Obligations Spring 2012 – Holmes – B Lindsey OBLIGATIONS   Obligations arise from contracts and other declarations of will.

They also arise directly from the law, regardless of a declaration of will. A 1757 Harrison v Gore: P states she was molested while at school & tries to bring suit on basis of school not providing her with safe environment as a contractual obligation. P filed suit 8 years after tortious act by D. P tries to claim contractual damages due to 10 year prescriptive period. o Nature of duty breached determines whether action is for tort or contract. Must determine if breach is of a special obligation contractually assumed by obligor or violation of a general duty owed to all persons. o Here the claims involve sexual harassment & touching. This is a tort. Claims do not arise from breach of contract, when based on such intentional conduct. o P also plead allegations of negligence, supporting tort theory of recovery, not contractual. Unless a writing is required, contract for less than $500 may be proven by evidence, but if greater than $500, then needs at least one witness & corroborating evidence. A 1846. Party who demands performance must prove the obligation exists. A 1831. o Belgard v Collins: D owned store damaged by storm. P states he contracted w/ D to provide consulting services to aid in recovery from her insurance company. P states D was a contractor bidding on the work.  Evidence supports that D never agreed to hire P to do the consulting work.  Based on enrichment w/o cause, D will have to reimburse P for some charges incurred. Party who claims obligation as null/modified/extinguished must prove the facts establishing those. A 1831. Contracts must be performed in good faith. A 1983. Compromise, on a disputed claim, must be in writing. A 3072. o North LA Milk v Southland: P sold milk in bulk to D. P notified D of price they were offering milk for sale. D objected to paying more than gov’t set price & responded to P objecting to price increase. Employees of P & D continued to place and fill milk orders.  P clearly & expressly informed D of unwillingness to sell @ gov’t price. This offer to sell was not revoked by D grumbling about price.  D merely tried to get P to agree to continue to sell milk @ gov’t price. This was not an offer to buy, as it did not specify a quantity. When silence of the offeree leads offeror to reasonably believe a contract is formed, the offer is accepted. A 1942. Contract is an agreement between the parties that creates, modifies or extinguishes obligations. A 1906.  Illinois Central Gulf RR v International Harvester: D leased land from P. D could not sublet as per lease terms. D requested modification and was refused. D sublet. P became aware and objected. D refused to comply & continued to pay lease. P brought eviction proceedings a year later against lessee. o There is no showing that P unequivocally consented to modify the lease terms. o Will of the parties did not unite on a modification of lease. o Acceptance of the rent & delay in filing eviction were not inconsistent w/ intent to enforce the lease as written.  Marine Ins. Co. v Rehm: P parked car @ lot. Car stolen. Case dismissed at trial court on basis of limitation of liability on the back of receipt given to P. o Check given by D was a means of identifying property, not a special contract. o P not even aware of what was on back of ticket until after car was stolen. o Proprietor of a parking lot, who collected a fee for parking cars is a compensated depositary.  Nominate contract of deposit cannot be modified w/o consent of both parties.  D held strictly to obligation to take as good a care of the deposited cars as he would his own. Nominate contracts are given a special designation (A 1914), but all contracts subject to general rules. A 1915. Nominate contracts are subject to the special rules when they differ from general rules. A 1916.

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Cashio v Amco: P paid and parked car @ D’s lot. Car was stolen. P not informed that lot was unattended. o The issue is if the contract was for lease of space or compensated deposit. If deposit, a presumption is raised that the loss resulted from lack of due care. If lease of space, P must prove that owner did not maintain suitable facilities or was negligent in business conduct. o To establish lease of space, court must consider: retention of keys by owner, complete dominion of patron over vehicle, unrestricted access to vehicle, fact that lot was unattended & that P was aware of this. o Here there was absolutely no notice by D that he intended to limit liability by merely leasing space, therefore this was a compensated depositary. Contract is unilateral when only one party acquires an obligation. A 1907. Bilateral(Synallagmatic) where obligations are reciprocal or correlative to each other. A 1908. Onerous contract where each party obtains an advantage in the exchange. A 1909. Gratuitous contract where party obligates for the benefit of the other w/ no benefit in return. A 1910. Commutative contact when performance by each party is correlative to other’s performance. A 1911. Aleatory contract where extent of performance depends on an uncertain event. A 1912. o The cause of an Aleatory contract will be the hope for financial gain. Hoping that you come out ahead, but taking risk that you will not. Future thing may be sold, & the coming into existence of the thing sold is a suspensive condition. A 2450. o Party who prevents coming into existence of the thing due to his fault is liable for damages. A 2450. Hope may be the object of a contract of sale. A 2451. Obligor not liable for failure to perform when it is impossible due to a fortuitous event, unless he has assumed the risk of such an event, when the event happens after he has been put in default, or when the failure causing event was preceded by his fault, w/o which failure would not have occurred. o Losecco v Gregory: D sold orange crops of 1899 & 1890 to P in 1898. Contract stipulated that P assumed all risks. 1899 freeze killed the trees of D. P sued for deposit. D countersued for remainder owed.  Parties made use of potential terms to describe the crop, not simply future, therefore, the sale was of the hope of crops, not the crops.  Parties contemplated that crop might fail & by assuming all risks, P assumed risk of total failure. Contract is accessory when made to provide security for performance of another obligation. That secured obligation contract is called the principal contract. A 1913. A contract is formed by the consent of the party established through offer & acceptance. Unless otherwise required, it may be oral/writing, or by action or inaction, if circumstances show clear indication of consent. There is no need for conformity in manner of acceptance & the offer. A 1927. Price must be fixed or determinable via an agreed method. No sale unless price intended to be paid. A 2464 o

THE OFFER  Acceptance of an irrevocable offer is effective upon receipt (A 1934), but if revocable, then it is effective upon transmission. A 1935. CL Mail box rules usually apply to revocable offers. o Effective transmission determined by court based on business practices, etc. o Burden of stating particular method of communication is on offeror. o Ambrose v M&M Dodge: P had dispute w/ D over car purchase. Settlement docs sent to attorney & P signed. Attorney noticed documents did not contain the entire discussed agreement. D refused payment of further amount and stated that by signing settlement docs, P accepted compromise.  Not an effective acceptance as acceptance was not communicated (revocable), and for an effective acceptance, the acceptance would have to have been rcvd by D (irrevocable). Manner of acceptance is reasonable if it was same as the offer, or custom in like transactions, unless circumstances, known by offeree show otherwise. A 1936. Revocation of a revocable offer is effective upon receipt. A 1937.

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Receipt is when it comes into the possession of the address, authorized person, or place of deposit selecting by offeror. A 1938. Oral acceptance is considered as received when party hears it. If accepting by performance, contract is formed when offeree beings the requested performance. A1939. o Offeror must invite performance as acceptance, or terms & circumstances suggest that if offeree begins performance, it will be completed. o Ever-Tite Roofing: Roofer obtained offer from D. Credit approval needed & this took several days. D obtained another contractor. P showed up with supplies & men & D revoked offer.  Acceptance by performance when P loaded trucks & drove to P’s home.  Reasonable time for acceptance must be allowed for irrevocable offer. If offer can be accepted only by performance, offeror cannot revoke once offeree has begun for a reasonable time needed to complete performance. But the offeree is not bound to complete the performance he has begun & offeror duty of performance is conditioned on completion of performance. A 1940. o Ryder v Frost: D sent letter to P regarding shared debt. D agreed to contribute $500 to the debt if P was able to resolve debt. P settled debt & D refused to pay agreed part, saying P never accepted offer.  Terms of the letter indicate that P has a reasonable time to accomplish the desired object, & imply a continuance of the offer for a reasonable time.  P unequivocally manifested his consent. The object was the satisfaction & cancellation of the judgment & this was promptly done. Obligation complete.  No express requisition in offer letter that P should notify D of such acceptance. o Cardinal Wholesale v Chaisson: P had D sign personal guarantees on a business credit application. P denied credit. 4 years later, after D had sold the business, P granted credit to business, who defaulted. P sued on personal guarantees of D.  No acceptance to complete the contract, at that time, so no acceptance by performance of P.  Acceptance in some form is essential & P did not accept them for the purpose for which they were intended, therefore no accessory obligation arose. Offeree must give prompt notice to offeror that he has begun performance, unless the offeror knows or should know that performance has begun. If offeree fails to give notice, he may be liable for damages. A 1941. Counteroffer is an acceptance not in accordance with the terms of the offer. A 1943. o Rodrigue v Gebhardt: P agreed to sell land to D. Acceptance of D had new terms & P never responded.  Acceptance differed in material forms, so no contract was formed.  Counteroffer must be accepted to be binding. o Elmer v Hart: D sent written offer to sell land to P. P accepted, but stated it was subject to warranty title.  Court found this to be a counteroffer, so D was free to reject.  HOLMES: WHERE THE RESPONSE IS ONLY REGARDING AN IMPLIED TERM, THERE IS NO COUNTEROFFER & ORIGINAL OFFER DOES NOT EXPIRE. Offer of reward to the public is binding, even if one who performs doesn’t know about it ahead of time. A 1944 Offer is a declaration of will to be bound. A 1945. The will must be projected outward & declaration must be sufficiently precise & complete. o North Central Utilities v Walker: P responded to ad & submitted low bid, but not given contract. P claims he had low bid, and should have been awarded contract.  Where assent to be bound is not present, the proposal is not an offer, but is an invitation to negotiate, or an expression of willingness to receive offers from others.  For a proposal to be an offer, it must firmly reflect intent of author to be bound. Where parties want contract to be in a certain form, it is presumed they do not intend to be bound until the contract is executed in that form. A 1947. o Breaux Brothers v Associate Contractors: P & D discussed deal. P says a binding agreement was reached. D said only discussions & no agreement until written agreement.  Consent of the parties to be bound not freely given, as parties intended a written contract.

