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Obligations Outline Professor Picou Spring 2005 Introduction What is an Obligation? 1. La. C.C. art.

1756: (quote this directly on final) An obligation is a legal relationship whereby a person, called the obligor, is bound to render a performance in favor of another, called the obligee. Performance may consist of giving, doing, or not doing something. a. something that the law or morals command a person to do, made effective by imposition of a sanction for failure to obey/ comply b. written instrument, where (1) party contracts with (2) for payment of sum of money (value) c. legal bond binding two persons where, the creditor or obligee, is entitled to demand from the other, a certain performance d. legal relationship where the obligor is bound to render performance in favor of the obligee Every obligation contains a duty, but not every duty amounts to an obligation 2. La. C.C. art. 1757 Sources of Obligations: Obligations arise from - Contracts (La. C.C. art 1906) - other declarations of will. - directly from the law (La. C.C. art. 1757) , in instances such a (1) wrongful acts, (2) management of the affairs of another, (3) unjust enrichment (4) other acts or facts. - management of the affairs of another - unjust enrichment a. has a duty to be performed by a person in addition to a corresponding right by the obligee to demand performance of that duty. Obligor = bound to perform Obligee = demands performance b. Patrimonial Right: the right that an obligation gives a creditor or obligee, the satisfaction of an obligee need for performance needs to be satisfied. The legal relationship is often referred to as a credit right or patrimony. c. This right can be transferred or assigned. Patrimony the sum of a persons assets and liabilities; the net assests of a person 3. La. C.C. art 1758: Effects of an obligation A. the obligee has the right to (1) Enforce the performance that the obligor is bound to render (specific performance) (2) Enforce performance by causing it to be rendered by another at the obligors expense (obligor pays someone else) Page 1 of 70 I.

(3) Recover damages for the obligors failure to perform, or his defective or delayed performance (damages) B. the obligor may have the right to (1) obtain the proper discharge when he had performed in full (2) Contest the obligees action when the obligation has been extinguished or modified by a legal cause Note: There is not obligation without cause C. Natural Obligations v Real Obligation: 1. La. C.C. 1760 Moral Duties that may give rise to a natural obligation: a. A Natural obligation arises from circumstances in which the law implies a particular moral duty to render a performance Note: the statement natural indicates that this a quasi-legal relationship b. Art. 1761 Effects of a Natural Obligation - Not enforceable by Judicial action - May not give rise to reclamation (exception: duress, fraud, or error) - A contract made for the performance of a natural obligation is an onerous one . 2. La. C.C. 1763 {Real obligation} Definition: An real obligation is a duty correlative and incidental to a real right D. La. C.C. art 1759 Good Faith a. Good faith shall govern the conduct of the obligor and the obligee in whatever pertains to the obligation (a) Parallel article 1983 Contracts must be performed in good faith II. Contracts What is a Contract? 1. La. C.C. 1906: Definition of contract; A contract is an agreement by two or more parties whereby obligation are created, modified or extinguished 2. La. C.C. 1907: Unilateral contracts; A contract is unilateral when the party who accepts the obligation of the other does not assume a reciprocal obligation. 3. La. C.C. 1908: Bilateral or Synallagmatic contract; A contract is bilateral, or synallagmatic, when the parties obligate themselves reciprocally, so that the obligation of each party is correlative to the obligation of the other. (a) The obligation to one party is the cause of the other parties obligation (b) La. C.C. Art. 1911 4. La. C.C. 1909 Onerous contract; a contact is onerous when each of the parties obligate themselves reciprocally, so that the obligation of each party is correlative to the obligation of the other. 5. La. C.C. 1910 Gratuitous Contract; A contract is gratuitous when one party obligated himself towards another for the benefit of the latter, without obtaining any advantage in return. a. Loan for suretyship, mandate, deposit donation Page 2 of 70

b. Donor depletes his patrimony. c. Donation (La. C.C. art. 1536) B. The (4) Elements of a Contract If all four elements of a contract are not meet then a contract is null (Art. 2029). All four elements must be present for contract to be enforceable Capacity (art. 1918) Consent (art. 1927) Cause (art. 1966) Object (art. 1971)

Capacity to enter into an agreement, - sufficient age, age of discernment - we presume that all people have the capacity until we find out otherwise - a mental capacity to take care of themselves - except all unemancipated minor, interdicts and persons who not of the mental capacity at the time of contracting - capacity is the rule and incapacity of the exception Consent => establishing the offer and acceptance, LA C.C. Art. 1927 Cause => Lawful Cause - an obligation can not exist without a lawful cause - cause is a reason why a person obligates themselves Determinable Object => The object of the contract is an understanding of the ideas of giving, doing or not doing (the object of performance). - The obligation to give is one whereby the obligation binds herself to transfer to the obligee the ownership of a thing or to grant him some other real right in a thing. - The obligation to do is one whereby the obligor binds herself to carry out or execute an act or series or acts other then the transferring of a real right, such as a making or manufacturing something or rendering service. - The obligation not to do is one whereby the obligor bind herself to abstain from undertaking a certain course of action. Personal Rights and Real Rights both are part of a persons patrimony Real right - requires only one subject, the holder, who exerts direct and immediate power over the thing which is the object of the right. Absolute bec/ its exerted directly over a thing. - One person and attached to an object. Personal right enforceable between two parties, but dies w/ a person Patrimonial rights in certain situations, these rights may be transferred; patrimony of debtor is the common pledge of the creditor (creditor may seize debtors patrimony) 2 types of creditors: 1. Secured creditor (obligee) 2. Unsecured creditor (obligee)

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Secured creditor this person has a mortgage on immovable property and creditor would seize land, then if thats not sufficient, then creditor could go after debtors partimony to satisfy default of loan. Unsecured creditor has an obligation which is NOT secured by any mortgage; only right he has to enforce his loan is the obligors patrimony Salles v Stafford, Drebes and Roy, Inc A contract can override the code if the parties agree to it and as long as it is not consent to illegal activity; K must be made in good faith. potestative condition depends entirely upon the will of the obligor Harrison v. Gore - filed suit against old coach for sexual harrassment, but this was really a tort case, not a K case.

CHAPTER TWO: CONSENT (the 2nd requirement for a valid K) Union of the parties will Consent: La. C.C. art. 1927; A contact is formed by the consent of the parties established through offer and acceptance. Unless the law prescribes a certain formality for the intended contract, offer and acceptance mau be made orally, in writing, or by action of inaction that under the circumstances is clearly indicative of consent. Unless otherwise specified in the offer, there need not be conformity between the manner in with the offer is made and the manner in which the acceptance is made. If an offeror purposes a conclusion of a contract and the offeree accepts then you have a contract. To constitute a true offer this has to be sufficiently precise and complete. Offers can be either expressed or implied; Newspaper advertisements and catalogs, generally do not constitute an offer; is there a true intent of the offeror to conclude a contract up receipt of the consent of the offeree You can have two different offers, an irrevocable offer and revocable offer

Consent has 2 meanings: 1. A partys assent to the terms and conditions of a projected K, given w/ the intent of creating legal effects (consent can be in the nature of an offer) but this is a restrictive definition. 2. The accord (agreement) of the parties will on the projected K or meeting of the minds FOUR elements for a valid CONTRACT: 1. Parties must have legal capacity to contract. 2. Parties mutual consent must be freely given. 3. There must be lawful cause or purpose. 4. The object of the contract must be lawful, possible, and determined.

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Expressing Consent: Express consent consent conveyed by words whether verbal or written i. WORDS? it must be clear to prevent misunderstanding and it must be looked at as a whole and not taken out of context. By conduct consent through ACTS and WORDS i. implied consent mere action w/o words may demonstrate consent provided that the action occurs in circumstances that suggest that implication (may be established by law, if not, then its left up to the discretion of the court). ex. receiveing and using goods sent by a merchant implies a promise to pay a reasonable price even though none was named in the order ii. SILENCE? consent may be conveyed by a partys inaction or silence The surrounding circumstances must be very clear in order to corroborate a presumption that a partys silence amounts to an expression of his consent. ex. Can use previous transations between parties (trade usage may also come into play). Mutual Expression of consent: 1. Belgard Construction Co. v Collins a. There needs to a meeting of the minds for a formation of a contract. The tendering of a acceptance in an untimely manner, would then make that acceptance a counteroffer, left to the consent of the other party (offeror), who then becomes the offeree. La. C.C. art. 1947: Consistently followed by jurisprudence Form contemplated by parties; When in the absence of a legal requirement, the parties have contemplated a certain form, it is presumed that they don not intend to be bound until the contract is executed in that form.

