Grounds for Liability - Fraud, Negligence (1/2) Flashcards
B2 - Breach of Obligations and Grounds for Liability
BREACH OF OBLIGATIONS AND GROUNDS FOR LIABILITY (Art. 1170)
BREACH OF OBLIGATIONS AND GROUNDS FOR LIABILITY (Art. 1170)
x and y entered into a contract whereby Y would deliver to x certain rattan raw materials in the amount of 200k. x is a manufacturer of rattan-made furniture and has as his major cusomter, Sun Gold furniture. x would deliver to SunGold an average of five (5) sets of furniture per month. The raw materials were to be delivered on march 10, 2013.
However, Y failed to deliver said materails on the stipulated date despite repeated demands. Y delivered the materials only on June 10, 2013, after X threatened Y to sue him in court.
Is Y still liable for damages?
- why did Y fail to deliver (this is important) to determine the extent of damages. (bad/good faith?)
- what then are the natural and probable consequence
note
this threat to exercise a right is alright and does not incur criminally liable
in case of breach and the obligor fulfills the obligation AFTER the breach, will obligor be held liable for damages just the same?
yes. for as long as there was ‘breach’ the injured party is entitled to damages (nominal damages, Areola’s Case)
- determine if it was breached in if it was in bad faith/good faith
What is Article 1170
Those who in the performance of their obligations are guilty of [fnd] fraud, negligence, or delay, and those who in any manner contravene the tenor thereof, are liable for damages.
*for all these breaches, damages may be claimed
Example of Breach in Good Faith
Example of Breach in Bad Faith
[Good Faith]
Juan the building contractor who was unable to fulfill his obligation to build in good faith, is liable for the probably and natural consequences such as additional rental cost for the CAT heavy machines & lose of income due to delayed opening of the houses for sale/business of the client.
[Bad Faith, Fraud, Malice, Wanton Attitude ]
Juan, the building contractor, deliberately slows down work progress, fails to allocate sufficient resources, and intentionally makes errors in the construction process. This behavior is aimed at extending the project timeline and creating additional work opportunities for the contractor, leading to increased billing hours and additional charges for the client. They are focusing on financial gain over the fulfillment of the obligation
note
exemplary damages is not a damage for good faith.
[Art. 2201]. In contracts and quasi-contracts, the damages for which the obligor who acted in good faith is liable shall be those that are the natural and probable consequences of the breach of the obligation, and which the parties have foreseen or could have reasonably foreseen at the time the obligation was constituted.
In case of [bffmwa] fraud, bad faith, malice or wanton attitude, the obligor shall be responsible for ALL damages which may be reasonably attributed to the non-performance of the obligation
Fraud: Intentional deception to secure unfair or unlawful gain.
Bad Faith: Dishonesty or unfair dealing, often characterized by a deliberate intent to deceive or manipulate.
Malice: Intent to harm or injure another person or to act in a way that is wrongful and without just cause or excuse.
Wanton Attitude: Reckless disregard for the rights or safety of others, often manifested by a deliberate indifference to known risks or consequences.
debtor now pays thru a check, and check was received but it was dishonored.
is the contract of loan VALID? even if there was fraud.
It is valid. The illegality of performance (fraud) doesn’t invalidate the obligation
Enumerate the kinds of damages
[Art 2197]
M - oral
E - exemplary/Corrective Damages
N - ominal
T - emperate/Moderate
A - ctual
L - iquidated
[TEMPERATE]
(when exact amount can’t be determined)
ex.
- there is death certificate, court assumes there is burial expenses, plaintiff failed to bring the receipt of those so temperate damages are given
- medical expenses - the victim before dying he was in the hospital but plaintiff didn’t put the receipts
the exact amount cannot be determined, the court will issue temperate damages
[LIQUIDATED]
Liquidated damages (predetermined by parties)
- ‘in case of breach, breach of party will pay this fixed amount’
FRAUD
FRAUD
Two kinds of Fraud
- fraud in obtaining the consent (1390)
- fraud in the performance of an obligation. (1170)
[Art. 1390.]
The following contracts are voidable or annullable, even though there may have been [no] damage to the contracting parties:
(1) Those where one of the parties is incapable of giving consent to a contract;
(2) Those where the consent is vitiated (impaired/invalidated) by [mfuiv] mistake, violence, intimidation, undue influence or fraud.
These contracts are binding, unless they are annulled by a proper action in court. They are susceptible of ratification. (n)
lack of consideration renders the contract __
failure of consideration renders the contract __
lack of consideration = VOID
failure of consideration = VOIDABLE & ANNULABLE
- this will NOT affect the current binding power of a contract until a proper action in court is made to annul it or ratify it.
distinction between voidable and annullable?
VOID - void ab initio (void from the beginning) no act or procedure or process are required to nullify such contract since it was void from the beginning.
VOIDABLE - valid requiring act, procedure, or process to annul it (valid until annulled)
- once void, cannot be estopped or ratified
VOIDABLE CONTRACTS - can be either be annulled or ratified
performed the obligation by delivering a fake item (fraud in the performance of an obligation)
is the contract valid?
Yes. if it weren’t so, how then can we claim for damages if the contract is invalidated by reason of fraud?
