9. Code III: Sales and Leases Flashcards
Warranty against Redhibition: Remedies for Good Faith Seller
- useless = entitled to refund of purchase price and reasonable expenses (NO damages/attorney’s fees)
- if not USELESS = quanti minoris
however, buyer MUST give good faith seller opportunity to correct defect before seeking rescission of the sale
Good Faith Seller
= one who did not know thing had defect
Warranty against Redhibition
implied in every sale
protects buyer from:
(1) hidden defects in the thing:
(2) present at the time of delivery
(3) that qualify as redhibitory
Types of Redhibitory Defects
(1) defect that renders the thing either absolutely useless or so inconvenient to use that the buyer would not have bought the thing had he known of the defect
(Remedy = RESCISSION of the sale)
OR
(2) defect that diminishes the usefulness or value of the thing such that it must be supposed that the buyer would have paid a lesser price
(Remedy = quanti minoris)
Quanti minoris
reduction of the price
remedy for the type of redhibitory defect that diminishes the usefulness or value of the thing such that it must be supposed that the buyer would have paid a lesser price
Hidden Defect/ Duty to Inspect
one that would likely not be discovered upon reasonably prudent inspection
- buyers knowledge/ expertise
- opportunity to inspect
- assurances made by sellers
Burden of Presence of Redhibitory Defect Upon Delivery
burden on buyer to prove existence at time of delivery
not the cause of defect
Waiver of Warranty against Redhibitory Defects
(1) must be clear and unambiguous (“as is” is likely not good enough)
(2) must be brought to buyer’s attention
IMPORTANT: waiver is ineffective against a seller who declared that a thing had a quality that seller knew it did not have
Liberative Prescription for Redhibitory Defects: Good Faith Sellers
the shorter of:
(i) 2 years from the date of perfection of the sale
(ii) 1 year from the date the buyer discovered the defect
Liberative Prescription for Redhibitory Defects: Bad Faith Sellers
bad faith = had knowledge of the defect
the shorter of:
(i) 10 years from the date of perfection of the sale
(ii) 1 year from the date the buyer discovered the defect
Warranty of Fitness
seller warrants that the thing sold is reasonably fit for its ordinary use
governed by the rules of contract
limited to ordinary uses – EXCEPTIONS
Warranty of Fitness extended to uses beyond ordinary when:
- buyer has some particular use in mind for the thing,
-
seller knows or should know the buyer’s particular purpose,
AND - the seller knows or should know that the buyer is relying on the seller’s skill and judgement in selecting the thing
Warranty of Fitness: Remedies
damages for the amount of loss sustained by the breach
Prescription of Breach of Warranty of Fitness
the shorter of:
(i) 2 years from the date the thing was delivered, or
(ii) 1 year from the date the buyer discovered the unfitness
Contract to Sell
bilateral agreement where the parties promise to enter into a sale at a later date
Form for Contract to Sell
- must specify the thing and the price
- in writing for immovables
Sale: Definition
contract whereby a person
transfers ownership
of the thing
to another
for a price in money
sale of immovables must be in writing to affect 3d persons
Perfection of the Sale
- object
- price (determined or determinable)
- consent of the parties (consider counteroffer)
Contract to Sell: Earnest Money
money given by buyer to seller to secure the parties’ interests in the event of breach
- must be EXPRESSLY stipulated
- precludes possibility of seeking specific performance and damages (functions as stipulated damages)
Contract to Sell: Earnest Money Effects on Breach
if buyer recedes from contract: buyer forfeits earnest money
if seller recedes from contract, seller must pay the earnest money given to the buyer plus the same amount
if either party’s failure to perform is EXCUSED, earnest money is not owed
Sale of an Immovable: Prescription of Action for Failure to Perform
5 years
Warranty against Eviction
seller warrants the buyer against eviction
Eviction
the buyer’s loss of or danger of losing
the whole or part of a thing sold
because a third person’s right existed in the thing
at the time of sale
Warranty against Eviction: Servitudes
warranty against eviction extends to undeclared, nonapparent conventional servitudes
does NOT extend to natural or legal servitudes
Seller’s Liability for Breach of Warranty Against Eviction: Waiver/Modification by Warranty Sale
parties do not address the matter of the warranty OR they state that the sale is a “warranty sale”