Expressing Consent: usually there is no real requirements to the way in which a person accepts: Note: For the transfer of immovables, there must be written documentation. - La. C. C. art. 1936: Reasonableness of manner and medium of acceptance; A medium or a manner of acceptance is reasonable if: o it is the one used in making the offer o one customary in similar transactions at the time and place the offer is received, unless the circumstances known to the offeree indicate other wise. La. C.C. art 1939: Acceptance by performance; When an offer invites an offeree to accept by performance and, according to usage or the nature of the terms of the contact, it is contemplated that the performance will be completed if commenced, a contract is formed when the offeree begins the requested performance La. C.C. art. 1940 Acceptance only by complete performance When according to usage or the nature of the K, or it own terms an offer made to a particular offeree can be accepted only by rendering a completed performance, the offeror cannot revoke the offer, once the offeree had begun to perform, for the reasonable time necessary to Page 5 of 70

complete the performance. However the offeree is not bound to complete the performance he has begun. The offerors duty to performance is conditional on completion or tender of the requested performance. Neither is bound till the performance is complete. La. C.C. art 1942: Acceptance by Silence; When, because of special circumstances, the offerees silence leads the offeror reasonably to believe that a contract has been formed the offer is deemed accepted o This words special are added because of the general assumption that silence means non-acceptance or disinterest. Case Law Illinois Central Gulf Railroad Company => Railroad Company, Riding on the New Orleans Railroad Their lease indicated that the property had to remain for the purposes of truck sales and service business which was started in 1936. No subletting. - The court ruled in this case that silence was not acceptance due to the distance of the company from the actual property and reasonableness of the delay - Every contract or modification of previously concluded agreement requires the occurrence of the consent of the parties (La. C.C. 1927) Marine Ins. Co., Limited of London Eng v. Rehm => Insurance Companies Knowledge of the offer? The court was concerned about this creating a contract, when the customer has to stop and read and see if he wants to consent to the agreement on the back of the receipt. SO therefore the court concludes that a parking lot or any other business that benefits, shall be deemed a depository and should treat the property of the consumer the same as they would treat their own. - A proprietor of paid parking is a compensated depository, and must be held to the strict obligation. - Depository person must care for property like it is his and will be liable for damage - The language on the back of the ticket did NOT consitute an other K, it was an offer and Kleins acceptance of the ticket did NOT constitute acceptance. Cashio v Amco Transmissions => No notice was given that they liability was limited and one the vehicle was left, the D knew and therefore his consent was implied. Once the owner has sent the thing to the depository and the later knows the thing has been sent, consent is implied. Safe Harbor for unattended parking lot owners. Signs must tell patrons that the lot is unattended, patrons must have unrestricted access to lot, and car owner must retain his keys THEN the lot owner is NOT liable for damage to the car, bec/ car owner is only leasing the space to the car owner. compensated deposit there is a presumption of fault by the lot owner when the loss resulted from a lack of due care on the part of the depository making him liable for damage. The burden is on him to exonerate himself from fault. North Louisiana Milk Producers Assoc., Inc. v The Southland Corporation => Letter sent to the D constituted notice of price and an order can be legally operable as acceptance. It is not enough for a party to say what he will do, it must be concrete, (i.e. in this case, they should have included the quantity with there pricing demand) Page 6 of 70

Acceptance by performance (La. C.C. art. 1939) (1) The effect of beginning performance (delivering the milk) is that the offier is not revocable for a reasonable time (Art. 1928) (2) When there is no specifice wording to the effect of (Art. 1940) we assume acceptance under 1939.

Offer: La. C.C. arts. 1928 1932 An offer in a unilateral declaration of will, it has to propose the conclusion of a contract. - To constitute an valid offer, it must be sufficiently precise, and complete so that the intended K can be concluded by the offerees expression of his own assent, thereby giving rise that mutual consent of the parties. An offer can be expressed or implied. Offerors will must be declared (projected outward) Declaration must be addressed to the person w/ whom the offeror intends to contract. - If offer lacks precision NOT an offer, but an invitation to offer; invites negotiation to contract. - If offeree changes terms? Counteroffer OFFER 3 requirements 1. the design to give the other party the right of concluding the K by his assent 2. the offerors intention to obligate himself 3. a serious intent - Offer can be made to one person or, if properly communicated, to the general public Offer may be made by: words (spoken or written) action w/o words Can be express or implied Irrevocable Offer (La. C.C. 1928); An offer that specifies a period of time for acceptance is irrevocable during that time. When the offer manifests Revocable Offer (La. C.C. art 1930); An offer not irrevocable under Civil Code Article 1928 may be revoked before it is accepted Expiration of offer by death or incapacity of either party (La. C.C. art 1932); An offer expires by the death or incapacity of the offeror or the offeree before it had been accepted Offers to the public Ads and invitations to negotiate In LA ad may be an offer if accepted in special situations ex. offer of a prize or announcement of the terms of a contest (ex. auction sales) BUT, generally in LA, an ad is regarded as an invitation to negotiate o ex. ad that certain goods are for sale at a certain price Offer may be made w/o words and may be made by inaction ex. taxicab waiting for passengers at a taxi stand Ks are binding bec/ law is protecting the wills of the parties bec/ you can bound yourself with your free will

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Case Law Johnson v. Capital City Ford Co. Inc. => Based on advertisement for sale and trade in of vehicles. In Louisiana and elsewhere a newspaper add may constitute an offer, acceptance will consummate a contract and create an obligation to perform the terms of the published offer. Acceptance of an offer may be made by silence; implied or expressed by words, but acceptance based on consent to an offer creates a valid contract and is binding. - La. C.C. art 1944: Offer of reward made to the public; An offer of a reward made to the public is binding upon the offeror even if the one who performs the requested act does not know of the offer North Central Utilities, Inc. v. Walker Community Water System Inc. => A request for bids for the sale of an object is not an offer but an invitation to make an offer. - Unequivocal words, expression of mere intent, do not make an obligation - For an offer, a proposal must firmly reflect the intent of the author to enter into a contract. Ds advertisement was merely an intent to sell and does not constitute an offer to accept the highest bid. Duration of the Offer A proposition to enter into a K is not intended to remain open indefinitely or for an unreasoanble amount of time If an offeror has named a period of time, he is bound by his offer during that time If NO period of time is named, then the minimum REASONABLE period is assumed Reasonable period? This is: o time necessary for the offer to reach the offeree o Plus, the time necessary for the offerees reply to get back to the offeror C. Irrevocable Offer (La. C.C. 1928); An offer that specifies a period of time for acceptance is irrevocable during that time. When the offer manifests - Expiration (La. C.C. art. 1929) An irrevocable offer expires if not accepted within the time prescribed in the preceding Article - Expiration relieves the offeror of the need to revoke. If the offer expired and the offeree accepts after then the acceptance will be deemed a counter-offer, governed by art. 1943. - Effective Acceptance (La. C.C. art. 1934); An acceptance of an irrevocable offer is effective when received by the offeror. i.e. a written acceptance: (1) if when comes into the possession of the addressee (2) someone else authorized by him to receive it, (3) deposited in a place the addressee has indicated 2. Does the offer specify a time? Then it is irrevocable (1928) 3. If doesnt specify, did the offeror manifest intent? Then it is irrevocable (1928) 4. Neither, then it is revocable and governed by 1930. Notes: (1) An offeror who specifies a time for acceptance which is too long under the circumstance is not bound beyond a reasonable time. (2) Determining Intent, to delay a. Nature of the contract Page 8 of 70

i. Is it a gratuitous or onerous ii. Is it a promise for a promise or a promise for an act? b. Situation of the Parties i. Are they face to face? ii. Are they at a distance? iii. How do they communicate? iv. Do they have prior dealings? v. Circumstances of the case Everything that might influence the manifestation of the offeror.

IRREVOCABLE OFFER. An offer is irrevocable in two situations: If an offer specifies a period of time for a acceptance it is irrevocable during that time. (Art. 1928) If the offeror manifests an intention to given the offeree a delay within which to accept, without specifying a time, the offer is irrevocable for a reasonable time. (Art. 1928) REVOCABLE OFFER. All other officers are revocable and can be revoked before acceptance. (Art. 1930) Revocation of a revocable offer is effective if received by the offeree before acceptance. Case Law Schulingkamp v. Aicklen => Court concluded that in this case, 36 days after the offer was made was a reasonable time and the P had ample time to accept before the withdrawal was sent, therefore the D was entitled to revoke. Meyers v. Burger Kind Corporation => An offer specifies a period of time for acceptance is irrevocable during that time period. When the offer manifests an intent to give the offeree a delay within which to accept, without specifying a time, the offer is irrevocable for reasonable time. - The use of the words at least does not make a definite time and therefore Burger Kings signature and allowing parkway to begin renovations indicates acceptance done in a reasonable time. W.M. Heroman & Co. Inc. v Saia Electronic, Inc. => It is customary that subs bids are irrevocable and the court found that Ds bid was irrevocable until such bid by the general contractor to the owner had been declined or the project been abandoned, provided an unreasonable time had not elapsed A general contractor who relies on a bid by a subcontractor = there is an issue here of irrovocable offer. Usually the ct. will allow a LONG PERIOD of time for this type of case bec/ of the nature of the business. 2. Revocable Offer (La. C.C. art 1930); An offer not irrevocable under Civil Code Article 1928 may be revoked before it is accepted - Expiration of revocable offer (La. C.C. art. 1931); A revocable offer expires if not accepted within a reasonable time - Effective Acceptance of a revocable offer: (La. C.C. art. 1935) Unless specified by the offer or the law, an acceptance of a revocable offer, manner and by a medium suggested by the offer or in a reasonable medium, is effective when transmitted by the offeree. Page 9 of 70

What is considered an effective transmission is to be determined by the courts, according to business practices. Time when revocation is effect (La. C.C. 1937); A revocation of a revocable offer effective when received by the offeree prior to acceptance.