HOLMES: NOT TRUE UNDER CURRENT A 1947. NOW WE LOOK TO SEE IF PARTIES INTENDED TO BE BOUND BY ORAL, IF SO THERE IS A PRESUMPTION. Parol evidence may not be admitted to negate or vary contents of an authentic act, but the evidence may be admitted in the interest of justice. A 1848. o Johnson v Capital City: P bought car on basis of ad. P did not mention ad when he purchased car. D refused to honor ad on basis of merger clause in written contract.  Ad was specific enough to be an offer & burden was on D to inform P of any conditions or modifications of the offer contained in ad.  Merger clause does not make obligation unenforceable.  Purchase agreement was also the acceptance of the offer in the ad, creating another & separate obligation to the terms of the ad.

DURATION OF THE OFFER  Offer is irrevocable for the time stated, or for a reasonable time when offeror shows an intent to give offeree time to accept, w/o specifying a time. A 1928. o Schulingkamp v Aicklen: Irrevocable offer made by D to purchase land, w/in 30 days. P accepted 36 days after offer made.  36 day time period became unreasonable, thus making the offer revocable. D did not revoke, so contract to sell is enforceable.  HOLMES: WRONG! AS PER A 1929, IRREVOCABLE OFFER EXPIRES AFTER AN UNREASONABLE TIME. o Meyer v Burger King: PW agreed to indemnify BK as part of proposal. BK never accepted w/in time period, but PW showed up & began work.  Clause states offer would remain open for at least 45 days. Indicates offer may be open for a longer reasonable time.  BK allowed PW to begin work. Demonstrates tacit acceptance of PW offer w/in reasonable time. o Heroman v Saia Electric: D submitted bid for work as subcontractor, knowing there would be 3 month delay in bid process. D refused to honor bid when P later accepted.  Offer remains irrevocable until offeree has a reasonable time to accept.  Offeror must give reasonable time as from circumstances of the case he may have supposed to have intended to give the other party. Irrevocable offer expires if not accepted w/in time period prescribed. A 1929. Revocable offers may be revoked before accepted. A 1928. o Strong fact situation is necessary to imply that an offer is irrevocable. The offer expires by death or incapacity of offeror or offeree before acceptance. A 1932.

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OPTION CONTRACTS & RIGHT OF FIRST REFUSAL (ROFR)   Option contract is when parties agree that the offeror is bound by his offer for a specified time & that the offeree may accept w/in that time. Option may be assigned & is heritable if not personal. A 1933. Option must set forth the thing & price & meet form requirements of the thing. A 2620. An option for a perpetual or indefinite term is null. o Time specified is for benefit of obligee, & may be renounced before the deadline. o If holder clearly intends to counter propose, rather than inquire about possible offeror consent to modification, such intent implies a rejection of offer & triggers a counteroffer. o Barchus v Johnson: P purchased option on land from D. P called D w/in 30 day period & accepted. P then sent written notice of acceptance after 30 day period.  Acceptance of an offer to buy immovable property must be written & must be tendered before the time limited in the option.

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Casey v National Services: Option not timely accepted when a timely phone acceptance made, when option specified a written acceptance. Party may agree not to sell a thing w/o first offering to a certain person. A 2625. This is called a right of first refusal. Promise binds promisor to offer to sell first to holder, if promisor decides to sell. Promised offer does not have to be irrevocable. Grantor of ROFR may not sell to another w/o first offering to sell to holder on same terms or on contract terms. A 2626. Unless agreement otherwise, offer to sell to holder must be accepted w/in 10 days for movable & 30 days for immovable. ROFR renews if grantor does not sell thing to another w/in 6 months. Term for immovable ROFR may not exceed 10 years, and if contract specifies longer time, it will be reduced to 10 years. But, if ROFR is granted in connection with a contract that gives rise to obligations of continuous or periodic performance, then the ROFR may be granted for as long as required for performance of those obligations. A 2628. o Right or option for perpetual or indefinite term is null. o Continuous/periodic example would be a 15 year lease contract, that has an option to purchase attached. o Youngblood v Rosedale: D signed contract w/ P, giving P option to purchase portions of tract of land. Option would renew for additional 3 years every time D purchased minimum amount of land. It was possible to keep land tied up for decades w/ partial purchase & renewal option.  D did not obligate himself to purchase entire tract of land, or any additional land. Therefore this is not an option granted in connection w/ a contract that gives rise to obligation of continuous or periodic performance. Option/ROFR to sell immovable effecting against 3rd person only from time it is filed for registry. If a movable thing, it is effective against 3rd parties, who had actual knowledge of that transaction. A 2629. Option/ROFR are indivisible & all CO must exercise the right if it belongs to more than one person. A 2630.

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CAUSE   Obligation must have a lawful cause. A 1966. The court will often use to enforce or not enforce an otherwise valid agreement. Cause is to make certain that persons have a reason to limit their freedom. Cause is THE reason why a party obligates himself. A 1967 o Look for principal, determining, or immediate motive, or the one that has been expressed or presumed. o If motives are expressed, or the other party was made aware, they become the cause. When no special motive is expressed, the law will presume one based on the circumstances.  Cause of buyer will be presumed to be his wanting the thing, unless other cause expressed. o Where D agreed to purchase P’s home to move closer to his job, & P was informed of the cause, the contract was unenforceable, when the employer moved, due to failure of cause. Carpenter v Williams. Detrimental reliance is an additional ground for enforcement. A 1967. o If the promise is enforceable due to detrimental reliance, it could also be said that there was a gratuitous contract of an innominate nature. o Promisee must be reasonable in his reliance & must be w/in scope of promise intended by promisor & the reliance must have been foreseeable by promisor. o Reliance is unreasonable when placed on a gratuitous promise lacking of form. o Where P elected early retirement on ER’s erroneous representation of benefit amounts, the promise was enforceable and the error was no assertable as a defense. Sanders v United Distribitors. o Patient able to invoke reliance as a defense to collection of MD bill, when staff of MD agreed to file the claim, but failed to do so timely. Hebert v McGuire. o D able to recover reliance damages for repairing a house promised to him by P, but later revoked. D assumed financial obligations he was not obligated to assume to repair the home. Edinburgh. o Reasonable expectation of P to be paid extra for teaching an additional class, though there was no expressed agreement from D for additional pay. Damages under A 1967. Kertley v Draughon.

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Cause is unlawful if enforcement creates a result prohibited by law or against public policy. A 1968. o Contract supported by consideration not to criminally prosecute is against public policy. USF&G v Crais. o Where P sells land to D to hide it from creditors & secure loan from D, & D later sells to another, P’s estate is not allowed to sue D for recovery. Gravier v Carraby.  HOLMES: UNDER A 2044 CREDITORS MAY EXERCISE RIGHTS OF THE OBLIGOR.  NOT A SIMULATION, AS THERE WAS CONSIDERATION GIVEN. o Where the obligation is one step removed from unlawful activity the obligation is enforceable. Cahn v Baccich. Agent of P colluded w/ D to rig bidding on land. P ratified agreement & transferred the land, but D refused to follow through on rest of the agreement. o UNLAWFUL CAUSE = ABSOLUTE NULLITY, BUT A VICE OF CONSENT (FRAUD ETC.) ONLY CREATES A RELATIVE NULLITY. Obligation may still be valid even though cause is not expressed. A 1969. When cause expressed is not true, obligation still valid if a valid cause can be shown. A 1970. Contract is absolutely null when it violates a rule of public order & may not be confirmed. A 2030. o Contract that is effective only on a condition that a divorce be granted is unlawful. McMahon v Hardin. Action for annulment of an absolutely null contract does not prescribe, but relatively null is 5 years from time the ground for nullity ceased or was discovered. Nullity may still be raised as a defense if prescribed. A 2032. Contract declared null by the court is deemed to never have existed, and the parties must be restored if possible. Money damages may be awarded if not able to make restoration in kind. A 2033. Party, who knew of illicit cause, may not recover a performance rendered, but may recover if he invokes the nullity before the contracts purpose is achieved & for exceptional situations in interest of justice. A 2033. Absolute nullity may be raised as a defense, even when party knew or should have known of defect. A 2033. Law gives no action to enforce gambling debts, except for games tending to promote skill, but even then, the judge may reject the demand when the sum appears excessive to him. A 2983. o For P to recover a gambling debt he must be an innocent bystander & have been wholly unconnected with the gambling activity. Result not changed because loan took place prior to the gambling. Lamy v Will. o Fact that the gambling took place in a state where gambling is legal does not make contract enforceable. Prohibition of recovery for gambling debts is express. Lauer v Catalanotto.  Where loan was made and the debtor then went and lost the money gambling, & creditor was not a party to the gambling, it is enforceable. o Bad checks written to cover markers for casino chips is an enforceable obligation, as D asked for & was given a sum of money in casino chips. This exchange is enforceable. Telerecovery v Maier. For gambling debts, the law refuses the action of the winner, or the looser to reclaim what he has voluntarily paid, absent fraud, deceit or swindling. A 2984.

DONATIONS   A.A. is full proof of the agreement against the parties, heirs & successors. A 1835. Rules of donations inter vivos do not apply to a donation with an obligation imposed on the donee that gives a material advantage to the donor, unless the cost of performing the obligation is less than 2/3 of the thing. A 1526. o Onerous donation! o Donation, lacking form, may be a valid onerous contract of an innominate kind. Agreement to transfer property, for promise to care for deceased, is an enforceable onerous contract. Thielman v Gahlman. Rules of donations inter vivos do not apply to remunerative donation, unless the value of services is less than 2/3 of the value of the thing donated. A 1527. o Where J took care of L for L’s life, the aggregate value of services given by J to L is not less than 2/3 the value of the property given by L to J. Succession of Lawrence. Donation inter vivos requires A.A. under penalty of absolute nullity, unless otherwise allowed by law. A 1541.

