous
contract is very difficult)
In consideration of the other person – intuitu(s) personae
o Contract of mandate: bilateral, onerous in most instances; mandate: is based on the consideration of the two
persons who enter into the contract – the principal – mandatary – can be rescinded on the ground of error,
when the mandatary dies the obligation is terminated, the obligation is strictly personal because of
consideration of the person
In a gratuitous contract no obligation of the warranty type; in an onerous contract warranty is often necessary to
ensure the performance of the obligation of each party
o Donee has no right of warranty in the donor – no grounds to complain
Art. 1910. Gratuitous contracts
A contract is gratuitous when one party obligates himself towards another for the benefit of the latter, without
obtaining any advantage in return.
Relationship between Unilateral and gratuitous; Donation and the will are examples
Loan can be gratuitous or onerous; it is unilateral because only the borrower has the obligation to return
o Loan with interest – is onerous
o Loan without interest – to return the very thing received – the borrower isn’t digging out of his pocket – only
obligation to return that very same thing – it is a gratuitous unilateral contract
Onerous and synallagmatic are usually aligned
Tandem is broken here!
Art. 1911. Commutative contracts
A contract is commutative when the performance of the obligation of each party is correlative to the performance
of the other.
Hasn’t been relied on by a court since 1985
o What is commutative in all civil law jurisdictions, in contrast with aleatory contract
o §1768 in 1825 code: is considered as equivalent, the object/thing given for a price – (Sale - the price is the
equivalent to the market price; lessee expects premises he can enjoy reflective of the amount he pays) bilateral
- each party considered that what he gave away to what he received
Each party knows at the outset that he will receive the equivalent – it is in the nature of the contract to give each party
the equivalent of what he wants
Each performance depends on the other (correlative – depending one upon the other)
o Correlative? Webster: related, correspondent, indicating a reciprocal or complementary relationship; Blacks:
relating or corresponding, mutual or …. Interdependent
The performance occurs when the other performance occurs - performance depends on a performance… this is
what a bilateral contract is all about
What does this add to bilateral contracts (onerous)? enter into obligations which in their mind they consider
equivalent (you don’t enter into a sale looking to lose money)
This article really brings into the discussion of a term
i.e. seller gives k 3 months to pay? Is it correlative? Wont a suspensive term prevent performance
Commutative as defined in other Civil law jurisdictions
o Opposite of aleatory – each party expects the equivalent; the performance is equivalent
Equivalent performances abinitio; aleatory where risk is part of the contract which makes
performance abintio not equivalent
Art. 1912. Aleatory contracts
A contract is aleatory when, because of its nature or according to the parties' intent, the performance of either
party's obligation, or the extent of the performance, depends on an uncertain event.
Performance of one obligation depends on an uncertain event
i.e. gambling in a casino- you put money in the machine hoping you get the same or more than what you put in – the
greater thing depends on luck – suspensive condition – the event may or may not happen – will make the object of
the casino’s performance exist
party knows that he will not receive the equivalent – they want more
Art. 1913. Principal and accessory contracts
A contract is accessory when it is made to provide security for the performance of an obligation. Suretyship,
mortgage, pledge, and other types of security agreements are examples of such a contract.
When the secured obligation arises from a contract, either between the same or other parties, that contract is the
K of sale where buyer takes a loan – for mortgage
o K of sale – principle contract
o Loan/mortgage – kind of security – mortgage is accessory
Why is there a difference? *** watch out for the big lure!!! To try to catch you!!!!
o Take one step at a time!!!!
o Lure is obvious – must identify the principal contract first!!!
o NO accessory of contracts and no issue or mortgage, surety, or pledge unless there is a valid binding
principle contract first – before you talk about warranty make sure that you convince professor that there is a
sale because warranty will not exist if there is no sale to back it up
o An accessory contract can be invalid because of error by one party or incapacity to enter into this particular
type of suretyship
o The invalidity of the accessory contract doesn’t affect the validity of the principal contract
Art. 1914. Nominate and innominate contracts
Nominate contracts are those given a special designation such as sale, lease, loan, or insurance.
Innominate contracts are those with no special designation.
Nominate: given a name
Innominate: no special designation
Difference important? Courts don’t like innominate contract, courts prefer to bring a contract under a label – rules are
important, if the courts are faced with the lack of rules, the courts could impose on the parties a contract that they
never intended to entered in to
Art. 1915. Rules applicable to all contracts
All contracts, nominate and innominate, are subject to the rules of this title.
You can enter into any contract you want to as long as you have consent capacity cause and object and as long as you
don’t violate the rules of public order
Freedom of contract lets parties enter into whatever contracts they want to
Art. 1916. Rules applicable to nominate contracts
Nominate contracts are subject to the special rules of the respective titles when those rules modify, complement,
or depart from the rules of this title.
Art. 1917. Rules applicable to all kinds of obligations
The rules of this title are applicable also to obligations that arise from sources other than contract to the extent that
those rules are compatible with the nature of those obligations.
Contracts of adhesion: parties are supposed to be equal when they enter into contracts – freedom of contract; h/e
there are many instances where the weaker parties aren’t in a position to negotiate, must adhere even if they don’t
really like it;
o in order to recreate parity between the parties – to put them back on the same level
Provisions prohibiting competition are read out of the contract by the courts
Will bring about the nullity of some provisions of a contact
Art. 1918. General statement of capacity
All persons have capacity to contract, except unemancipated minors, interdicts, and persons deprived of reason at
the time of contracting.
Found under the law of person in the CC § 27: all natural persons have general legal capacity to have rights and duties
§28 A natural person who has reached majority… a broader concept than contracts – juridical act – a contract is the
expression of two juridical acts
§26 – the unborn child shall be considered as a natural person… general legal capacity to have rights and duties, child
So when does a natural person become entitled to rights and duties? §25 natural personality – live birth until death;
conception but born alive –suspensive condition attached to the live birth – retroactive effects – bestow personality
retroactively to the time of conception
Personality v. capacity
o Person has rights and can enter into obligations
o Natural person may not be able to enjoy every right attached to one’s personality
Capacity of enjoyment
Incapacity of enjoyment: person deprived of right to enjoy, takes away from a person a right vested
§§941, 945 – every person has the right to inherit under the law; but some heirs will be
denied the right to enjoy the inheritance if they kill…
945 If struck with an incapacity of enjoyment – the right dies
§2447 – any natural person enjoys the right to enter into a sale, even children; but officers of
a court – cant purchase litigious rights, (right is litigious when it is being litigated between A
and B) a right is a thing and as a thing it can be sold or transferred
§1476 minor under 16 doesn’t have capacity to donate unless in favor of his spouse or
children – minor is given a right that belongs to every person except under the age of 16
Incapacity of enjoyment is restricted – it infringes upon one’s personality
o Presumption that all rights belong to a natural person
Reasons of incapacity of enjoyment: distrust of a lawyer because they should have known; distrust of a
minor or protection of a minor against himself… heir who attempts to kill the decedent – as punishment
o A natural person may not be able to exercise rights vested in him
incapacity of exercise
Personality is vested in a person and rights are attached but for some reason that person cannot
exercise the rights
§§27, 29 Minors have the rights but since they are under 18 the law presumes that they aren’t
mentally capable – minor is represented by parents (parental authority - §216 – until
maturity or emancipation) Parents will assist with exercise of the child’s rights; if one parent
dies the remaining parent will most likely be appointed tutor, it also begins by dissolution of
§219 incapacity to exercise may lead to someone else exercising the rights – the parents can
delegate the rights to someone else – they can appoint tutors
Art. 1919. Right to plead rescission
A contract made by a person without legal capacity is relatively null and may be rescinded only at the request of
that person or his legal representative.
Art. 1920. Right to require confirmation or rescission of the contract
Immediately after discovering the incapacity, a party, who at the time of contracting was ignorant of the
incapacity of the other party, may require from that party, if the incapacity has ceased, or from the legal representative if it
has not, that the contract be confirmed or rescinded.
Art 1842 Confirmation is a declaration whereby a person cures the relative nullity of an ob (Lev prefers juridical
act here instead of ob). Emanates from the very person protected by the relative nullity.
EG: minor enters into K, K can be rescinded by the minor, or minor can refuse to perform when asked by
the other party. Minor when he becomes of age can confirm the K which until the day before was not
enforceable-- can say he was protected by relative nullity and now I can confirm I am of age and therefore the
K is now binding.
Art 1843 Ratification is a declaration whereby a person gives his consent to an ob incurred on his behalf by
another without authority. A juridical act which comes from a person who was to be the protector of the
EG: minor enters into a K at 17yo, the act is relatively null, father/mother or parent with tutorship can step
in and ratify the K bc the persons with parental authority will make the K valid by exercising the right to K
which was denied to the minor. EG: the pres of the US enters into an international agreement, pres signs the
treaty, has to be ratified by cong, a third person who comes in to give authenticity/validity to the treaty
Art. 1921. Rescission of contract for incapacity
Upon rescission of a contract on the ground of incapacity, each party or his legal representative shall restore to the
other what he has received thereunder. When restoration is impossible or impracticable, the court may award
compensation to the party to whom restoration cannot be made.
Art. 1922. Fully emancipated minor
A fully emancipated minor has full contractual capacity.
Art. 1923. Incapacity of unemancipated minor; exceptions
A contract by an unemancipated minor may be rescinded on grounds of incapacity except when made for the
purpose of providing the minor with something necessary for his support or education, or for a purpose related to his
Art. 1924. Mere representation of majority; reliance
The mere representation of majority by an unemancipated minor does not preclude an action for rescission of the
contract. When the other party reasonably relies on the minor's representation of majority, the contract may not be
Art. 1925. Noninterdicted person deprived of reason; protection of innocent contracting party by onerous title
A noninterdicted person, who was deprived of reason at the time of contracting, may obtain rescission of an
onerous contract upon the ground of incapacity only upon showing that the other party knew or should have known that
Art 395-- full interdict lacks capacity to make a juridical act…
Art. 1926. Attack on noninterdicted decedent's contracts
A contract made by a noninterdicted person deprived of reason at the time of contracting may be attacked after his
death, on the ground of incapacity, only when the contract is gratuitous, or it evidences lack of understanding, or was
made within thirty days of his death, or when application for interdiction was filed before his death.
Art. 1927. Consent
A contract is formed by the consent of the parties established through offer and acceptance.
Unless the law prescribes a certain formality for the intended contract, offer and acceptance may be made orally,
in writing, or by action or inaction that under the circumstances is clearly indicative of consent.
Unless otherwise specified in the offer, there need not be conformity between the manner in which the offer is
made and the manner in which the acceptance is made.
Invitation is different from an offer! But what does it take for the invitation to turn into an offer that creates ob's?
look at consent under its 2 component parts: offer and acceptance-- the 2 together form the consent. There is no
consent unless there is acceptance that meets the terms of the offer. The offer combined with acceptance may lead to
the formation of consent
What are the req's for the offer to be an offer leading to an acceptance leading to an agreement as a K?
1. The offer must be serious, must be enlightened, free, intended to look forward to entering into a binding
agreement. Serious as opposed to an offer made in jest. Would a reasonable man consider it serious?
2. The offer must be precise, specific, etc. Means that in the offer, the offeror must make it clear to the offeree
what obj of the ob is meant to be created, and there must be in the offer some clear understanding as to the
cause of the K to be entered into (why is the offeror making his offer), is the cause of the K to be lawful/legal.
That's why distinction btw nominate and innominate K's is very important. If the offer contains reference to a
particular thing/price/cause then it looks like the K that would be entered into would be a sale. Therefore the
offeree knows there is a thing offered, a price, and the relationship btw price and thing is meant to transfer
ownership to him the offeree. If a thing is offered with no price attached to it, cant make connection btw shoe's
price and transfer of ownership-- offer is not precise enough to lead to acceptance that would bind the parties.
Easy to relate an offer as precise when the offer is for a K governed by the CC, but if the offeror wants to enter
into an innominate K it will be harder to bind the other party to the K.
Intent: to bind himself – to create an obligation on himself; animus obligandi (glue that ties together)– brings together
the precision of the offer with its seriousness, as opposed with negotiations
Offer may be express, tacit §1927, addressed to A particular person or to the public at large as long as it meets the
requirements of specificity, precision and seriousness
Same requirements for an acceptance than for an offer
…Customary, at the place the offer is received (not the same as the medium at the place where the offer is given (?)
Drafters of contract should be specific as to medium, means, manner of acceptance of the offer
Art. 1928. Irrevocable offer
An offer that specifies a period of time for acceptance is irrevocable during that time.
When the offeror manifests an intent to give the offeree a delay within which to accept, without specifying a time,
the offer is irrevocable for a reasonable time.
Binding nature of offer? How far do you go to decide the intent to bind truly binds the offeror – distinction
btw revocable and irrevocable offers
Dominant concept of the offer – revocable, a contrario the irrevocable offer
IO- beneficial to the offeror
Offeror sets a term – extinctive term which leaves to the offeree that amount of time to accept
o How specific must the offeror be with the time?
o How does an offer manifest his intent to give the offeree a reasonable time? How must it be different
from a specification? Do you apply the second para of 1927? Problem the offeror will have to
o IO – can be made even though a time isn’t specified – manifested intent to give offeree a reasonable
time to accept… look for manifested intent – in second paragraph of 1927
Art. 1929. Expiration of irrevocable offer for lack of acceptance
An irrevocable offer expires if not accepted within the time prescribed in the preceding Article.
Art. 1930. Revocable offer
An offer not irrevocable under Civil Code Article 1928 may be revoked before it is accepted.
§1930 – 1928, 1931
All depends on manifestation of intent by the offeror
1928, 29 make the IO a presumption and the RO by default
To remove doubt use an extinctive term
Art. 1931. Expiration of revocable offer
A revocable offer expires if not accepted within a reasonable time.