Art. 1931: Expiration of an Irrevocable Offer: A revocable offer, expires if not accepted in a reasonable time. Art 1935: Time when acceptance of a revocable offer is effective: Unless otherwise specified by the offer or the law, an acceptance of a revocable offer, made in a manner and by a medium suggested by the offer or in a reasonable manner and by a reasonable medium, is effective when transmitted by the offeree. Art. 1937: Time when revocation is effective: A revocation of a revocable offer is effective when received by the offeror prior to the receipt of acceptance. E. Option contracts: 1933, An option is a contract wherby the parties agree that that the offeror is bound by his offer for a specified period of time and that the offeree may accept within the time. - The offer requires the consent of both parties - The contractual object in an option K is the time allowed in order to accept and not accept an offer or in essence make a contract. - O.K. is preliminary to another K. It is entered in contemplation of another contract that may come into existence. - A K containing a promise to make another K later - Unilateral promise a. Option Ks v. irrevocable offers? ***ON FINAL Option K Irrevocable Offer -Is a K - Is not a K -Does not expire at death -Expires at death -Can be assigned -Cannot be assigned -MUST have a specified - only an OFFER period of time -Dont need consideration bec/ hes bound by his free will - The grantee in an option contract is in a better position than the offeree of an irrevocable offer. - The difference is the amount or lack of consent. In an O.K. you already have the consent of both parties - There must be a specified time for a valid O.K. - The promise not to redraw the offer, by its very nature if not by definition implies a promise to give thought to the offer and reach a decision => consideration Effectiveness of the offer: - The acceptance of an irrevocable offer is effective upon receipt. - By its nature, an O.K. is irrevocable ofr a specified period of time Page 10 of 70

Acceptance under an O.K. must be regarded as effective at the moment of receipt

Right to Accept, rejection and Counteroffer Under an Option - Counteroffer: implies a rejection of the original offer and puts an end to the right to accept it - Rejection under O.K: o An obligee is privileged to avail himself of the obligation under the option contract o In making a rejection before the specified time, the obligee is expressing his intent to renounce the obligation or terminate the option contract - Counteroffer: o If the intent is to counterpropose rather then inquire about the possible consent of modification of the offer then it is renounced or terminate o If the intent of the obligee is merely to inquire about a possible modification of the offer it does not extinguish his right to accept the other offer. Case Law Glover v. Abney => - Did the D make an agreement or irrevocable offer? - C.C. art. 2462: To be valid as an option instrument must be supported by valuable consideration Chapter III: Consent (Contd.) II. General Principles Revisited i. Art. 1928 consent can be expressed by the offeror or offeree in any way unless the law prescribes a certain formality. An example of this formality is found in the sale of immovable property which the law requires by in writing. ii. Art. 1939- Binding when performance begins iii. Art. 1940- period of irrevocability not binding until completed iv. Art. 1941 duty to give notice unless offeror knows or should know A. The Acceptance Acceptance and Offer: correlative acts B. Manner and Medium a. May be made in a special manner i. An offeree who wants to accept must do it in the manner prescribed in the offer ii. If no manner is prescribed then a medium us a manner of acceptance it is reasonable 1. the one used for making the offer 2. one customary in similar transactions 3. at the time when and the place where, the offer is received 4. Therefore if the offer is received through a faster means of communication is would be reasonable to convey the acceptance through a slower means iii. If no manner is specified and the offeree has special knowledge of circumstances that call for a particular manner or medium of acceptance, the Page 11 of 70

acceptance made in another manner or by a different medium would not be effective C. Communication a. A persons will has no existence at law if it is not declared and therefore unknown b. Two questions to ask with considering acceptance: (1) whether the acceptance is effective only when communicated to the offeror. 1. bound only upon learning of acceptance 2. in communication my amount to a wavier of acceptance (2) Whether parties are negotiating face to face or at a distance? 1. if no delay is given for acceptance, an acceptance must be given before the end of the communication 2. this applies to telephone conversations and other instantaneous communication D. Parities at a Distance and Time of Contract Formation a. The Declaration theory: sees the contract formed at the moment the internal will of the acceptor is generated in his mind. b. Second Theory: considers the contract formed at the moment of transmission, that is, when the party who accepts parts whit the letter containing the acceptance c. Third Theory: considers the contract formed only at the moment the offeror actually earns of the acceptance d. Louisiana has adopted both, transmission and reception theories. E. Acceptance of a Revocable Offer a. The acceptance of a revocable offer made in manner and by the medium suggested by the offer, or made in a reasonable manner and by a reasonable medium, is effective once it had been transmitted by the offeror. b. If the offeror has transmitted a message of revocation at the time the offeree transmits his acceptance, a contract is nevertheless formed, since a revocation is not effective until received by the offeree. i. Whether an act constitutes effective transmission of acceptance is a question answered in the light of circumstances. ii. Once the offeree has done whatever is reasonable and customary for his message of acceptance to start in the direction of the offeror, the acceptance of a revocable offer is effective, and therefore a contract is formed. F. Acceptance of a Irrevocable Offer a. Named Medium: the offeree must follow that prescription and the acceptance will only be effective when received in that mode i. This protects the offeror, thus, is sheltered against the surprise of a contract formed without his knowledge b. No Medium: a written acceptance is received when it comes into the possession of a person authorized by the offeror to receive it or in a place that the offeror has indicated. c. This does not apply when a place is merely suggested G. Overtaking an acceptance with rejection a. Question: Whether the offer, to which the overtaken acceptance was given, is irrevocable or revocable. i. Irrevocable: it is possible to overtake the acceptance with a rejection

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1. both the acceptance and the rejection are effective upon reception by the offeror 2. so therefore which ever reaches the obligor first ii. Revocable: a rejection received after the acceptance of a revocable offer has been transmitted amounts to an offer from the offeree to dissolve the contract already concluded, an offer which the original offeror is of course free to accept or reject. Overtaking of a rejection by an Acceptance a. If the offeror receives an acceptance, a rejection that arrives later, though transmitted before the acceptance, does not prevent the formation of a contract. b. When the offer is revocable, the acceptance is effective upon transmission, but the rejection is effective only upon rejection. c. Whether the offer is revocable or irrevocable, if the offeree attempt to overtake fails so that his acceptance is received after reception of the rejection, that untimely acceptance must be regarded as a counteroffer. Acceptance by Performance a. When the offer requires an express acceptance the offeree may not accept in a different manner. b. Bilateral/Commutative: the acceptance, directly and indirectly, expresses the offerees promise to render the performance the offeror has requested in return for his own.=> promissory acceptance c. Unrequested Acceptance: the offeree may choose to go ahead and render the performance requested in the offer, without making a promissory acceptance. In either case performance by the offeree is an effective acceptance. d. When the offeror invites an offeree to accept by performance, a contract is formed when the offeree begins the requested performance. i. The offerees intent must be to complete the performance he commenced ii. When the nature of the contract is such that the offeree cannot fail to realize that if he starts to perform the offeror will expect him to complete the performance started. Acceptance Only be Completed Performance a. According to usage, or the nature or the terms of an intended contract, only a completed performance can be regarded as acceptance of the offer b. This is based off of cases of uncertainty or doubt i. The relevant feature of situations of that kind is an element of uncertainty or doubt. ii. The intended contact does not come into existence until the offeree renders a completed performance iii. The offeror cannot revoke the offer, once the offeree has begun to perform, for the reasonable time necessary to complete the performance. iv. The offeree is not bound, however, to complete the performance he has begun c. This analogous to an O.K. where the offeror is bound not to revoke the offer for a period of time while the offeree is free to accept or not Notice of Commencement of Performance

