LA BAR EXAM CODE III: MULTIPLE CHOICE SHUFFLE

Question 1

Lesion may be claimed

A. in the case of the sale of any immovable, unless the seller has renounced the right to claim it.
B. only in the case of the sale of a corporeal immovable.
C. within the prescriptive period of two years from the date of the sale.
D. by the seller of corporeal property that is movable or immovable.
E. by the seller of immovable property that is corporeal or incorporeal.

Answer 1

1. B. This question calls for simple recall of the prescription that applies to a lesion claim and the circumstances under which such a claim may be brought.

Question 2

Under the Louisiana Civil Code, a lessee may assign its right under a lease
A. only if the lease expressly permits assignment.

B. unless the lease prohibits assignment.

C. regardless of what the lease may provide with respect to assignment.

D. with the consent of the lessor, not to be unreasonably withheld.

E. with the consent of the lessor, not to be unreasonably withheld, except that the lease may provide a contrary rule.

Answer 2

2. B. Both assignment and sublease are permitted in Louisiana, unless the lease provides otherwise. The doctrine of abuse of right prevents a lessor from unreasonably withholding his consent to a sublease or assignment, but this doctrine does not kick in unless the lease provides that an assignment or sublease may be perfected only upon the lessor’s consent.

Question 3

An offer of reward made to the public is binding upon the offeror
A. only if the person who performs the requested act knows of the offer.

B. even if the person who performs the requested act does not know of the offer.

C. only if the person who performs the requested act relies to his detriment on the offer in performing the requested act.

D. even if the offeror, before completion of the requested act, revokes the offer by the same or an equally effective means as the offer.

E. only if the formal requirements of a donation inter vivos have been satisfied in the making of the offer.

Answer 3

3. B. This question calls for simple recall of the general rule that offers of reward made to the public are binding regardless of the knowledge of the party who renders the requested performance.

Question 4

Which of the following is NOT a correct statement of the law?

A. Stipulated damages must be reduced by the court if the obligor proves that the amount of the stipulated damages exceeds the obligee’s actual damages.

B. Stipulated damages for non-performance may be reduced in proportion to the benefit derived by the obligee from any partial performance rendered by the obligor.

C. Nullity of the principal obligation renders a clause for stipulated damages null.

D. An obligee may not avail himself of a clause stipulating damages for delay unless the obligor has been put in default.

E. An obligor whose failure to perform the principal obligation is justified by a valid excuse is also relieved of liability for stipulated damages.

Answer 4

A.

Stipulated damages will be acceptable even if they do not precisely match the obligee’s actual damages. As long as they are not so unreasonable as to be violative of public policy, they are enforceable.

Question 5

Compensation:
A. between an obligee and a surety extinguishes the obligation of the principal obligor.

B. takes place only when two obligations are to be performed at the same place and arise from the same source.

C. can neither take place nor be renounced to the prejudice of rights previously acquired by third parties.

D. causes an obligation to be extinguished when the qualities of obligor and oblige of the obligation are united in the same person.

E. has all of the attributes and effects described above.

Answer 5

5. C. A inappropriately flips the principle that extinction of the principal obligation extinguishes its accessories; the reverse is not true. D describes confusion, not compensation. B is incorrect because compensation may operate regardless of differing sources or places of performance.

Question 6

In the case of the sale of an immovable:
A. the seller may disclaim the warranty against eviction but may not absolve himself of the obligation to return the purchase price if eviction occurs.

B. the seller may absolve himself of responsibility for an eviction that is occasioned by his own act, provided that he does so by clear and unambiguous language that is brought to the attention of the buyer and explained to him.
C. a buyer who avails himself of the warranty against eviction may recover from the seller the price he paid, the value of any fruits he had to return to the third person who evicted him, and also other damages sustained because of the eviction with the exception of any increase in value of the thing lost.
D. the liability of the seller upon the buyer’s eviction is limited to a return of double the purchase price.

E. the buyer’s action to enforce against a good faith seller the warranty eviction prescribes one year from the date of the sale.

