Contracts Flashcards
Vices of Consent
(1) Error
(2) Fraud
(3) Duress
vitiation of consent results in a relative nullity
Unilateral Error
vitiates one party’s consent if:
(1) cause was one without which the obligation would not have been incurred (but-for)
(2) cause was known or should have been known to the other party
Remedies for Unilateral Error
rescission of the contract (but party rescinding is liable for loss sustained by other party unless other party knew of the error)
Exceptions:
(a) other party is willing to perform the contract as written
(b) effective protection of other party’s interest requires that contract be upheld (damages instead)
(c) error was inexcusable
Prescription Period for Error
5 years from date error was discovered
RELATIVE NULLITY
Fraud
(1) the misrepresentation or suppression of the truth
(2) made with the intent to obtain an unjust advantage or cause a loss or inconvenience to the other party
(3) that “substantially influenced” consent
Fraud: Exception
fraud does not vitiate consent when a party could have ascertained the truth without difficulty or special skill
UNLESS there was a relationship of confidence between the parties that induced a party to reasonably rely on assertions
Fraud: Remedies
rescission, damages and attorneys’ fees
Fraud: Silence
silence is only considered fraud when the facts justify the imposition of a duty to speak
Fraud: Committed by a Third Party
only vitiates consent if the party not in error knew or should have known of the fraud
Prescriptive Period for Relative Nullities
5 years
Detrimental Reliance
(1) promisee relied on promise to her detriment
(2) promisor knew or should have known that. the promisee would rely
(3) promisee was reasonable in relying
*if promise was gratuitous, reliance is not reasonable
Detrimental Reliance: Recovery
entirely within the discretion of the court
can limit damages to expenses incurred or include all damages suffered by promisee
Ratification through Conduct
a contract signed by one party can be enforced against the other party when the other party’s conduct ratifies the contract
(jurisprudence rule)
Suspensive Condition
obligation is not enforceable unless and until the uncertain event occurs
Resolutory Condition
obligation is immediately enforceable but comes to an end if the uncertain event occurs
Postative Condition
condition whose fulfillment is within a party’s power
Suspensive Postative Condition
depends solely on whim of obligor = null
depends solely on will of obligor = valid
Suspensive Postative Condition
depends solely on whim of obligor = null
depends solely on will of obligor = valid
Whim
obligor’s unbridled discretion or arbitrariness
Will
considered weighing of interests in the exercise of reasonable discretion
Resolutory Postative Condition
party’s power must be exercised in good faith, valid
Revocatory Action
action taken by an obligee to revoke an act (or failure to act) by the obligor that causes or increases his insolvency
the act or failure to act must have occurred after the rights of the obligee arose
Revocatory Action: Onerous Contract
when the third party DID know that the act would cause/increase insolvency –> third part can only recover what he gave that benefitted the obligor’s creditors
when the third party did NOT know that the act would cause/increase insolvency –> third party can recover everything he gave to the obligor
Revocatory Action: Gratuitous Contract
third party’s knowledge of insolvency is irrelevant - obligee can bring revocatory action regardless
Subrogation
the substitution of one person to the rights of another
Assumption
an assumption by a third person of an obligation of an obligor
original obligor is NOT released
Novation
the extinguishment of an old obligation by the substitution of a new one
original obligor IS released
never presumed - must be shown that a novation was intended by clear and unequivocal evidence
Transfer of Immovable Property
must be made by act under private signature
Transfer of Immovable Property: Exception
oral transfer is allowed when the property has been delivered and the transferor recognizes the transfer when interrogated under oath
Recovery of Nonpecuniary Damages
only available under 2 circumstances:
(1) because of its nature, contract was intended to gratify a non pecuniary interest AND the obligor knew/should have known that his failure to perform would cause that kind of loss
(2) obligor intended to aggrieve the feelings of the obligee through his actions
Vendor’s Privilege
if buyer defaults on the promise to pay for a credit purchase, creditor can have the purchased property seized and sold and apply proceeds to the unfulfilled obligation
on moveables - created as a matter of law
only benefits creditor, and only while immediate buyer has possession of the property
can only be enforced after vendor obtains a judgment on the unpaid obligation and seeks to enforce the judgment
Joint, Several, and Solidary Obligations/Obligors
several: each obligor owes individual (unique) and complete performance
joint: obligors together owe 1 performance and no obligor is bound for the whole
solidary: each obligor is bound for one performance and obligee may call upon any obligor for the whole performance
Acquisitive Prescription vs. Liberative Prescription vs. Prescription of Nonuse
Acquisitive Prescription: mode of acquiring ownership or another real right by virtue of possession for a period of time
Liberative Prescription: barring of an action because of the passage of time
Prescription of Nonuse: method by which a real right (other than ownership) is extinguished because it is not exercised for a period of time
Subjective vs. Objective Novation
Subjective Novation: new obligor is substituted for a prior obligor who is discharged by obligee
Objective Novation: agreement of the parties where a new performance is substituted for that previously owed
Absolute Simulation vs. Relative Simulation
Absolute Simulation: parties intend to have NO legal effect; produces no legal effects
Relative Simulation: parties intend to have a legal effect different than that recited; produces legal effects as to the parties’ true intent (so long as form requirements are satisfied)
When are damages owed/accruing?
damages are owed from the time the obligor has failed to perform
Prescription period for late rent?
action for arrearages of rent prescribes 3 years from date exigible
but if acceleration clause, all remaining rent is due on day lessor sent notice that all remaining rent is due (so start prescription from then)
RENT IS USUALLY CONJUNCTIVE