Art. 1932. Expiration of offer by death or incapacity of either party
An offer expires by the death or incapacity of the offeror or the offeree before it has been accepted.
Even during the irrevocable period of time
Before offer is accepted, there is no contract – one intent is lacking upon death
Art. 1933. Option contracts
An option is a contract whereby the parties agree that the offeror is bound by his offer for a specified period of
time and that the offeree may accept within that time.
Why is it located here, a contact formed already – option is a contract!
The option is a fiction, intangible thing, is the object of the offeror’s obligation – the offeror gives that option
to the obligee who accepts is as the object of the contract of option
Thing of value – can be transferred – can be the patrimony of the beneficiary of the option – so a K has been
The obligation created by the option K to lift the option – to exercise the option(effect of option contract)
may be strictly personal to the beneficiary of the option
o The grantor of the option can say this option is sold to you alone – strictly personal
o Should you die, it will die with you
it is a contract which can stand as the principle and only existing contract – sell you the option to buy my Civil Code –
by itself this is perfectly valid; §2620… is a contract – it can stand on its own or it can be attached as an accessory –
lease with an option to buy – validity of the option is contingent on the validity of the lease – their existence depends
on the validity of the principle contract
the object – the right can be sold; the buyer may decide to exercise the option – he may or may not want to buy – it
his up to the buyer of the option because he owns it
Art. 1934. Time when acceptance of an irrevocable offer is effective
An acceptance of an irrevocable offer is effective when received by the offeror.
Acceptance has the effect of creating the contract, when received by the offeror
During the irrevocable period of time
Offeree must agree to enter into the contract during that period of time
That the offeror will receive the acceptance during the irrevocable period of time
Receipt – creates meeting of the minds
It is easy when time is specified…What about when the time isn’t specified? Problem offeree will encounter – no
specific time but a reasonable time
o Reasonable period of time is tied to an irrevocable offer
o How does offeree make sure that its received in the reasonable period of time
This is why the contract is of benefit to the offeror
Art. 1935. Time when acceptance of a revocable offer is effective
Unless otherwise specified by the offer or the law, an acceptance of a revocable offer, made in a manner and by a
medium suggested by the offer or in a reasonable manner and by a reasonable medium, is effective when transmitted by
Art. 1936. Reasonableness of manner and medium of acceptance
A medium or a manner of acceptance is reasonable if it is the one used in making the offer or one customary in
similar transactions at the time and place the offer is received, unless circumstances known to the offeree indicate
Sale of movables §2601 – 2617, in between there are extensive comments – most of the articles are taken from sales
convention – convention of the international sale of goods – taken from the UCC
2602 – formation by conduct – could be action or inaction, issues of interpretation
Art. 1937. Time when revocation is effective
A revocation of a revocable offer is effective when received by the offeree prior to acceptance.
When is the contract formed when the offer is revocable? Revocation of the offer when received
Acceptance of RO when transmitted –transmitted as opposed to received
Transmitted = revocable – even though the offeror hasn’t received the contract yet
Receipt = irrevocable; presumption that offeror makes an IO because he wants to remain in control
If the offer is irrevocable the offeror cannot revoke it until the term is up
IO – offeror has received through mail or fax… even though the offeror hasn’t taken knowledge of the
communication (get a letter and put it in a drawer unopened – receipt presumes knowledge)
What if takes the offeree three or four days to make up his mind
o Offer received on the 1st
o reasonable party may need two or three days
o mailed on the 4th – at this point the contract is formed
o what about days in between?
o Can the offeror revoke offer on the 1, 2, 3? Is offeror under the obligation to give offeree a reasonable time
in which to decide?
o No reference to right to revoke after a reasonable time
o Offeror giving the offeree the benefit of creating the offer –should he be given a reasonable time? Offeror
bound unilaterally for a reasonable period of time like he is with an IO
o IO offeror is bound for a period of time, even though he is the one who has the benefit, who has the timing
of the formation of the K - give offeree a reasonable period of time
o Offeree should be given a reasonable period of time – given the right to determine when the contract is
Revocation of a revocable offer cannot be made without giving the offeree a reasonable period of time – determined
by usage, custom, trade…
What if offeree receives revocation before he gets the offer himself? There is no problem there
Art. 1938. Reception of revocation, rejection, or acceptance
A written revocation, rejection, or acceptance is received when it comes into the possession of the addressee or of
a person authorized by him to receive it, or when it is deposited in a place the addressee has indicated as the place for this
or similar communications to be deposited for him.
Art. 1939. Acceptance by performance
When an offeror invites an offeree to accept by performance and, according to usage or the nature or the terms of
the contract, it is contemplated that the performance will be completed if commenced, a contract is formed when the
offeree begins the requested performance.
Action consisting of performing, instead of accepting orally or in writing does so by action
Problems will be created when the acceptance is made by action
Contemplated – completed when commenced
Suggests that the offer – unilateral juridical act – binding the offeror, and the offeree derives the
understanding that if he performs he will be bound (offer meets requirements)
Commencement of performance is acceptance! Not finished…. Look at §1941!
THE CONTRACT IS FORMED! So why impose a duty on the obligee to give notice of beginning of
performance… read with 1941
Art. 1940. Acceptance only by completed performance
When, according to usage or the nature of the contract, or its own terms, an offer made to a particular offeree can
be accepted only by rendering a completed performance, the offeror cannot revoke the offer, once the offeree has begun to
perform, for the reasonable time necessary to complete the performance. The offeree, however, is not bound to complete
the performance he has begun.
The offeror's duty of performance is conditional on completion or tender of the requested performance.
Particular features and qualities – in this instance – when completed performance is acceptance – it suggests
there is no contract until performance is complete – not bound until complete
Application of this article will prove to be difficult
For beginning or completed performance?
Offeree who has to complete performance to manifest acceptance must give notice to the obligor – no notice
is required if the offeror should have known according to usage… should have known what?
ACCEPTANCE BY PERFORMANCE V. ACTION?
Art. 1941. Notice of commencement of performance
When commencement of the performance either constitutes acceptance or makes the offer irrevocable, the offeree
must give prompt notice of that commencement unless the offeror knows or should know that the offeree has begun to
perform. An offeree who fails to give the notice is liable for damages.
“offeree must give prompt notice” that he has begun to act, and therefore accepted
How is this different than §1927?
Why are there separate articles
Last sentence… liability – should it had said: of his beginning of performance, or who knows that the offeror
does not know that he has begun performance…
Damages for what? For failure to give notice? But the offeror because of usage or custom… he should have
known that I was accepting by performance
What has the offeror suffered?
Offer usually imposes a term – in favor of the obligor/offeree
Art. 1942. Acceptance by silence
When, because of special circumstances, the offeree's silence leads the offeror reasonably to believe that a
contract has been formed, the offer is deemed accepted.
Silence as a form of acceptance? May in special circ.
Special circ in relation to silence, lack in 1927 second paragraph – where inaction can under the circ. – nothing about
Equate silence with special circ…. Inaction? Just circumstances
Art 2721 A lease with a fixed term is reconducted, if, after the expiration of the term, and w/o notice to
vacate/terminate/or other opposition by the lessor or the lessee, the lessee remains in possession. Inaction causes
the lease to be automatically reconducted.
Silence is often a mode of consent in K's of sale, particularly when you are dealing with professionals. Art 2601
and 2602-- sales enter into with professionals, the K can be modified by silence by one party, can be terminated
by the silence of one party-- these are the special circumstances in which Art 1942 would apply. Most have the
special circumstances for silence to be a form of consent.
Art. 1943. Acceptance not in accordance with offer
An acceptance not in accordance with the terms of the offer is deemed to be a counteroffer.
Covered in a large extent in sales
Remember A contract must meet essential requirements: Capacity, Consent, Object, Cause
o *all K must meet these requirements – not enough for offer to bind the offeror
o Must contain 4 and specific requirements of contract to be entered into
i.e. sale: object of offer must also include price, and intent must be specific to convey
ownership – so the offeree knows what he has to pay and to know the intent of the offeror,
if the offeree says yes then when the acceptance meets the offer then the contract will be
What must the offeree do to become the offeror?
If the offeree says to the offeror I want to pay half the price? CO? very likely – bears an essential element – similar to
what the offer is offering
What about if the offeree says not only will I pay 1K but Ill give you 500 more
Why is a suspensive condition affecting the essence of these requirements? Would it be the same If you had a
o SC do to an obligation? Is the person binding himself – changes the intent of the offeror – suspends the
existence of an obligation – I wont pay, and if! He has not accepted,, has not bound himself to paying the
price – messed with the essence of the transfer of ownership
o RC – the ob exists under the threat of it being rescinded later on
o How about a suspensive term? Ill pay you in three months – the thing is there and the ownership can pass –
2601: the offeree may include in acceptance, but those additional terms may not make the offer
different than what is was – unless the offeror makes any additional terms…. Then you have custom
and practices coming in
When you make an offer – make sure you specify irrevocability – keep control of formation – project
into the future the effects of the contract – reason backwards
How can I draft the contract to get this this and this?
Think ahead and draft backwards
Art. 1944. Offer of reward made to the public
An offer of a reward made to the public is binding upon the offeror even if the one who performs the requested act
does not know of the offer.
Promises made to the public at large always contain some restrictions-- if you want a pair of shoes, the price is there,
so it's offer to enter into a sale. But what if you walk into store and the manager says sorry we're out of stock? Most
offers made to the public have included implicitly some suspensive conditions. When a store advertises this item for
sale, no raincheck, first come first serve, the store is imposing some conditions on your ability to express your
acceptance and the store is often in control of those conditions
Art. 1945. Revocation of an offer of reward made to the public
An offer of reward made to the public may be revoked before completion of the requested act, provided the
revocation is made by the same or an equally effective means as the offer.
Art. 1946. Performance by several persons
Unless otherwise stipulated in the offer made to the public, or otherwise implied from the nature of the act, when
several persons have performed the requested act, the reward belongs to the first one giving notice of his completion of
performance to the offeror.
Art. 1947. Form contemplated by parties
When, in the absence of a legal requirement, the parties have contemplated a certain form, it is presumed that they
do not intend to be bound until the contract is executed in that form.
***1928, 9…. Timely, received by offeror of IO, it must be dispatched in a reasonable time when the offer is
Acceptance must match, must be identical to the offer
i.e. §2601 – where does this article come from? The comments don’t say…. Second paragraph dealing with merchants
Vices of Consent
Art. 1948. Vitiated consent
Consent may be vitiated by error, fraud, or duress (violence).
These are the three basic vices
Art. 1949. Error vitiates consent
Error vitiates consent only when it concerns a cause without which the obligation would not have been incurred
and that cause was known or should have been known to the other party.
Why didn’t the law institute use mistake like the common law? Or change violence to duress
Defective, wrong appreciation, understanding of a material reality or psychological expression of the will
Error of fact: when the consent of one party fails to meet one of the essential requirements of the offer; offer
is expressed by the offeror (object, cause,) error bares one of these factual errors or the contract – most
common kind of error
o Object: nature of the contract – presented in the offer (offeror to enter into a lease, offeree may
interpret as being a contract of sale – object in the broad sense, what kind of contract the parties are
going to enter into
In the narrow sense – the thing that is to be transferred, the performance – the object of an
obligation (car in a sale)
Can be on the substance of the object – a gold plated ring instead of a ring made of gold –
the true substance of the making of the thing
Can be on a substantial quality of a thing - §2524, deals with the substance of a contract,
reasonably fit – a reasonable person would expect; 2nd paragraph seems to address the
o Subjective v Objective: is an issue of evidence, that party has the burden of proof – and that the
other party knew of the motive; when objective – that the average reasonable man would see that
error – shifts the burden of proof to usually the offeror
o Cause: reason or motive for entering into a contract (§1967 – reason why a party obligates himself);
can be the objective cause – one party lease, the other sale – somewhat meaning the object as a
whole; subjective error – reason as to why the party wants to enter into the contract
i.e. buying a clock for the personal/subjective reason/motive because it belonged to
Napoleon… error if I have communicated to the offeror – it has to be shared by the offeror,
if the offeree wants to purchase a tract of land to turn it into a casino – offeree not buying
just to build condos but to build a particular type of establishment
subjective motive must be communicated to the offeror
§1949 comment – contract between two minds – error must be shared; unilateral and bilateral
o ***if there is a presumption – or presumed to know – the presumption makes the error bilateral***
o Unilateral mistake – common law – who ever makes a unilateral error has a right to rescind -
**absolutely not – you cannot do this; ground of error as to one of these items must be shared by the
two parties – the person makes the error and the other party has to be aware of it
o Bilateral error is presumed – contract of sale §§2520, 2521,2524,2529, 2545 (devised with the specific
intent to hold the manufacturer liable – automatically aware of the error in their products – of the
poor performance of services which he sells – he is presumed to know of the defects in his things,
damages and attorneys fees)
o Sanction of an error which has entered into the field of a contract – a contract is relatively null –
party who made the error is protected and can seek the nullity of the contract – must be brought
w/in the prescriptive period – time within the discovery of the error – the nullity will not always be
granted- there are some equitable considerations
o Sanction of an error which has entered into the field of a contract – a contract is relatively null –
party who made the error is protected and can seek the nullity of the contract – must be brought
w/in the prescriptive period – time within the discovery of the error – the nullity will not always be
granted- there are some equitable considerations, §1951 – read the concept of good faith, if the other
party is willing to meet you the contract will impose the contract
Error of law: very few instances, difference between error of law and ignorance of the law §5 – you cannot
plead ignorance of the law but you can plead… of the effects of a contract – rare – except in the case of Wise
Errors as to the effect (where it may be common) – is the compromise §3071 - §3082 – nevertheless the
Compromise cannot be rescinded as to error of law or lesion
Art. 1950. Error that concerns cause
Error may concern a cause when it bears on the nature of the contract, or the thing that is the contractual object or
a substantial quality of that thing, or the person or the qualities of the other party, or the law, or any other circumstance
that the parties regarded, or should in good faith have regarded, as a cause of the obligation.