Answer 6

6. C. Although it could be more precise, C is the best choice here. A buyer who successfully demonstrates breach of this warranty does receive the sums detailed, but damages only if he was unaware of the danger of eviction. A is incorrect because a sale at the buyer’s peril and risk even relieves the seller of the responsibility of returning the price. B is incorrect because a seller may not escape responsibility for his own act even through waivers of warranty. E describes the prescriptive period for breach of the warranty against redhibitory defects.

Question 7

A relatively null contract:
A. is a contract that is considered by the law to be null because it is between relatives of the first degree of propinquity of consanguinity.

B. is a contract that violates a rule of public order.

C. is a contract that violates a rule intended for the protection of private parties.

D. is a contract the object of which is illicit or immoral.

E. may be annulled by any person in a suit for annulment brought within 10 years from the time the ground for nullity either ceased or was discovered.

Answer 7

C.

B and D describe absolute nullities.

E inaccurately describes the prescriptive period; it is five years, not 10.

Question 8

Which of the following must be in writing to be enforceable? (NOTE: Each alternative choice below should be considered a correct answer only if ALL of the types of agreements enumerated in the choice must be in writing to be enforceable)

A. The sale, lease and mortgage of an immovable.
B. A mortgage, a security agreement, and a contract having a price or value exceeding $500.

C. A suretyship, a transaction or compromise that is reached out of open court; and a conventional mortgage.

D. The sale of future things, the sale of a hope and the sale of a thing pending litigation of ownership.
E. All of the above.

Answer 8

8. C. The lease of an immovable may be oral, so A is incorrect. B is wrong because a security agreement may be oral if the collateral is in the possession or control of the creditor. There is no requirement that sales of further things or hopes be in writing, making D incorrect.

Question 9

Which of the following is defined by the Louisiana Civil Code to be a synallagmatic contract by which one party binds himself to give to the other party the use and enjoyment of a thing for a term in exchange for a payment that the latter party binds himself to pay?

A. Usufruct by onerous title.
B. Right of use.
C. Lease.
D. Deposit.
E. Antichresis

Answer 9

9. C. This choice reproduces the definition of a lease from the Louisiana Civil Code, only replacing the word “rent” with the word “payment.”

Question 10

Under the Louisiana Civil Code, which of the following is effective only if accomplished by clear and unambiguous language that is brought to the attention of the contracting parties?
A. A waiver of the vendor’s privilege.

B. A waiver of the seller’s right to assert lesion.

C. An express dissolution clause.
D. A clause that, in advance, excludes or limits the liability of one party for intentional or gross fault that causes damage to the other party.

E. None of the above.

Answer 10

10. E. A, B, and C are valid whether or not called to the other party’s attention. D is not valid even if expressed in clear and unambiguous language that is brought to the other party’s attention. [See La. Civ. Code art. 20047

Question 11

When an immovable described as a certain and limited body is sold for a lump price with an expression of the extent of the immovable in the act of sale,
A. the expression of the measure does not give the seller the right to a proportionate increase of the price unless there is a surplus of more than one-twentieth of the extent specified in
the act of sale.
B. the price must be proportionately reduced if the seller is unable to deliver the full extent specified in the act of sale.

C. the buyer must pay to the seller a proportionate supplement of the price if the extent delivered by the seller is greater than that specified in the act of sale.

D. the buyer may recede from the sale if the actual extent of the immovable sold exceeds by more than one-twentieth the extent specified in the act of sale.

E. the expression of the extent of the immovable does not give the parties any right to an increase or diminution of the price in case of surplus or shortage in the actual extent of the immovable.

Answer 11

11. E. The situation described here, a sale of a certain and limited body for a lump price with an expression of quantity describes a sale per aversionem. In such sales, there is no adjustment of price, up or down, for a discrepancy between the represented and actual extent of the immovable.

Question 12

Which of the following is a correct statement of Louisiana law?
A. A hope may be the object of a contract of sale.