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a. When the parties are at a distance so that the offeror cannot immediately learn whether performance has been started by the offeree, the latter must give the offeror prompt notice that he has commenced to perform. i. the case of the offeree not giving notice, the contract may still be enforceable but the offeree will be responsible for any damage that might have incurred by the offeror due to the lack of notice. Acceptance by Silence a. Acceptance by Silence may be adequate for consent, therefore adequate for acceptance b. There only occur when for special circumstances when the offerees silence leads the offeror to reasonable believe a contract has been formed. Acceptance Must Conform to the offer a. An effective acceptance must be in accordance with the terms of the offer b. An acceptance not in accordance with the terms of the offer is not valid as such but only as a counteroffer. c. No contract of sale may comes into existence if offer and acceptance differ on thing or the price. d. If the acceptance limits, conditions or modifies the offer, it is itself considered a new offer and gives the one who made the original offer the right to withdraw. e. An acceptance may contain a term that, though not in accordance with the offer, may not indicate dissent on the part of the offeree but rather a request addressed to the offeror for modification or reconsideration of the offer. i. This will not prevent the formation of the contract f. Acceptance by Performance: in this case, an acceptance that does not conform to the offer may also amount to a breach of contract. g. The Mirror Image Rule => strict interpretation Counteroffer and Rejection a. A counteroffer is a new offer addressed by an offeree to the offeror of an original offer involving the same matter and proposing terms that are different from those contained the original offer. b. A rejection is an expression of the offerees intention not to accept the offer made to him and is effective by the offeror. i. An effective offer puts an end to the offeree ability to accept ii. An offer comes to the end upon rejection iii. A counteroffer is a rejection of the original offer 1. to become a contract the counteroffer must be accepted by the offer 2. thus the power of acceptance has been transferred 3. exception: a reply to an offer that is not an acceptance is not always a rejection or counteroffer a. may be a reply for clarification b. suggestion c. inquiry etc. d. this does not extinguish the offerees power of acceptance as long as the offer is not revoked e. The intent of the offeree must be looked at Duty to Accept Case Law: Page 14 of 70

Ryder v. Frost - Art. 1940 Acceptance only be complete performance: An offer made to a particular offeree can be rendered by performance but must be completed in the reasonable time necessary. This based off of usage or the nature of the contra, or its own terms. The offeree is not bound to complete the performance, where the offeror is bound to keep the offer open until the completion or tender of the performance. - Art. 1941: Notice of commencement of performance: once the performance has begun constituting acceptance or rendering the contract irrevocable the offeree must given prompt notice to the offeror unless the offeree knows or should have known of the performance. If the offeree fails to give notice he is liable of the damages caused. - In this case the commencement of the performance began before the D actually made his offer. Evertite Roofing v. Green - Art 1930: Revocable Offer: An offer not irrevocable under the C.C. may be rocked before it is accepted - Art. 1928 states that if the offer manifest the intent to give a delay in acceptance it is irrevocable for a reasonable amount of time - What is reasonable time dependsa more or less upon the circumstances surrounding each particular case. - Art. 1939: Acceptance by performance: A contract is formed when the offeree begins the requested performance. - In this case the court found not there was contract and because the offeror did not notify the offeree of his intent to use another company, the offeror was liable for damages o The court find that the loading and transporting of equipment was the commencement of performance - Art. 1994: Obligor liable for failure to perform: A obligor is liable for the damages cause by his failure to perform a conventional obligation. A failure to perform result from nonperformance, defective performance, or delay in performance. - Art. 1995 Where the object of the contract is anything but the payment of money, the damages due to the creditor for its breach are the amount of the loss he has sustained, and the profit of which he has been deprived.

Cardinal Wholesale Supply Inc., v. chaisson Ambrose v. M & M Dodge No Contract - La. C.C. 1938, a written acceptance is received when it comes into the possession of the addressee or of a person authorized by him to receive it, or when it is deposited in a place the addressee has indicated is the place for this or similar communications to be deposited for him. Section 7. Acceptance and Terms of the Offer I. Acceptance must conform to the Offer Page 15 of 70

a. Generally an effective acceptance must be in accordance with the terms of the offer. b. Accpetance not in accordance with the terms of the offer is not valid as such but only as a counteroffer. c. A properly shown lack of conformity must to the conclusion that no contract has been formed, unless special circumstances indicate that the lack of conformity is only apparent. i. Lack of consent ii. No Meeting of the minds d. term not in accordance, may not indicate dissent i. may be a request ii. does not prevent the formation of a contract. e. acceptance by performance i. non-conformity in performance may also be a BOC ii. Can be regarded as rejection and or a counteroffer f. Mirror Image rule = Common v. Civilian i. Strict interpretation ii. May lead to unfair results iii. Louisiana = an acceptance may be deemed in conformity even if its terms are not in absolute accordance with the offer. Case Law: Rodrigue v. Gebhardt New Offer - A modification in the acceptance of an offer constitutes a new offer which must be accepted in order to become a binding contract Elmer v. Hart - No meeting of the minds Section 8. Form a. Freedom of Form a. It is rare that a law prescribes that consent must be expressed in a certain form b. The sale of immovable property i. In writing ii. By authentic act 1. Signed by both parties 2. in front of two witnesses and 3. signed by a notary

1. Art. 1839: Transfer of Immovable Property: a transfer of immovable property must be made by authentic act or by act under private signature. 2. Art. 1947: Form contemplated by the parties When, in the absence of a legal requirement, the parties have contemplated a certain form, it is presumed that they do not intend to be bound until the contract is executed in that form. a. This codifies the jurisprudence created in Breaux. b. This is a strong but rebuttable presumption Case Law: Page 16 of 70

Breaux Brothers Construction Company v. Associated Contractors Inc. - Was a valid contract entered into by the parties? - Where it has been agreed between the parties that an agreement shall be reduced to writing the contract is not complete until it is written and signed by all the parties - Even if all of the terms of the alleged contract has been verally agreed upon, no valid contract would have existed between the parties because the intention to reduce the contract into writing suspended the final consent until it is reduced to writing and signed by all the parties. Barchus v. Johnson Sale of Immovable Property (No Acceptance) - According to provisions under C.C. art. 2440, 1839, all contracts relative to the transfer of immovable property MUST be in writing. - Therefore, although the P has an option contract to accept the offer to buy the property for 30 days has not acceptance before the Ps purported acceptance, the acceptance was over the phone and not valid. - The written instrument for the sale did not occur until after the 30 day timer period.

Chapter IV CAUSE Articles 1966 1970 Section I. General Principles: In primitive law, agreements gave rise to an action only exceptionally because a rule prevailed according to which no agreement was enforceable unless good reasons were given to justify enforceability. Art. 1966: No Obligation without Cause: An obligation cannot exist without a lawful cause Art. 1967: Cause Defined Detrimental Reliance: Cause is the reason why a party obligates himself. A party may be obligated by a promise when he knew or should have known that the promise would cause the other party to rely on that promise to his detriment and the other party was reasonable in believing so. The other party may be able to recovery damage in so much as to prevent injustice (limited to the amount of the reliance). Reliance on a gratuitous contract made without required formalities is not reasonable. Art. 1968: Unlawful Cause: The cause of an obligation is unlawful when the enforcement of the obligation would produce a result prohibited by law or against public policy. I. Definition a. Terminology i. Motive, Purpose, End, or reason on obligate himself. ii. Something that stimulates the will

Section 2. Cause as a Criterion for the Classification of Contracts: Articles 1906-1917 A. Cause of the Obligation and Kind of Contract a. Distinguishing as onerous contract from a gratuitous contract

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i. Onerous = because the reason that prompts the parties to bind themselves is to obtain an advantage in return. ii. Gratuitous = because the reason the prompts the party to bind himself is to confer a benefit on the other party b. Bilateral or Synallagmatic i. If there is reciprocal obligation incurred by the other party c. Commutative i. If it is because of the Performance of the other partys obligation d. Aleatory i. If the reason is because the party wants to protect himself against a risk that may or may not occur, or to procure an advantage that may not materialize. Invalid Gratuitous Contract but valid onerous contract a. An act, as a donation may be invalid because of lack of proper form but may still be an onerous contract i. If can be shown that a donation not in proper form was given as recompense for service rendered in the past or fulfillment of a natural obligation, though it may be an invalid donation, it is classified as valid onerous contract. ii. A charitable subscription is an example Invalid Onerous Contract but Valid Gratuitous Contract a. Par excellence b. If there is no price and no price was intended i. The onerous contract is invalid but may be a gratuitous contract ii. i.e. If there is a intention to donate immovable property iii. and the invalid sale was made by authentic act, the invalid onerous contract is valid donation Invalid Onerous Contract and Invalid Gratuitous Contract. a. If there is no cause b. No required form c. Even if there is a donative intent d. Gift = if not made by authentic act e. No valid donation Gratuitous Contracts I. Donations Inter Vivos (Between living persons) Articles 1467-1469, 1493, 1494, 1570, and 1571 Art. 1467: Methods of Acquiring or Disposing Gratuitously Property can neither be acquired nor disposed of gratuitiously, unless by donation inter vivose or mortis causa, made in the forms hereafter established. Art. 1540: Donation Effective from date of Acceptance: A donation inter vivos shall be binding on the donor, and shall produce effect only from the day of its being accepted in precise terms.

