Code III - Obligations

Question 1

What is an obligation?

Answer 1

An obligation is a legal relationship between two or more persons. An obligor owes a performance in favor of an obligee; and the performance or duty is legally enforcable.

Question 2

What are the effects of obligations on the obligee or obligor?

Answer 2

1. Effect on obligee–entitled to judicial enforcement of the obligor’s duty to perform, and to recover damages if the obligor fails to perform; 2. Effect on obligor–entitled to be discharged from the obligation after performance has been rendered in full.

Question 3

What is the duty of good faith in the context of obligations?

Answer 3

Overriding duty of good fatih imposed on all obligors and obligees. No specific proscription in the Code against unconscionability.

Question 4

What is the civilian doctrine of abuse of right?

Answer 4

May be invoked to prevent an obligee from exercising a right with the primary intention of harming the obligor. (usually tested in context of a lease)

Question 5

What is a natural obligation?

Answer 5

A natural obligation exists when there is a moral, but not a judicially enforceable, duty to render performacne–where the law implies a particular moral duty to render a performance. Obligor should perform, but the obligee cannot make him perofrm.

Question 6

What are the three primary effects of natural obligations?

Answer 6

1. No judicial action for obligee; 2. No reclamation of freely rendered performance–once performed, cannot be reclaimed; 3. A new contract made for the performance of a natural oligation is onerous, not gratuitous–will elevate debt into a fully enforceable obligation, but the promise must be express. If the natrual obligation is a prescribed obligation, the new promise must be in writing.

Question 7

What are examples of natural obligations?

Answer 7

1. A prescribed debt; 2. A debt discharged in bankruptcy; 3. An obligation incurred by one who lacks capacity; and 4. Dispositions in a will that is null for want of form.

Question 8

What is a real right? What is a real obligation?

Answer 8

1. A real right is a right in a thing that is good against the world. 2. A real obligation is an obligation that is incurred as a result of a real right.

Question 9

How are real obligations transferred?

Answer 9

1. Property bound–a real obligation is transferred to the person who acquires the thing to which the obligation is attached without any agreement to that effect. Personal obligations cannot be transferred without agreement. 2. Particular successor not personally bound–one who acquires a thing by particular title is not personally bound by any real obligation that attaches to it. A particular successor may free himself of the obligation by abandoning the thing.

Question 10

What is a heritable obligation?

Answer 10

An obligation is heritable if it can be enforced by or against the successors of the original obligors and obligees; it is also transferable. Heritability concerns the question of whether a third party can be substituted or added to the obligation.

Question 11

What is a strictly personal obligation?

Answer 11

A strictly personal obligation is only enforceable by the original obligee or against the original obligor.

Question 12

How can one determine whether an obligation is strictly personal?

Answer 12

1. Strictly personal for obligor–An obligation is presumed o be strictly personal for the obligor if performance requires special skill or qualification of the obligor, or if the obligation is to perform personal services. 2. Strictly personal for obligee–performance is intended for that obligee’s exclusive benefit.

Question 13

What is a conditional obligation?

Answer 13

An obligation whoce occurrence depends on an uncertain event. Uncertainty over whether the event will occur is the key to a conditional obligation.

Question 14

What types of conditions are there for a conditional obligation?

Answer 14

1. Suspensive condition defined–Obligation is not enforceable UNLESS AND UNTIL the uncertain event occurs. 2. Resolutory condition defined–Obligation is immediately enforceable but comes to an end if the UNCERTAIN EVENT OCCURS.

Question 15

What is party’s power to bring about the fulfillment of a condition?

Answer 15

In the civil law, conditions whose fulfillment is within a party’s power are called potestative conditions. The only null potestative conditions are suspensive potestative conditions whose fulfillment depends on the obligor’s whim.

Question 16

What is a potestative suspensive condition?

Answer 16

An obligation with a suspensive condition that depends solely on the whime of the obligor is null, but an obligation with a suspensive condition that depends on the exercise of the obligor’s will is valid. 1. Whim–dependend entirely on the obligor’s unbridled discretion or arbitrariness. 2. Will defined–a considered weighing of the interests or the exercise of reasonable discretion is not whim, but will.

Question 17

What is a resolutory potestative condition?