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Donation lacking form, may be a valid onerous contract, if it satisfies some interest of donor that can be said to be the reason he agreed to bind himself. o $500 pledge to open a new college is binding, though its cause is not expressed. Cause could be any number of things that would not be gratuitous. Louisiana College v Keller. o Promise to pay debt of another is enforceable if cause can be inferred. Flood v Thomas. If no price paid in sale, due to parties never intended for a price to be paid, the onerous contract is invalid for lack of cause. But, if an intent to donate can be gleaned from the circumstances and the invalid sale was made by an A.A., the invalid onerous contract is a valid donation. o Transaction is onerous if it depletes patrimony Is contract remunerative? If not, then it is purely gratuitous. o D’Orzenos v Droz: Land sold in 1805 & 1806 with price paid. 1807 land was “sold” based on past consideration for those sales.  No new exchange for 3rd land sale, so it is not an onerous contract. Patrimony depleted, so it is gratuitous. Nothing to suggest a natural obligation.  Sale w/o a price is not a sale & is not binding as such on the parties, but the act may be a valid donation, provided it is not contrary to public order, purchaser had capacity to receive a donation, and that no injury resulted to 3rd person. o For a suspect sale of immovables to be a valid donation A.A. is required. Spanier v DeVoe. Donation of a movable only requires real delivery. A 1543. Manual Gift. o Cars may be donated by manual gift, even w/o complying w/ the requirement of registration. Loan for use, Commodatum, is a gratuitous contract, where the lender gives a non-consumable thing to borrower, for him to use and return. A 2891. o The borrower is bound to keep, preserve & use the thing as a prudent administrator & may only use it in accordance with its nature or as agreed to in the contract. A 2894. Loan for consumption, Mutuum, is loan for use of a consumable thing, and the borrower is bound to return to the lander an amount of things equal in amount, kind & quality. A 2904. Deposit is where a person delivers a movable thing to another for safekeeping, under the obligation of returning it to depositor on demand. A 2926. The contract may be onerous or gratuitous, but is considered gratuitous in the absence of contrary agreement, custom or usage. A 2928. o Requires delivery of the thing to form the contract. A 2929. Mandate is where a person contracts authority to another to manage his affairs. A 2989. It may be onerous or gratuitous, but is gratuitous unless otherwise indicated. A 2992 Collation is the supposed or real return of things to the estate, that an heir rcvd in advance, for the property to be divided with the other things of the succession. A 1227. o Forced heir may not be deprived of his legitime, unless decedent has just cause to disinherit. A 1494. o Donations may not exceed ¾ of deceased property, if there is one forced heir, or ½ if he leaves two or more. The portion reserved for forced heirs is the forced portion & the remainder is disposable. A 1495. Property cannot be acquired or disposed of gratuitously, except by donation in proper form. A 1467.

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NATURAL OBLIGATIONS   Natural obligation arises from circumstances where the law implies a moral duty to render a performance. A 1760. It is not enforceable, but whatever has been freely given may not be reclaimed. A 1761. Examples are prescribed debts, obligation null for lack of capacity, or universal successor to follow through on wishes of deceased when the will is void for lack of form. A 1762. A natural obligation operates as the cause of an obligation to deem the obligation as valid and onerous. A 1761. How to turn a moral duty into a natural oblation: o Duty must be felt towards a particular person. o Circumstances must exists to allow for inference of strong moral duty.

o Duty must be such that performance fulfills the debt. o Recognition of obligation by obligor, such as a promise to perform or giving performance. o Fulfillment of the moral duty must not impair public order. Stepfather, who signs a note agreeing to pay for stepson’s drug treatment with the real father, has acknowledged natural obligation, as he has a moral duty to pay for this treatment. Thomas v Bryant. o HOLMES: KEEPING STEPSON IN TREATMENT COULD BE AN ADVANTAGE TO D, SO THIS IS ARGUABLY ONEROUS TO D. ALSO, PROMISEE HERE IS A 3RD PERSON, THE STEPSON’S REAL FATHER, WHO IS NOT THE PERSON FOR WHOM D HAS A MORAL DUTY. P sold house to wife for $10 to secure a quick divorce following him cheating on her. Obligation to pay spouse damages for cheating is against public policy & may not give rise to an enforceable natural obligation, but is still a moral duty. P discharged his natural obligation by executing the deed to the house & court may not return what P has freely given. Wortman v French. D filed for bankruptcy & had two conversations with D concerning a debt owed. P made three additional payments and ceased paying D. Acknowledgment of the debt by bankrupt was not an unambiguous promise to pay, but a recognition of a moral obligation. Debts discharged in bankruptcy may only be revived by an express promise to pay the specific debt. Service Finance v Daigle. o HOLMES: P DID NOT FILE CLAIM IN BANKRUPTCY COURT ON RELIANCE OF PROMISE OF D TO PAY THE DEBT. A 1967 WOULD GIVE RELIANCE DAMAGES, BUT RELIANCE NOT REASONABLE HERE AS THE COURT FOUND NO EXPRESS PROMISE OF P TO PAY THE DEBT.

REVOCATION  Revocation forces the donee to return the thing or restore value of thing donated. Value is measured as of the time the action to revoke is filed. A 1560. But, revocation for ingratitude does not affects acts by donee prior to filing of the action to revoke. A 1559. o If made after the filing and it is a movable thing, then the act is effective against the donor when it is an onerous transaction made in good faith by third party. Registry applies if immovable. A 1559.

SURETYSHIP    Parol evidence may not be used to establish a promise to pay the debt of another or prescribed debt. A 1847. Suretyship is an accessory contract where a person binds himself to a creditor to fulfill the obligation of another upon that persons failure to perform. A 3935. It must be express and in writing. A 3038. May also arise in circumstances of solidary liability, where the circumstances suggest suretyship. A 1804.

REMISSION OF A DEBT -> Extinguishes the obligation.  Remission of debt by obligee extinguishes the obligation, and may be express or tacit. A 1888. o Not subject to form requirement. o Only requires creditor’s intent to remit & communication, but does require capacity to alienate by the obligee, and capacity to accept donation by obligor. If obligee gives back instrument evidencing obligation to obligor, there is a presumption that the obligee intended to remit the debt. A 1889. o When creditor returns notes to the obligee, it is not a donation, but a remittance of the debt that those notes represent. Hicks v Hicks. Remission is effective when obligor receive the communication as acceptance is presumed, but the obligor may reject the remission if he does so in a reasonable time. A 1890. It may however, be revoked for ingratitude or failure to fulfill a condition, as it is still a donation, just not subject to form requirements. o Rejection of remission may be express or tacit, such as rendering performance.

Where P sells land to his son, D, secured by a mortgage, and D cancels the mortgage in exchange for the son taking care of the dad, and the son abuses the dad, the son has failed to fulfill the condition imposed on him as consideration of the note being canceled. Donation inter vivos may be revoked for nonperformance of the condition, therefore son owes dad for the mortgage. Hurley v Hurley.  HOLMES: COURT DID NOT APPLY 1526 FORMULA TO SEE IF ONEROUS DONATION.  RARE FOR PURE REMISSION, SO LOOK FOR SOME CONDITION IMPOSED. Release of security does not give rise to a presumption of remission of the debt. A 1891.

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COMPROMISE  Compromise is a contract where the parties make concessions to settle a dispute. A 3071. It is valid and enforceable if it is reduced to writing or recited in open court. A 3072. Reciprocal concessions are necessary, but they don’t have to be of equal value. Cause is seen as ending or preventing litigation. To be a valid agreement to stop or prevent litigation then there needs to be: o Possibility or existence of litigation. o Intention to put an end to it. o Reciprocal concession of the parties. If the compromise effects real rights, then the parties must have capacity and meet form requirements. A 3073. Civil consequences of an unlawful act, may be the object of a compromise, but criminal action itself shall not be extinguished by the compromise. A 3073. Need clear showing of violation of public policy to invalidate. Compromise with one party of a multiple party obligation, and it does not bind the others nor can it be used as a defense, unless the matter is a solidary obligation. A 3075. Compromise only settles the issues the parties clearly intended to settle, but does include the necessary consequences of what they express. A 3076. It does not affect rights later acquired by a party, unless rights are expressly included in the agreement. A 3078 It is made when claimant of disputed/unliquidated claim accepts payment that the other party pays with the clear express written condition that acceptance of payment will extinguish the obligation. A 3079. Receipt of payment makes his informed consent manifest when he accepts the payment intended to be made in full. o Attempt to unilaterally add in stipulation on a compromise payment to invalidate compromise, while accepting the payment in not effective. Meyer v Acme Homestead.  HOLMES: A 1861 allows obligee to refuse to accept a partial payment tendered as a compromise, but may not refuse to accept payment of an admitted sum. o Where P receives partial payment intended as compromise, and timely notifies D of objection, but willingness to accept as partial payment of disputed amount, P does not give up right to claim disputed amount & D’s silence in this situation is imputed to be acceptance. RTL Corp v Manufacturer Enterprises Compromise stops parties from bringing later action based on compromised matter. o Compromise between parties, who by mutual consent, agree to prevent a lawsuit, carries force equal to an adjudicated dispute. Later realization that injury was worse than thought does not invalidate the compromise. Robert v Carroll. Compromise is not a novation of the underlying obligation, so failure to perform a compromise gives the other party a right to enforce the compromise OR to enforce original claim. A 3081. Parties may agree that it is a novation by an express agreement. Compromise may be rescinded for error, fraud, & other grounds for rescission, but may not be rescinded due to error of law or lesion. A 3082. May be able to rescind if against public policy. Compromise prior to filing of the suit stops prescription, but if it is rescinded or dissolved, prescription on the settled claims begins to run again from time of rescission or dissolution. A 3083.