Seller’s Liability for Breach of Warranty Against Eviction: Waiver/Modification by Warranty Sale
REMEDIES
- restitution of the price
- restitution of fruits if buyer has to pay them to the owner who evicts him
- all costs incurred by the lawsuit concerning the warranty/eviction
- damages ONLY IF the buyer did not know about danger of eviction
- improvements (all improvements if bad faith seller, only “useful improvements” if good faith seller)
Seller’s Liability for Breach of Warranty against Eviction: Waiver/Modification by Non-Warranty Sale
seller renounces the warranty
Seller’s Liability for Breach of Warranty against Eviction: Waiver/Modification by Non-Warranty Sale
REMEDIES
restitution of the price ONLY IF buyer did not know about danger of eviction
Seller’s Liability for Breach of Warranty against Eviction: Waiver/Modification by Buyer’s Peril and Risk
non warranty sale +
(1) buyer was aware at the time of the sale the danger of eviction, or
(2) regardless of the buyer’s knowledge, the buyer declared that he was buying the property at his peril and risk, or
(3) the seller’s obligation of returning the price of the property has been expressly excluded
Remedies for buyer: nothing
Seller’s Liability for Breach of Warranty against Eviction: Quitclaim Deed
assignment of any rights without warranting the existence of those rights
REMEDIES: nothing
Warranty against Eviction: Partial Eviction
buyer is entitled to proportionate reduction in price
if buyer’s PRINCIPAL CAUSE was to get the part on which the eviction occurred, buyer could get complete rescission of sale
Right of First Refusal
unilateral contract in which one party agrees that she will not sell a certain thing without FIRST offering it to a certain person
- may be enforced by specific performance
- need not contain a term OR price
- immovable must be in writing and cannot extend past 10 years (movable capped at 5)
Sale on View or Trial
buyer retains the right to test the goods
sale is not perfected until the goods have been checked
Sale on a Suspensive Condition (when perfection?)
title does not transfer (sale is not perfected) until the condition is fulfilled
Types of Warranties
(1) warranty against redhibition
(2) warranty against eviction
(3) warranty of fitness
Option Contract
unilateral K whereby a grantor of the option is BOUND TO BUY OR SELL if the grantee accepts within the time stipulated
Option Contract: Requirements
- thing
- price
- correct form (immovables = writing)
- term
Option Contract Term Requirements
can be tied to another contract with a definite term,
NO LONGER THAN 10 years for an immovable
UNLESS tied to a contract that gives rise to obligations of continuous and periodic performance (ie a lease)
Lesion Beyond Moiety
(1) K for corporeal immovable
(2) only SELLER can bring action for lesion
(3) price is less than 1/2 FMV at time of sale
Counteroffer
- an acceptance not in accordance with the terms of the offer is deemed to be a counteroffer
different terms = proposals for modification (must be accepted by offeror to be part of K
MERCHANT EXCEPTION
Counteroffer Exception: acceptance forms K of sale of movable even if acceptance contains different terms from original offer IF
- THERE IS AGREEMENT ON THE SALE AND THE PRICE
(no K if acceptance conditioned on acceptance of additional terms)
Merchant Exception for Counteroffers
different terms become part of the K automatically unless:
a. they materially alter the offer
b. offer expressly limits acceptance to terms of the offer
OR
c. offeror objects within reasonable time
(still a K just not included automatically)
sale of future things
Things not yet in existence
coming into existence = suspensive condition so buyer does NOT assume the risk
sale of hope
ALEATORY (uncertain)
buyer assumes risk that thing won’t materialize
Simulation
when parties do not intend a price to be paid (presumed if seller remains in possession)
Ownership
Passes to buyer upon perfection of the sale
Risk of Loss
risk of loss due to fortuitous events (not reasonably foreseen @ time of K) transfers to buyer upon delivery
Perfection of the Sale: Goods Sold by Weight/ Tail
perfection when weighing/counting completed
Perfection of the Sale: Lump Sale
perfection at consent (no counting)
Perfection of the Sale: Individualization
things sold must be set aside for buyer when seller can’t easily change her mind
Perfection of the Sale: Things in Transit
transfer of ownership determined by BILL OF LADING
- person owns the things in transit deliverable to them