B. A lease of a thing that does not belong to the lessor is an absolute nullity.

C. A future thing may not be the object of a contract of sale.

D. The sale of a thing belonging to another is an absolute nullity.
E. The sale of a litigious right is an absolute nullity.

Answer 12

12. A. A hope may be sold in Louisiana. The only other tempting choice is D. The sale of a thing belonging to another is ineffective, but it is not an absolute nullity. One must remember that such a sale may become valid under the after-acquired title doctrine.

Question 13

Delivery of the thing is essential to the effectiveness between the parties of:
A. A sale of a movable.

B. A lease of a movable.

C. A giving in payment.

D. A contract of exchange.

E. A security interest.

Answer 13

13.

C. Delivery is typically not required for the effectiveness of transactions between the parties. The exception in this list is the giving in payment. Its existence requires the delivery of a thing in satis-faction of a debt.

Question 14

Which of the following matters is effective as to a third person even though not evidenced of record?
A. A matter of capacity or authority.

B.
The occurrence of a suspensive or resolutory condition.
C.
The exercise of an option or right of first refusal.
D. A termination of rights that depends upon the occurrence of a condition.

E.
All of the above.

Answer 14

14. E. Louisiana Civil Code article 3339 expressly lists each of these items as transactions or occurrences which are effective against third parties even absent recordation.

Question 15

Which of the following is not a method of extinction of a mortgage?
A.
The extinction or destruction of the thing mortgaged.
B.
Confusion as a result of the obligee’s acquiring ownership of the thing mortgaged.
C.
Prescription of all the obligations that the mortgage secures.
D.
The mortgagor’s tender of substitute collateral for the secured obligation.
E.
Consent of the mortgagee.

Answer 15

15. D. All other methods are explicitly mentioned in the Civil Code.

Question 16

On May 1, 2013, Borrower signed an act of mortgage encumbering a parcel of Borrower’s immovable property in East Baton Rouge Parish, which was identified by a full legal description.
The mortgage recited that it secured “any and all indebtedness owing from Borrower to Bank from time to time, at any time, up to a maximum of $300,000 outstanding at any given time.” Though the act of mortgage contained a space for a signature of a Bank representative, that blank was never filled in. Moreover, the notary’s signature was not accompanied by an official seal. Is Bank’s mortgage valid and enforceable against Borrower?
(a)
No, because the mortgage described the secured indebtedness inadequately.
(b)
No, because the mortgage was not signed by the proper parties.
(c)
No, because the mortgage was not properly notarized.
(d)
Yes, because the mortgage meets the minimum form requirements imposed by law.

Answer 16

D

This mortgage is in writing, signed by the mortgagor (Borrower), and describes the secured debt and the encumbered immovable property sufficiently.

A is wrong because this multiple indebtedness mortgage mentions a maximum amount of debt to be secured at any given time, even though it is not confined to one secured loan or a fixed time period.

B is wrong because the mortgagee (Bank) need not sign a mortgage.

C is wrong because an act under private signature is the only legal requirement for validity; an authentic act is not required for validity. These distracters are commonly tested on the Louisiana bar exam.

Question 17

On March 1, 2003, Borrower signed a promissory note promising to repay a $120,000 loan from Bank. The note recited that Borrower would make 119 monthly installment payments of only the interest accruing on the $120,000 principal, followed by one final balloon payment of the $120,000 principal on March 1, 2013.

Borrower also signed an act of mortgage, also dated March 1, 2003, encumbering a parcel of Borrower’s immovable property in Caddo Parish to secure repayment to Bank of “that certain $120,000 promissory note dated March 1, 2003.”

On August 1, 2003, Bank filed the act of mortgage for record in the Caddo Parish mortgage records.

Ten years later, Borrower had failed to make several interest installments and the final balloon payment. As of August 15, 2013, is Bank’s mortgage effective against third parties?