B.

C.

D.

a. Requirement of form

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Art. 1536: Donation of immovable or incorporeals, form required: An act, shall be passed before a notary public and two witnesses of every donation inter vivos of immovable property or incorporeal things, such as rents, credits, rights or action, under the penalty of nullity. Case Law: Spanier v. De Voe: (Price claimed by D = $5; a donation in disguise) - If the price is out of proportion with the value of the thing, it is a donation. (Art. 2464) - A donation acquires validity and the rule of law with both parties, two witnesses, and a notary public signing an authentic act. - Exception: negotiable instrumentsthrough deliverysuch as promissory notes, deposit certificates, checks, stock transfers Immovables, incorporeals, and movables require authentic act. Court held the transfer was not authentic Art. 1836: An act under private signature, though acknowledged, cannot substitute for an authentic act when the law prescribes such an act. b. Manual Gift Art. 1539: Manual Gift- The Manual gift, that is, the giving of corporeal movable effects, accompanied by a real delivery, is not subject to any formality - A donation inter vivos of a corporeal thing can be validly made without formality other than the real delivery of the thing o Money is a corporeal moveable and therefore can be donated by manual gift o Automobiles o Stuffed Teddy Bear c. The Donative Intent Art. 1468: Donation Inter Vivos: Definition: a donation inter vivos is an act by which the donor divests himself, at present and irrevocably of the thing given, in favor of the donee who accepts it. Art. 1910: Gratuitous Contracts: A contract is gratuitous when one party obligates himself towards another for the benefit of the latter, without obtaining any advantage in return. Although mere delivery of a corporeal movable is sufficient to effect a change in ownership, the donee of a manual gift must of a manual gift must show by strong and convincing proof that the donor had the intent to irrevocably divest himself of the thing and that delivery was made d. Purely Gratuitous, Onerous and Remunerative Donations Articles: 1523 1526 Art. 1523: Gratuitous, onerous and remunerative Donations; definitions: There are three kinds of donations inter vivosl The donation purely gratuitous or that which is made without condition and merely from liberality The onerous donation, or that which is burdened with charges imposed on the donee

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The remunerative donation, or that the object of which is to recompense for services rendered. Art. 1524: Onerous Donation: The onerous donation is not a real donation, if the value of the object given does not manifestly exceed that of the charges imposed on the donee Art. 1525: Remunerative Donation: The remunerative donation is not a real donation, if the value of the services to be recompensed thereby being appreciated in money, should be little inferior to that of the gift. - usually involved family donations or close relationships whereas natural obligations, such as fulfillment of past debt does not. - The motives are different in each case - Family = give something to a love one because of kindness as well as in gratitude for services rendered - Other = pay off debt Art. 1526: Onerous and Remunerative Donations. When Rules Applicable: In consequence, the rule peculiar to donations inter vivos do not apply to onerous and remunerative donation, except when the value of the object given exceeds by one-half of the charges or services. Art. 1536: Donation of immovables or incorporeals, form required: An act shall be passed before a notary public and two witnesses of every donation inter vivos of immovable property or incorporeal things, such as rents, credits, rights or action under the penalty of nullity. Onerousnot gratuitous; Transferor puts strings on the transfer Remunerativetransferee already done the wonderful things that motivate the transfer to the transferee Questions to Ask when Considering if a something is a donation: 1. Did he deplete his patrimony? (Amount donated) 2. Did he obligate himself for the benefit of another without getting anything in return? 3. Did he bestow his liberality? 4. If the answer is yes, then must be authentic act to complete the donation (1536)

Succession of Lawrence: This case involves an onerous donation because the value of the gift was about equal to the services and the charges (Art. 1524). Art. 1526 says that rules applying to pure donations do not apply to onerous donation. Therefore, no formal authentic act was required. The intent of Lawrence was to give the money to his nephew. Therefore, the money is his nephews and not part of Lawrences succession. ***Weak link is existence of inter vivos act of transfer. Making someone a co-party in a joint account is a transfer of ownership. Book talks about nephew did all of this stuff for uncle and the value of these services are high.

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Revocation: Art. 1468: Donations made inter vivos are irrevocable Art. 1469: Donations mortise causa are revocable until death Art. 1559: Causes for Revocation or Dissolution Donations inter vivos are liable to be revoked or dissolved on account of the following causes: 1. Ingratitude 2. Non-fulfillment of conditions 3. Non-performance of the conditions 4. The legal or conventional return Art. 1560: Revocation for ingratitude Revocation on account of ingratitude can take place only in three following cases: 1. If the donee has attempted to take the life of the donor 2. If he has been guilt of cruel treatment of grievous injuries toward him 3. If he has refused him food in time of distress.

Perry Jr. v. Perry, Sr. - Art. 1560Provides for revocation of a donation on account of ingratitude if the donee has been guilty toward the donor of cruel treatment, crimes, or grievous injuries. - In juries include any act naturally offensive act to the donor. - This does not involve the enforceability of fathers promise. Father asking for the court not to uphold the rest of the judgment b/c father has another injunction to revoke the donation. - Donations can in certain circumstances be revoked b/c of ingratitude. - A typical situation to enjoin the injunction for judgment. II. Other Gratuitous Contracts Articles 2891, 2893, 2894, 2926, 2995, and 2992 1. The distinguishing feature of donation is depletion of donors patrimony. Other gratuitous Ks differ from donation inter vivos because they are not a liberality. These other Ks are not subject to a requirement of a formality, nor are they subject to collation or reduction. Liberality = depletes the patrimony of the lender, depository, or of the mandatory. Therefore these contracts are not subject to the same formalities. B. Invalid donation But Valid Onerous Contract I. Innominate Contract = an un-named contract

Art. 1914 : Nominate and innominate contracts: Nominate contracts are those given a special designation such as sale, lease, loan, or insurance. Innominate contracts are those with no special designation. Theilman v. Gahlman

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Donation inter vivos are not the only gratuitous contracts regulated by the LA Civ. Code. Loan for use or consumption, deposit, and mandate are other gratuitous contracts included. They are different than a donation inter vivos because they are not a liberality since they do not deplete the patrimony of the lender, depository, or mandatory. These contracts are not subject to a formality. These are nominate gratuitous contracts. Due to contractual freedom, parties may also enter into innominate gratuitous contracts, such as when one engages to render services for free to the other (charity workdonation of services). *Donation inter vivos requires authentic action because it is a depletion of ones patrimony, which requires legal enforcement and protection. The court found that this alleged donation, was subject to a lack of form, but is actually a valid onerous contract of an innominate kind. (It is immaterial that the contract fall under some category of contract in the Civil Code)

Art. 1848: Testimonial or other evidence not admitted to disprove writing: Testimonial or other evidence may not be admitted to negate or vary the contents of an authentic act or an act under private signature. Nevertheless, in the interest of justice, that evidence may be admitted to prove such circumstances as a vice of consent or a simulation, or to prove that the written act was modified by a subsequent and valid oral agreement Pg. 126 In a few instances, instead of regarding the provision of services for elderly as a contractual commitment, the court sees it as a donation with strings attached. Difference between donation subject to charge versus onerous donation.. Art 1523-1526. 1526If element is given where the services are way more than the money value, it is not onerous but gratuitous. If person dies before money value of the care is less than the money value of the gift for those services, then it is a donation. If no authentic form, no transfer.

Louisiana College v. Keller - Rule of lawAn obligation according to the Code is not less binding, though its cause is not expressed. (The papers do not say the def. cause. It could have been the benefits of a college near his home for his children, or a spirit of liberality, or to be seen as a good citizen). Whatever it is, the promise binds him if he consented freely and the contract had a lawful object. In contracts of beneficence, the intention to confer a benefit is s sufficient cause or consideration. - In both the cases, the court holds that these promises are enforceable because they are not truly donations. - Reliance isnt a basis for enforcement. Ct is trying to differentiate this situation w/ cases in which promises are deemed not gratuitous and therefore, enforceable. - Pg. 129Ct sees there is many other causes rather than purely generosity. This holds def promise binding. If it would have had the authentic form, it is okay to classify as gratuitous. If no formality, must differentiate gratuitous cases to cases that could find other reason but generosity to classify the case. - Pg. 129 last sentence wrong. The intention of conferring a benefit is a sufficient consideration or reason, provided that the requisite formalities for such a gratuitous contract are present. This setting is differentiated from Happy Birthday considerations. Contracts of beneficence are contracts gratuitous.