- shipment k = risk of loss transferred to buyer upon delivery to CARRIER
- destination K = risk of loss transferred to buyer when things duly tendered to buyer at place of destination
Agreements Preparatory to the Sale
- Option
- Right of First Refusal
- Contract to Sell
Implied Warranty of Merchantability
allows buyer to refuse to go through with sale if title of the property is suggestive of serious litigation
Primary Obligations of the Seller
- Delivery
- Implied Warranty Against Eviction
- Implied Warranty Against Redhibitory Defects
Seller’s Failure to Deliver
buyer may demand dissolution or specific performance + buyer is entitled to DAMAGES
Obligations of the Seller: Conforming Goods
- seller must deliver goods of agreed kind/quality/quantity
- buyer always has right to inspect (must reject within reasonable time)
- can’t accept then later reject
Seller’s Right to Cure Nonconforming Goods
IF:
1. Time for performance has not expired OR
2. Seller reasonably believed buyer would find nonconforming goods acceptable
Intentional Misrepresentation by Seller
innocent misrepresentation/ not of the kind specified = general rules of K
intentional = REDHIBITION
Redhibitory Defects MUST:
(1) not be apparent (buyer must not know of defect at time of sale)
(2) not discoverable at time of sale by a reasonably prudent buyer of such things (imposes duty to inspect)
AND
(3) exist at the time of delivery (presumed if manifests within 3 days/ reasonable inference otherwise)
Warranty against Redhibition: Remedies for Bad Faith Seller
= knew of defect and omits to declare it OR declares it to have a quality it does not have
manufacturer = always charged with knowledge
- useless = entitled to refund of purchase price and reasonable expenses
- if not USELESS = quanti minoris
PLUS DAMAGES AND ATTORNEYS FEES
BAD FAITH SELLER HAS NO RIGHT TO REPAIR
Considerations for Claims of Breach of Warranty against Redhibition
- deduction for use (generally only for GF sellers/ BF= court’s discretion)
- notice to GF seller (so they can repair)
- return of the thing (if remedy = rescission , must take care as prudent administrator pending satisfaction of his claim)
- risk of loss (thing destroyed BECAUSE of redhibitory defect and buyer gave notice BEFORE fortuitous event)
- quanti minoris
- subrogation (buyer can bypass seller and sue manufacturer)
Obligations of Buyer
- pay the price (can be compelled to pay if seller offers to deliver the thing)
- take delivery of the thing
Breach: Buyer Doesn’t Pay
seller can either:
(1) dissolve sale
OR
(2) seek performance (suit for specific performance)
Right of Resale
FOR MOVABLES: If buyer doesn’t pay, seller has right of selling thing to 3d party and buyer is held responsible for any LOSSES realized in the resale
Dissolution for Nonpayment of Price
if buyer fails to pay, seller entitled to dissolution
if promissory note/ other instrument given to represent price has PRESCRIBED, right to dissolve prescribes as well!! 5 years
Sale with Right of Redemption
= right to take thing back from buyer
- must be included in act of sale
- must reserved for a peremptive period (5 yrs movables/ 10 immovables)
- immovables = recorded for effectiveness against 3P/ movables = effective against 3P with knowledge of ROR
Exchange
K in which each party transfers to the other ownership of a thing for something other than money
Eviction of a thing Received in Exchange
person evicted may get value of the thing or the return of the thing he gave
plus damages
Daiton En Paiment
debtor gives a thing to creditor as payment for a debt that is due
Contract to Build
(1) buyer has some control over the specification of the object
(2) negotiations BEFORE object is constructed
AND
(3) K contemplates that any one party will supply materials and furnish his skill and labor to build the desired object
breach = breach of warranty of workmanlike performance
Contract to Furnish and Install
= K of Sale with suspensive condition
Promise or K to Sell
no transfer until actual K of sale
Effects of Lesion Beyond Moiety
buyer can EITHER:
(a) return the thing (and get price back)
OR
(b) keep the thing and give seller supplement equal to difference price paid and FMV
if buyer sold to 3d party - only against OG buyer and capped at his profits on resale
PEREMPTIVE 1 YR from date of sale
Sale of Future Thing transfers when . . .
transfers when thing comes into being
Lease
a bilateral contract in which one gives the use of the thing in exchange for the rent
Lease: Term
If the parties do not fix a term for the lease, a term will be supplied by law.