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VICES OF CONSENT - ERROR

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Error only vitiates consent when it concerns a cause w/o which the obligation would not have been incurred & that cause was known or should have been known to the other party. A 1949. o They do not need to know of the mistake, only the cause. o Buyer is not allowed to rescind purchase offer on the house, later found unsuitable for his needs due to zoning laws, where he did not communicate this to the seller. Bordelon v Kopicki. o Purchaser of building, used commercially in the past, is able to rescind when he learned of zoning laws not allowing him to modify building for his use, and seller was aware of this. CH Boehman v Russo. Error concerns a cause when it concerns the nature or substantial quality of the thing, or qualities of the other party, or any other circumstance that the parties regarded, or in good faith should have regarded, as the cause of the obligation. A 1950. o Error in party’s motive purely subjective to that party does not invalidate consent. o Where P makes a land conveyance on the erroneous belief that a prior transfer of land did not contain enough acres, that error concerned the principal cause of the contract. Calhoun v Teal. o Mutual error that a proper MD exam had taken place, where it is reasonable to conclude that if a proper MD exam has been done the parties would not have compromised, is grounds for rescission. Saunders v NO Public Services. Claimant dx w/ bruise by MD who never examined him. Injury found to be serious. o Motive of one who purchases a bar is for receipt of an ongoing business concern operating as a bar. D was not able to obtain a liquor license & P was aware that city had revoked the license prior to sale. This was an error in the principal cause of the contract. Marcello v Bussiere. o Error in judgment of value of the property is not grounds for rescission. Citizens Bank v James. o Where P has a subjective intent to hide the truth from D and cause an error as to a quality of the person, the contract is void at the start. Bischoff v Brothers of the Sacred Heart.  HOLME: May be fraud for suppression of the truth under A 1953. o Where insurance adjuster obtains compromise by telling claimant that the settlement check was a gift from the other driver and the release form was a letter acknowledging receipt of the gift, this is an error as to the nature of the contract and therefore it is grounds for rescission. Wise v Prescott. Party may seek annulment for error of law, if the error was the reason to make the contract. A 1950 o Usually not allowed to annul a compromise. Party may not rescind for error if other party is willing to perform as intended by party in error. A 1951. If rescinded for the party’s own error, he is liable for the loss sustained by the other party, unless the other knew or should have known of the error. A 1952. o Error of fact by purchaser, that was known but not corrected by seller of custom ordered fur, was grounds for rescission. Clear communication from D would have prevented the confusion & this lack of communication, by D, caused the error. Deustschman v Standard Fur. Court may refuse rescission to protect interest of the other party, & instead award a reasonable compensation for any loss sustained by party in error. A 1952. o Damages awarded are limited to reliance-like damages. (Not reliance as it is party’s own error.) Court may consider whether the error was excusable or inexcusable. Relief usually refused for negligence. o Failure to read a contract is not a defense of error. A person who signs a written agreement is presumed to know its terms. Shreveport Broadcasting. o Unilateral errors must be reasonable for annulment.

FRAUD  Fraud is a misrepresentation or suppression of the truth made w/ the intention to obtain an unjust advantage for one party or to cause a loss or inconvenience to the other & may result from silence or inaction. A 1953. o When D lies to P claiming to be buying land for his own use, when in fact he was buying for a neighbor of P, whom P hated, this is actionable fraud to annul the sale. Orr v Walker.

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It is not fraud if the person could have learned the truth w/o difficulty, inconvenience or special skill, but this does not apply where there is a fiduciary like relationship. A 1954. o Where P was invited to come to jewelry store to have found ring valued, this established a quasi-fiduciary relationship. When parties are on unequal footing, the one possessing superior knowledge regarding the value or quality of the object must not take undue advantage of the other. Griffins v Atkins. Fraud does not have to be about the cause of the obligation, but it must entail a circumstance that has substantially influenced that consent. A 1955. Fraud of a 3rd person vitiates consent, if the other party knew or should have known of the fraud. A 1956. Party to the contract needs to have known of the fraud. NOT THE ERROR. Fraud need only be proven by preponderance of the evidence & by circumstantial evidence. A 1957 Party against whom rescission is granted for fraud is liable for damages & attorney fees. A 1958. If fraud committed by 3rd person, that person is also liable for damages.

DURESS  Duress must be such as to cause a reasonable fear of unjust & considerable injury to a person’s property, person or reputation. Personal circumstances of party are considered to determine reasonableness of fear. A 1959. o Degree of violence must be considered & must be weighed in light of men or ordinary composure & nerve & not in the scales of an imaginative alarmist. Cauder v Oteri. Sissy exception to duress. o Duress connotes an actor performing an exterior act, not the entire set of circumstances causing the victim to act as he does. Person w/o bargaining power to resist accepting a settlement offer may be under strong economic pressures, but this is not duress such to grant rescission. Wilson v Aetna. o Fear of having no money is not duress to rescind property divorce agreement. Lewis v Lewis. It is still duress when it is directed at the person’s spouse, child or parent. Other relations are at the discretion of the court. A 1960. Look for friendship or relationship of strong affection. Consent is vitiated even when duress has been exerted by a 3rd person. A 1961. o Does not require knowledge of the duress by other party, as in fraud. Threat of doing a lawful act is not duress. Threat of doing an act that is lawful in appearance only may be. A 1962 o Threat of husband to declare bankruptcy, if wife did not sign unfavorable divorce agreement, is not duress, as he had a lawful right to declare bankruptcy. Adams v Adams. o When the city impounds P’s car for months & requires P to sign a full release before returning the car, P did not freely sign, as he had no choice but to sign to get car back. Duress. Jodan v City of BR. Contract w/ a 3rd person to secure means of preventing threatened injury may not be rescinded for duress, if that person is in good faith. A 1963. Thus, a contract for a loan to pay a ransom cannot be rescinded for duress if the lender is in good faith. If rescission granted due to duress exerted by or known by a party, the other party may recover damages & atty fees. If 3rd person duress, the innocent parties may recover damages & atty fees from 3rd person. A 1964.

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OBJECT       Parties may contract for any object that is lawful, possible, determined or determinable. A 1971 Object is possible or impossible according to its nature & not according to the parties ability to perform. A 1972. Object must be determined at least to its kind. Quantity may be undetermined, but must be determinable. A 1973. If quantity determination left to a 3rd party, the quantity is determinable. If parties fail to name a person, or the person is unwilling or unable to determine, then the court may determine. A 1974 Quantity may be determined by output or requirements of a party, but must be determined in good faith. A 1975. Future things may be the object of a contract. A 1976.

Object may be that a 3rd person will incur an obligation or render performance. Party who promised is liable for damages if the 3rd person does not bind himself or does not perform. A 1977. Promisor is released when 3rd party binds himself.

THIRD PARTY BENEFICIARY   Look for and discuss: Existence of legal relationship between the promisee & TPB involving an obligation owed by the promisee to the beneficiary which performance of promise will discharge. Look for an discuss: Existence of a factual relationship between promisee & 3rd party where: o There is a possibility of future liability either personal or real on the part of the promisee to the beneficiary against which performance of the promise will protect the former. o Securing an advantage for 3rd person may beneficially affect the promisee in a material way. These are almost always dismissed as an incidental beneficiary. o There are ties of kinship or other circumstances indicating that a benefit by way of gratuity was intended. INCIDENTAL BENEFICIARY: Party who, though having an interest related to a contract between the parties, is not a TPB in that contract, but is an IB & does not have an action arising from that contract. o Employees of a corporation that suffers damages due to a breach of a contract between the corporation & D, are not TPB, but are only IB. Joseph v Hospital Service District. Promisor may raise any defense against TPB that he would have against promisee. Contract produces effects for 3rd parties only when provided by law. A 1985. Once TPB has manifested intention to accept the benefit, parties may not dissolve w/o his agreement. A 1978 o Property owner may not revoke a benefit owed to his lessee, who is a TPB of contract between owner & Oil company, where lessee has manifested intention to avail himself of the clause holding Oil Company responsible for all damages caused on the property. TPB filing suit to recover crop damages is evidence of such availment. TPB may be undetermined at the time of the contract, but determinable on the day agreement is to have effect for their benefit. Andrepont v Acadian Drilling.  HOLMES: Lessor would be liable for interfering with lessee’s peaceable possession, so this provision protects owner from damage claim. o Where creditor sold land to another, who agreed to assume the note to debtor, the debtor manifests his intent to avail when he agrees to a payment extension for buyer. Therefore, that contract of sale may not be rescinded w/o the consent of the creditor. Vinet v Bass. o Consent of the bank is required to annul a sale by assumption. Bryant v Stothart.  HOLMES: Code doesn’t discus judicial dissolution w/o TPB, only by consent. Stipulation may be revoked only by the stipulator & only before TPB manifested intention to avail, but if the promisor has an interest in performing, the stipulation may not be revoked w/o his consent. A 1979. If stipulation revoked or refused, the promisor shall render performance to the stipulator. A 1980. Stipulator gives TPB the right to demand performance from promisor. Stipulator may demand performance for the benefit of TPB. A 1981. There is a direct right of beneficiary to demand performance. Promisor gets to use defenses against TPB as he may have against the stipulator. A 1982. o Where B stops paying assumed notes upon discovering fraud of G, he is able to raise defense of fraud of G, against bank’s suit to collect from B. Union Bank v Bowman. Obligor & another may agree to an assumption of an obligation of obligor. To be enforceable by obligee against the 3rd person, it must be in writing. Obligee consent does not effect a release of the obligor. The unreleased obligor remains solidarily bound with the 3rd person. A 1821. o C sold property to H, who promised to pay notes to J, that C had signed. H defaults & J sued C. C is still liable as the contract w/ C & H did not release debt between C & J. Jacobs v Calderwood. Obligee & 3rd person may agree on an assumption by 3rd person. Agreement must be in writing & does not effect a release of the original obligor. A 1823.

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LESION: Unique to Louisiana.   Lesion is only available when provided by law. A 1965. Sale, exchange or partition. Sale of an immovable may be rescinded for lesion where the price is less than ½ of fair market value. Lesion can only be claimed by seller, & only in sales of corporeal immovables. Not applicable in court sales. A 2589. Not applicable to a simulate sale that is really a disguised donation. Immovable is evaluated according to state it was at the time of the sale. If sold by a contract or option, the thing is evaluated in the state it was at the time of that contract. A 2590. 1 year SOL from act of transfer. A 2595. When a sale is rescinded for lesion, the buyer may return the thing or keep & pay seller amount equal to the difference between the price paid & fair market value. A 2591.