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Baptist Hospital v. Cappel (Charitable Subscriptions) Charitable subscriptions are enforceable because of policy reasons- we want to encourage subscriptions and party may reply on the promise Charitable subscription promises are cases that establish that a limited category of arguably gratuitous donations are enforceable even though not in authentic form. Societal benefit. Rule of LawIf some of the plans of a contract is changed, but the purpose is served, the donators cause or benefit is not lessened, the donator is not injured, than he is bound by his contract. Utilizes LA College case. In both of these cases, there was a change in position of the recipient. Neither case looks at the reliance that a change of position occurred. The promise is what counts. The promise would be bound by bargaining or gratuitous reliance upon promise before the promise was revoked. In this case, most states would regard the promise as having been relied upon in the aggregate, so there was a reliance once project has begun. LA promises are enforceable as soon as they are made. They could be differentiated from the pure gratuitous promise. Cite these promises that are in charitable subscriptions can be differentiated from most gratuitous promises, which can then be enforced w/o authentic form. Art. 1967Cause is the reason why a party obligates himself. Reliance upon a gratuitous promise made w/o required formalities is not reasonable. This is despite a change in position. Ex. In writing, land that has been mine is now yours. You go out and paint property. Later, I die and kids want property. Their position would be that it was not writing in authentic form, so transfer is not gratuitous donation. So I would have to find some explanation for the transfer the legal system would be able to distinguish the transfer from a gratuitous donation. I cannot just say I relied or changed position on this property. Then the message is that it was a gratuitous transfer and is unreasonable. III. Debt of Another Party Case Law: Flood v. Thomas - the court find that the debt of another is a sufficient consideration to support a contract of surety, or a promise to pay it - Art. 1847: parol evidence is inadmissible to establish a promise to pay the debt of a third person - Art. 1823: Assumption by agreement between obligee and third person: An obligee and a third person may agree on an assumption by the latter of an obligation owned by another to the former. That agreement must be made in writing (since parol evidence is inadmissible). That agreement does not effect release of the original obligor. - Art. 1821: The unreleased obligor remains solidarily bound with the third person. - Art 1978: Third Party Beneficiary Art. 3035: Definition of Suretyship: Suretyship is an accessory contract by which a person binds himself to a creditor to fulfill the obligation of another upon the failure of the latter to do so.

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Art. 1913: Principal and Accessory Contracts: A contract is accessory when it is made to provide security for the performance of an obligation. Suretyship, mortgage, pledge, and other types of security agreements are examples of such a contract. When the secured obligation arises from a contract, either between the same or other parties, that contract is the principal contract. A promise of surety is subject to a suspensive condition. Meaning that the obligor will not be called on to pay until the another person fails to pay. Flood involves a promise to pay. A promise to pay is not subject to a suspensive condition. The promise is perfect from the outset not subject to any condition. IV. Services rendered in the past May be an onerous contract rather than a donation invalid for lack of form. V. Invalid Onerous Contract but Valid Donation Case Law: DOrgenoy v. Droz transfer of immovable property - Rule of lawSince intention to transfer, ct said not gratuitous so not need authentic form. - Other instances which transfers were upheld and formalities present, but transaction not onerous as claimed.pg. 136 Disguising a donation as a sale is not legal. - Upheld donation as one b/c admitted intent to transfer and act is in authentic form. - Spanier v. Ndevoesale was held to constitute a donation and null b/c not in authentic form Section 3. Absence of Cause - If there is no cause, the obligation is ineffectual. - If at the time of contract of sale is made, the thing of which is the object has been destroyed, the buyer cannot acquire something which no longer exists. His obligation then lacks cause and is no longer an obligation. - If the obligation is contracted based on threats or violence, cause is absent. There must be a true reason or true will to enter into the obligation. - The cause of an obligation may be only partially absent. If the thing sold has perished only in part at the time of the sale, the buyer may free himself if he wanted the thing in whole. He also may accept a reduced obligation to buy the part of the thing that remains Art 1966: An obligation cannot exist without lawful cause. Art 1966 ***A cause may exist at the inception of an obligation and then fail. When such is the case the obligation ceases to exist. Ex. When a leased thing is destroyed, the leasees obligation to pay rent ends since he no longer has a cause. ***A cause may fail only in part. If a leased thing is only partially destroyed, if the reason to bind himself to pay rent was not to obtain the whole enjoyment, the leasee may accept a reduced rent equal with that part of the thing that still exist. ***If one partys performance becomes impossible, the cause of the others obligation fails if the contract is commutative, but not if the contract is aleatory. Page 24 of 70

Art 1967: Cause if the reason why a party obligates himself. CauseArt. 1967Detrimental reliancereliance on a gratuitous promise made without formalities is not reasonable. Cause is the reason why someone obligates himself. What role does cause play in the enforceability? Art. 1767: Suspensive or Resolutory Condition: A conditional obligation is one dependent on an uncertain event. If the obligation may not be immediately enforced but will come to an end when the uncertain event occurs., the condition is resolutory. Case Law: United States Fidelity v. Guaranty Co. v. Crais - on to repay a failed check - this is considered a nature obligation because she felt compelled by a moral duty to repay her employer - Therefore she can not invoke the payment of thing not do. - The payment did not arise from coercion and therefore you can recover for the payment in this case Notes: Consideration: a valuable consideration may, in general terms, be said to consist of either in come right, interest, profit or benefit accruing to the party who makes the contract, or some forberarance, detriment, loss, responsibility or act or labor or service on the other side and if either of these exist, it will furnish a sufficient valuable consideration to sustain the making or indorsing of a promissory notes in favor of the payee or other holder. Carpenter v. Williams: - When ones cause or motive for entering the obligation ceases to exist or failed, the contract becomes unenforceable. - The buyer communicated his reluctance to the seller, and the seller still allowed the buyer to sign the papers. - When the employer rethinks the need to make the employee stay so close, the buyer wants to move back to Lafayette - Just b/c a seller knows why one wants something, it doesnt mean the contract is dependable on the true cause. This case is atypical. - The assumption mistaken provides basis for relief if the contract depends upon assumption. The buyer should bear the risk of the accuracy of his assumption. The obligation to be enforceable must have a lawful cause. If you can succeed in convincing the judiciary that you dont have a cause, the obligation will not be enforceable. Losecco v. Gregory: - Art. 1897 Sale of Future Things o A future thing may be the subject of a contract of sale. In such a case the coming into existence of the thing is a condition that suspends the effects of the sale. A party who through fault, prevents the coming into existence of thing is liable for damages. - Art 1912 comment( e ) o Sale of Hope A hope may be the object of a contract of sale. Thus, a fisherman may sell a haul of his need before he throws it. In that case the buyer is entitled to

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whatever is caught in the net, according to the parties expectations and even if nothing is caught, the sale is valid. Art. 1870 Failure of Cause Subsequent to Contract o Where the consideration f cause of the contract really exists at the time of make it, but afterwards fails, it will not affect the contract if all that was intended by the parties has been carried into effect at the time. The destruction of property sold, after the sale is perfected, without the fault of the seller, is a case governed by this rule. (a) The sale of a hope is an aleatory contract (b) The case under article 2451 is hope A sale may be aleatory not only because if its nature, but also because of the intention of the parties. The parties intent must be scrutinized in order to determine whether the contact is the sale of a future thing or the sale of a mere hope. Fortuitous Act: an act of God, not a foreseen risk of growing orange in Louisiana The seller only contracted to take the risk of foreseen risks

Section 4: Unlawful Cause Articles: 11, 12, 2030, 2033, 2983, 2984 Art. 1968 Unlawful Cause: the cause of an obligation is unlawful when the enforcement of the obligation would produce a policy prohibited by law or against public policy. Contracts with an unlawful cause are absolutely null. Art. 2030 Absolute Nullity of the Contract a contract is absolutely null when it violates a rule of public order, as when the object of a contract is illicit or immoral. A contract that is absolutely null may not be confirmed. Absolute nullity may be invoked by any person or may be declared by the court on its own initiative. Art. 2031 Relative Nullity of contract A contract is relatively null when it violated a rule intended for the protection of private parties, as when a party lacked capacity or did not give free consent at the time the contract was made. A contract that is only relatively null may be confirmed. Relative nullity may be invoked only by those persons for whose interest the ground for nullity was established, and may not be declared by the court on its own initiative. Art. 2032 Prescription of Action Action for annulment of an absolutely null contract does not prescribe. Action of annulment of a relatively null contract must be brought in 5 years from the time the ground for nullity either ceased, as is the case of incapacity or duress, or was discovered, as in the case of error or fraud. Nullity may be raised at any time as a defense against an action on the contract, even after the action for annulment has prescribed. Art. 2033 Effects An absolutely null contract, or a relatively null contract that has been declared null by the contract, is deemed never to have existed. The parties must be restored to the situation that existed before the contract was made. If it is impossible or impracticable to make restoration in kind, it may be made through an award of damages. (1) May not be recovered by a party who knew or should have known of the defect that makes the contract null (2) May be recovered when that party invokes the nullity to withdraw from the contract before the purpose is achieved