Fixed Term Lease
tied to a designated date or the occurrence of an uncertain event
MAY NOT EXCEED 99 YEARS
Required Elements of a Lease
agreement on the thing
agreement on the rent
does NOT have to be in writing! - even for immovables
Indefinite Lease: Non-Agriculture (immovable) or Residential (movable)
a non-agricultural lease of an immovable or a residential lease of a movable without a stated term shall have a month-to-month term (imposed by law)
Lessee’s Right to Sublease
can if not expressly prohibited
= transfer of lessee’s right of occupancy & does NOT promise to pay lessor anything
Payment of Taxes on a Leased Thing
Lessor is responsible
Making of Repairs on a Leased Thing
unless otherwise agreed
Lessor’s responsibility:
all other repairs, including those necessary to keep the thing in a condition suitable for the purpose for which it is leased
Lessee’s responsibility:
damage that is lessee’s fault, and
deterioration caused by lessee’s use beyond the normal use of the thing
Dissolution of a Lease for Breach
within the court’s discretion
factors court will consider:
(a) whether the breach was major
(b) whether breach was fault of lessee/lessor
(c) whether the breach was in good faith
Enforcement of a Lease Against a Third Party
requires that the lease be recorded in the mortgage records of the parish in which the immovable property is situated
(actual knowledge is irrelevant)
Tacit Reconduction
ONLY IN FIXED TERM LEASES
occurs when lessee continues in possession for a certain period of time after the conclusion of the fixed term without opposition from the lessor
ASK:
1. has the lease been reconducted?
2. if so, how long is new term?
1. Has the Lease been Reconducted?
Period of Time Required for Tacit Reconduction
NON-AGRICULTURAL LEASE
1 week
2. How long is New Term?
New Term of Tacitly Reconducted Lease
NON-AG LEASE WITH A TERM LESS THAN 1 DAY
term is equal to expired term
Lessee Abandonment
allows lessor to retake the premises and rent to another lessee as a mandatary for the original lessee
but lessor can only recover from original lessee the difference between rent paid by new lessee and rent owed by old lessee
Acceleration Clause
if put in lease, allows lessor to demand payment of all rent due for the duration of the lease when one payment is not made on time
does not apply after tacit reconduction because lease becomes month to month (usually)
Termination of the Lease: Indefinite Term
lease term > 1 mo
NOTICE (by either party) MUST BE GIVEN TO TERMINATE
WRITTEN for leases of immovables or residential leases of movables
30 days before end of period
Lessor’s Obligations
(1) deliver the thing to the lessee
(2) maintain the thing in a condition suitable for the purpose for which it was leased
(3) protect the lessee’s peaceful possession for the duration of the lease
Lessor’s Duty to Maintain
lessor must make all repairs NECESSARY to maintain thing in a suitable condition for purpose in which it was leased
except for those which lessee is obligated to make
Lessee’s Obligations
(1) repair damage to the thing caused by his fault or that of persons who use the thing with his consent
(2) repair damage or deterioration due to use excessive of normal wear and tear
Motorcycle Steering Problem when Going Above Speed Limit: Whose Duty to Repair?