(a)
No, because the effectiveness of this mortgage’s inscription lapsed on March 1, 2013.
(b)
No, because the effectiveness of this mortgage’s inscription lapsed on August 1, 2013.
(c)
Yes, because this mortgage’s inscription is effective until March 1, 2019.
(d)
Yes, because this mortgage’s inscription is effective until August 1, 2019.

Answer 17

A

The default 10-year period for duration of inscription applies here. That period is measured from the date of the mortgage, not from the date of the filing, so B is wrong.

C and D are wrong because, though the mortgage mentions that it secures a note that matures more than nine years after the date of the mortgage, the mortgage itself does not describe the maturity date (we know the maturity date from another part of the hypothetical), so it is not clear from the mortgage itself that the exceptional longer duration of inscription should apply. If that exception applied, it would be measured from the date of the note’s maturity, March 1, 2013, plus six more years, so D could not be the correct answer, and again, C would be correct only if the mortgage itself recited the maturity period of the note.

Question 18

A seller and a buyer entered into negotiations over the telephone. They reached a general understanding that the buyer would buy widgets from the seller. Following their conversation, the seller sent the buyer a contract, already signed by the seller, agreeing to sell 1,000 widgets to the buyer for a total contract price of $10,000. Upon receipt of the contract in the mail, the buyer signed the contract and deposited an envelope containing the contract in the mailbox located in front of the buyer’s office building. Before the seller received the contract, the buyer had a change of heart. He telephoned the seller and said, “Look, I just can’t make a profit on those widgets. I’m not interested in that contract we talked about.” The seller replied, “That’s all right, I understand. Maybe we can do business some other time.” The next day, the signed contract was delivered to the seller’s office. The seller, also having had a change of heart, decided that he wanted to enforce the contract. Is the contract enforceable against the buyer?
(a)
Yes, because the acceptance occurred prior to rejection.
(b)
Yes, because of the parol evidence rule.
(c)
No, because the offer to rescind was accepted and that discharged the original contract.
(d)
No, because the rejection by telephone voided the acceptance by mail.

Answer 18

3. A The contract is enforceable because the “mailbox rule” applies here. Acceptance by mail creates a contract at the moment of transmission, as long as the acceptance is made in a manner and medium suggested by the offer or by another reasonable medium. The buyer’s attempt to reject occurred after acceptance took place. Thus, a valid contract was formed and the seller may enforce it. B is incorrect because nothing in the parol evidence rule would serve to validate the contract. Ostensibly, this choice implies that there is a contract because the parol evidence rule will prevent the buyer from introducing evidence of the oral rescission. However, as discussed below, the rescission is ineffective because there was no meeting of the minds. C is incorrect because there is no “meeting of the minds” concerning the rescission. A contract may be discharged by an express agreement between the parties to rescind; the agreement to rescind is itself a binding contract. Because the seller did not know that the buyer had accepted the contract, the seller’s statement that “that’s all right” cannot be construed as acceptance of the buyer’s offer to rescind. Therefore, a contract to rescind was not formed. D is incorrect because the telephone rejection did not void the acceptance by mail. As discussed above, if the offeree sends an acceptance first, followed by a rejection, the mailbox rule applies; i.e., a contract is created upon dispatch of the acceptance. Because the buyer’s telephone rejection took place after his acceptance by mail, his acceptance was effective and a contract was created when the letter was mailed.

Question 19

On July 1, a cattle breeder, who was planning to retire soon, sent a note to his neighbor offering to sell his prize bull for $15,000.

On July 10, the neighbor, who was also a cattle breeder, wrote the following note to the retiring breeder: “I have decided to take the bull. I will give you a cashier’s check on delivery on Saturday, July 28.” The retiring breeder did not respond.

The retiring breeder did not want to deliver the bull on July 28 and did not think that the delivery day was agreed to. Instead, he delivered the bull on Monday, July 30. The neighbor refused the delivery and stated that he had found another bull he likes better. The retiring breeder sues the neighbor for breach of contract. Is the retiring breeder likely to prevail?