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CAPACITY  All persons have the capacity to contract, except unemancipated minors, interdicts, & (PDR) persons deprived of reason at the time of contracting. A 1918. o PDR includes all varieties of derangement. Party using defense of PDR has BOP. o To donate A 1477 imposes a higher standard, as you must possess ability to comprehend the nature & consequences of the disposition that one is making. o Proving that one is PDR at the time of the trial is not the same as at the time of contracting. Robin v Blaze o Minor is emancipated by marriage, notarial act after age 15, or judicial declaration after 16. Contract made by one w/o legal capacity is relatively null & may be rescinded only at the request of that person or his legal representative. A 1919. Prescriptive period of 5 years, that runs from the date incapacity ceases. Immediately upon discovering the incapacity, a party who was ignorant of the other party’s incapacity at the time of contracts, may require a capable party to confirm or rescind the contract. A 1920. Confirmation is a declaration where a person cures the relative nullity of an obligation. Confirmation must be an express act stating the substance of the obligation & show intention to cure the relative nullity. Tacit confirmation may result from voluntary performance. A 1842. Confirmation is retroactive to the date of obligation, but may not impair the rights of 3rd persons. A 1844. Upon rescission, each party shall restore to the other what he has received. If restoration is impossible or impracticable, court may award damages to the party who may not be restored. A 1921. Minor’s contracts for necessities, education or business may not be rescinded for lack of capacity. A 1923 Mere representation of majority by minor does not stop action for rescission, but when the other party reasonably relies on a minor’s representation of majority, the contract may not be rescinded. A 1924. PDR may rescind onerous contracts only if other party knew or should have known of incapacity. A 1925. PDR gratuitous contracts may be attacked after death, or if it shows lack of understanding, or was made w/in 30 days of his death, or when application for interdiction was filed before death. A 1926.

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PUTTING THE OBLIGOR INTO DEFAULT   Damages for delay are owed from the time the obligor is put into default (PID). A 1989. o Moratory damages presuppose a performance actually rendered, through delayed. If there is a fixed or clearly determinable term, the obligor is PID by the arrival of that term. Otherwise the obligor must be PID by obligee, but not before performance is due. A 1990. o Even if performance is immediately due, the obligor must be given a reasonable time to perform o Performance must be w/in a reasonable time if term not determinable. o PID not needed for breaches of contract stipulating that they must be executed w/in a specific time, where time is of the essence, or where a specific time for performance expires. A party does not get stipulated damages for a delay he causes. A 2008 & Firebond v Aetna. o Not necessary to PID, where obligee refuses to accept cotton, he was contracted to store. Allen v Steers.

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Formal PID not needed where D is refusing to pay rent at the agreed terms. Meetings where P demanded rent sufficed to PID as it was done in front of two witnesses. Melancon v Texas Co. Obligee may PID by a written request, orally w/ two witnesses, or by filing suit, or by contract. A 1991. If obligee bears the risk, the risk devolves on the obligor, who is PID, for failure to deliver thing. A 1992. In reciprocal obligations, one obligor may not be PID, unless other obligor has or is ready to perform. A 1993 Obligor is liable for damages for failure to perform, A 1994, but the obligee may not get stipulated moratory damages unless obligor has been PID.

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JUDICIAL DISSOLUTION   Upon failure to perform, obligee has a right to judicial dissolution, or regard the contract as dissolved. A 2013. Obligor may be given additional time to perform by the court, but obligee does get damages for delay. A 2013. o Court will consider extent & gravity of party’s failure, nature of obligor’s fault, good & bad faith of the parties & surrounding economic circumstances that may make dissolution opportune. o Obligor in default may still perform, but court may find the tender untimely & still dissolve the contract due to an unjustified delay. o Court may dissolve w/o damages when both parties are at fault or no fault can be found in either party. o Owner is able to obtain dissolution of mineral lease for failure to develop land prudentially. D failed in his obligation of diligent development for the benefit of both parties. Demands & inquiries were made on D by P for several years prior to filing suit. Waseco Chemical v Bayou State Oil. Contract may not be dissolved when the obligor has given substantial part of the performance & the part rendered does not substantially impair the interest of the obligee. A 2014. TWO PART TEST. o Good faith prevents a party from seeking total dissolution of the contract when the obligor’s partial performance has already satisfied a substantial or reasonable part of the creditor’s interest. Upon failure to perform, the other may serve him a notice to perform w/in a certain reasonable time, with a warning that unless performance rendered w/in that time, contract shall be deemed dissolved. A 2014. o Notice requirements are the same as for PID. A 2014. If a delayed performance would be of no value to the obligee or when it is evident that the obligor will not perform, the obligee may regard the contract as dissolved w/o any notice to the obligor. A 2106. o Party may dissolve unilaterally, but acting at own peril if court disagrees. Parties may expressly agree that contract is dissolved for failure to perform. Contract will be dissolved as of the time it provides for or at the time obligee gives notice that he invokes the dissolution clause. A 2017. Upon dissolution, parties are restored to pre-contract situation. Court may award damages if restoration not possible or practical. If partial performance rendered is of value to the obligee, the obligor gets that value. A 2018. Where there is continuous or periodic performance, the dissolution effect does not extend to rendered performance. A 2019. Thus, dissolution does not always restore the party to pre-contract status. o If you live in house for six months, then stop paying rent, owner may rescind, but you don’t get rent back. Where there are more than two parties, one’s failure to perform does not dissolve for the others, unless the failed performance was essential to the contract. A 2020. Dissolution does not impair the rights of an onerous contract by a 3rd party in good faith. Recordation applies as to immovables and a 3rd party. A 2021. For a commutative contract, either party may refuse performance, if the other has failed to perform or does not offer to perform, if the performances are due simultaneously. A 2022. If by the financial situation it is clear that one party’s ability to perform is questionable, other party may demand adequate security. Upon failure to give security, that party may withhold or stop performance. A 2023. Where the contract has no specified duration, it may be terminated at the will of either party by a notice that is reasonable in time & form. A 2024.

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SPECIFIC PERFORMANCE

Court shall grant specific performance plus damages for delay if requested. If SP is impracticable, court may allow damages. For failure of an obligation to do, granting of SP is at the discretion of the court. A 1986. o It is impractical when the thing has been sold to another, destroyed, or requires court supervision. o Court is more likely to award damages in case of personal services than SP. o A partially executed sale of land, where purchaser has paid the price, can be enforced by SP. Girault. o Lessee of shopping mall not able to force lessor to destroy mall expansion to enforce contractual right to parking spaces, despite specific right to enforce by SP. Weingarten v Northgate Mall. Obligor may be restrained from doing anything in violation of obligation not to do. A 1987. o Court may impose an injunction upon breach of agreement. No need to show irreparable injury to obtain injunctive relief. Cellular One v Boyd.

DAMAGES  Obligee must show: o Existence of damage. o Obligor is at fault. o Direct connection between fault & damage. Damages are the loss sustained by the obligee & lost profits. A 1955. o Measure of damages for breach for sale of personal property is the difference between the contract price & market price on the date of the breach. Friedman v JB Beaird. o Measure of damages for breach is the lost profits, not the difference between market price at the time of the breach & the contract price, especially in custom ordered goods. Interstate Electric v Frank. o If there is no market price, damages are the full anticipated profits from the contract. Security Nat’l Bank. o Damages due to the creditor are the difference between the market value of the thing he was to give & the thing he was to receive in exchange, which was fixed & ascertainable at breach. Womack v Sternberg. Good faith obligor is only liable for damages foreseeable at the time of contracting, A 1996, but if in bad faith he is liable for all damages, foreseeable or not, that are a direct consequence of failure. A 1997. o The court will consider the nature of the contract, prior dealing & all circumstances known to obligor. o Bad faith here is the intentional & malicious failure to perform. Nonpecuniary damages are allowed when the contract is intended to gratify a nonpecuniary interest, or when due to the circumstances, obligor knew or should have known that failure to perform would cause that kind of loss. Damages may also be recovered when obligor intended to hurt obligee’s feelings. A 1998. o Nonpecuniary interest is one to satisfy an intellectual or spiritual purpose, such as a contract for a work of art, conduct scientific research or involves some sentimental purpose. o Circumstances must give rise to a presumption that obligee’s embarrassment was intended by obligor. o Mere worry or vexation is not a compensable nonpecuniary loss. o The nature of the contract must show that gratification of a nonpecuniary interest was a significant interest. Where a principal or exclusive object of a contract is intellectual, nonpecuniary damages resulting from nonfulfillment of that object are recoverable. Obligee’s nonpecuniary interest must be significant & more than an incidental or inferred contemplation of the parties. Young v Ford Motors  No nonpecuniary damages following purchase of new truck that was a lemon. o Purchase of a hand built top of the line performance car satisfies A 1998. The sale of such car laden w/ redhibitory defects is grounds for recovery of nonpecuniary damages. Chaudoir v Porsche. o Damages must be restricted to what reasonably could be held have been in the contemplation of the parties upon entering into the contract. D must have known that if dresses for a honeymoon were not available as of the wedding date, the bride would be keenly disappointed. Lewis v Holmes. o P gets nonpecuniary damages for airline ruining his vacation. D rerouted plane into a storm & was aware of P’s connecting flight. P made every other effort to reach destination w/o success. Flight has for it object, as part of a vacation, gratification of P’s intellectual enjoyment. Vick v Nat’l Airlines.