provided the steering problem was not caused by the misuse of the lessee, it is the lessor’s duty to make the necessary repairs, because the steering problem seems to prevent the use of the motorcycle for the purpose in which it was leased
Lessee Withholding Rent
only acceptable if the lessee could consider the lease extrajudicially dissolved
Types of Leases
categorized by dominant purpose
- residential
- agricultural
- mineral
- commercial
- consumer (personal use outside his trade or profession)
Indefinite Term Lease
no fixed term/ depends on the will of the parties subsequently expressed
- AG = year to year
- non ag immov/ res movables = month to month
- non res immovables = day to day
Indefinite Term Lease
no fixed term/ depends on the will of the parties subsequently expressed
- AG = year to year
- non ag immov/ res movables = month to month
- non res immovables = day to day
Termination of Lease: Fixed Term
upon expiration of the term
Destruction of the Leased Thing
- completely destroyed = lease terminates (no one pays damages)
- partially destroyed/ substantial impairment of use = if lessee is NOT at fault: lessee can get diminution of rent or dissolution of lease (if lessor at fault lessee can get DAMAGES)
if impairment caused by external circumstances lessee only gets dissolution (eg. zoning)
Peaceful Possession
Lessor liable if lessee disturbed by:
(1) any person claiming a right in the leased thing OR
(2) persons with access to the thing with lessor’s consent or who occupies adjacent property belonging to lessor
nonwaivable
Lessee’s Right to Repair and Deduct
first must make DEMAND that lessor repair
if he doesn’t, lessee can repair and demand immediate reimbursement (price lessee pays must be reasonable)
GENERALLY HE CANNOT WITHHOLD RENT
Lessor’s Responsibility for Vices and Defects
lessor liable for all DEFECTS AND VICES that prevent the thing from being used for its intended purpose
- includes natural decay/ deterioration
- does not have to exist at the time of K/ lessor need not know
Waiver for Vices and Defects
(1) clear and unambiguous AND
(2) brought to the attention of the lessee
Lessee’s Duties
- use thing as a prudent administrator according to the purpose for which it was leased
- pay the rent
- return the thing at the end of the lease in same condition as delivered (minus normal wear/tear)
Lessee Misuse of Property
Misuse = lessee uses in way not intended OR in a way that may cause damage
lessor may DISSOLVE lease + damages OR injunctive relief
Lessee’s Failure to Pay Rent
Lessor may:
(1) sue to dissolve and regain possession
(2) specific performance
PLUS ACCRUED RENT
- can’t collect future rent before it’s due unless ACCELERATION CLAUSE
- can’t BOTH retake possession and collect future rent unless lessee has ABANDONED property and he RELETS it to another (OG amount owed reduced by new rent)
Lessee’s Right to Assignment
can if not expressly prohibited
= transfer of K (both rights and duties) & includes obligations of paying right to lessor
Lessee’s Right to Assignment
can if not expressly prohibited
= transfer of K (both rights and duties) & includes obligations of paying right to lessor
Bourbon St. Case
an owner lessor with full knowledge of potentially harmful effects of lessee’s activities on property is answerable for the damages lessee causes
Lessee’s Right to Improvements
- right to remove = lessee may remove all improvements but is bound to restore them to its former condition
- if he does NOT remove lessor may (1) keep and pay costs or enhanced value OR (2) demand lessee remove within reasonable time (if lessee doesn’t the lessor may remove at lessees expense or keep and notice by certified mail and not pay)
Lessee’s Right to Assignment
can if not expressly prohibited
= transfer of K (both rights and duties) & includes obligations of paying right to lessor
Security Deposit
if the lessor in a residential lease does not return the security deposit within 30 days after written demand, lessee has right to recover the amount of deposit wrongfully withheld and the greater of $300 or 2X the amount wrongfully withheld
(court has discretion to award costs + attorney fees)
1. Has the Lease been Reconducted?
Period of Time Required for Tacit Reconduction
AGRICULTURAL LEASE
30 days
2. How long is New Term?
New Term of Tacitly Reconducted Lease
AGRICULTURAL LEASE
year to year
2. How long is New Term?
New Term of Tacitly Reconducted Lease
NON-AG LEASE WITH A TERM OF 1 MONTH OR LONGER
month-to-month
1. Has the Lease been Reconducted?
Period of Time Required for Tacit Reconduction
LEASES WITH A FIXED TERM OF 1 WEEK OR LESS
1 day
2. How long is New Term?
New Term of Tacitly Reconducted Lease
NON-AG LEASE WITH TERM BETWEEN 1 DAY AND 1 MONTH
day-to-day
Termination of the Lease: Indefinite Term
1 week – 1 month
NOTICE (by either party) MUST BE GIVEN TO TERMINATE
WRITTEN for leases of immovables or residential leases of movables
5 days before end of period
Termination of the Lease: Indefinite Term
month to month
NOTICE (by either party) MUST BE GIVEN TO TERMINATE
WRITTEN for leases of immovables or residential leases of movables
10 days before end of period
Termination of the Lease: Indefinite Term
> 1 week
NOTICE (by either party) MUST BE GIVEN TO TERMINATE
WRITTEN for leases of immovables or residential leases of movables
any time before expiration
Waiver for Vices and Defects NOT Effective For
(a) vices lessee didn’t know and lessor did/ should have
(b) violate rules prohibiting advance limiting liability
(c) in res/consumer leases, seriously affect or threaten HEATH or SAFETY