(a)
Yes, because his breach, if any, was minor.
(b)
Yes, because the parties had not agreed on July 28 as the delivery date.
(c)
No, because there was no contract.
(d)
No, because he did not deliver the bull on July 28.

Answer 19

4. D The retiring breeder will not prevail because he did not deliver the bull on July 28. Civil Code article 2601 applies because the parties are contracting for the sale of movables. The parties have agreed on thing and price, so they have a contract. With respect to the sale of the bull, they are merchants. As a result, proposed new terms in this deal between merchants are a part of the contract unless they materially alter the offer, the offer expressly limited the acceptance to its terms, or they are objected to within a reasonable time. The change in the delivery date does not materially change the offer, the offer did not limit the acceptance to its terms, and the retiring breeder did not object. Therefore, the July 28 delivery date became part of the contract. By delivering the bull on July 30th, the retiring breeder breached the contract.

Question 20

A homeowner contracted with a builder for the remodeling of the homeowner’s bathroom and kitchen at a cost of $10,000. The contract was in writing and specified that the work was to be completed within two months after the date of execution of the contract. Two weeks after entering into the contract with the homeowner, the builder was offered an extremely lucrative job that would take all of his time and effort for several months. The builder told the homeowner that he was not going to perform. The homeowner diligently called many other contractors over a period of several weeks and none of them could offer a price anywhere near as low as $10,000 for the remodeling work that he wanted done. Two months after entering into the contract with the builder, the homeowner sued the builder for specific performance. What is the likely result of the suit?

(a)
The court will order specific performance, because the homeowner was ready and able to perform his part of the contract.
(b)
The court will order specific performance, because, despite diligent efforts, the homeowner could find no one who could perform the desired services at a competitive price.
(c)
The court will not order specific performance, because the doctrine of laches applies.
(d)
The court will not order specific performance, because the contract involves a duty to do.

Answer 20

5. D Specific performance is within the court’s discretion, but courts more frequently order it for duties not to do or duties to give (execute an instrument). When it comes to the performance of affirmative activity - duties to do - Louisiana courts are generally very hesitant to order specific performance. The court will not order specific performance merely because the builder had a much lower price than anyone else. More likely, the court will require the non-breaching party to hire a different contractor and to sue the builder for damages. The builder would be liable for the difference between the new price for remodeling and the original $10,000 price. It should be noted that nothing indicates that the builder was hired for his unique talents; even if he were, specific performance would not be granted because of difficulties of supervision and a reluctance to force one person to work for another. Thus, A and B are incorrect. C is also incorrect. Laches is a common law defense that does not exist in Louisiana

Question 21

On September 1, a law school professor announced to his class that he would pay the tuition of the bar review course of the student’s choice for the student who received the highest grade in his Constitutional Law class. A week later, one student in the professor’s class told the professor that he was giving his best effort to get the highest grade in class to win the prize and had already purchased every substantive Constitutional Law outline on the market. Shortly thereafter, the dean of the law school learned of the contest and informed the professor that it was against school policy. On October 1, the professor told his class that he was withdrawing his offer. Which of the following statements about the professor’s October 1 announcement is correct?
(a)
It had no legal effect, because no offer had been made.
(b)
It was an effective revocation of the offer to all students who heard it because it was made in the same manner as the offer.
(c)
It was an ineffective revocation as to any student who failed to hear it.
(d)
It was ineffective as to the student who had begun performance prior to the withdrawal of the offer.

Answer 21

6
D The professor’s announcement was an ineffective revocation as to the student who had begun performance, because an offer that contemplates acceptance by a completed performance becomes irrevocable once performance has begun. Here, the student’s devotion of his study time extensively to the subject of Constitutional Law and purchase of outlines specifically so he would win the prize constitutes beginning performance, thus making the professor’s offer irrevocable. As to the student who began performance, then, the offer is irrevocable for the reasonable time necessary for him to complete the performance. A is incorrect, because the offer was valid. It created a reasonable expectation in the offeree that the offeror was willing to enter into a contract on the basis of the offered terms. There was an expression of a promise, undertaking, or commitment to enter into a contract; the terms were certain and definite; and they were communicated to the offeree. C is incorrect because a revocation need only be published in the same manner as the offer; it need not actually reach everyone who knew of the offer. B is incorrect because the start of performance made the offer irrevocable for a reasonable time.