Answer 17

An obligation whose fulfillment is within a party’s power are not null, but the conditions must be exercised in good faith.

Question 18

What is obligation with a term?

Answer 18

A term is the period allowed for the performance of an obligation. It may be express or implied; certain or fixed; uncertain (determinable or undeterminable). A term is presumed to benefit the obligor; and any term can be renounced by the party for whose exclusive beneift it was established.

Question 19

What happens if an obligation does not have a term?

Answer 19

Performance is due immediately.

Question 20

How does one distinguish terms from conditions?

Answer 20

1. Condition–uncertainty concerns whether the event will occur. 2. Term–uncertaintiy concerns when the event will occur. Furthermore, a condition has to do with whether an obligation exists, while a term has to do with whether an obligation has been breached.

Question 21

What are the three classifications of obligations with multiple persons?

Answer 21

1. Several obligations–exist when separate performances are owed. Several obligations are treated as separate obligations, and produce the same legal effects as obligations incurred through different juridical acts. 2. Joint obligations–oner performance is oweed, and not joint obligor is bound for the whole and no joint obligee is entitled to receive the whole performance. 3. Solidary obligations–an obligation is solidary for the obligors when each owes the whole performance, and each obligee is entitled to receive the whole performance.

Question 22

What are the effects of joint obligations?

Answer 22

Depends on whether the obligation is divisible or indivisible. If the joint obligation is divisible, each obligor must perform his portion, and each obligee may receive only her portion. If a joint obligation is indivisible, joint obligors or obligees are governed by the rules of solidarity.

Question 23

How does one distinguish between several and joint obligations?

Answer 23

Look to the object of the obligation. In several obligations, the objects are different. In joint obligations, there is a single object, one performance.

Question 24

What are the causes of solidarity?

Answer 24

1. Solidarity may arise either voluntarily or by operation of law. Depends on the parties’ intent. May arise from different sources for each obligor.

Question 25

What are the effects of solidarity?

Answer 25

If an obligation is solidary for the obligees, the obligor may extinguish the obligation by rendering perofrmance to any of the solidary obligees. If an obligation is solidary for the obligors, the obligee may demand the whole performance from any of the solidary obligors.

Question 26

Can an obligee renounce solidarity?

Answer 26

If there are solidary obligors, the obligee can expressly renounce the solidarity in favor of one or more obligor. Renunciation must be express, but no writing is required. Once an obligor renounces, the obligee will look to an obligor only for that obligor’s share. Can renounce in favor of less than all obligors–deduct the payment of obligors as to whom solidarity was renounced.

Question 27

What about remission of debt?

Answer 27

If there are solidary obligors, the obligee can remit the debt in favor of one or more obligors. The obligors as to whom the debt was not remitted remain solidarily liable for the original debt after deduction of the portion of the debtor as to whom the debt was remitted.

Question 28

What is the effect of remitting the debt?

Answer 28

1. Obligee is releasing the obligor, essentially saying to him that no one can come after him for any amount. 2. If the obligee surrenders to one solidary obligor the instrument that evidences the obligaton, there is a presumption that the remission of the debt was intended to benefit all solidary obligors.

Question 29

How is debt allocated among solidary obligors?

Answer 29

If there are solidary obligors, the ultimate allocation of the obligation among the obligors will be made in accordance with one of two principles: contribution or indemnity.

Question 30

What is contribution for the purposes of allocating debt among solidary obligors?

Answer 30

1. If the circumstances giving rise to the obligation concern all the obligors, then each is liable for his virile portion. If the solidary obligation arises from contract or quasi-contract, virile portions are generally equal. If the solidary obligation arises from offense or quasi-offense, virile portions are proportionate to the fault of the obligors. SOlidary obligors bear the loss arising from the insolvency of a solidary obligors in proportion to their portions.

Question 31

What is indemnity for the purposes of allocating debt among solidary obligors?

Answer 31

If the circumstances giving rise to the solidary obligation concern only one of the solidary obligors, then that obligor is liable for the whole obligation. The other solidary obligors are considered sureties.

Question 32

What are conjunctive obligations?

Answer 32

An obligation is conjunctive if the obligor must render MULTIPLE items of performance, each one of which may be separately rendered. Each item is regarded as a separate obligation. Significance for liberative prescription.