Error as to the person: who is the offeree
Can be a ground for nullity
In an onerous K error as to the person is irrelevant; enter into in the K not because of the identity of the
offeree but because they can pay and carry out the obligation
o BUT there are instances where the nature of the person can be relevant – contract of mandate,
contract based on representation of one party by someone else §2989
o Whenever there is an idea of a party representing another – the agent/mandatary must meet the
qualities that the principal wants them to have
Hiring of services – if can be provided only by a particular person than there can be error
Gratuitous contract – consideration of the person/qualities of the person in foremost in the mind of the
donor, who provides a benefit to an other – the other has to respond to those qualities
Error of law/cause – not always distinguishable from the object
Error of law – not very common - Error is drawing the wrong legal effects
Art. 1951. Other party willing to perform
A party may not avail himself of his error if the other party is willing to perform the contract as intended by the
party in error.
Art. 1952. Rescission; liability for damages
A party who obtains rescission on grounds of his own error is liable for the loss thereby sustained by the other
party unless the latter knew or should have known of the error.
The court may refuse rescission when the effective protection of the other party's interest requires that the contract
be upheld. In that case, a reasonable compensation for the loss he has sustained may be granted to the party to whom
rescission is refused.
o Threat against a party who may want to go against a contract
o Damages or compensation can be granted to the party to whom rescission is refused
o There is a difference between knowing the reason, knowing the cause, and knowing that “a buyer” is making
o Subtle distinction between error and fraud – when there is a presumption of error
Art. 1953. Fraud may result from misrepresentation or from silence
Fraud is a misrepresentation or a suppression of the truth made with the intention either to obtain an unjust
advantage for one party or to cause a loss or inconvenience to the other. Fraud may also result from silence or inaction.
o Fraud adds to error
o §1955 – there be an error and that the error be created by fraud – before you can argue fraud you must be
able to argue error – action brought under fraud give attorney’s fees, not under simple error
o What is fraud? Made up of two parts
o Misrepresentation/suppression of the truth – by maneuvers and schemes
Suppression of the truth – remaining silent, when if the info was disclosed the contract
would not have been formed
Maneuvers must be intended on the part of the author of the fraud to obtain an advantage
or to cause a detriment
o If one of these elements is missing there is no fraud
o The second element – causing an detriment to the offeree, is more significant
o Author of the fraud – where must the fraud come from?
must be a party to a contract §§1954, 1956 – one on one basis – important difference with
Fraud can also come from an agent §1956 – seller cannot call upon another person without
penalty – grounds for nullity – cannot do indirectly what you cannot do directly
Victim of fraud §1954 – must be a party to a contract which is subjected to maneuvers so as
to cause a detriment
Art. 1954. Confidence between the parties
Fraud does not vitiate consent when the party against whom the fraud was directed could have ascertained the
truth without difficulty, inconvenience, or special skill.
This exception does not apply when a relation of confidence has reasonably induced a party to rely on the other's
assertions or representations.
o How do you determine when behavior is fraudulent? There is a psychological element - §1954 first and
o Standard is of the reasonable man – if they could have discovered without difficulty that the schemes
by the other party in the contract is fraudulent – then the average man will not be protected because
he failed to act reasonably
o Dolus bonus – good fraud – salesman putting on show – don’t fall for it – it is an act
o Code is concerned with the bad fraud – dolus malus – the one that the average person cannot
i.e. buying a used house – you are required to take a tour and discover reasonable errors, but
not expected to walk in with a hammer looking for errors
o 2 nd paragraph of §1954 – concerned with the family relationship – relation of confidence lowers the duty
of looking into – fraud can be found more easily in a family relationship
o §1958 – damages and attorney’s fees – if error and two elements of fraud
o §2032 – 5 yr prescriptive period
Objective and subjective component parts
Must be proven by the plaintiff
Not easy to prove – not easy to prove intent to derive benefit
Easier to prove maneuvers schemes - but the subjective part has to be proven as well
Art. 1955. Error induced by fraud
Error induced by fraud need not concern the cause of the obligation to vitiate consent, but it must concern a
circumstance that has substantially influenced that consent.
Art. 1956. Fraud committed by a third person
Fraud committed by a third person vitiates the consent of a contracting party if the other party knew or should
have known of the fraud.
Art. 1957. Proof
Fraud need only be proved by a preponderance of the evidence and may be established by circumstantial
Art. 1958. Damages
The party against whom rescission is granted because of fraud is liable for damages and attorney fees.
Art. 1959. Nature
Consent is vitiated when it has been obtained by duress of such a nature as to cause a reasonable fear of unjust
and considerable injury to a party's person, property, or reputation.
Age, health, disposition, and other personal circumstances of a party must be taken into account in determining
reasonableness of the fear.
Comment (b) duress is a word of art or technical word – word of the English language to convey substantive
notion of violence – danger of translating words – w/o knowing the substance of the law behind it – at
common law you will not find the same situation as described in 1960 – CL will not use duress against
threatened injury – in CL one party against the other – 1960 would be undue influence in the CL –
What is violence? Duress?
o At the common law: when one party to the K exercises physical violence against the other party of
the contract, the victim; because of equity – duress was later on extended to economic duress –
threats of violence of the property on the weaker party to the contract ** but this is the extent of
duress at the common law, mostly physical – narrow interpretation because K find its justification in
torts – because of torts that some contracts were created, CL has no theory of K, typical writ system;
no duress at CL if a CL attorney were to include §1960 – spouse, ascendant, descendant – this isn’t
part of duress at common law – courts of equity stepped in and they created the concept of undue
influence **we don’t have this connected to duress in our Civil Code…. §1959 Comment (b) **not
equivalent of violence
Who is the average La. lawyer that is going to use the common law meaning?
Not likely to be encountered – what you may encounter is something more like to economic duress – more
like a contract of adhesion, or abuse of rights
Unlikely to encounter physical violence
Elements? Subject/Object: person, property – pecuniary loss, patrimony affected by violence; reputation –
moral violence, i.e. blackmail of a person reputation
Duress must be present at the time the K is entered into – not the fear of past threats – the party is coerced
Standard of violence – it is a dual standard – beginning is the reasonable person, which is described in first
paragraph of 1959 – reasonable fear – this is the abstract standard, in abstracto standard – if you can
established that a reasonable man would buckle under this then you may find duress; more common is the
second paragraph – the in concreto standard – impact that duress has on the victim
Art. 1960. Duress directed against third persons
Duress vitiates consent also when the threatened injury is directed against the spouse, an ascendant, or descendant
of the contracting party.
If the threatened injury is directed against other persons, the granting of relief is left to the discretion of the court.
No La. case dealing with this article – must look at Quebec cases
We can borrow by analogy
List of victims used to be much broader – when the concept of the family was broader – more relatives were
Collaterals are excluded – brothers and sisters
They would fall under the second paragraph – left up to the discretion of the court
What about a fiancé? Not listed – will it fall under the second – against other persons – no adjective before
persons, doesn’t say related or close persons
What about a pet? Is this violence/duress? Old article included reference to animals – they probably would
fall under first paragraph of §1959 under property
Art. 1961. Duress by third person
Consent is vitiated even when duress has been exerted by a third person.
Lack of consent, not error
s/o who knows they are entering into a K w/o their free consent
lack of freedom from a party to a K and from a third person as well
Not the case at common law – duress by a non party is not duress at CL!!!
Art. 1962. Threat of exercising a right
A threat of doing a lawful act or a threat of exercising a right does not constitute duress.
A threat of doing an act that is lawful in appearance only may constitute duress.
Fear must be a result of an unjust threat
Some threats are lawful and not tantamount to duress
The second sentence – abuse of right and contract of adhesion – courts will reestablish balance
i.e. Threat of a creditor to sue his debtor would be a lawful debt; threat of cutting off funds from son in
college unless they sign a contract to come to law school – is this lawful?
i.e. man threatening woman with divorce? Unless she agrees to release him from responsibility – but you
cannot be released from a legal responsibility – threat of doing something lawful in appearance but unlawful
Art. 1963. Contract with party in good faith
A contract made with a third person to secure the means of preventing threatened injury may not be rescinded for
duress if that person is in good faith and not in collusion with the party exerting duress.
i.e. lost in the waters of the gulf near Cuba – so in case of emergency hopefully there is no connection
between the person you are asking for rescue and the unlawful party
Taking advantage of the situation is this duress?
In La. there is a good Samaritan law – so there would be criminal charges
Stepping in to help some one – may be management of the affairs of another
In the common law w/o good Samaritan law a rescue situation would call it maybe an unconscionable
contract – but they have no prior name for it – they would have to decide in court
Art. 1964. Damages
When rescission is granted because of duress exerted or known by a party to the contract, the other party may
recover damages and attorney fees.
When rescission is granted because of duress exerted by a third person, the parties to the contract who are
innocent of the duress may recover damages and attorney fees from the third person.
Damages and attorneys fees for fraud (lesser one) then a fortiori ratione you can recover it for duress as well
Second paragraph – contract would remain in existence –but the court can determine that if it could be
rescinded the court could award damages
Rescission first then damages
Prescriptive period – relative nullity – vice of consent – it is relative §2032 from the time violence stopped,
fraud was discovered or error is ascertained – until then the prescriptive period is suspended because the
person doesn’t know they have a right
Art. 1965. Lesion
A contract may be annulled on grounds of lesion only in those cases provided by law.
Not a general concept like fraud or error
Encountered in few contractual relationships
One doesn’t know exactly where to put it so it was put with vices
Post French revolution – nobility was forced to get rid of property – so this was put in place – so if sold for
less than half the value – the buyer had to know, there was no way they could not know – they presumed that
the seller was under economic duress or acting under error
Since it was inspired by error/violence it was put in this section but only in one article…
Send to K of sale/exchange/giving in payment/successions
o In sales it only applies to immovable property
Remedy available only in a few K when the discrepancy is such that it is sold for less than half or a fourth
than lesion will automatically apply
As soon as you establish that the value of the immovable sold was twice the value – it does not apply to
buyers only sellers!!!
Art. 1971. Freedom of parties
Parties are free to contract for any object that is lawful, possible, and determined or determinable.
Object: gives rise to most litigation
Object – misnomer – a k has no object – a k creates obligations to do give or not do – those obligations have
i.e. k of sale – creates ob on buyer and seller – they are both obligor and obligee; selling a car; 2 objects 2
what the CC is actually saying… it is coming to a conclusion that can be reached by reasoning – object of the
offeror’s obligation – but what about the other party? Also bound by an obligation – but in general the object will
be that of the offeror
but it could be just as valid as the offeree’s obligation
features of the object contemplated by the parties to a K whether it is the thing on one side or the price on the
o object must be determined - §1973
Art. 1972. Possible or impossible object
A contractual object is possible or impossible according to its own nature and not according to the parties' ability
The object must be possible
If it is possible than it can become the object of a K regardless of whether or not the obligor can deliver or
Condition impossible because the object is impossible – i.e. cannot sell an object that it is impossible of
existence, cannot enter into services that no human being can perform
But If I enter into a k to perform with the symphony – any musician. Can perform – but I am no musician.
But the K is valid because the object is possible – if I am unable to perform I am liable for damages they will
take place for my lack of ability or skill
Identified as to its kind – i.e. secretary of admin – some adj that helps determine the kind of job that helps
determine the applicants
Art. 1973. Object determined as to kind
The object of a contract must be determined at least as to its kind.
The quantity of a contractual object may be undetermined, provided it is determinable.
Under the notion of determined – you can have many different practical instances of determination of the
object of a K – i.e. 50 cars on a lot – I will sell you a car for 10K – the object is not determined – determined
when some guidance is given on the thing to be determined eventually
o Identification of the object of the sale in a K of sale
Object can be merely determinable
o Process of determination that leads to the identification of the object
o Can be determined when a term occurs – to determine as to quantity
Art. 1974. Determination by third person
If the determination of the quantity of the object has been left to the discretion of a third person, the quantity of an
object is determinable.
If the parties fail to name a person, or if the person named is unable or unwilling to make the determination, the
quantity may be determined by the court.
The court may determine…somewhat borrowing from CL and international convention
Have the intent – but the parties fail – but it can determined that they wanted to contract
Where is the determination of the object as to the quality? CC doesn’t make an agreement on the quality of the
o Object and quantity have been determined so quality doesn’t matter
o §1860 – get something in between the best or the worst
o Quality is an accessory element – but not an essential requirement for a determination of the object!!!!
Art. 1975. Output or requirements
The quantity of a contractual object may be determined by the output of one party or the requirements of the
In such a case, output or requirements must be measured in good faith.
Art. 1976. Future things
Future things may be the object of a contract.
The succession of a living person may not be the object of a contract other than an antenuptial agreement. Such a
succession may not be renounced.
Future things: do not exist at the time the K is entered into
If out of commerce it can not be an object of a contract …. Second paragraph
o Person sells succession – person deprives them self of personality
o It cannot be the object of a k
o But future things can – the object of the obligation will not come until sometime in the future
o The contract is formed but it will have no effect - like a suspensive condition, with retroactive effects
i.e. farmers selling their crops in advance – nothing is sold but the contract is there and it binds the parties to
that K – when the thing comes into existence than the K will have its effects
future thing v. hope – what helps distinguish
o Is the price of a hope commensurate/related to the hope – equivalent value of the future thing?
o Look at discrepancy between the price paid – the lower the price the more likely it is a hope… the more likely
you are to have a commutative/price becoming equal more likely to be a future thing
o Insurability of the thing bought… is it normal to insure a hope? Unlikely you want to a take a chance – it is
likely to insure a future thing
o Warranty – goes with commutative K – if the seller gives one it could be a future thing – unlikely that Springs
Thunder would have a guaranteed the renewals
o Looks at the extent of the seller’s involvement – the personal involvement in bringing about the thing?