Question 22

1. A resolutory condition:

A. prevents the enforcement of an obligation until an uncertain event occurs.

B. causes an obligation to come to an end when an uncertain event occurs.

C. that depends solely on the whim of the obligor makes the obligation null.

D. is implied in every synallagmatic contract.

E. is satisfied when a corporate officer produces authentic evidence of a resolution authorizing his execution of a
contract.

Answer 22

B Choice A describes a suspensive condition, and choice C describes the rule of nullity for suspensive conditions only. D is incorrect, as synallagmatic (in essence, bilateral) contracts need not be conditional ones.

Question 23

2. In a revocatory action seeking the annulment of a gratuitous contract made by an obligor, which of the following must
   the plaintiff prove?

A.
That the contract caused or increased the obligor’s insolvency.
B.
That the plaintiff has rights against the obligor upon a claim that was liquidated by a judgment prior to the execution of the contract.
C.
That the other party to the contract knew that the contract would cause or increase the obligor’s insolvency.
D.
That the contract was made in fraud of the plaintiff’s rights.
E.
All of the above.

Answer 23

A The revocatory action allows an obligee to set aside the transaction of his obligor that causes or increases the obligor’s insol-vency. To bring the action, the obligee must have a right which arose before the transaction sought to be set aside. There is no requirement that the obligee’s claim be liquidated, as B suggests. If the transaction the obligee seeks to set aside is gratuitous, whether the other party to it knew it would cause or increase the obligor’s insolvency is irrelevant. Finally, D is incorrect. The
“fraud of the (plaintiff’s) rights” standard was removed from the revocatory action in the 1984 revision of the Obligations articles of the Civil Code.

Question 24

3. Which of the following is an example of circumstances under which a natural obligation arises?
   A. A contract to sell immovable property is unenforceable because it is not in writing.

B. A borrower enters into an unenforceable agreement to pay interest at a usurious rate.

C. A contract is unenforceable because it is predicated upon unlawtul cause.

D. A civil obligation has been extinguished by prescription.

E.
All of the above.

Answer 24

D Choice D describes the classic example of a natural obligation, and one source of it expressly mentioned in Louisiana Civil Code article 1762. Most of the other examples represent contracts which the law regards as invalid for reasons of general public policy - contracts without lawful case, which may include gambling debts, and contracts involving usurious interest - and therefore the law implies no moral duty.

Question 25

4. Remission of a debt:
   A. is effective only when express.

B. granted to a surety releases the principal obligor and all other sureties.

C. granted to one surety releases the other sureties only to the extent of the contribution the other sureties might have recovered from the surety to whom the remission was granted.
D. is not effective until the obligor has expressly accepted the remission.

E. is presumed to arise from the release of a real security given for performance of the debt.

Answer 25

C The other responses are clearly wrong. A remission may be tacit, and acceptance is presumed. Note that E is not entirely accurate, as releasing real security releases a commercial surety only to the extent that the release actually injures the surety, and the “performance of the debt” might have been partial.

Question 26

5. Which of the following is a correct statement of Louisiana law?
   A. A depositary is bound to return the precise thing that he received in deposit.

B.
Deposit is a contract by which a person delivers an immovable to another for safekeeping under the obligation of returning it to the depositor upon demand.

C.
The formation of a contract of deposit is complete upon agreement of the thing, price and consent of the parties, regardless of whether the thing has been delivered to the depositary.
D.
The depositary may use the thing deposited unless this right has been interdicted in the contract of deposit.
E.
If the deposit is onerous, the depositary is responsible for loss resulting from an irresistible force.