Question 33

What are alternative obligations?

Answer 33

An obligation is laternative if the obligor is bound to render one of two or more items of performance.

Question 34

What are the effects of alternative obligations?

Answer 34

The choice belongs to the obligor unless granted to the obligee either expressly or impliedly. The obligor is not permitted to render partial performance of one item and partial performance of another item. If one item of performance becomes impossibile or unlawful, the obligor must render one of those items of performance that remain. If all items of performance becaome impossible or unlawful without the obligor’s fault, the obligation is extinguished.

Question 35

What is a divisible obligation?

Answer 35

An obligation is divisible when the object of performance may be divided. An indivisble obligation is when the object of the performance is not susceptible of division.

Question 36

What are the general principles guidng the transfer of obligations?

Answer 36

Unless an obligation is strictly personal, an obligation may be transferred from the original party to a third party. A person who assumes the obligation stands in the shoes of the original obligor.

Question 37

How does assumption of an obligation arise?

Answer 37

Conventional assumption of an obligation may arise by agreement between the obligor and a third person, or by agreement between the obligee and a third person. An agreement between the obligor and a third person whereby the third person agrees to assume an obligation of the obligro is enforceable against the third person by the obligee if made in writing. An agreement between an obligee and a third person whereby the third person agrees to assume an obligation owed to the obligee must also be in writing and does not effect a release of the original obligor.

Question 38

What are the rights and liabilities of the person assuming the obligation?

Answer 38

The assuming third person becomes bound to the extent of her assumption. Assuming third person may raise any defenses that are based on the contract by which the assumption was made. Assuming third person may raise any defenses based on the relationship between the original obligor and the obligee, but may not raise any defenses based on the relationship between the assuming third person and the original obligor.

Question 39

What is release of the obligor?

Answer 39

Consent by the obligee to the assumption does not release the original obligor, who remains solidarily bound with the third person. Only released through a subjective novation.

Question 40

What is subrgoation?

Answer 40

Substation of one person to the rights of another: two types–conventional and legal. When subrogation occurs, the obligation is extinguished only for the original obligee. Party is substituted as an obligee.

Question 41

What is conventional subrogation?

Answer 41

May arise by agreement with either the obligor or the obligee. Subragtion by agreement with the obligor is effective without the obligee’s consent. (and vice versa) The agreement must be in writing and state that the purpose of the loan is to pay the debt.

Question 42

When does legal subrogation take place?

Answer 42

1. One obligee pays another obligee with superior rights; 2. A purchaser of property uses the purchase money to pay a creditor with a real right to the property; 3. When an bolgior who owes a debt with others pays that debt and has recourse against those other obligors on account of the payment. 4. When a successor pays an estate debt with his own funds. 5. When the law provides for legal subrogation.

Question 43

What are the effects of legal subrogation?

Answer 43

Legal subrogation entitles the new obligee to recover but only to the extent that he has PERFORMED.

Question 44

What general principles underly proof of obligations?

Answer 44

Party demanding performance must prove the existence of the obligation. When a contract must be in writing, it cannot be proved by testimony unless the instrument has been destroyed, lost, or stolen.

Question 45

What types of writings constitute proof of obligations?

Answer 45

1. Authentic act–a writing executed in front of a notary and two witnesses and signed by the parties, notary, and witnesses. Constitutes full proof of the agreement. 2. Act under private signature duly acknowledged–(notary not present at the time)–cannot substitute when an authentic act is required. 3. Act under private signature–(signed but not necessarily written by the parties) as long as signed by one party, can be enforced against both if non-signer has availed himself of the contract. Electronic signature satisifed the law under the LA Uniform Electronic Transactions Act.

Question 46

What rules govern the transfer of immovables?

Answer 46

The transfer of an immovable must be in writing, either by an act under private signature or by authentic act. An oral transfer is valid if there has been delivery and if the transferor recognizes the transfer under oath. To affect third persons, the instrument must be recorded.

Question 47

What is the public records doctrine as applied to immovables?

Answer 47

1. Any instrument affecting immovable property binds third parties only from the time it has been filed for registry in the parish where the property is located. Third parties, despite their knowledge, are not affected by unrecorded transfers.