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o Nonpecuniary damages allowed where D buried P’s husband in wrong grave. Robinson v Providence. Discretion is left to the court when damages are not certain. A 1999. o While damages for lost profits may not be based on speculation & conjecture, they need only be proven to w/in a reasonable certainty. Where damage & liability are certain & quantum is uncertain, courts have to award damages. Folds v Red Arrow. Obligee must make reasonable efforts to mitigate damage. If none, obligor may reduce damages. A 2002. Obligee may not recover damages when his own bad faith has caused obligor’s failure, or when he concealed material facts at the time of contracting that he knew or should have known would cause a failure. If the obligee’s negligence contributes to the obligor’s failure, the damages are reduced in proportion to that negligence. A 2003. o One cannot claim damages unless he has shown his full compliance with the terms. Copleand v Drury. Any clause is null, in advance, that excludes or limits liability for intentional or gross fault to the other party or for causing physical injury to the other party. A 2004. o Parties are able to allocate fault amongst themselves for 3rd party injuries. o Courts will limit damage waiver clauses to acts of ordinary negligence or carelessness, absent personal injury. Provision not applicable to gross negligence or willful/wanton misconduct. Roll up Shutters. o Where P is injured by negligence of D, but waiver clause seeks to limit liability for intentional acts, that clause is null in advance. Ramirez v Fair Grounds.

STIPULATED DAMAGES      Parties may stipulate damages (SD) to be recovered. Stipulation gives rise to a secondary obligation. A 2005. Nullity of the principal obligation renders the stipulated damages clause null. A 2006. Obligee may demand SD or performance, but not both, unless SD are for delay. A 2007. Where failure to perform is validly excused (impossibility), no liability for SD. A 2008. Obligee does not need to prove actual damages to get SD. A 2009 But, this does not prevent D from proving that P has no loss, or less loss than SD, it merely shifts the BOP to D to prove no loss or loss less than SD. o SD where bank officer would get full year salary upon termination unenforceable as the SD in no way reflected the actual damages suffered by P. Carney v Boles. SD may be reduced in proportion to a benefit derived by obligee from partial performance. A 2011. SD may not be modified by court unless SD is so manifestly unreasonable as to be against public policy. A 2012 o $1000 SD are sellers only remedy, though he sold the land for a much greater loss. Not so unreasonable as to be contract to public policy & SD mean seller was under no duty to mitigate. Lombardo

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REAL OBLIGATIONS  Real obligation is transferred with the thing. Particular successor is not bound personally, unless he assumes the personal obligation of transferor & he may free himself of the real obligation by abandoning the thing. A 1764. o Not only the obligation, but the right resulting from a contract relative to the immovable passes w/ the property. Breaux v Laird. Subsequent purchaser of house able to sue contractor’s surety. Obligation is heritable when performance may be enforced by successor of either party. Every obligation is deemed to be heritable as to all parties, absent contrary terms or nature of the contract. A 1765. o Every obligation is deemed to be heritable as to both parties. Widow of purchaser of theatre is able to enforce non-competition agreement her husband obtained from former owner. Bogard v Caldwell. Obligation is strictly personal when performance can be enforced only by the obligee or against the obligor. When it requires a special skill or qualification of the obligor, the obligation is presumed to be strictly personal for the obligor. Personal services are presumed to be strictly personal for the obligor. A 1766. o Other features of the obligor, such as a social status or profession, may make it strictly personal. o Obligation to fulfill a marriage engagement is personal, as is the obligation of a musician to record music under a contract, as it pertains to him.

SUSPENSIVE CONDITION  Conditional obligation is one dependent on an uncertain event. If not enforceable until event occurs it is suspensive, but if it may be immediately enforced and comes to an end when event occurs, it is resolutory. A 1767 o Need not be a future event, as it may be an uncertain past event. o Fulfillment of a condition cannot be demanded or enforced, as contrasted w/ counter performance. Conditions may be express or implied. A 1768. Suspensive condition that is unlawful or impossible makes the obligation null. A 1769. o If unlawful or impossible condition is resolutory, the policy reasons for nullity are absent. The obligation will be valid & condition is regarded as not written. Suspense condition that depends solely on whim of the obligor (potestative condition) makes the obligation null. Resolutory condition that depends solely on the will of the obligor must be fulfilled in good faith. A 1770. o Event left to his whim is such as his wishing or not wishing to do something, not one that he may or may not bring about after a considered weighing of interests.  Obligation to buy a house, if one moves to Paris, is valid, as it is assumes the decision is based on reasons other than trying to escape an obligation. o Not every potestative condition renders null the obligation. If the condition, though dependent on the will & power of the obligor, involves some detriment, disadvantage, or inconvenience to the obligor if he brings about or hinders the happening of the event, then the condition does not render the obligation null. Humble Oil. Party’s decision to enter or not to enter into mineral leases not subject to whim. o Obligation may be made by consent of the parties that depends on the will of the obligee for its duration. Long v Foster & Ass. HOLMES: Resolutory that depends on will of the obligee is acceptable. Condition is regarded as fulfilled, when it is not fulfilled due to fault of party w/ an adverse interest. A 1772. o D owes damages, when he entered into a sale contingent upon approval of transfer by board, & then later withdrew application before board could render a decision. George v Harris.

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OBLIGATIONS WITH A TERM       Term may be express or implied. Performance of an obligation w/o a term is due immediately. A 1777. o Performance due in reasonable time if no term or due immediately. Terms is presumed to benefit the obligor, absent agreement/circumstances showing otherwise. A 1779. Party for whose exclusive benefit a term was established may renounce it. A 1780. Performance may not be demanded before the term ends, and if obligor performs before end of term, he may not recover the performance. A 1781. When term is a period of time, the term begins to run on the day after the contract is made, or on the day after the occurrence of the event that marks the beginning of the term & it includes the last day of the period. A 1784. Performance on term must be in accordance with the intent of the parties or established usage. A 1785.

CONJUNCTIVE & ALTERNATIVE OBLIGATIONS  Conjunctive obligation is when it binds the obligor to multiple items of performance that may be separately rendered & enforced. Each item is a separate obligation. Parties may provide that the failure of obligor to perform one will allow obligee to demand immediate performance of the remaining ones (acceleration clause). A 1807. o When a sum is owed periodically or in installments, such as rent, prescription starts separately for each installment, unless there is an acceleration clause. o Where wages are earned on periodic basis, the amount due for each period is a separate & distinct claim. Prescription begins to run from the date due unaffected by anything that may be done concerning any other claim for any other period. Gardiner v Montegut.

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An alternative obligations gives a choice of items of performance. A 1808. The choice belongs to the obligor unless express/impliedly granted to the obligee. 1809. But, where a party with the choice does not exercise it, after a demand to do so, the other party may choose. A 1810. Obligor may not perform an alternative obligation by rendering parts of different alternatives. A 1811. When obligor has the choice & one item become unlawful/impossible, he must render a remaining item. If obligee has choice, he must choose from remaining items, or sue for damages if obligor is at fault. A 1812 If all alternatives become impossible/unlawful w/o obligor fault, obligation is extinguished. A 1813. If obligor has choice & it is the fault of obligor for one item, & all are now impossible/unlawful, the obligor owes damages based on last item that became impossible. If fault of obligee, obligor not bound to deliver any remaining. A 1814.

SEVERAL, JOINT & SOLIDARY LIABILITY  When different obligors owe a separate performance to one obligee, the obligation is several for them. When one obligor owes a separate performance to different obligees, the obligation is several for them. Several obligations produce the same effects as a separate obligation owed to each obligee. A 1787. Prescription runs separately. When obligors owe together one performance to one obligee, but none is bound for the whole, the obligation is joint for the obligee. When one obligor owes just one performance intended for the common benefit of different obligees, none of whom are entitled to the whole performance, the obligation is joint for the obligees. A 1788. If joint obligation is divisible, each obligor is bound to perform & each obligee is entitled to receive only his portion. When indivisible, joint obligors/obligees are subject to the rules governing solidary obligations. o Solidary = ALL FOR ONE AND ONE FOR ALL! o Contract is joint, though it embodies several things, if consideration is paid in a gross sum & it is impossible to affirm that the party would have signed the contract w/o the rights acquired applying to al things received or conveyed. Nabors v Producer Oil. Drilling on land of one is performance for all.  HOLMES: Consider. Is the contract joint? If so, is it indivisible? If so, then solidarity.

SOLIDARY OBLIGATIONS     Obligation is solidary for the obligees when it gives each the right to demand the whole performance. A 1790. o HOLMES: ACTIVE SOLIDARITY. joint bank account, each has right to take all money & screw other. Remission of debt by one solidary obligee releases the obligor but only for the portion of that obligee. A 1792. Obligation is solidary for the obligors when each obligor is liable for the whole performance. Performance by one obligor relieves the others of liability toward the obligee. A 1794. Obligee may demand whole performance from any solidary obligors, who may not request division of the debt. Obligee may sue any obligor to recover, even after suing another. A 1795. o Obligee may collect full amount from any number of them. PASSIVE SOLIDARITY. More common. Solidarity is not presumed & must arise from a clear expression of the parties intent or from the law. A 1796. o There must be clear evidence of an intent to be bound solidarily. Co-endorsee’s on a promissory note are bound jointly, & payment by one does not interrupt prescription against the other. Cambre v Gerald.  HOLMES: Now they would be bound solidarily under statutory law. Take commercial paper. Interruption of prescription against one solidary obligor is effective against all & their heirs. A 1799. Solidary obligors are liable for their own portion among each other. Even shares if from a contract, but according to fault if from a tort. If the circumstances giving rise to the solidary obligation concern only one of the obligors, that obligor is liable for the entire debt to the others, who are considered his sureties. A 1804. o Where P & D personally guaranteed loans to corporation, each was bound in solido, so Corp & D each owe P 1/3 of the debt paid by P. Gautier v Scott.  HOLMES: Under current A 1804, these two were sureties, as circumstances show primary concern was for a company. Company not bankrupt. Under A 3056, P & D each owe half, or P may sue company & obtain entire amount under A 3049. The man is a machine.