Springs thunder – not much, but i.e. a farmer a lot –higher for the obligor… likely
Reasoning backwards from aleatory and commutative K
Must be distinguished from sale or transfer or delivery of hope!!
o Hope: thing that exists now – incorporeal thing, fiction, and it can be transferred at the moment the
parties enter into the agreement
o Aleatory contracts are the sale of hopes, like gambling
o Emptio rei sperante – sale of a future thing
o Emptio spei – sale of a hope
Art. 1977. Obligation or performance by a third person
The object of a contract may be that a third person will incur an obligation or render a performance.
The party who promised that obligation or performance is liable for damages if the third person does not bind
himself or does not perform.
CL doesn’t have a name for this kind of thing/contractual relationship
Comment (b) promesse de porte-fort: triangular relationship
o I go to see the rare book dealer and say that Trahan will buy the volumes… and you promised they
will be purchased – he refuses you are liable for damages
o Useful device – when thinking about others – to help one another
o A K the object of which is an act to be done by another party
o Resembles a suretyship in that the promisor never becomes an accessory obligor – you are either the
sole obligor or no obligor at all
o For as long as the third person does not bind himself, the promisor remains the sole obligor, and as
soon as the third person binds himself the promisor is released
Third Party Beneficiary
Art. 1978. Stipulation for a third party
A contracting party may stipulate a benefit for a third person called a third party beneficiary.
Once the third party has manifested his intention to avail himself of the benefit, the parties may not dissolve the
contract by mutual consent without the beneficiary's agreement.
Stipulation Pour Autrui
Insurance contract, particularly life insurance - Insured; insurer; beneficiary
Contract whereby the stipulator (insured) stipulates in contract that promisor (insurer) will pay 3rd party
Benefit can be transferred by contract to 3rd party - third person benefits from a K made by others
o v. in a promesse de porte-fort – third person by expressing consent, substitutes himself for an intended party
to a K and therefore binds himself
3 rd party has right to demand performance from promisor
When is right vested in 3rd party beneficiary? As soon as stipulation is made part of contract b/w stipulator and
As soon as stipulation is attached to contract, right is vested in 3rd person; 3rd person doesn’t have to be aware that
As long as 3rd party beneficiary is not aware of benefit in his or her favor, the insurer can change the beneficiary
As long as principal obligation is binding, the stipulation can have effect
Can have a stipulation for benefit of 3rd person for contract of sale b/w stipulator (seller) and buyer
Ex. Seller stipulates to buyer that buyer will pay price to 3rd person
Effects of stipulation for benefit of another in relationship b/w promisor & the 3rd party (assuming that all goes well
in relationship b/w parties to the principal contract)
Depends on whether or not stipulator has prior contract with 3rd party beneficiary or no contract at all
Stipulation for benefit of another can be a form of donation
Will likely have to decide if stipulation for another has to be expressly included in a contract
Determination of identity of beneficiary - Identity of beneficiary need not be expressly stated – in insurance contract
husband can simply say “spouse” instead of a name; Identity of beneficiary must be clear/determinable at time
stipulation is to take effect
Think of this as means of bringing a 3rd person into an existing contractual relationship; as devices meant to grant
contractual rights to persons not original parties to contract
As long as the benefit is granted, that benefit should be means of bringing 3rd person into contractual relationship
**Compare to an assumption** as per Carroll outline** but if gratuitous not an assumption
Art. 1979. Revocation
The stipulation may be revoked only by the stipulator and only before the third party has manifested his intention
of availing himself of the benefit.
If the promisor has an interest in performing, however, the stipulation may not be revoked without his consent.
Acceptance of benefit by 3rd party makes the stipulation irrevocable unless there are reasons for revocation to be
Art. 1980. Revocation or refusal
In case of revocation or refusal of the stipulation, the promisor shall render performance to the stipulator.
Art. 1981. Rights of beneficiary and stipulator
The stipulation gives the third party beneficiary the right to demand performance from the promisor.
Also the stipulator, for the benefit of the third party, may demand performance from the promisor.
Art. 1982. Defenses of the promisor
The promisor may raise against the beneficiary such defenses based on the contract as he may have raised against
Art. 1966. No obligation without cause
An obligation cannot exist without a lawful cause.
Required necessary component part
Art. 1967. Cause defined; detrimental reliance
Cause is the reason why a party obligates himself.
A party may be obligated by a promise when he knew or should have known that the promise would induce the
other party to rely on it to his detriment and the other party was reasonable in so relying. Recovery may be limited to the
expenses incurred or the damages suffered as a result of the promisee's reliance on the promise. Reliance on a gratuitous
promise made without required formalities is not reasonable.
What is the cause – the reason why?
Classified into two categories
o Objective cause – described by Pothier and Domat, classical cause – objective reason why parties enter
into a contract of a certain kind… expectation of receiving something in exchange
All K of sale have the same objective sale… same for lessee – lessor wants rent, lessee wants
premises… what about donations? The objective cause is the same in all – the gratuitous intent
Theory criticized as being useless – how do you nullify? Nothing illegal in wanting to donate, buy
or lease – since every requirement (object, consent) must be a potential ground for nullity – but
for illegal cause there is none
o So subjective cause came into being – the reason why parties came into the K
Maybe you bought a car for a particular reason – like buying a car to show off
The cause has to be communicated/shared with the other party in the K – as to the reason why
they entered into the K
Cause is shared by the parties
Determinate in entering into the K between the two parties
Dolus – fraud on the part of the seller – i.e. person wants to buy land to build a truck stop but
seller knows that the land is zoned residential
SECOND PARAGRAPH is a monstrosity!!!!
o Uses detriment… but there is also detrimental reliance!!! This is a Trojan horse!!! Common law concept and
jurisprudence of detrimental reliance find their way into the theory of cause… titles aren’t part of the law!
Have no force of law!!
If you rely on s/o else’s promise then s/o may be liable to you for… not needed! §1759 is all we need (good faith) and
o Good faith – not materialistic concepts such as detrimental reliance
o Is DT part of our law? Not really L hasn’t seen it!
Art. 1968. Unlawful cause
The cause of an obligation is unlawful when the enforcement of the obligation would produce a result
prohibited by law or against public policy.
Art. 1969. Cause not expressed
An obligation may be valid even though its cause is not expressed.
Cause need not be expressed – reasonable parties – the reason doesn’t have to be expressly made but the cause
has to exist
o Check – doesn’t have to state the cause – it is an object – the absence of statement of the cause will not make
the check invalid
Art. 1970. Untrue expression of cause
When the expression of a cause in a contractual obligation is untrue, the obligation is still effective if a
valid cause can be shown.
Effects of Conventional Obligations
General effects will apply to all obligations – §§1758/59 (these we have already encountered – apply to all
obligations not just conventional obligations: but conventional, delictual and unjust enrichment
1758: all obligees and obligors have the same rights
(A)Specific performance: Can demand performance, to obtain something by performance
o Refers to those that are not strictly personal
o Damages in lieu of specific performance: Right to recover damages
(B) can obtain discharge
o Contest the obligees action when it has been extinguished or modified
1759: Good Faith – GF shall govern the oblgor and the obligee in whatever pertains to the obligation
Obligation imposed on an obligor to transfer a real right on a thing – that right on the thing can be U, F ,A – it
can be ownership/dismemberment
Impose on the obligor – two sub-obligations
o Obligation to deliver: ob to place the thing (object of the ob to give) at the disposal of the other
party/obligee; who in turn is under the obligation to remove
§2475 – seller bound to deliver the thing sold – bound to transfer the real right over the thing
§2483 – cost of making delivery is borne by the seller; taking delivery is borne by the buyer
What is delivery?
Actual delivery/ physical delivery: delivery of physical possession of the thing into the hands
of the other party in the K
Fictitious delivery: takes place by operation of the mind; power of the mind;
o §2456 – transfer of ownership
o §2457 – movable
o Immovable – the operation of the mind is not as effective – you have to have a
private writing or before a notary for ownership to be transferred to the buyer –
writing is the mode of making delivery
o Instead of immovable itself – but when the paper is transferred/recorded the
ownership is transferred
§2467: Delivery is related to the risk of loss – risk of loss… is it actual or fictitious? And
who bears the risk
o Risk of loss is on party who has actual/physical possession – dealer has
insurance and in a better position to be protected in risk of loss
American Creosote case – did the buyer have physical or fictitious delivery… was
o Obligation to keep the thing safe while it is in possession of the obligor until the obligee takes
§2489: in the condition - at the time of sale – until the buyer actually removes the thing
§2555: buyer who is late in removing, that buyer will have to pay for seller preserving until the
buyer removes it
§§2937/39/40/45 – deposit
§§1986/88 – as opposed to the best means available and result
o Means: obligations to do impose on the obligee the burden of proving that the obligor failed to carry out
o Result – if performance does not take place as per result/ contracted for
Extent of the ob to do will vary with the K of that ob to do – there is a difference between an ob to do on the
mandatary, depositary, the nature of the K will determine the extent of the ob to do imposed on the obligor –
there is a more burdensome ob to do on the part of the depositary – because of the trust that is justifying the K
Not to do
In most instances these obligations can be specifically enforced … §1987
What if there is failure to perform/breach?
Reciprocal performances – bilateral K exceptio non adiplenti contractus §§1993/1908
Whether SP is possible/ if not possible than damages
o Before demanding either – a party must be put in default §1990
o Leon v. Dupre – obligation to give, pay money/damages – failure to perform – why not enter into K and
create an alternative obligation to pay money if the obligor doesn’t perform?
o American Creosote
Art. 1983. Law for the parties; performance in good faith
Contracts have the effect of law for the parties and may be dissolved only through the consent of the parties or on
grounds provided by law. Contracts must be performed in good faith.
Effect peculiar to contracts – it is the law between parties
Related to 1985 – third parties – if the K is the law between parties (relative effect – in the relationship between the
parties) the K between A and B cannot be detrimental to third persons – cannot impose obligations on parties not in
the contract… exception – testament, because it’s a unilateral juridical act and not something between two parties)
K between A and B – it is not to say that it will not effect other persons – but its not by intent in the K (sale between
A and B, if A sells car to B then 3rd parties cannot buy it, they have not been affected by will – they have not imposed
an obligation on C
Art. 1984. Rights and obligations will pass to successors
Rights and obligations arising from a contract are heritable and assignable unless the law, the terms of the contract
or its nature preclude such effects.
Art. 1985. Effects for third parties
Contracts may produce effects for third parties only when provided by law.
By their K two parties can produce effects on third parties as opposed to against third parties
Stipulation for the benefit of another
Promesse de porte-forte
You can be altruistic and give rights to third persons
Specific Performance - Don’t like to compel people into performing
K creating an ob to give – SP is possible under §1986…
Art. 1986. Right of the obligee
Upon an obligor's failure to perform an obligation to deliver a thing (to give), or not to do an act, or to execute an
instrument, the court shall grant specific performance plus damages for delay (moratory damages) if the obligee so
demands. If specific performance is impracticable, the court may allow damages to the obligee.
Upon a failure to perform an obligation that has another object, such as an obligation to do, the granting of
specific performance is at the discretion of the court.
In bilateral contracts - implicit alternative right in the obligee – specific performance or damages
o Alternative right is compensatory damages
If the obligor has to do something it will be difficult to get specific performance – so try to get an agreement for
stipulated damages ahead of time
o Courts consider circumstances and decide
In this case we are talking about compensatory damages who suffers from nonperformance from obligor –
amount equivalent to performance
In K to do – requiring personal services – easy to understand why SP cannot be imposed
o Strictly personal and personal must be distinguished, the latter can be done by another obligor
Art. 1987. Right to restrain obligor
The obligor may be restrained from doing anything in violation of an obligation not to do.
Can have SP – particularly by way of injunction
Art. 1988. Judgment may stand for act
A failure to perform an obligation to execute an instrument gives the obligee the right to a judgment that shall
stand for the act.
Connection between this and §1986
Ob to give can be enforced by judgment… many obligations can be preceded by obligations to do
Art. 1989. Damages for delay
Damages for delay in the performance of an obligation are owed from the time the obligor is put in default.
Other damages are owed from the time the obligor has failed to perform.
Putting in default is warning/notice to the obligor which triggers the obligation of the obligor to pay moratory
Owe moratory damages for each day of delay
o Moratory – moratorium – delay
o **time has become of the essence – obligor has breached obligation to perform on time – and the breach
carries with it the payment of damages – for each day of delay**
What are the forms of putting in default? §1991 – methods of putting in default
It has nothing to do with performance of the principle obligation – if an obligee puts an obligor in default the
assumption is that the obligor is still capable of performing – moratory is like placing some pressure to perform
on the obligor
Existence of term emphasizes the insistence of performance on time
Art. 1990. Obligor put in default by arrival of term
When a term for the performance of an obligation is either fixed, or is clearly determinable by the circumstances,
the obligor is put in default by the mere arrival of that term. In other cases, the obligor must be put in default by the
obligee, but not before performance is due.
Art. 1991. Manners of putting in default
An obligee may put the obligor in default by a written request of performance, or by an oral request of
performance made before two witnesses, or by filing suit for performance, or by a specific provision of the contract.