Question 48

What obligations must be in writing to be effective?

Answer 48

1. Transfers of immovable property, including creation of any real rights; 2. A mandate authorizing the transfer of immovable property; 3. A promise to pay the debt of a third person; 4. A promise ot pay a debt extinguished by prescription; 5. A compromise; 5. Suretyship.

Question 49

How are obligations extinguished?

Answer 49

Performance extinguishes an obligation. Either the obligor or a third person may render the performance unless the obligee has an interest in performance only by the obligor. 1. Imputation of payment–if the obligor owes several debts, he can impute payment to any one of the debts. If not imputation by the obligor, payment is imputed to the debt the obligor would most likely want paid.

Question 50

What happens when performance is impossible?

Answer 50

1. An obligor is not liable when her failure to perform is caused by a fortuitous event that makes performance impossible. A fortuitous event is one that was not reasonably foreseeable at the time the contract was made. 2. Exception is obligor assumed the risk of loss by a fortuitous event, or has been put in default before the fortuitous event has occurred. (unless the object would have been destroyed if in th ehands of the obligee and timely rendered, obligor not liable except for delay damages).

Question 51

What is the effect of impossibility?

Answer 51

If the entire performance has become impossible, the contract is dissolved. The other party can recover any rendered performance. If the performance is impossible in part, a court may reduce the counterperformance or dissolve the contract. If the contract is dissolved b/c of a fortuitous event that occurred after partial performance, the obligee is bound to the extent he was enriched.

Question 52

What is novation?

Answer 52

Noation is the extinguishment of an existing obligation by the substitution of a new one. Novation is never presumed. Obligee’s intent to extinguish the original obligation must be clear and unequivocal. 1. Objective novation–substitution of a new performance or new cause in place of the original one. Obligor remains the same, but a new obligation is substituted for the original obligation. 2. Subjective novation–substitution of a new obligor for the original obligor. Prior obligor must be discharged on abbount of the substitution; can occur even without the original obligor’s consent.

Question 53

What are the effects of novation?

Answer 53

If novation is made by the obligee and one of the obligors of a solidary obligation, the other solidary obligors are released. If the obligee wants the other solidary obligors to remain bound, the obligors must all consent to the new obligation.

Question 54

What is remission of debt?

Answer 54

A remission of debt is the voluntary relinquishment by the obligee of her right to demand performance. Extinguishes the obligation.

Question 55

When does a presumption of remission arise?

Answer 55

If obligee voluntarily surrenders to the obligor the document that evidences the obligation, there is a presumption that the obligee remits the debt. No presumption arises if the obligee releases any real secruity given for performance of the obligation.

Question 56

Is acceptance by the obligor required for remission of a debt?

Answer 56

Yes, a remission of debt is effective when the obligor receives communication from the obligee. It is always presmed that the obligor has accepted the remission unless he rejects the remission within a reasonable time.

Question 57

What are special rules for remission of debt for sureties?

Answer 57

1. Remission of debt in favor of the principal obligor releases the sureties. 2. Remission of debt in favor of the sureties does not release the principal obligor.

Question 58

What is compensation?

Answer 58

Compensation (or offset) is a method of distinguishing two obligations simultaneously. It occurs by operation of law when two requirements are met: 1. Two persons owe each other either sums or money or quantities of fungible things identicial in kind; and 2. These sums or quatntities are liquidated and presently due.

Question 59

What is the effect of compensation?

Answer 59

It extinguishes both obligations to the extent of the lesser amount. 1. Compsensation between an obligee and an principal obligor extinguishes the surety’s obligation. 2. Compensation between an obligee and a surety does not extinguish the principal obligor’s obligation. 3. Compensation between the obligee and one solidary obligor extinguishes the obligation of the other solidary obligors only for the portion of the obligor. 4. Compensation between one solidary obligee and the obligor extinguishes the obligation only for the portion of that obligee.

Question 60

What is judicially decreed compensation?

Answer 60

A court is empowered to declare compsenation even when an obligation is unliquidated, but only as to that part of the obligation suceptible of prompt and easy liquidation.

Question 61

What is the effect of confusion on the obligation?

Answer 61

Confusion exists when the qualities of the obligee and obligor are united in the same person; extinguishes the obligation.