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EFFECTS OF SOLIDARY OBLIGATIONS   Renunciation of solidarity by the obligee must be express. Obligee who gets partial performance from an obligor separately preserves the solidary obligation against all obligees after deduction of partial performance. A 1802. Remission of debt by obligee of one solidary obligor benefits the others in the amount of the portion of that obligor. If obligee gives instrument evidencing the debt, it is presumed to be intended for benefit of all. A 1803. o Remission of the debt of one obligor does not extinguish the solidary obligation, but reduces it for the other obligors in the amount of the remitted share. In the case of insolvency of a solidary obligor, after the obligee has remitted the debt, the loss must be borne by the obligee. Loss arising from insolvency of a solidary obligor, must be borne by the other solidary obligors in proportion. Any obligor, in whose favor solidarity has been renounced, must contribute to make up the loss. A 1806 REMISSION = NO ONE CAN GO AFTER HIM & OBLIGEE EATS THE LOSS. RENUNCIATION = HE STILL HAS TO CONTRIBUTE IF ANOTHER GOES INSOLVENT.

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ASSUMPTION  PAY ATTENTION TO WHO THE AGREEMENT IS BETWEEN AS THERE ARE DIFFERENCES!!!! o If between 3rd party & obligor:  Writing required to be enforceable by obligee. A 1821. Obligor needs no writing to enforce.  Creates solidary liability, but only to extent of assumption. A 1821 & A 1822.  3rd party gets to raise defenses based on the contract between him & the obligor, & defenses as between obligee & obligor, not personal to obligor. A 1822 & A 1801.  I.E. Assumer can plead prescription or extinction by way of performance of the obligation owed to the obligee, as he is bound solidarily for that performance, but he cannot assert lack of capacity, as to the original obligor to obligee. rd o If between 3 party & obligee:  Writing required to be enforceable by ANY party. A 1847.  No solidarity. A 1823 (c).  3rd party may not raise defenses based on any relationship he has with original obligor. A 1824.  He may raise same non personal defenses as above, but not compensation. A 1824

SUBROGATION   Subrogation is the substitution of one person to the rights of another. It may be conventional or legal. A 1825. When it results from one’s performance of the obligation of another, that obligation subsists in favor of the one who performed, who has the same rights as the original obligee against the obligor, but it is extinguished as to the original obligee. A 1826. o If the original obligee is paid in part, he may still collect on the balance due & has preference. A 1826  This right shall not be waived or altered if the original obligation arose from a tort. A 1826. Obligee who receives performance from a 3rd person, may subrogate that person to the rights of the obligee, even w/o the obligee’s consent. A 1827. o Conventional subrogation is valid between the parties w/o more, but requires notice to the obligor, or his acceptance in A.A. to be valid against 3rd parites. Until notice is given to the obligor, performance rendered in favor of the original obligee will extinguish the obligation. o Agreement may be made at any time & need not be in writing. o Conventional obligee subrogates to the full amount of the debt, not the amount paid to the obligee. o An inferior creditor has the legal right to pay the claim of a superior creditor, he then stpes into the shoes of the creditor & may use all means & remedies available to the superior creditor. Decuir v Carne. o Plaintiff garage acquired, by payment to customer for damage caused by D, a right of action to recover the payment from the person legally obligated for the debt by way of quasi-contract. Standard Motor.

HOLMES: This would be management of affairs of another also. Negotiorum Gestro. Negotiatum Gestro? I always forget how to spell that. Sounds more like a spell from Harry Potter anyway. Obligor who pays a debt, by borrowing for that purpose, may subrogate that lender to the right of the obligee, even w/o the obligee’s consent. The subrogation agreement must be in writing expressing that purpose. A 1828. o Where D takes out a new mortgage to pay off prior mortgage, ignoring a judgment lien, the payment of the mortgages by D subrogated him to the rights of those creditors, whose claims were paid out of the purchase prices of the property. These claims retain preference over the judgment lien of P. Bierhost. Subrogation takes place by operation of law in favor of: o an obligee who pays another obligee, whose right is preferred to his. o a purchaser who uses the purchase money to pay creditors on property. o an obligor who pays a debt he owes w/ other & for others who have recourse against those others as a result of the payment. When it takes place by operation of law, the new obligee only recovers the amount he paid to the original obligee. The new obligee may not recover more by invoking conventional subrogation. A 1830.

EXTINCTION OF OBLIGATIONS   Performance extinguishes the obligation. A 1854. HOLMES: DUH! Performance may be given by a 3rd person, even against the will of the obligor. This effects subrogation only when so provided by law or agreement. A 1855. o Does not extinguish when performance of that particular obligor was of some value to the obligee. Obligation may be extinguished by transfer of thing, but only if transfer validly transfers the title to thing. A 1856 o If obligor uses a lost or stolen thing to perform, obligee does not acquire ownership, but if the obligor uses a thing obtained by fraud, obligee gets title, so obligation is extinguished. o When payment is made by 3rd party check & the check bounces, it must be the clear intention of the parties that delivery of the check was performance & that it is not conditional on the check clearing. No intention here that the checks should serve as absolute payment. Abry Brothers v Tillman. Performance must be rendered to the obligee, or a person he authorized. Performance rendered to an unauthorized person is valid, if the obligee ratifies it. W/o ratification, performance to an unauthorized person is valid, if the obligee has derived a benefit, but only for the amount of that benefit. A 1857. Performance to an obligee w/o capacity to receive is valid to the extent of the benefit he derived from it. A 1858. When performance is to give a thing of a kind, he doesn’t have to give the best, but can’t give worst. A 1860 Performance shall be rendered in the place given in the agreement or intended by the parties. If there is no agreement or indication, performance to give a thing will be where thing was when obligation arose. If any other kind, then performance is at the domicile of the obligor. A 1862. o Where lease is silent as to where the rent shall be paid, payment is to be made at the leased premises, or at the domicile of the obligor. Therefore, check mailed from lessee on 10th, that did not arrive until the 21st, when it was due on the 15th, is not grounds to rescind lease. Edwards v Standard Oil. Expenses required to render performance are to be paid by the obligor. A 1863.

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IMPUTATION OF PAYMENT     Obligor who owes several debts has the right to pick which debt his payment goes towards. His intent may be expressed at the time of the payment or inferred from circumstances known to the obligee. A 1864. Obligor may not pick a debt not yet due w/o the obligee’s consent. A 1865. When interest is owed, obligor may not choose to pay only principal, w/o consent of obligee & when payment is made on principal & interest it must be applied first to interest. A 1866. Obligor, who has accepted a receipt that puts payment to one of his debts, may not demand that it be instead placed on another debt, unless the obligee knowingly applied to wrong debt. A 1867. Bad faith, if so.

Absent request of obligor, payment is first applied on whether a debt is due, next according to if it bears interest, 3rd according to if it is secured, 4th according to date it became due. If all equal, then to all equally. A 1868.

IMPOSSIBILITY OF PERFORMANCE  Obligor not liable for failure to perform, if it is caused by a fortuitous event that makes performance impossible. He is liable when he assumes the risk of such an event, when he has been PID prior the event, & when the event was preceded by his own fault, w/o which the failure would not have occurred. A 1873. o The event must make performance truly impossible, not just harder or more expensive. Obligor, who has been PID, is not liable for failure to perform if the event would have also destroyed the object of the performance had performance been timely, but he is still liable for the damage caused by his delay. A 1874. Event is one that, at the time contract was made, could not have been reasonably foreseen. A 1875. o Court places more emphasis on the reasonableness of the parties foresight rather than the objective foreseeability of a particular event. The fact that an event is foreseeable does not preclude a conclusion that the parties could not have reasonably foreseen it, since they may not have thought it a sufficiently important risk to have made it part of the contract. o Freezing of the Ohio river in December was so probable that D should have known of the risk & impliedly accepted the risk. D failed to ship in first 11 days, when ships could sail, & only waited to so as to use its own boat, even though he was warned of the freeze by P. Failure puts D at fault, so exception to A 1873 makes D liable for P’s damages. Eugster v Joseph West.  HOLMES: Implied exception of a risk, when it is blatantly obvious. When the entire performance owed by a party is impossible, the contract is dissolved. The other party may then recover any performance he has already rendered. A 1876. If performance only made impossible in part, court may reduce the other party’s counter performance, or according to the circumstances, dissolve the contract. A 1877. If a contract is dissolved due to a fortuitous event that happened after an obligor has partially performed, the obligee is bound, but only to the extent he was enriched by the obligor’s partial performance. A 1878.

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NOVATION    Novation is the extinguishment of an existing obligation by the substitution of a new one. A 1879. Such an intention must be clear an unequivocal, as novation may not be presumed. A 1880. It occurs by agreement of the parties to substitute a new performance or cause for one that is already owed. If any substantial part of the original performance remains owed, there is no novation. It also occurs when the parties expressly declare an intention to novate an obligation. Mere modification of an obligation, w/o intention to extinguish it, does not effect a novation. I.E. Execution of a new writing, negotiable instrument or new security for the performance of an existing obligation. A 1881. o Novation is the obligor contracting new debt, which is a new obligation having a new cause or whose performance has a different object, but may still occur absent a new performance or cause, if there is an express declaration of the parties to that effect. o Executing a new note for the renewal of an old one, does not novate the original debt or destroy the privilege securing creditor’s right. Creditor is able to seize the mules. Farmers Bank v Belle Alliance. o Novation takes place by the substitution of one debtor for another & does not require an express written declaration by the creditor to discharge the debtor who has made the delegation. Chain Saws Case. Novation takes place when a new obligor is substituted for a prior obligor, whose debt is discharged. The consent of the prior obligor is not required, unless he had an interest in performing the obligation himself. A 1882. It has no effect if the obligation it extinguishes does not exist or is absolutely null, but if obligation is relatively null, the novation is valid, as long as the obligor of the new one knew of the defect in the old obligation. A 1883 Security given for the performance of the old obligation may not be transferred to the new one, w/o agreement of the parties who gave that security. A 1884.

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Novation between the obligee & one solidary obligor, releases the other solidary obligors. A 1885. Delegation of performance by an obligor to a 3rd person is effective when that person binds himself to perform. A delegation effects a novation only when the obligee expressly discharges the original debtor. A 1886. If the new obligor has assumed the obligation & acquired the thing given as security, the discharge of any prior obligor by the obligee does not affect the security or its rank. A 1887.