Answer 26

A The very nature of the contract of deposit is the safeguarding of a thing to be returned to the depositor. The contract may pertain to immovable or movable property, which makes B incorrect. The contract is not effective until delivery, which makes C incorrect. D is wrong, as the depositary may not use the deposited thing unless he has the express or implied permission of the depositor. And E is not correct, as neither onerous nor gratuitous depositaries are responsible for losses caused by a force majeure. Such forces typically extinguish obligations as a result of impossibility of performance.

Question 27

6. Subrogation is:
   A. an assumption by a third person of an obligation of an obligor.

B. the substitution of one person to the rights of another.

C. the extinguishment of a new obligation by the substitution of a new one.

D. an agreement under which a new obligor is substituted for a prior obligor who is discharged by the obligee.

E. the extinguishment of obligations arising by operation of law when two persons owe to each other sums of money that are liquidated and presently due.

Answer 27

B Choice A addresses an assumption, not a subrogation. C defines a novation. D seems to describe a subjective novation. E describes legal compensation.

Question 28

7. A transfer of immovable property:
   A. must be made by authentic act or by act under private signature duly acknowledged before a notary public.

B. is never valid unless in writing.

C. has effect against third persons only from the time the instrument of transfer is filed for registry in the parish of domicile of the transferor.
D. is valid between the parties, even though the agreement of transfer is oral, if the property has been actually delivered and the transferor recognizes the transfer when interrogated on oath.
E. all of the above.

Answer 28

D A transfer of immovable property must be made by an act under private signature, or some more elaborate form (such as an authentic act). However, there is an exception between the parties which makes an oral transfer recognized under oath valid where the property has been delivered. A is incorrect because an act under private signature will suffice. B is incorrect because of the word “never,” which fails to recognize the exception to the general rule, detailed above. C is incorrect because the Public Records Doctrine would require filing of an act affecting immovable property in the parish where the property is situat-ed, not in the parish of a particular party’s domicile.

Question 29

8. The extinction of the principal obligation:
   A. extinguishes ordinary suretyship for the obligation, but does not extinguish commercial suretyship.

B. extinguishes ordinary suretyship for the obligation, but does not extinguish mortgages securing the obligation.

C. extinguishes all mortgages securing the obligation, but does not extinguish suretyship.

D. extinguishes both suretyship and mortgages securing the obligation.

E. has no effect on either suretyship or mortgages securing the obligation.

Answer 29

D Mortgage and suretyship are both security rights, accessory contracts ancillary to the principal obligation; therefore, extinction of the principal obligation extinguishes both of these accessory contracts.

Question 30

9. Which of the following is essential to the establishment of a conventional mortgage between the parties?

A. a statement that a promissory note(s) secured by the mortgage has (have) been paraphed for identification with
the mortgage.
B. the signatures of both mortgagor and mortgagee.

C. filing of the mortgage in the mortgage records of the parish in which the property is located.

D. execution of the mortgage in authentic form.

E. none of the above.

Answer 30

E None of these is required for validity of the mortgage between the parties. A paraphs are never required; B only the signature of the mortgagor is required, C filing is necessary for effectiveness against third parties, but not between the parties; and D an authentic act is not required, though it is useful for evidentiary purposes (to make a “self-proving” document).

Question 31

10. Which of the following is not a correct statement of Louisiana law?
    A.
    Suretyship is an accessory contract by which a person binds himself to a creditor to fulfill the obligation of another upon the failure of the latter to do so.
    B.
    Suretyship must be express and in writing.
    C. A surety who pays the principal obligation is subrogated by operation of law to the rights of the creditor.
    D.
    The surety may assert against the creditor any defense to the principal obligation that the principal obligor could assert except lack of capacity or discharge in bankruptcy.
    E.
    Solidary suretyship exists when a person binds himself as a principal obligor by promising that a third person will incur an obligation or render a performance.

Answer 31

10. E The remaining statements are perfect statements of the law, and “solidary suretyship” arises when multiple sureties together undertake the obligation described in A, not the odd statement in E.