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(3) Exceptional Circumstances: would further the interest of justice (4) Absolute nullity may be raised as defense by a party how at the time of the contract, know or should have known of the defect that makes the contract null. II. Protection of Public Order i. An obligation must not only have cause but that cause must be lawful. 1. A cause is illegal when it is forbidden by law 2. It is immoral when ti runs counter to the moral standard of the community 3. It is against public policy when it is contrary to values recognized as paramount by the community ii. Cause allows the court to examine the parties subjective intent to see why the bound themselves iii. Cause v. Object 1. Object is a performance consisting of transferring and delivering the property sold to the buyer 2. Where the reason that prompted the parties to bind themselves may be intent to operate a brothel in the property sold. iv. The cause is illicit in obligations arising out of contract for the transfer of property made for the purpose of defrauding creditors v. Although you may have a lawful object with an unlawful cause you may still have an unlawful object with an unlawful cause together in a synallagmatic contract. Case Law: Lamy v. Will - illegal w/ participation can not recover for. - The law grant no action for the payment of what has been won at gambling or by a bet, except for games tending to promote skill in the use of arms, such as the exercise of gun and foot, horse and chariot racing. - An obligation without a cause, or with a false or unlawful cause can have no effect - Contra bonos mores (contrary to moral conduct) or public order - The courts consistently have refused to entertain either action to recover what has been won or lost in gambling or demands for the collection of notes or other obligations given for a gambling debt - The only way the pl could recover, he must occupy the role of an innocent bystander entirely unconnected with the gambling activity. The transaction was a part of the gambling activity so the pl is prevented from recovery or action. Lauer v. Catalanotto - illegal w/o participation - Gambling took place in a state which it is legal does not grant the P a remedy to recover such movies under Louisiana law

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Louisiana public policy traditionally has considered gaming contra bonos mores and or state constitution has been long directed the legislature to suppress gambling. To be constitutionally prohibited, gambling contract, there must be a mutual illegal intent to gamble and the inter of one party not communicated to or concurred in by the other will not nullify the agreement. Public policy does not allow ct action for the cause of gambling. The cause is unlawful, so the obligation has no effect. The As for as the loan made to the pl, the pl simply asked the def for money and the def was not involved in the transaction for which the pl requested the money, which was gambling.

McMahon v. Hardin - Public Policy consideration - Contract so framed as to have effect only on condition that a divorce between the parties should be granted are held illegal as to their object is to interest the party to be benefited in procuring or permitting a divorce. - If the object to the contract is to divorce man and wife the agreement is against public policy and void. - Under LA law at time, only husbands debt is seized by community $. The only way detective would get paid is if he gives evidence that husband cheating and if she wants a divorce. Public policy violated if enforcement. Now, community property can be seized for debtdont have to get divorced for community assets to be available. So, today, cts would not make this distinction. Graviers Curator v. Carrabys Executor - Credit fraud - Art. 2026: Absolute Simulation a simulation is absolute when the parties intend that their contract shall produce no effects between them. That simulation therefore can have no effects between the parties. - Art. 2027: Relative Simulation A simulation is relative when the parties intend that their contract shall produce effects between them though different from those recited in their contract. A relative simulation produces between the parties the effects they have intended if all requirements for those effects have been made. - A debtor hiding his assets from his from his creditor is considered contrary to public policy. - Art. 3182 Whoever has bound himself personally, is obliged to fulfill his engagements out of all his property - Art. 3183 The property of the debtor is the common pledge of his creditors, and the proceeds of sale must be distributed to them - Art. 2036 Revocatory Action An obligee (creditor) has the right to annual an act of the obligor, the causes or increases the obligors insolvency - Art. 2044 Oblique Action If obligor increases his insolvency by failing to exercise a right, the obligee may exercise it himself. Cahn v. Baccich - A contract to stifle competition is illegal and unlawful - The contract was found to be void because it subverts the policy of fair bidding and protection of the integrity of action.

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Schwegmann v. Schwegmann - an agreement between cohabitants for services in exchange for sex are unenforceable because they are against public policy

Section 5. Detrimental Reliance No one is allowed to go against the consequences of his own acts. Art. 1938 An offer is made that is to accepted by performance the offeree relies on the promise to his detriment when he commence performance. Earlier cause used detrimental reliance. The offeree under 1939 is considered to have accepted as soon as he begins performance and under 1940 the offeree is protected by a period of irrevocability to permit the offeree to complete. Art. 1944 Offer of reward made to the public is binding upon the offeror this incorporates some notions of detrimental reliance because the actor who relies on reward to his detriment is protected. Art 1952 Rescission If a party obtains rescission of a K, for a vice of consent, such as simple error, he is liable when the error is his own for the loss sustained. The promisor is relived of the obligation because it is relatively null but he nevertheless is till liable for the loss sustained. I. Detrimental Reliance a. The Principle i. A party may be obligated by a promise when 1. Knew or should have known 2. that the promise would induce the other party to rely 3. to his detriment, and 4. that party was reasonable in relying 5. The recovery is limited to the expenses incurred or the damages suffered as a result of the promisees reliance on the promise 6. Reliance on a gratitutious promise made without required formalities is not reasonable a. Is an additional grounds for enforceability (enforceability of promises) b. Specific performance or loss sustained (may exceed expenses incurred) and profit b. Problem and Solution at Common Law i. In may instances a promise is made for which no consideration is given, and the promise though the promise is not technically enforceable, relies on it to his detriment ii. Reasonableness c. Detrimental Reliance and Civil Law i. La. a promise is enforceable when 1. it gives rise to an obligation 2. with a lawful cause 3. not because it was supported by consideration ii. the existence of a lawful cause is always presumed iii. the party responsible for the offer should have known that reliance would be induced by the publication. d. The Louisiana Jurisprudence Page 29 of 70

e.

f.

g. h.

i.

Usefulness i. granted whenever a promise is found enforceable 1. on grounds of reasonable reliance 2. detrimental to the promise 3. the same conclusion could be reached on different grounds, i.e. a unilateral gratuitous contract of an innominate nature ii. used for other reasons 1. charitable subscriptions 2. business, that is onerous contract Reasonableness i. if the promise excess the promisors ability to perform, reliance by the promise would not be reasonable 1. when the promisor engaged to give something beyond his means 2. if it is not reasonable it will not be enforceable ii. Reliance is also unreasonable when placed on the kind of gratuitous promise for the validity for which a formality is required, and the promise has been made only informally 1. reliance on a gratuitous donation not made in authentic form is not reasonable Recovery may be limited to the expenses incurred by the reliance Reliance by a Third Party, when the promise is such that its performance would benefit a party other than the promisee it is foreseeable that the beneficiary may rely on the promise. i. It is enforceable for the same reason it would be reasonable for the original parties to recover ii. When a contract contains a stipulation pour autrui Detrimental ReliancePlace in the Civil Code

3 elements of estoppelan affirmative defense alleging good faith reliance on a misleading representation and an injury or detrimental change in position resulting on that reliance: 1. Representation by conduct or word. 2. Justifiable reliance 3. A change in ones position to his detriment. Case Law: Hebert v. McGuire - Detrimental Reliance v. Gratuitous Contract - Gratuitous Promise v A Gratuitous contract - The have not given up any money are taken anything out your patrimony, this person if just being nice. When there is no money taken out of no where, the it is done by being nice. Is there a certain type of form or donation inter vivos, does it need to be authenticated. - the doctors office agreed before the surgery to file the claim, the promise was part of an enforceable contract. - If the promise came after, the situation would be based on a more gratuitous promise, in which estoppel would not apply. - Either way, the pl breach of promise to the def to take care of the insurance claim caused the def to suffer the loss of insurance benefits. Page 30 of 70

The def are liable for the 20% the insurance would not have relieved them of. Edinburgh v. Edinburgh 1967 Comment (F): a promise to make a disposition mortis causa is enforceable against promisors estate when the formal disposition is not made a representation was made justifiable reliance upon that representation a change in position to ones determinant because of the reliant., Kethley v. Draughon Business College Inc. The Ds promise to pay hime more for teaching two course than for teaching one are enforceable obligations under. La. C.C. art 1967 The court may grant specific performance or damages, in this case the pl will receive damages. Can ground reliance on a promise. Also, unjust enrichmentsomeone receives something and another is impoverished by giving something. If there is no cause, the one impoverished can be owed something. Martin v. Schluntz Since there was no contract between the parties, the trial ct correctly assumed the lease was month to month. The pl established detrimental reliance only for those months the tenant occupied the premises. The pl is not deserving of alleged incurred expenses other than that which the tenant legally occupied the apartment. Chapter V Applying the Theory of Cause