COMPENSATION  Compensation extinguishes both obligations to the extent of the lesser amount. It is by operation of law when: o Reciprocal obligation exist between the same parties. o Object is money or fungible goods identical in kind. o Amount of the object is liquidated. o Obligation is presently due. A 1893. Compensation occurs regardless of the cause of the obligation, but not if one of the obligations it to return a thing, unlawfully taken from the owner, or to return a thing given in deposit, or loan for use etc. A 1894. o Bank may apply funds on deposit with the bank towards debt owed by depositor. Compensation between obligee & principal obligor extinguish the obligation of a surety. Compensation beteween obligee & surety does not extinguish the obligation of the principal obligor. A 1897. Compensation between the obligee & one solidary obligor extinguishes the obligation of the other solidary obligors only for the portion of that obligor. A 1898. Compensation cannot occur or be renounced to the prejudice of prior rights of 3rd parties. A 1899. Compensation of obligations may take place by agreement of the parties, though the requirements for compensation by operation of law are not met. A 1901. Although the obligation claimed is unliquidated, the court can declare compensation as that part of the obligation that is susceptible of prompt & easy liquidation. A 1902.

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CONFUSION  Confusion is when the obligee & obligor are united in same person & the obligation is extinguished. A 1903. o When the insurer is the insurer of both P & D, confusion extinguishes the claim of P against D to whatever P has already been paid by insurer. Rosenblath’s Inc. v Evans. Confusion between the obligee & surety does not extinguish the principal obligation. A 1904. If solidary obligor becomes obligee, confusion extinguishes obligation only for the portion of that obligor. A 1905

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SIMULATION  Contract is a simulation when it does not express the true intent of the parties by mutual agreement. If there is a writing with the true intention, that is called the counter letter. A 2025. o Anyone w/ an interest can seek a declaration of simulation as there is no insolvency requirement as in a revocatory action. Relief is for the court to state effects of the supposed act. It is an absolute simulation when it is intended that the contract will have no effects between them. A 2026. o Action for absolute simulation does not prescribe. Milano v Milano. Had to look this up in treatise! o Jurisprudential presumption of simulation when circumstances show a highly reasonable doubt as to the circumstances of the sale. Peacock. Nominal priced sale of land presumed to be a donation. Relative simulation when parties want effects between them that are different from the contract. It creates all effected intended by the parties, if all requirements for those effects have been met. A 2027. o Transaction will not be set aside as a simulation if supported by consideration. Trident Oil. Simulation may have effects to 3rd parties. Counter letters can have effects for 3rd parties in good faith. A 2028. If the seller keeps the thing sold, act is presumed to be a simulation. A 2480. Parol evidence is allowed to prove a simulation. A 1848 (c).

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NULLITY  Contract is null when it lacks a requirement of formation. A 2029. It is absolutely null when it violates a rule of public order. A 2030. It is relatively null when it violates a rule intended to protect a party. A 2031. o Will, that is invalid for lack of form, is an absolute nullity. Newsome v Boothe. Absolutely null contracts may not be confirmed, but a relatively null one may be confirmed. A 2030& A 2031. Action for absolute nullity never prescribes, but for relative it is 5 years from when the nullity ceased or the defect was discovered. A 2031 & 2032. Even if prescribed, it may always be raised as a defense. A 2032 o Anyone with an interest can sue on an absolute nullity, but only the party can for relative. A 2031. o Court can declare null sua sponte for absolute, but not for relative. A 2031.  Court can declare contract null, even w/o proper SOP on the parties. Jones v Chevalier. If declared null, parties are restored as contract is deemed to never have existed. A 2033. o If the cause was unlawful & the party knew or should have known, he may not recover. A 2033. o Absolute nullity is still a defense even if that party knew. A 2033. o If a provision is declared null, the entire contract is not null, unless the parties wouldn’t have agreed unless that clause was in the contract. A 2034. o Nullity does not impair rights of 3rd parties from onerous contracts. Recordation rules apply. A 2035.

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REVOCATORY ACTION  Obligee may annul any act or failure to act of the obligor, that happens after the debt to obligee arose, if it causes or increases obligor’s insolvency. A 2036. It is required that the debt predate the act & that the debtor is insolvent.  Insolvent when total he owes exceeds total of his assets. A 2037. o Claim of obligee does not have to be a liquidated judgment to be considered prior debt. o If obligor’s act was payment of a valid debt, it may not be annulled. o Must sue w/in 1 year from time creditor learned of the act, but no more than 3 years from act. A 2041  2 year period if obligee represented by trustee in bankruptcy.  No SOL if act was gratuitous. A 2039. rd If 3 party knew or should have known the onerous act would cause or increase insolvency then: o 3rd person gets back from obligee only the amount paid that increased solvency of obligee. A 2038. If 3rd party did not know that onerous act would cause or increase insolvency then: o 3rd person gets back what he gave. o Lack of knowledge presumed if 3rd person paid at least 80% of value of thing. Contract may not be annulled if it was conducted in regular course of business. A 2040. Creditor must join debtor & 3rd person in the suit. A 2042. 3rd person may plead discussion of the obligor’s assets. A 2042. o Discussion is a process where the parties determine if there is other property to which the creditor may attach. If so, the action to annul is delayed until that property is dealt with. Gayoso v Lewis.  Reported cases are from 1832. Not discussed in class but I had no idea WTF it meant… If creditor wins, the act is annulled only so much as it affects the creditor’s right. A 2043. o Creditor that brings suit is first in line to recover, even over superior creditors. But, if multiple creditors all sue at about the same time, then they all split evenly. If a debtor causes/increases his insolvency by failing to exercise a right, creditor can exercise it for him, unless the right is strictly personal to the debtor. A 2044. Oblique action. o

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FORM REQUIREMENT A.A. required: o Donation inter vivos.  Exceptions:  Real delivery of a corporeal movable.  Onerous donation – donation w/ obligation on donee for benefit of donor, unless obligation is worth less than 2/3 of the thing.  Remunerative – unless services worth less than 2/3 of the thing. Writing Required. o Contract to TRANSFER an immovable or real right in an immovable.  This includes acceptance of offers to transfer immovables.  Acceptance of Options & ROFR in immovables.  Oral modifications to a contract of sale of immovables OK? o If parties intent is to not be bound until writing is executed, where no writing required by law. o Compromise, but it is also valid if recited in open court.  Writing required to notify obligee that partial payment of obligor is intended as full payment. o Assumption of obligation by 3rd person, between obligor & 3rd person, to be enforceable by obligee. o Assumption of obligation by 3rd person between obligee & 3rd person. o Suretyship. o Subrogation agreement where obligor borrows money to pay existing debt on thing to subrogate that new creditor to the rights of the one that was paid off. o Promise to pay debt of another. NO form requirement. o Remission of debt. o Transfer of movable, but need evidence & witness if over $500. o Third party beneficiary o Confirmation of relatively null contract. o Putting in default, may be written, or oral if made in front of 2 witnesses. o Subrogation. o Ratification of performance rendered to a 3rd person by obligee. o Novation o Renunciation of solidarity.

MUST BE EXPRESS.          Requirement in an advertisement that customer must notify store that he is accepting advertised offer. Non-obvious subjective cause, if party wants to use failure of cause to annul. Notification from employer to employee that he would not be paid extra for extra work. Promise to pay debt discharged in bankruptcy. Suretyship Novation Confirmation of a relatively null contract. That the parties agreed that the contract would be dissolved for failure to perform. Solidarity & renunciation of solidarity.

PRESUMPTIONS  In a contract of deposit, it is presumed that a loss to the thing resulted from lack of due care.

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Presumption that the parties do not intend to be bound by an oral agreement, when no writing is required but they intend to reduce agreement to writing. Presumption of normal cause based on the circumstances of the obligation. It is presumed that the obligor will accept remission of debt by the obligee upon receipt. Person who signs a written agreement is presumed to know its contents. Obligation involving personal services is presumed to be strictly personal. Term is presumed to benefit the obligor. If obligee returns the instrument evidencing the debt, it is presumed that he intends to remit the debt. Presumption that an act is a simulation if too low of a price is paid. If seller keeps the thing sold, it is presumed to be a simulation. Presumed lack of 3rd party knowledge that an onerous act would increase the insolvency of a debtor, if that 3rd party paid at least 80% of the value of the thing.

VICES: Fraud, Error & Duress  Cause: o Error: Must concern a cause that w/o which, the obligation would not have been incurred. o Fraud: Must be a cause that has substantially influenced decision. o Duress: Cause doesn’t matter, unless it is a contract to secure means of preventing threatened injury with a 3rd party in good faith. No rescission granted in that case. Other party knowledge: o Error: The cause must have been known or should have been known to other party. o Fraud: Other party must have intent for fraud. For 3rd party fraud, fraud is grounds for rescission if the other party knew of the fraud, not the error. o Duress: Party knowledge does not matter. Consent is vitiated. Reasonableness matter? o Error: Yes, court may refuse if error was not excusable or due to negligence. o Fraud: Yes, not fraud if party could have learned truth w/o difficulty, inconvenience, or special skill, unless there is a fiduciary like relationship. o Duress: Yes, the act must cause reasonable fear of unjust & considerable injury & the personal circumstances of the person are considered. Remedy: o Error: For unilateral errors, party in error is liable for reliance damages to other party, unless other party knew or should have known of the error. Court may also refuse to annul & instead grant damages to party in error for any loss sustained, if justified based on interests of other party. o Fraud: Fraudulent party owes damages and attorney fees. If against 3rd person, that person also liable. o Duress: Innocent party or parties may recover from one that exerted duress. Recovery are damages & attorney fees. This includes against a 3rd person, so long as other party had no knowledge. Can the other party do anything to stop dissolution? o Error: Yes, if other party is willing to perform, as intended, for the party in error. o Fraud: No. o Duress: No. Though I suppose he could threaten to break your legs again…