LA BAR EXAM CODE III: LIBERATIVE PRESCRIPTION & OBLIGATIONS

Question 1

I. What is prescription generally?

Answer 1

Prescription is generally defined as the effect of time on legal rights. Louisiana has three types: 1. Acquistive Prescription, 2. Liberative Prescription (Statute of Limitations), and 3. Prescription of Nonuse.

Question 2

What is liberative prescription?

Answer 2

Liberative prescription is defined as the barring of an action through the passage of time.

Question 3

Why is liberative prescription important?

Answer 3

It is a defense/bar to an action. It must be pleaded.

Question 4

How is time computated?

Answer 4

If a prescriptive period consists of one or more years, prescription accrues on the day of the last year that corresponds to the commencement of prescription.

Question 5

Do parties have the contractual freedom to modify prescription?

This is tested every time.

Answer 5

Parties cannot exclude prescription. Additionally, parties generally cannot specify a longer prescriptive period than that established by law. However, after liberative prescription has begun to run, but before it accrues, an obligor may, by juridical act, extend the prescriptive period. The extension cannot exceed one year, and it must be express and in writing.

An extension of prescription made by a principal obligor is effective against his surety. An extension of prescription by a surety is effective only if the principal obligor has also granted it. (from BARBRI supplement and updates).

Question 6

What is the renunciation of prescription?

Answer 6

Renunciation is the abandonment of rights derived from the accrual of prescription. (Prescription may only be renounced after it has accrued.) A writing is required when a party is renouncing an acquistive prescription that has accrued in his favor or has promised to pay a prescribed debt.

Question 7

For tort claims, when does prescription commence?

Answer 7

Prescription commences on the date that injury or damage is sustained.

Question 8

What is the prescription period for a revocatory action?

Answer 8

A revocatory action has a one-year liberative prescription. Prescription commences from the time the obligor learned or should have learned of the act or the result of the failure to act. However, suit may not be brought more than three years from the date of the act or result.

Question 9

What actions fall under the three-year liberative prescription period?

Answer 9

Actions on past due rent; annuities; money lent; compensations for services rendered, etc.; prescription commences to run on the day the payment is exigble (due).

Action by client against attorney for return of papers. Prescription commences to run from rendition of judgment in suit or termination of attorney/client relationship.

Question 10

For promissory notes, when does prescription accrue?

Answer 10

For promissory notes, prescription commences to run on the day the payment is exigble (due).

Question 11

For renovation claims, when does prescription accrue?

Answer 11

For renovation claims, prescription accrues on the day of delivery of the thing sold OR the discovery of the defect.

Question 12

III. What are the two ways prescription can be delayed?

Answer 12

There are two ways in which prescription can be delayed: (i) interruption and (ii) suspension (a.k.a. “tolling” at common law).

Question 13

What is the effect of interruption on prescription? What is the difference between interruption and renunciation?

Answer 13

If prescription is interrupted, the time that has run is not counted. Prescription commences to run anew from the last day of interruption. Renunciation can only occur after prescription has accrued. Interruption takes place before prescription has accrued.

Question 14

How is interruption caused?

Answer 14

Liberative prescription is interrupted in two ways (i) by filing suit in court, continuing as long as the suit pending; and (ii) when one acknowledges the right of the person against whom one has commenced to prescribe.

Question 15

What are the causes of suspension?

Answer 15

As a general rule, prescription runs against absentees and incompetents, including minors and interdicts, unless an exception applies – the exceptions cause suspension.

The exceptions are: (i) legislative and (ii) judicial.

Question 16

What are the legislative exception causes of suspension?

Answer 16

The three legislative exception causes of suspension are: (A) special relationships (prescription is suspended as between (i) “during marriage,” (ii) “during tutorship,” (iii) “during interdiction,” (iv) b/t caretakers & minors “during minority,” (v) b/t parents & children “during minority”); (B) minors during minority as to (i) annul a testament, (ii) reduce an excessive donation, (iii) recision of a partition; (C) compromise (Prescription is suspended on claims settled in a compromise when it is entered into prior to filing suit. If the compromise is rescinded or dissolved, prescription on the settled claims begins to run again from the time of rescission or dissolution).

Question 17

What is the judicial cause of suspension?

Answer 17

Through the doctrine of contra non valentum which applies only in exceptional circumstances, such as wehn the plaintiff was prevented from enforcing his rights for reasons external to his own will.

Question 18

IV. What is peremption? What is the difference between peremption and liberative prescription?

Answer 18

Peremption is a period of time fixed by law for the existence of a right. Peremption differs from liberative prescription in three respects: (i) Peremption is generally immune from the principles of suspension and interruption of prescription. (ii) Since the right (and not merely the remedy) is extinguished by the passage of time in the case of peremption, a natural obligation does not subsist after peremption accrues. (iii) Because peremption extinguishes the right (and not merely the remedy), a peremption may be supplied by the court (unlike prescription, which must be pleaded by a party).

To distinguish them, in the absence of labeling by the legislature, a period will be classified as peremptive where the time period is fairly short and there exists a public policy need for defnitiveness of rights – need to know of a fixed period after which one can be assured that no further actions will be brought.