Oral – but problem is one of evidence that is why you need witnesses
But today the more efficient one is the creation of a term… the mere occurrence of a term puts a person in
default - §1990 – without doing anything the obligee puts the obligor in default
Putting someone in default is not always necessary – it would be useless
o When the obligor delivers the wedding dress too late – default would be too late unless the wedding
is put off
o Unable to perform – the seller of a car – in the obligation to transfer ownership – A sells to C instead
o §2016 i.e. of uselessness of putting in default – the facts will dictate whether putting in default is
Art. 1992. Risk devolves upon the obligor
If an obligee bears the risk of the thing that is the object of the performance, the risk devolves upon the obligor
who has been put in default for failure to deliver that thing.
Art. 1993. Reciprocal obligations
In case of reciprocal obligations, the obligor of one may not be put in default unless the obligor of the other has
performed or is ready to perform his own obligation.
Reciprocal obligations – bilateral/synallagmatic K
Think about exceptio non adiplenti contractus
Party is not required to perform if the other party doesn’t either
§2487 – may refuse to deliver/retain… if the buyer is unable to pay price – can raise exceptio
Art. 1994. Obligor liable for failure to perform
An obligor is liable for the damages caused by his failure to perform a conventional obligation.
A failure to perform results from nonperformance, defective performance, or delay in performance.
the granting of damages is the primary obligation in a tort action – compensatory damages
no so in a K!!! the granting of damages is a secondary obligation – it is an obligation that comes in existence only if the
primary obligation is not carried out/carried out in a defective manner
o Payment of damages – secondary obligation – existence depends on existence of primary ob – it has to be
legal and possible
o conditional on the primary ob not being performed
damages are not to be considered as an alternative obligation – the obligor doesn’t have a choice between performing
and paying obviously – unless you make damages an alternative ob in the K – you can give them a choice in the K –
but in the absence damages aren’t an alternative performance
If the principle obligation is invalid/illegal/immoral then there will never be payment of damages!
If the primary ob is impossible of performance as a result of a fortuitous event, if no blame can be put on the obligor
– no damages
Cause: obligee must prove that the obligor’s failure to perform was the cause of the injury/damage
Second paragraph: damages for non performance or defective performance… these lead to compensatory damages
Damages for delay lead to moratory damages
Art. 1995. Measure of damages
Damages are measured by the loss sustained by the obligee and the profit of which he has been deprived.
For non perf or defective perf – compensatory damages
o Loss or damnum emergens – loss that has been created caused by defective performance
o Profit of which obligee has been deprived or lucum cessans
Well how are you to measure them? §§1996, 1997 and §2003 on the other side
Art. 1996. Obligor in good faith
An obligor in good faith is liable only for the damages that were foreseeable at the time the contract was made.
What loss was foreseeable in the event an obligor fails to perform – very speculative – particularly if you leave it to the
courts to decide – what profits/loss you should have foreseen – the more discretion you leave to the court the less
likely you are to get compensated properly… makes stipulated damages very useful
Pay whatever could have been contemplated at the time they entered into the K – no more or no less
Art. 1997. Obligor in bad faith
An obligor in bad faith is liable for all the damages, foreseeable or not, that are a consequence of his failure to
Evidence of bad faith, he intentionally failed to perform so as to cause a detriment; ill intended/motivated will be hit
harder than the GF obligor
ALL!!! The damages… all that is not in GF
Problem: with all the damages – monetary, physical damages – equated with a certain amount of money, moral
damages – much discretion left to the court in deciding what is direct or indirect damages
Art. 1998. Damages for nonpecuniary loss
Damages for nonpecuniary loss may be recovered when the contract, because of its nature, is intended to gratify a
nonpecuniary interest and, because of the circumstances surrounding the formation or the nonperformance of the contract,
the obligor knew, or should have known, that his failure to perform would cause that kind of loss.
Regardless of the nature of the contract, these damages may be recovered also when the obligor intended, through
his failure, to aggrieve the feelings of the obligee.
Meador v. Toyota – make sure to look at comment
Concept of moral damages raised problems – related to good faith
Nature – importance of properly identifying a K and its components
Moral satisfaction from obligation not the value of the components
Circumstances surrounding non perf or creation of the K
Second paragraph – close to §2315 – by intent want to cause a moral prejudice to the obligee
Moral damage/sentimental prejudice….Embarrassment and humiliation
Whether the K by its nature – knew or should have known
Much discretion left to the courts in determining moral damages
Art. 1999. Assessment of damages left to the court
When damages are insusceptible of precise measurement, much discretion shall be left to the court for the
reasonable assessment of these damages.
Art. 2000. Damages for delay measured by interest; no need of proof; attorney fees
When the object of the performance is a sum of money, damages for delay in performance are measured by the
interest on that sum from the time it is due, at the rate agreed by the parties or, in the absence of agreement, at the rate of
legal interest as fixed by R.S. 9:3500. The obligee may recover these damages without having to prove any loss, and
whatever loss he may have suffered he can recover no more. If the parties, by written contract, have expressly agreed that
the obligor shall also be liable for the obligee's attorney fees in a fixed or determinable amount, the obligee is entitled to
that amount as well.
Art. 2001. Interest on interest
Interest on accrued interest may be recovered as damages only when it is added to the principal by a new
agreement of the parties made after the interest has accrued.
Art. 2002. Reasonable efforts to mitigate damages
An obligee must make reasonable efforts to mitigate the damage caused by the obligor's failure to perform. When
an obligee fails to make these efforts, the obligor may demand that the damages be accordingly reduced.
Can read together with §2003 to create an obligation to disclose
Obligation to mitigate damages
Art. 2003. Obligee in bad faith
An obligee may not recover damages when his own bad faith has caused the obligor's failure to perform or when,
at the time of the contract, he has concealed from the obligor facts that he knew or should have known would cause a
If the obligee's negligence contributes to the obligor's failure to perform, the damages are reduced in proportion to
GF required of all parties to an obligation
Issue… standard part of law of K… obligation to disclose on the part of the parties to a K – to bring to each others
attention knowledge facts and circumstances that may change the K… ob to disclose is a component part of the
obligation to be in good faith
What about the duty to be informed on the other party – to find out for himself?
The obligee must also (kind of part of obligation to disclose) mitigate §2002
If negligent and no bad faith – the damages are reduced
Behavior and attitude will have an effect on damages
GF/BF cuts across all parts of the CC
Art. 2004. Clause that excludes or limits liability
Any clause is null that, in advance, excludes or limits the liability of one party for intentional or gross fault that
causes damage to the other party.
Any clause is null that, in advance, excludes or limits the liability of one party for causing physical injury to the
** intentional or gross fault §2003 second paragraph isn’t mentioned here… physical injury
Cannot exonerate from liability for causing damages – requirement of the public order
But how do you determine gross fault? The article is a bit narrow
Art. 2005. Secondary obligation
Parties may stipulate the damages to be recovered in case of nonperformance, defective performance, or delay in
performance of an obligation.
That stipulation gives rise to a secondary obligation for the purpose of enforcing the principal one.
Damages determined by convention. Parties by contract could agree in advance as to what damages would be for
failure to perform…Parties are allowed to stipulate damages and generally we will hold them to it…avoids
litigation…helps the obligee because he doesn’t have to prove damages, only a failure to perform.
Dealing here with secondary not an alternative obligation – the obligor doesn’t have the choice between performing
and paying damages – the obligee still wants performance – but they have agreed that if obligor doesn’t he pays
Courts can adjust damages – for non perf or defective §2011 court may reduce if the obligee has received a benefit….
h/e §2012 the courts cannot abuse their discretion – must be manifestly unreasonable – what is the value of the
principal performance - §2012 is to prevent penalty clauses – more powerful from imposing on the weaker
Art. 2006. Nullity of the principal obligation
Nullity of the principal obligation renders the stipulated damages clause null.
Nullity of the stipulated damages clause does not render the principal obligation null.
Art. 2007. Stipulated damages or performance
An obligee may demand either the stipulated damages or performance of the principal obligation, but he may not
demand both unless the damages have been stipulated for mere delay.
Art. 2008. Failure to perform justified
An obligor whose failure to perform the principal obligation is justified by a valid excuse is also relieved of
liability for stipulated damages.
Art. 2009. Obligee not bound to prove damage
An obligee who avails himself of a stipulated damages clause need not prove the actual damage caused by the
obligor's nonperformance, defective performance, or delay in performance.
Art. 2010. Obligor put in default
An obligee may not avail himself of a clause stipulating damages for delay unless the obligor has been put in
Art. 2011. Benefit from partial performance
Stipulated damages for nonperformance may be reduced in proportion to the benefit derived by the obligee from
any partial performance rendered by the obligor.
Art. 2012. Stipulated damages may not be modified
Stipulated damages may not be modified by the court unless they are so manifestly unreasonable as to be contrary
to public policy.
Revocatory Action and Oblique Action
How can the CC prevent a K from having a detrimental effect on 3rd persons?
A & B & C- Paul (Pauliana Action)
Revocatory action – Pauliana Action – right avail to a third person – to try to undo what A & B have done to C
Acts of conservation. There is an obligation between the parties though its performance may be deferred…and if the
obligor performs some kind of “act” that increases his insolvency would allow the obligee to annul the act… The obligee
has the right to do it even though performance is not due yet.
Art. 2036. Act of the obligor that causes or increases his insolvency
An obligee has a right to annul an act of the obligor, or the result of a failure to act of the obligor, made or
effected after the right of the obligee arose, that causes or increases the obligor's insolvency.
Paul – A’s obligee for $200, A assets amount to $300, A enters into a K with B – question is how can this K cause a
detriment to Paul… A is in need of liquidity and sells car to B for $150… Paul suffered loss as a result of A and B
entering into a K… can Paul bring an action against a K – so that the car is returned to A which is worth $300 – so Paul
can seize the car and get proceeds from the sale
Art. 2037. Insolvency
An obligor is insolvent when the total of his liabilities exceeds the total of his fairly appraised assets.
Art. 2038. Onerous contract made by the obligor
An obligee may annul an onerous contract made by the obligor with a person who knew or should have known
that the contract would cause or increase the obligor's insolvency. In that case, the person is entitled to recover what he
gave in return only to the extent that it has inured to the benefit of the obligor's creditors.
An obligee may annul an onerous contract made by the obligor with a person who did not know that the contract
would cause or increase the obligor's insolvency, but in that case that person is entitled to recover as much as he gave to
the obligor. That lack of knowledge is presumed when that person has given at least four-fifths of the value of the thing
obtained in return from the obligor.
Conditions pertaining to juridical act between A & B
Paragraph 1: Onerous – obligee (Paul) may annul a K made by obligee (B)…
Nature of the K! Then look at the rights of the parties
Onerous K where B knew or should have known – when he entered into K with A that he would cause or increase A’s
insolvency… got car for less than what it was worth – then he should have known he caused the insolvency… as a result
of which C can possibly have an action against A & B
o Onerous K caused increased insolvency = burden of proof is on C to prove the insolvency
o Conditions pertaining to the K… Between A & B and the Existence of C; A is indebted to C=Paul
o Presumption of knowledge is less than 4/5th the value
Paragraph 2: presumption is set at 4/5th because it is hard to prove
If this is met there is no creation or increase of insolvency – but this is a presumption – C can still bring the action to
show cause or increase of insolvency
o Exception to the right of C/Paul §2040
No need to est fraud/under prior articles this was an additional requirement on Paul – had to prove insolvency and fraud
Impact of A’s action on creditor/Paul: Conditions Paul must meet
o Paul must be a creditor on the grounds of a prior existing debt owed by A to Paul… prior to A entering into K by
o Prescription bars Pauliana action later on; no longer a creditor
o Existence of term? Impact of insolvency – term which prevented Paul from bringing action will fall, right of
action becomes accessible right away, importance of creating a term – if insolvent the term no longer prevents
What if Paul was a creditor of A under a suspensive condition – right of action is suspended on account of condition- A
enters into K with B where B increases insolvency (term will fall)… is a creditor under a SC entitled to bring a revocatory
action – is that creditor like a creditor under a term… the ob doesn’t exists and may never exist – but chance that it can
and its retroactive and that C was a creditor way back
o What is the nature of the action?
o §1771 – lawful measures to preserve right; Lawyer for C/Paul – action ought to be considered an action
meant to conserve/preserve the chance that in the future the condition will occur and Paul will be a creditor
retroactively ** pauliana action = conservatory action – to preserve the future existence of a right
o §1771/1782 – under term but titles are irrelevant – reason by analogy where the reason is the same the law is
the same – combine these articles and grant pauliana action
What about if B is the party Defendant to the revocatory action –Paul brings joint action, jointly against A & B… §2038
o B knows or should have known that when he entered into K he was causing/increasing A’s insolvency – K is
to be annulled
o B will return the car to A - $300 back to A’s Patrimony – sufficient to pay Paul’s claim of $200 - $100 remain
in A’s patrimony – Paul’s action is extinguished…
o But what of A’s relationship with B? Is B entitled to his $100 yes and there will be nothing left in A’s
o What if debt owed to Paul… changing #’s C/Paul was entitled to $400 from the beginning, car was worth
$300 so A was short $100, he transfers car to B for $100 so A is now short $200 – Paul brings action – B to
return the car worth the $300 into A’s patrimony – But doesn’t get his $100 money back – Paul gets his
money and A & B get nothing (B knew or should have known)… but if there is anything left over B can
recover the balance… B is on the hook for whatever amount he transferred to A
B will not recover anything if whatever was transferred is needed to pay Paul
B returns what he has acquired from A – he will have to leave in A’s patrimony whatever he was
given until Paul is paid – if there is anything left over then B gets it
Once C/Paul has been paid… paid out of what is returned + whatever is needed from B to pay Paul
Excess in A’s patrimony must be retuned to B – action that Paul brings is an action personal to Paul
– revocatory action brought by creditor for his personal exclusive benefit – benefits only that creditor
that brings the action
o If A had other creditors – if they don’t act in time – TOUGH §3182 – patrimony is pledge given by the
person to a creditor – when B has to return car and leave what he has paid A –as soon as Paul is paid – the
excess is returned to B and the other creditors will not benefit from this – opposite of the OBLIQUE
Can the action be stopped – they can just pay out and the action will be moot
o Nature of the juridical act – then look to see if the 4/5 trigger is met
o discrepancy of 4/5th you automatically get presumption of knowledge of insolvency
o Should the bank find out nature of the juridical act – if gratuitous there is no need look for presumption
o If onerous there is a barrier of 4/5 makes the burden easier for the bank – can still bring even if 4/5 is met
o What if it creates as strictly personal obligation? Whether the action will lead to interfering with strictly
o Bossier City Case
Art. 2039. Gratuitous contract made by the obligor
An obligee may attack a gratuitous contract made by the obligor whether or not the other party knew that the
contract would cause or increase the obligor's insolvency.
Don’t care at all about amount of that gratuitous act
Obligee (Paul)… obligor (A)… other party (B)….
C can have a revocatory action to have the donation returned to the patrimony and then get what they are owed
All G K between A and B can be challenged by Paul – in G K B is only receiving a donation and not incurring an
obligation in return – they are easily returnable
Not much jurisprudence on the situation
Art. 2040. Contract made in course of business
An obligee/C may not annul a contract made by the obligor/A in the regular course of his business.
Exception to C/Paul’s right
Art. 2041. Action must be brought within one year
The action of the obligee must be brought within one year from the time he learned or should have learned of the
act, or the result of the failure to act, of the obligor that the obligee seeks to annul, but never after three years from the
date of that act or result.
1 yr prescriptive period – but if 3yrs P is stuck – preemptive period – considered sufficient time to give Paul to find A
Art. 2042. Obligee must join obligor and third persons
In an action to annul either his obligor's act, or the result of his obligor's failure to act, the obligee must join the
obligor and the third persons involved in that act or failure to act.
A third person joined in the action may plead discussion of the obligor's assets.
Action is a joint action – against the two parties to the juridical act – A & B the obligee must be joined and
the third person also in the action
Doesn’t make A & B solidarily bound – automatically gives B the right of discussion – find out if there are
enough assets in A’s patrimony to pay Paul
Cost incurred – is by party who raises the defense of discussion
Art. 2043. Assets transferred must be returned
If an obligee establishes his right to annul his obligor's act, or the result of his obligor's failure to act, that act or
result shall be annulled only to the extent that it affects the obligee's right.
Excess in A’s patrimony which may be owed to B… it is returned to B… see above
Art. 2044. Insolvency by failure to exercise right
If an obligor causes or increases his insolvency by failing to exercise a right, the obligee may exercise it himself,
unless the right is strictly personal to the obligor.
For that purpose, the obligee must join in the suit his obligor and the third person against whom that right is
o Oblique action – remedy for creditor who doesn’t receive his due
o C/Oliver – A (Henican) son of deceased gave $ to grandchildren bypassing son – didn’t bring an action to get his
$ (Oblique – Oliver goes through A to get to B… instead of O going straight to B he must go through A first)
o Henican- Right to demand inheritance is strictly personal to the heir – cannot be transferred to a third
person and the action was denied
o Maybe different if it was a loan
o Look at the nature of the right which the Obligee fails to exercise – if heritable, as all obs are presumed
to be heritable, then the obligee’s creditors can bring the oblique action
o §967: creditor of a successor… this is the oblique action; the second part of the article differs from the
outcome of the oblique action – when Oliver brings an oblique action he is exercising the right that A has
against B – therefore if Oliver is successful, whatever the lawsuit brings into A’s patrimony will become
the pledge of all the creditors of A – because Oliver has exercised A’s right of action
o When B returns to A and Paul is paid whatever is left over stays in A’s patrimony… Automatically becomes
(other) creditors pledge
o Detriment to a careful creditor who is watching over his own rights – when he brings the action he runs
the risk of getting nothing
o The creditors come and rank… oldest or one with a mortgage and if Oliver is too far down the line he
may get nothing… look at §967
o Prescriptive period? Same prescriptive period that A would have against in his right of action against B
o How long must Oliver wait to bring the action? If A wants to wait? Is the action strictly personal to A
(assume its not)?
o How about Oliver sends notice – and asks if they are going to bring the action
Art. 2025. Definition; simulation and counterletter
A contract is a simulation when, by mutual agreement, it does not express the true intent of the parties.
If the true intent of the parties is expressed in a separate writing, that writing is a counterletter.
Lawful juridical act – not illegal to enter into a simulated juridical act
Conditions that must be met:
o Between the parties btw the juridical act – an apparent juridical act and in the background there is a
counter letter ( purpose is to modify/reverse the purpose of the obvious juridical act – obvious one
is a sale, counter letter seller agrees not to demand payment of a price, so the counter letter is a
donation) no violation of a public order or defraud creditors this transaction is lawful
o When must the counter letter be entered into? Other time than when the juridical act is entered into
(from comment)… But…Writers of doctrine – counter letter must be entered into at the same time
of the obvious juridical act – manifest both intents - if subsequently to the obvious juridical act – if
later on they enter into another juridical act then the second is a revision it is a new juridical act,
modify repeal the prior one… but its not a counter letter
Form of simulation? Can bear on the consent manifested of juridical act
The counterletter can be a donation – its meant to manifest a different form of consent – instead of an onerous
juridical act it will show that they want to enter into a gratuitous K
It can bear on the object of the juridical act – in a K of sale they can agree to one price and in the counter letter they
can say another
Cause/purpose of counter letter – the purpose can be a donation to X, the counter letter can be that the donation
goes to Y
Art. 2026. Absolute simulation
A simulation is absolute when the parties intend that their contract shall produce no effects between them. That
simulation, therefore, can have no effects between the parties.
Art. 2027. Relative simulation
A simulation is relative when the parties intend that their contract shall produce effects between them though
different from those recited in their contract. A relative simulation produces between the parties the effects they intended
if all requirements for those effects have been met.
Art. 2028. Effects as to third persons
Any simulation, either absolute or relative, may have effects as to third persons.
Counter letters can have no effects against third persons in good faith.
Intimate K between two parties – cannot cause a detriment to a third person
Third persons who do not know about the counter letter
First sentence? Don’t they contradict each other?
CL can have a benefit for third persons – other than one of the parties in the juridical act
3rd persons can when they find the CL they can bring an action in simulation – which has no prescriptive period
attached to it – action can only begin when the third party becomes aware
Recognized in the law - 2480
Art. 1825. Definition
Subrogation is the substitution of one person to the rights of another. It may be conventional or legal.
Sub/rogare: to ask, demand, request, in the place of someone else
o Person substituting for another to complete performance of an ob
o Ob between A and B – onerous or gratuitous nature – may be performed by a third person for the benefit of a
o §1855 – performance may be rendered by a third person –even against the will of the obligee – unless its strictly
personal, then no third party can carry out the ob – in all other instances someone can step in, creditor has no
reason to object
o **familiar with real subrogation (res – when insurance pays insurance to homeowner after its destroyed, as a
substitute for res, another res[money] is provided)
o **now we are talking about personal subrogation (one person for another)
Transferring an obligation from one party to another – common mode of involving a third person in an obligation
existing between two other parties – solidarity is a common mode of binding parties/indivisibility bound like
solidarity – and subrogation should come into play
Legal fiction – an obligation is declared to survive in a person other than the original party and despite the
performance of the original obligation
*If he doesn’t give a good def come back to the précis*A subrogation assumes a performance made by a third party
with the intent of seeking some form of reimbursement of his own from the obligor
Amounts to a transfer of an obligation – but a mode of extinction of an obligation at the same time
An accessory right brought into existence by the performance of an obligation
*cant be disassociated from performance of obligations §§1854-1863
Art. 1826. Effects
A. When subrogation results from a person's performance of the obligation of another, that obligation subsists in
favor of the person who performed it who may avail himself of the action and security of the original obligee against the
obligor, but is extinguished for the original obligee.
B. An original obligee who has been paid only in part may exercise his right for the balance of the debt in
preference to the new obligee. This right shall not be waived or altered if the original obligation arose from injuries
sustained or loss occasioned by the original obligee as a result of the negligence or intentional conduct of the original
New creditors may have two actions to recover their money –
o sale between A and B – subrogated creditor will have an action against the buyer
o But the subrogated may have own personal action in the event that the subrogated creditor was already a creditor
of that same debtor - §§1855/56 – that there may be already an existing obligation with the common obligor
Unless third person has a gratuitous intent – they have a right of action against the obligor
The ultimate purpose of subrogation is to transfer from the creditor-accipiens (original obligee) to the subrogee-
solvens (new obligee), the rights, actions and accessory rights (mortgages, sureties…) that the creditor held against his
obligor – even defenses
Strictly personal rights of the obligee-creditor cannot be transferred to the third person-solvens who would otherwise
enjoy the benefit of subrogation
Look at §1804 in reference to subrogation – for principal and solidary obligors
Extent of the right of the subrogated creditor to recover from the debtor A – difference between conventional and
legal – 1830
The original obligee reserves a right of preference to the balance of the debt over the third person who has subrogated
themselves, and are also owed a sum by the original obligor… ie: an obligee has against the principal obligor a
right preferential to the right of a surety who paid only part of the debt he secured – the right to preference
can be altered since its not of the public order… unless it arises from a situation mentioned in the second
paragraph of this article
Differs from novation in that novation extinguishes an obligation and therefore all securities cease, where as in
subrogation the obligation and its accessories subsist for the benefit of the subrogee
Art. 1827. Conventional subrogation by the obligee
An obligee who receives performance from a third person may subrogate that person to the rights of the obligee,
even without the obligor's consent. That subrogation is subject to the rules governing the assignment of rights.
Outcome from two different contracts where a third person is always involved
Can result from a K between the obligee-accipiens and the third party-solvens – ex parte creditoris
It must be an express agreement because there is no right (unless provided by law) to subrogation
***Levasseur doesn’t like the assignment of rights analogy or comments (d)&(f)
o Under the law of sale §2642 – all rights may be assigned if not strictly personal – the assignee is subrogated to the
rights of the assignor against the debtor
o **distinction between assignment of rights and subrogation – Subrogation is not always equivalent to a sale – it is
not in the mind of the third person or creditor to look upon it as a sale – third person may not even intend to bring
an action against the debtor (may be gratuitous) – so there is no reason to associate them
- The 3rd person could have done that to extinguish his own debt toward the obligor.
- The 3rd person could also want to make a donation to the obligor. If give $100 to the obligee
and the 3rd person could say you owe me nothing, I just wanted to donate that money to you.
- The third person might have paid the obligee as a way to invest his own money, to enter into a
future relationship w/ the obligor. Maybe it was a loan to the obligor.
Consent can be enough to vest subrogation in a third person – no particular form or even a writing is required – but
the 3rd party must rebut presumption that the obligee didn’t intend to subrogate – so its better if it is in writing
o Comment (f) agreement made at any time and need not be made in writing – prior decisions are overruled! How
can a comment overrule cases!!! Non-sense!!! There can be no subrogation unless there is a performance – in the
comment it seems to suggest that it can occur before performance… the text of this article itself says “an obligee
who receives performance”… if you want to do it before performance you should do an assignment
Art. 1828. Conventional subrogation by the obligor
An obligor who pays a debt with money or other fungible things borrowed for that purpose may subrogate the
lender to the rights of the obligee, even without the obligee's consent.
The agreement for subrogation must be made in writing expressing that the purpose of the loan is to pay the debt.
Second mode of entering into a conventional subrogation – subrogation by the debtor
o **not unusual but dangerous for the debtor
o Borrowed** third person is a lender (loans money to the debtor [A] and with that money debtor must pay debt –
loan is for its payment)
Can result from a K between the obligor-debtor and the third person – ex parte debitoris
**In a sense, the obligor himself removes a right or credit from his obligee’s patrimony to transfer it into the
patrimony of a third person…. So
A writing is required – although it need not be an authentic act – writing is of public order, to prevent lender and
debtor from entering into a fictitious transaction meant to defraud creditors of that debtor
o Three creditors – the purpose of the writing is to make sure that the debtor pays off the highest ranking creditor;
danger is that the debtor can work out a scheme with a 4th person who is in no way is indebted to the debtor but
who wants to help against creditors – nothing to prevent him from giving money to the debtor to keep the other
creditors under control… so to prevent fraud there must be an agreement in writing to show that it is to pay off a
o Way of disposing of someone else’s rights – debtor disposing of rights of the creditor and this is where there is an
opportunity for fraud
It must stipulate that the purpose of the loan being made by the third person was to pay off the obligor’s debt
No need to be notified because performance will occur
Art. 1829. Subrogation by operation of law
Subrogation takes place by operation of law:
(1) In favor of an obligee who pays another obligee whose right is preferred to his because of a privilege, pledge,
mortgage, or security interest;
Second mortgagee may want to take the place of the first mortgagee – and take their place
(2) In favor of a purchaser of movable or immovable property who uses the purchase money to pay creditors
holding any privilege, pledge, mortgage, or security interest on the property;
Make sure that debtor isn’t indebted to the gills – and that a creditor had rights on the thing
Particularly if it’s immovable
(3) In favor of an obligor who pays a debt he owes with others or for others and who has recourse against those
others as a result of the payment;
With and for – with others – simple surety; for others… all for one and one for all
Solidary or indivisible obligor – they are subrogated into the rights of the obligor – automatically * except
What is the right that the solidary obligor is not subrogated into * solidarity is not heritable – cannot
be transferred by K
Enjoys all the privileges but solidary obligor now subrogated cannot bring an action to recover from
others – once solidary obligor has paid the rest are joint
(4) In favor of a successor who pays estate debts with his own funds; and
On the part of heirs who thought they could easily recoup their own money
(5) In the other cases provided by law.