Question 19

I. What is an obligation? And when does it exist?

Answer 19

An obligation is a legal relationship between two or more persons. An obligation exists when: (i) an obligor (debtor) owes a performance in favor of an obligee (creditor); and (ii) the performance or duty is legally enforceable.

Question 20

What are the effects of obligations?

Answer 20

The obligee is entitled to judicial enforcement of the obligor’s duty to perform and to recover damages if the obligor fails to perform. The obligor is entitled to be discharged from the obligation after performance has been rendered in full.

Question 21

How is the duty of good faith imposed on all parties?

Answer 21

There is an overriding duty of good faith imposed on all obligors and obligees. There is not, however, any specific proscription in the Code against unconscionability.

This is tested on every exam.

Question 22

What are natural obligations?

Answer 22

The natural obligation is a distinctively civilian concept, and for this reason, it is a favorite of the bar examiners.

A natural obligation exists when there is a moral, but not a judicially enforceable, duty to render performance, where the law implies a particular moral duty to render a performance.

Examples of natural obligations include a prescribed debt, a debt discharged in bankruptcy, an obligation incurred by one who lacks capacity, and dispositions in a will that is null for want of form.

Question 23

What are the effects of natural obligations?

Answer 23

Natural obligations produce three primary effects: (i) no judicial action for obligee, (ii) no reclamation of freely rendered performance, (iii) new contract may be enforceable.

Question 24

II. What are the kinds of obligations?

Answer 24

There are seven main kinds of obligations: (i) real rights and real obligations; (ii) strictly personal and heritable obligations; (iii) conditional obligations; (iv) obligations with a term; (v) obligations with multiple persons; (vi) conjunctive and alternative obligations; (vii) and divisible and indivisible obligations.

Question 25

What are real rights and real obligations?

Answer 25

The phrases “real right” and “real obligation” describe the relationship between a person and a thing. A “real right” is a right in a thing that is good against the world. A “real obligation” is an obligation incurred as a result of a real right.

Question 26

What are strictly personal and heritable obligations?

Answer 26

An obligation is heritable if it can be enforced by or against the successors of the original obligors and obligees; it is also transferable. Thus, heritability concerns only the question of whether a 3rd party can be substituted or added to the obligation.

A strictly personal obligation is an obligation that is only enforceable by the original obligee or against the original obligor (thus it is not heritable).

Question 27

What are conditional obligations?

Answer 27

A conditional obligation is an obligation whose occurrence depends on an uncertain event. If the event is certain to occur, the obligation is not conditional, but one subject to a term.

Conditions can be either suspensive or resolutory. When an obligation is subject to a suspensive condition, that obligation is not enforceable unless and until the uncertain event occurs. Think, at common law condition precedent.

versus

When an obligation is subject to a resolutory condition, that obligation is immediately enforceable but comes to an end if the uncertain event occurs. Think, at common law condition subsequent.

Question 28

What are obligations with a term?

Answer 28

An obligation whose occurrence depends on a certain event. If the event is certain to occur, the obligation is not conditional, but one subject to a term. A term is the period allowed for the performance of an obligation. It can be express or implied, certain or fixed, suspensive or resolutory.

If the obligation is not subject to a term, performance is due immediately. Any term can be renounced by the party for whose exclusive benefit it was established.

A condition is present when the uncertainty concerns whether an event will occur. With a term, the uncertainty concerns when the event will occur. Furthermore, a condition has to do with whether an obligation exists, unlike a term which dictates whether an obligation has been breached.

Question 29

What are obligations with multiple persons?

Answer 29

If an obligation is binding on more than one obligor, or binds an obligor to more than one obligee, the obligation is classified as either several, joint, or solidary.

Question 30

How do you distinguish between each obligation with multiple persons?

Answer 30

Several obligations exist when separate performances are owed. Joint obligations exist for obligors when one performance is owed, and when no joint obligor is bound for the whole and no joint obligee is entitled to receive the whole performance.

For the exam, be sure you are able to distinguish between several obligations and joint obligations. The trick is to consider the object of the obligation. In several obligations, the objects are different, meaning there are separate performances; whereas in joint obligations there is a single object, and one performance.

An obligation is solidary for the obligors when each owes the whole performance. Whether or not an obligation is joint or solidarity is a matter of the parties’ intent.

Question 31

What are conjunctive and alternative obligations?

Answer 31

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. The primary significance here is the application of liberative prescription. An obligation is alternative if the obligor is bound to render one of two or more items of performance.

Question 32

What are divisible and indivisible obligations?

Answer 32

An obligation is divisible when the object of performance may be divided. An obligation is indivisible when the object of performance (by its nature or by agreement of the parties) is not susceptible of division.

Question 33

III. How are obligations transferred?

Answer 33

Unless an obligation is strictly personal, an obligation may be transferred from the original party to a third party. Assumption of an obligation transfers the obligation from the vantage point of the obligor. A person who assumes another’s obligation stands in the shoes of the original obligor. Subrogation takes place from the vantage point of the obligee. A person in whose favor subrogation takes place stands in the shoes of the obligee.