Where ever the law will decide but not aware of others
*(5) was created as a catch all to eliminate confusion as to the list being either illustrative or exclusive
Art. 1830. Effects of legal subrogation
When subrogation takes place by operation of law, the new obligee may recover from the obligor only to the
extent of the performance rendered to the original obligee. The new obligee may not recover more by invoking
Intended to protect persons who perform certain acts
Only amount paid to original obligee
Creditor pays 67% so the original is responsible for 33% and he can recover first
In conventional its different – this is where there should be difference between an assignment of rights and
o In assignment – why treat them the same – they should have a different objective
o Not all third persons have the same motivation – in cases in subrogation – maybe the third person
wants to be helpful – the cause may not always be onerous/speculative
**In conventional subrogation the third party can recover more than what he paid to the original creditor
Cannot claim conventional subrogation to recover a balance
Like an assignment of right where you can purchase at a discount 2642
But the motivations may be different
Distinguishing subrogation from assignment
Sub – takes place for the benefit of the subrogee w/o any necessity of gaining the consent of the obligor – sub of
creditors w/o consent of obligors – on the other hand an assignment 2643 requires knowledge on the part of the
obligor (actual knowledge)
Legal sub takes place only to the extent of the payment made by the subrogee to the creditor – assignment the
buyer of the right – they have the right to recover the totality of the debt and not a portion, it may be similar to
conventional (they have paid only a portion of the debt owed to the subrogated creditor)
In a subrogation conventional or legal (C more – in this case C) the subrogee doesn’t benefit from a guarantee that
the debt that he will be subrogated into will be guaranteed – if the debtor becomes insolvent and he cannot
perform the subrogee is stuck with payment, he can attempt to recover but with no guarantee that he will be able
to get $$ back; with an assignment the assignor/seller guarantees the existence of the debt (2646 - warrants its
existence at time of agreement)
Assignment is more beneficial to a person who wants to take over the right of action of the debtor
Assumption of Obligations
* Art. 1821. Assumption by agreement between obligor and third person
An obligor and a third person may agree to an assumption by the latter of an obligation of the former. To be
enforceable by the obligee against the third person, the agreement must be made in writing.
The obligee's consent to the agreement does not effect a release of the obligor.
The unreleased obligor remains solidarily bound with the third person.
as a mode of transfer of obligations
Known contractual device – worked out by business – formalized in 1985 – under this notion of assumption of ob
Articles are new but not the law behind it
An obligation can be the object of another ob - a thing that will itself become the object of another ob (object
becomes of object ob [like in novation])
Requires that three parties be involved in an assumption
*Obligor and the third person (who becomes an assuming obligor)
o Requirements it is a K – have to have consent, capacity, cause must be lawful – courts will focus on cause,
why did they enter into K of assumption [lawful, moral, ethical – intent of two parties] object of assumption is
the debt owed by obligor to obligee
o Also require writing
o But obligee’s consent to the agreement does not effect a release of the obligor!!!! When the obligee consents
– the obligee still reserves his right of action against the original obligor – not cut of by the K of assumption
o Benefit for the obligee – accept explicitly or impliedly to the assumption
o This is the more common of the two assumptions because there is solidarity
Subrogation is more common, even an assignment of right
o Between the assuming obligor and the obligor – where cause comes in – why did the assuming obligor want
to take the place in owing a debt to the obligee – maybe the third person wanted to extinguish a debt he
himself owed to the obligor (to extinguish his own debt); cause may be a donation – step in shoes as a form of
donation to the original obligor (I’ll pay debt as a gift);
3rd para of 1821 – unreleased obligor remains/is(no way a single obligor can be solidarily bound)*
solidarily bound with the third person – obligee now has two obligors where he had one originally
o Between obligors and obligee – the assuming ob who is solidarily bound is bound only for the amount of the
assumption – 1822 first para – if the cause of K of assumption was for the assuming obligor pay debt, he pays
2/3 – this is the extent of his ob – he will be solidarily bound for only 2/3, like legal subrogation… cant
recover more by resorting to conventional subrogation
This is tailor made – its really more like joint but its called solidary
Not like an assignment
Assumption is a way for the assuming obligor to pay off an existing debt between parties
Art. 1822. Third person bound for amount assumed
A person who, by agreement with the obligor, assumes the obligation of the latter is bound only to the extent of
The assuming obligor may raise any defense based on the contract by which the assumption was made.
Art. 1823. Assumption by agreement between obligee and third person
An obligee and a third person may agree on an assumption by the latter of an obligation owed by another to the
former. That agreement must be made in writing. That agreement does not effect a release of the original obligor.
Writing – obligation under the burden of proof - 1847- formal juridical act
Not a release of the original obligor… release v. remission
Basically a k between the assuming obligor and obligee – consent, capacity, cause – object is performance of the
obligation originally owed
Obligation taken on cant be strictly personal… no assumption, subrogation or other means
o Assuming obligor and original obligor are not solidarily bound – assumption may take place w/o the knowledge
of the original obligor… but they owe the same thing – what rule to apply – apply principle that they are joint and
they happen to owe the same thing, kind of like several at CL
o Relationship between obligors – if there was one cannot be opposed to that of the obligee… res inter alios, among
Art. 1824. Defenses
A person who, by agreement with the obligee, has assumed another's obligation may not raise against the obligee
any defense based on the relationship between the assuming obligor and the original obligor.
The assuming obligor may raise any defense based on the relationship between the original obligor and obligee.
He may not invoke compensation based on an obligation owed by the obligee to the original obligor.
Flows from that fact that they aren’t solidarily bound
Between obligors – will depend on whether or not there was a relationship between the obligors – if there was then
the assumption is a way for the assuming obligor it is way for him to pay off the original debt – giving him two rights
of action… the subrogated right of action from the obligee and what he has with the original obligor
Right will depend on the extent of the amount of the assumption… assumption of obligations is not an assignment of
This relationship isn’t common… third person will decide to pay the debt of another – anyone is allowed to pay this
debt unless its strictly personal, and the obligee can subrogate… other devices to pay debts of third persons
*assumption and assignment – assumption the obligee does not guarantee or warranty, but there is a warranty attached
to the assignment because it’s a sale
Imputation of Payment
Art. 1864. Imputation by obligor
An obligor who owes several debts to an obligee has the right to impute payment to the debt he intends to pay.
The obligor's intent to pay a certain debt may be expressed at the time of payment or may be inferred from
circumstances known to the obligee.
Won’t encounter often – except in one case – Liquidation of Hibernia Bank – dealing with a term
Imputation of payment – mode of performance of his obligations by an obligor who is indebted on several grounds the
Several debts – obligor will impute a payment to one of those debts – but there are conditions attached to that mode of
performance of an obligation
You can have several loans from the same bank
o Loans: Car, boat, rings – and you want to pay $ 1000 – you can decide which debt you want it to go to – but there
are some limitations… i.e. §1865
o Term to boat and ring so you can only pay the car
Art. 1865. Imputation to debt not yet due
An obligor may not, without the obligee's consent, impute payment to a debt not yet due.
Debt due is first be paid
What if you have a secured debt and other ones are due too- can the bank tell you we are sure about the secured debt
but were not sure about the second one which isn’t secured… we want you to pay the second – who chooses?
o The obligor – the one that is secured
Interest – 8% and two with 4% - the obligor imputes which? Can the bank choose? Remember interest is in the favor
of the bank, but the obligor is stuck with the higher payment….
§1866… this is fine if there is only one debt with interest – because its in the interest to be paid more
But what about the situation above who chooses? 1866 contemplates one debt – principle and interest… look at 1868
– but this is when the parties have not made imputation (when intent hasn’t been made by the parties, so its made by
law) but you can use in pari materia – so the obligor should be able to choose – not definite but likely – if you have
the right to make the imputation… but if you fail…1867
Art. 1866. Payment imputed to interest
An obligor of a debt that bears interest may not, without the obligee's consent, impute a payment to principal
when interest is due.
A payment made on principal and interest must be imputed first to interest.
Art. 1867. Imputation by obligee
An obligor who has accepted a receipt that imputes payment to one of his debts may no longer demand imputation
to another debt, unless the obligee has acted in bad faith.
BF is not easy to prove
Right of obligor to choose w/o infringing on the benefits – if the obligor fails to choose the obligation the obligee is
supposed to choose in good faith – BF would be where the obligee imputes payment to one debt although
circumstances clearly indicate the obligor’s intent to pay a different debt
Art. 1868. Imputation not made by the parties
When the parties have made no imputation, payment must be imputed to the debt that is already due.
If several debts are due, payment must be imputed to the debt that bears interest.
If all, or none, of the debts that are due bear interest, payment must be imputed to the debt that is secured.
If several unsecured debts bear interest, payment must be imputed to the debt that, because of the rate of interest,
is most burdensome to the obligor.
If several secured debts bear no interest, payment must be imputed to the debt that, because of the nature of the
security, is most burdensome to the obligor.
If the obligor had the same interest in paying all debts, payment must be imputed to the debt that became due first.
If all debts are of the same nature and became due at the same time, payment must be proportionally imputed to
No fact situation around this article in the exam
But you can see the reason to the logic behind it
Last paragraph? Making something divisible that might be indivisible – MUST – because the law doesn’t
know which debt to extinguish in the favor of the obligor – dividing debt into partial payments
Impossibility of performance
Art. 1873. Obligor not liable when failure caused by fortuitous event
An obligor is not liable for his failure to perform when it is caused by a fortuitous event that makes performance
An obligor is, however, liable for his failure to perform when he has assumed the risk of such a fortuitous event.
An obligor is liable also when the fortuitous event occurred after he has been put in default.
An obligor is likewise liable when the fortuitous event that caused his failure to perform has been preceded by his
fault, without which the failure would not have occurred.
Arts are new – but attempts have always existed that make obs impossible in totality or in part – instances in the CC
where the law modifies juridical act
o i.e. birth of a child – will require the re-writing of a will
o court can modify terms of a k
parties enter into a K with the thing, circumstances will remain the same, unless the parties provide otherwise –
parties want tomorrow what they are today… but when K require performance over time, who knows what may
How can perf be modified because of circ.?
Can a K be rescinded because of circ occurring in the future – obs which demand immediate perf, or general ones
which spread over a period of time – contracts which take longer than a day may fall because of impossibility of
Look at 1875 first…
Any JA can result in this – most likely bilateral K –
Art. 1874. Fortuitous event that would have destroyed object in hands of obligee
An obligor who had been put in default when a fortuitous event made his performance impossible is not liable for
his failure to perform if the fortuitous event would have likewise destroyed the object of the performance in the hands of
the obligee had performance been timely rendered.
That obligor is, however, liable for the damage caused by his delay.
Art. 1875. Fortuitous event
A fortuitous event is one that, at the time the contract was made, could not have been reasonably foreseen.
First requirement… this art should have come first – event beyond the control of the parties to bring about or prevent
Force majure; irresistible force comment (c)… it has few names… act of god”
Second: must lead to, must be the causation of the impossibility of performance
Obligor is not liable… direct causation- look at 1873, in toto or partial under 1877
Third: reasonably impossible to foresee, not absolutely impossible, but the reasonable man, average and reasonable
o Hurricane in MA v. LA – how foreseeable is it?
o Standard below what used to be the law – it used to be absolute
Fourth: at time K was made – it is at that time that the vent must be unreasonably foreseeable
o Formation of K is important here… revocable v. irrevocable offers –when is a K formed mailbox
theory, dispatch theory
o What if event occurs when the parties are waiting for acceptance – no K
o But as soon as the offeree the dispatches and the event strikes – the K has been formed
o What about when a condition is pending?
Obligor is exempt from damages if he’s in GF – 1873
After being put in default – like after a term
1874 – like an escape clause – is not liable – not many cases but it could happen
Requirements concerning the juridical act itself
o Can a unilat JA effect? Between the time when the donor enters and time of delivery – probably not responsible
twice because there is no reciprocal ob
o Likely to apply to bilateral K
o To give to do or not to do – spread over period of time (then it poss) – think ahead – and create alternatives
Alternatives – when one is made imposs by fortuitous event – should obligor be made to carry out
the remaining existing, if the obligee had the choice he have the right
Of the obligor had the choice he may be exonerated
advisable to foresee the unforeseeable/protect ahead if time rather than counting on a court (esp if the K spreads
over time and if you are K with other countries, econ or political risks)– provide for revisions through time – esp
if the stakes are high or money is involved – pegging the amount of money at a certain point/ or with gold as a
Art. 1876. Contract dissolved when performance becomes impossible
When the entire performance owed by one party has become impossible because of a fortuitous event, the contract
The other party may then recover any performance he has already rendered.
Art. 1877. Fortuitous event that has made performance impossible in part
When a fortuitous event has made a party's performance impossible in part, the court may reduce the other party's
counter-performance proportionally, or, according to the circumstances, may declare the contract dissolved.
Depend on the timing of the occurrence of the event –
Before performance – if no ob has been carried out while waiting – they have not exchanged perf – the event will
bring about the dissolution of the K - §1866 – when the entire performance - If they have engaged in some prelim
perf - §1876 –dissolution
o If the parties had prepared themselves – then they have to return to each other what has been carried out
to prevent unjust enrichment
While performance/after the perf has begun – the relationship becomes harder to settle
§1877/78 – in part then relying on the court’s equity – part of the perf is beneficial to the obligee then it will be
maintained – other part is not possible then you have part performance on both sides – if both parties are ok with
continuing… but not for something like building a house
1878 – to prevent unjust enrichment
These two arts assume obligor is in good faith – not at fault in delaying – if he was at fault – likely that obligor in
bad faith he will likely be liable for damages
Applied to instances where imposs is not an issue but where a greater burden in perf is imposed on the obligor –
carries burden that he agrees to bear to a certain point
o More burdensome obligation but not impossible – if rendered harder more expensive because of a F event –
these articles don’t apply to a more burdensome perf – only for impossibility!!!! Not a greater burden being
imposed – if not impossible and more burdensome then it can be done – so provide for situations, CYA esp
when you are dealing with foreign parties
Art. 1879. Extinguishment of existing obligation
Novation is the extinguishment of an existing obligation by the substitution of a new one.
Mode of extinction or transfer of obligations
Apply to K and other JA other than K
“Something new” occurring – innovation – an ob, new. Of a prior existing ob – new one becomes binding and the
other one disappear
Is novation a K? Novation is the effect, where an ob is extinguished – but comment (a) he says its preposterous –
certain acts… what acts? Novation effected by an agreement… agreement? But other comments, talk about intent and
NOVATION IS A K – but it can also take place by operation of law – law allows people to enter into a K of novation
o Parties must have the capacity to enter into a K of novation – capacity – may not be the same as the capacity to
enter into a K, this may require general capacity, but if novated it may require greater capacity…
parties want to novate a K of sale into donation… general capacity on part of an owner to sell something he
owns, to donate the capacity to donate there is more required in terms of capacity, more is required
o Not modify – but extinguish and turn it into a new ob – of a different nature
o What can you novate – an original/existing obligation – what is an existing ob – enforceable? Or can you novate
what is known as a natural obligation (exists but somewhere in the minds of the parties, because it can’t be
enforced/obligee can’t sue for performance)?
Probably cant novate a NO – because it then could become the cause of an onerous K – the arts didn’t say a
new K would be created – but that the ob became a K that then could be enforceable – not novation
Can you confirm an ob which is relatively null? Valid provided obligor knew of the defect of the extinguished
obligation… messed up comment… Confirmation - §1842: is a declaration… cures the relative nullity…
follow the law…
Absolutely null? §1883 the obligation does not exist – cant novate – contrary to public order
o Forget about novation of RN – we have confirmation to deal with this
Effects: Extinction of an existing ob – stresses the importance of distinguishing novation – different from assignment
– new creditor , assumption-new obligor and subrogation – none of three forms of “extinguishing” are alike except for
Effects continued…Creation of a new ob – doesn’t really lead to much difficulty if two parties are involved/third
persons – but mult parties in what could be a novation – the distinction between the others and novation becomes
important - §1885
o From the creation of a new ob that all the accessory rights which ensured the performance of the original primary
obligation are also extinguished as is suggested… but it can happen 1884
Art. 1880. Novation not presumed
The intention to extinguish the original obligation must be clear and unequivocal. Novation may not be
o Intent §1880 clear and unequivocal – animus novandi – explicit unequivocal intent to novate – may differentiate
if from a subrogation or assumption
Party in the new K who was also a party to the old K cannot benefit from the sureties – if assumption
or subrogation – the sureties will carry over – why its important to focus on the intent – consequences
may be drastic
Art. 1881. Objective novation
Novation takes place when, by agreement of the parties, a new performance is substituted for that previously
owed, or a new cause is substituted for that of the original obligation. If any substantial part of the original performance
is still owed, there is no novation.
Novation takes place also when the parties expressly declare their intention to novate an obligation.
Mere modification of an obligation, made without intention to extinguish it, does not effect a novation. The
execution of a new writing, the issuance or renewal of a negotiable instrument, or the giving of new securities for the
performance of an existing obligation are examples of such a modification.
o objective novation – objective component parts of the K which is novated – you can novate the object
o you can novate – by changing the cause into a new cause in the newly created K
change cause from sale to donation – shared by the parties… look back to cause
change in the term or condition… the suspensive condition – does it go to the substance, does it make it come
into existence… does a term make a K exist – what you change one with the other… impact of suspensive
condition – the obligation doesn’t exist
adding a suspensive condition novates the obligation – because it goes from pure and simple to something
else – one whose existence may or may not happen; same with resolutory condition – because it would
retroactively annihilate the existence of the obligation it affects… deleting or removing a condition would
have the same effect…. But the alteration of a term merely affects execution/performance and not its
Art. 1882. Subjective novation
Novation takes place when a new obligor is substituted for a prior obligor who is discharged by the obligee. In
that case, the novation is accomplished even without the consent of the prior obligor, unless he had an interest in
performing the obligation himself.
o Subjective novation – changes parties – one party in general is novated into the shoes - substitution of a new
obligor – assumption and subrogation (has retroactivity) ranking remains the same… here for novation the old
obligor is released not for the others
o Stipulation for the benefit of another – the original obligor is not released
o Can you have subjective novation of an obligee – the comment is BS – since novation has no retroactive effect
and does away with securities … Assignment is different…. Subrogation of obligees is very different
o Most common object of a novation – turn onerous JA into a gratuitous one?
o N usually bears on the object
o Cause is one of the reason why parities enter to novation
o Can it take place by tacit acceptance/consent – there is debate – but since its other forms of extinguishing, don’t
rely on tacit novation – hold on to the formal expression of consent – its safer – because of the consequences that
attach to the novated ob – better to have formal, written, open novation
Art. 1883. No effect when obligation is invalid
Novation has no effect when the obligation it purports to extinguish does not exist or is absolutely null.
If the obligation is only relatively null, the novation is valid, provided the obligor of the new one knew of the
defect of the extinguished obligation.
Art. 1884. Security for extinguished obligation
Security given for the performance of the extinguished obligation may not be transferred to the new obligation
without agreement of the parties who gave the security.
Art. 1885. Novation of solidary obligation
A novation made by the obligee and one of the obligors of a solidary obligation releases the other solidary
In that case, the security given for the performance of the extinguished obligation may be retained by the obligee
only on property of that obligor with whom the novation has been made.
If the obligee requires that the other co-obligors remain solidarily bound, there is no novation unless the co-
obligors consent to the new obligation.
P1 – if the obligee clearly expresses intent to novate and the obligor in solido does understand the object of the new K –
novate the prior ob into a new one/if they know what they are doing – the other obligors will be released they will not be
obligors to the novated K… so you have to be aware of the consequences of picking a specific obligor
P2 – stresses the importance of ascertaining the importance of making sure the obligor knows what he is doing – the
other obligors security will be gone
P3 – if the obligee requires that the others remain – he must get their consent
Art. 1886. Delegation of performance – see page 151 in the précis
A delegation of performance by an obligor to a third person is effective when that person binds himself to
A delegation effects a novation only when the obligee expressly discharges the original obligor.
Adds to the A,A,S & N
E and O – but E is also bound to 3 – delegate paying my debt to the third person
D is not novation – YET – at the time it is entered into – its purpose is to make it simpler for an E that is an O to pay a
debt – the end result is that the third person has two O – the original one and the delegated one
DOESN’T CREATE SOLIDARITY – SIMPLY DEVICE TO MAKE IT EASIER TO CARRY OUT OB WHEN 3
ARE INVOLVED IN A k RELATIONSHIP
When entered into can be turned into a novation – P2: discharge of the original obligor, express intent – third person
creditor of E will have to express his intent to consider the other person as a new obligor; not likely he will want a
novation unless that he knows the delegated O can pay the debt – he would rather have two, so he wont let the other
one go unless he’s sure the delegated O can pay
Obligee decides to accept
Art. 1887. Discharge of any prior obligor does not affect security
If the new obligor has assumed the obligation and acquired the thing given as security, the discharge of any prior
obligor by the obligee does not affect the security or its rank.
**wants to make sure he doesn’t lose securities which he has garnered in the other K
Remission of Debt/Not release
Art. 1888. Express or tacit remission
A remission of debt by an obligee extinguishes the obligation. That remission may be express
Can have the same effect as a novation – so consent is important – there is some overlap
i.e. K of sale O owes 10k, bilat, E decides to remit the debt to O – to extinguish the debt, now a donation
this is very often the purpose of remission
the cause: gratuitous intent
can take place by K – most common form – it is a K and must have all requirements – particularly capacity –
where you have bilat, onerous – transform into a donation – the capacity to donate may be different – not all
relationships are lawful
§1519 – donations made for unlawful/illegal purposes
Cause must also be lawful/proper
When does it take place?
Art. 1890. Remission effective when communication is received by the obligor
A remission of debt is effective when the obligor receives the communication from the obligee. Acceptance of a
remission is always presumed unless the obligor rejects the remission within a reasonable time.
Subject to the rules of proof of obligations – receipt theory: as time when remission is effective is reasonable since it
assumes that the obligor will accept the benefit of the remission of debt
99% donation – benefit granted to O who’s debt is now forgiven
O presumed to accept a benefit – always presumed – what is presumed? It is the acceptance by the O – the intent
UNLESS: the obligor rejects… it is a K must have offer and acceptance, A is presumed unless the O says “I do not”
not everyone wants gratuitous – A is presumed but it cant be forced on the O
Novation – expect clear acceptance as well
Art. 1891. Release of real security
Release of a real security given for performance of the obligation does not give rise to a presumption of remission
Tell sureties that you release them but not the O – very much a question of intent
Art. 1892. Remission granted to sureties
Remission of debt granted to the principal obligor releases the sureties.
Remission of debt granted to the sureties does not release the principal obligor.
Remission of debt granted to one surety releases the other sureties only to the extent of the contribution the other
sureties might have recovered from the surety to whom the remission was granted.
If the obligee grants a remission of debt to a surety in return for an advantage, that advantage will be imputed to
the debt, unless the surety and the obligee agree otherwise.
P1 - Effects of remission – leases the sureties – why? Remission of the principle ob – bring about the extinction of the
P2 – E goes over the head of the O – doesn’t release the principle – doesn’t affect the PO
P3 – joined to the second - applicable where sureties are solidary obligors – remission to one solidary O doesn’t
affect the others – only to the share of the one that has been remitted
Usually when you have multiple obligors
i.e. O’s in solido – 3 of them – E may want to extinguish the debt period – remit the debt to one – that will remit
the debt to others – they can act for the benefit of each other – if he receives the offer of remission he can do it – if
he accepts clearly and expressly
§1803 – somewhat misleading – where distinction comes in – release is the extinguishment of the debt – unless
the E tells the SO I will remit to you and to you only – only that portion will be remitted – why its important to
distinguish from remission – remission given to one only
With remission – one SO is remitted and the others don’t have a detriment they are now bound to everything but
the remitted persons share – a remission of debt of one O cannot increase the burden of the SO that are left the E
steps into the shoes of the one who has been released – 3three parties owe $90 one O is released the other SO owe
$60 if one cant pay the E is responsible for the $30 the bankrupt one cant pay since he cant increase the burden of
**1E 3SO - can go against any of them for $90 – E may have been responsive by O1 (pay tuition please don’t
ask me now for 90) he can release the obligor in solido from having to pay the totality of the debt – release for a
period of time – the debt remains due – but E can separate one O from the other – can make one joint one
temporarily – and go against another O for $60 – what of one of the remaining O cant pay his share, with release
– the E can go back against the first O who had been made joint and get $15 – usually only called into question if
s/o is insolvent… its like a suspensive condition…
What if O1 is the principal O – are the secondary also released because the P has been released? PO is still in
existence – so it doesn’t release the secondary obligors
1889 – remission by law
Presumption of remission – benefit – obligee’s voluntary surrender – intended to remit the debt
Voluntary surrender of title
Rebuttable presumption, not the equiv of a tacit presumption of acceptance – that E and O have entered into a
remission of debt – he can take back that presumption – few E’s are going to surrender titles until they have been
Voluntary: v and freely, of a NO and payment of an obligor who has benefitted from term but paid ahead of
time… could you recover the performance of a NO made freely, but in error… §1761
1761 Comment (b) – freely… only violence and fraud but not error
1782 on term – comment (b) says voluntarily… error duress and fraud… how do you contrast freely and
voluntarily….. so don’t rely on comments
Does remission of debt leave a NO in existence? If it’s a gift then no
Compensation – mode of extinction of Ob – 1893-1902
More important of the two forms – compensation under the law – as a right
1893 P1 – there are some requirements – parties are mutually indebted to each other – on one basis of K of sale,
and the other K for services… the debt must be liquidated – know what the amount of the debt is, each debt must
be presently due for compensation to take place by operation of law… money, amount is known, is it due
What if debt is subject to a term or condition
Due has to do with timing of payment – this is usually the obstacle to it taking place by operation of law
Delay of grace is not an obstacle
Operation of law – auto at the moment the two debts of the same kind/liquidated – the debts are extinguished by
operation of law
Usually one party calls upon the other that it has taken place… there was a term or something like a condition
§1898 - same theme
o P3 drafters intended to protect the “insured” so it doesn’t operate – what if $ owed is payment of
premium? Where the law makes no distinction we are to make none!
Exception to compensation: §1894 – P2 because there is no debt owed there to borrower/thief – what a person
needs to live with/on cannot be seized
§1901 – can by K do what you want – compensate horses with apples, rolls Royce for a bike… if there is a term
you can waive it… you can do what you want by K
Discussion: when obligor demands performance from a surety… before I pay, for principal - lets find out what assets are
in the principal-obligors patrimony – if there is nothing or not enough the surety will pay
Release: extinction of obligations – not an institution in the CC – distinguished from remission… solidarity – if
you release them telling obligor you are now joint – I just want your share and no more
1903 – Confusion: for a civilian – mode of extinction of obligations when two conflicting qualities are united in
the same person – debtor and creditor in a succession – Brits called it merger – doesn’t this change the meaning?