Question 34

What is the assumption of obligation?

Answer 34

Assumption of an obligation transfers the obligation from the vantage point of the obligor. A person who assumes another’s obligation stands in the shoes of the original obligor.

Question 35

What is subrogation?

Answer 35

Subrogation takes place from the vantage point of the obligee. A person in whose favor subrogation takes place stands in the shoes of the obligee.

When subrogation occurs, the obligation is extinguished only for the original obligee. Performance of the obligation by the party in whose favor subrogation occurs causes that party to be substituted as obligee.

Question 36

IV. How are obligations proved?

Answer 36

The party demanding performance must prove the existence of the obligation. Some contracts must be in written form. When a contract must be in writing, it cannot be proved by parole evidence unless the instrument has been destroyed,

Question 37

What types of writings prove obligations?

Answer 37

An authentic act is a writing executed in front of a notary and two witnesses and signed by the parties, notary, and witnesses. This constitutes full proof of the agreement against any contrary agreements by parties or their heirs and successors.

For an act under private signature duly acknowledged, the act is originally executed without a notary present, but a party thereafter acknowledges the signature before a court or before a notary and two witnesses.

An act under private signature is signed but not necessarily written by the parties. An electronic signature may suffice.

Question 38

How are obligations proved with regard to transfer of immovables?

Answer 38

The transfer of an immovable generally must be in writing, either by an act under private signature or by authentic act. An oral transfer is valid only if there has been delivery and the transfer or recognizes the transfer under oath. The transfer is effective as between the parties wants a proper written agreement is confected. However, to affect third persons, the instrument must be recorded.

Any instrument affecting immovable property binds third persons only from the time it has been filed for registry in the parish where the property is located. An instrument affecting immovable property that is not properly recorded does not affect third persons. This rule is unaffected by actual knowledge of the third person.

The public records doctrine has been heavily tested in recent years, so be sure to be prepared to discuss it. Remember for the exam that the transfer must be recorded in the proper location of any effect on 3rd persons. But third person’s knowledge of an act relating to the immovable property is immaterial.

Question 39

V. How are obligations extinct?

Answer 39

Obligations are extinct by performance, impossibility of performance, novation, remission of debt, compensation, or confusion.

Question 40

How do obligations go extinct via performance?

Answer 40

Performance extinguishes an obligation. The performance must be rendered to the obligee or to his agent. If rendered to an unauthorized third person, the obligation is extinguished if the obligee ratifies it, or reduced pro tanto if the obligee derives a benefit from it.

Question 41

How do obligations go extinct via impossibility of performance?

Answer 41

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.

Question 42

How do obligations go extinct via novation?

Answer 42

Novation is the extinguishment of an existing obligation by the substitution of a new one. Novation is never presumed. The obligee’s intent to extinguish the original obligation must be clear and unequivocal.

Objective novation is the substitution of a new performance or a new cause in place of the original one. In this type of novation, the obligor remains the same, but a new obligation is substituted for the original obligation.

Subjective novation is the substitution of a new obligor for the original obligor. To constitute novation, the prior obligor must be discharged on account of the substitution. Subjective novation can occur generally even without the original obligor’s consent.

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 43

How do obligations go extinct via remission of debt?

Answer 43

A remission of debt is the voluntary relinquishment by the oblique of her right to demand performance. A remission of debt extinguishes the obligation. If the obligee voluntarily surrenders to the obligor the document that evidences the obligation, there is a presumption that the obligate intended to remit the debt. There is no presumption of a remission of debt when the obligee releases any real security given for performance of the obligation. A remission of debt is effective when the obligor receives communication from the obligee. It is always presumed that the obligor has accepted the remission unless he rejects the remission within a reasonable time. Implicit in this rule is the notion that remission of debt is a contract between the obligor and obligee.

Remission of debt in favor of the principal obligor releases the sureties. Remission of debt in favor of the sureties does not release the principal obligor. This is a special rule.

Question 44

How do obligations go extinct via compensation?

Answer 44

Compensation (or offset) is a method of extinguishing 2 obligations simultaneously. It occurs by operation of law when two requirements are met: (i) two persons owe each other either sums of money or quantities of fungible things identical in kind, and (ii) these sums or quantities are liquidated and presently due.

Effect: When compensation occurs, it extinguishes both obligations to the extent of the lesser amount.

There are special rules for multiple parties. Compensation between an obligee and a principal obligor extinguishes the surety’s obligation. Compensation between an obligee and a surety does not extinguish the principal obligor’s obligation. Compensation between the obligee and one solidary obligor extinguishes the obligation of the other solidary obligors only for the portion of that obligor. Compensation between one solidary obligee and the other obligor extinguishes the obligation only for the portion of that obligation.

Question 45

How do obligations go extinct via confusion?

Answer 45

Confusion is the civil law counterpart to “merger” at the common law. Confusion exists when the qualities of obligee and obligor are united in the same person. Generally, confusion extinguishes the obligation. When a party in whom the confusion occurs is a surety, the obligation is not extinguished for the principal obligor.