A Natural obligation is a sui generis type of obligation regulated by articles 1760-1762 of the La. C.C.; Section 1. Natural Obligations La. C.C. arts 1760, 1761, and 1762 a. General Principles i. Civil Obligations and Natural Obligations 4. Natural obligations do not produce a civil obligation A. meaning that performance can be enforced B. The creditor can demand the debtor perform 5. Natural obligation which are perform can not be recovered A. The debtor can not recover any performance he rendered voluntarily i. Performing the obligation out of his own free will in which case he may not reclaims that performance because the obligee has now a right to keep it

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ii. By giving the obligee a promise that he will render a performance in which case the obligee now acquires a right to demand that performance. iii. Requirements for turning a moral duty into a natural obligation 1. the duty must be felt toward the particular person and not toward all persons in general 2. The duty must be such that it can be fulfilled through rendering performance whose object is pecuniary value. Note: - A contract made for the performance of a natural obligation is onerous. A contract which depletes the patrimony is not a donation but an onerous K. - A Natural Obligation: the party is not bestowing a liberality, rather he is acting out a sense of obligation, a particular moral obligation which we want encourage the enforcement of, this we do not require any form. Art. 1762: Gives examples of circumstances giving rise to a natural obligation. Non-exclusive, if it is not in the list we must determine if the obligation natural or only moral. 1. When a civil obligation is extinguished by prescription or discharged in bankruptcy. **This distinguishes between mere generosity, which constitutes a gratuitous cause, and obedience to a moral duty, which may determine the cause as onerous. Ex. After I declared bankruptcy, I never paid you any money I owed you. I transfer land or money to you because I never paid you. If I regret doing this or I die and my kids want to reassert property.Natural obligation is owed and it is onerous. The cause is generosity and it is not authentic. 1761 states you cannot reclaim. 2. When an obligation has been incurred by a person, who, although endowed with discernment, lacks legal capacity b. Moral Duty and Legal Duty a. The La. C.C. does not exactly define natural obligations i. States that, they arise from circumstances in which the law implies a particular moral duty to render performance b. A moral duty is traditionally described as a duty of conscience, which hints at is difference from a legal duty c. A legal duty is correlative of a right to demand a performance d. A moral duty contrains from within while a legal one constraints from without Moral Duty and Natural Obligation a. When a person feels a moral duty that is so strong toward another person that duty becomes an element of a clearly identifiable relation called a natural obligation. b. Though an act of his own, the obligor may promote his natural obligation to the rank of a civil one. Turning a Moral Duty into a Natural Obligation- Requirments a. Felt toward particular person b. Special Circumstances c. Pecuniary Value of the performance Page 32 of 70

c.

d.

d. Recognition of the obligation by the obligor e. May not impair public order e. Reflection in Retrospect Judicial Discretion a. The idea of a natural obligation does not lend itself to a definitive and exclusive list. b. Great discretion must be exercised by the court in concluding that c. A moral duty may become a structural part of a natural obligation Cause and Natural Obligation

f. Case Law:

Thomas v. Bryant - While a natural obligation is not judicially enforceable, it can serve as the cause or consideration for a civil obligation - A K is gratuitous when one party obligates himself toward another for the benefit of the latter - Not every moral duty will serve as a basis of a natural obligation (1) the moral duty must be felt towards a particular person (2) has to feel so strongly about the moral duty that he truly feels he owes a debt (3) the duty can be fulfilled through rendering a performance where object is of pecuniary value (4) Recognition of the obligation by the obligor must occur, either by performing the obligation or by promising to perform (5) Can not be contrary to public order. - A contract made of the performance of a natural obligation is onerousIt does not requires that the promise be made to the one whom the obligation is owed, so the K is onerous and enforceable under 1761 Wortmann v. French - In order to revive a liability on a debt discharged in bankruptcy pr to create a new enforceable obligation, there must be an express promise to pay the specific debt, made to the creditor or his agent and while no particular form or language is necessary, to constitute such a new promise there must be a clear, distinct, and unequivocal recognition and renewal of the debt as a binding obligation, anything short thereof being insufficient, as, for example, the mere acknowledgement of the discharged debt, or the expression of hope, desire, expectation or intention to pay or revive the same. II. Effects a. Preliminary Remark: i. The true effect of a natural obligation is indistinguishable from its function ii. Which is to serve as the cause required for a validity of a civil obligation b. Performance not recoverable i. Outside of compulsion, fraud or duress performance for a natural obligation is not recoverable ii. Fraud make invalid whatever act is involves iii. This counts for fraud performed by a third person c. Promise to perform = An Onerous Contract Page 33 of 70

i. In La, a contract for a natural obligation form an onerous contract. Case Law: Service Finance Co. of Baton Rouge Inc., v. Daigle - Any promise made to pay a debt must be made before the discharge of the bankruptcy through formal means - In order to revive liability on a debt discharged in bankruptcy or to create a new enforceable obligation, there must be an express promise to pay the specific debt, made to the creditor or his agent. - While no particular form or language is required, for there to be a new promise, the language must be a clear and distinct recognition and renewal of the debt as a binding obligation. - An oral promise can not be implied simply from conduct recognizing the debt and the words must be direct, definite, express, clear, distinct, and unambiguous. - The creditors acceptance of an offer to make a new contract for the payment of the discharged debt creates an enforceable contract. - The def words of an intention to pay was nothing more than an acknowledgement of a moral obligation to pay the debt. - The def. words and actions did not constitute an affirmation to pay the debt as enforceable obligation. Therefore, this was not an unambiguous promise but a mere recognition of a moral obligation. Note: The defendant could not have recovered any monies paid. Art 1847-- A promise of oral evidence is inadmissible to establish either a promise to pay the debt, the debtor can defeat by saying the promise has to be written. Under LA law, if promise unquestionably was made to pay the debt, the promise is binding. The basis for the courts determination that the debtor was not obligated to pay the debt discharged in bankruptcy was that the pl failed to prove the promise was clearly made. Had they proved it, the promise would be enforceable. This possibly could have been proved that the promise was made through testimony. Art 1847Some promises can be proved by testimonial evidence, but others require written, and some require authentic form. With regard to land, need promises in writing. This article refers to promises to pay debts to 3rd parties and prescribed debts, but does not expressly talk about bankruptcy debts. However, it is likely by analogy to prescribed debt

Stoll v. Goodnight Corporation A natural obligation is not enforceable by judicial actionart 1761. It arises by a moral duty to render a performanceart 1760. The existence of a natural obligation serves to be an onerous agreement which would otherwise by considered gratuitous. There are 5 criteria that give rise to a natural obligationart 1762 (see above). The pl satisfies these criteria. A natural obligation cannot be enforced by judicial action, but once a debtor recognizes and freely performs in response to a natural obligation, he cannot recover or reclaim what has been done or paidart 1761.

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The only time recovery is allowed is when the natural obligation was paid under the effects of fraud or violence, not mistake. Pl paid the loss w/o serious challenge after the manager referred her to the manual. Her fear of losing her job is not sufficient to render her decision involuntary or freely performed within the meaning of the civil code. She voluntarily made the payment out of a moral duty and cannot recover her payment.

Succession of Jones: - the court found that the cheap rent and other service that Ms. Poche supplied, supported the $5,000 gift and was an onerous contract not a donation - Donation natural obligation Muse v. St. Paul Fire and Marine Inc - the court said that the enforceable obligation of an indigent to pay a hospital that rendered services to him is actual obligation and payment pursuant to a natural obligation can not be recovered by an action in court. Factors and Traders Co. v. New Orleans Any promise to pay a debt must be made before the discharge of the bankruptcy through formal means. Section 2. Remission of Debt La. C.C. art 1888-1892 Meaning Terminology, Effect a. A remission of debt by an obligee extinguishes the obligation i. A remission of debt is a voluntary abandonment or renunciation of the creditor right ii. It releases the debtor of his obligation Express or Tacit a. The remission of a debt may be express of tacit i. Expressed: Orally or in writing ii. When a creditor makes manifest to his debtor a clean intent to accept a certain sum in full payment o f a fee owned, he makes a voluntary remission of any part of that debt in excess of the acknowledged amount iii. Tacit: when the credit speaks no words, 1. destroying the instrument that evidences the obligation in the presence of the debtor 2. giving a receipt for full amount owed without having received payment 3. returns to the debtor the instrument that evidence the obligation canceling the debt for service rendered. Presumption of Remission a. Acceptance of a remission is always presumed b. This presumption is rebuttable i. Unless the obligor rejects the remission within a reasonable time Release of Real Security a. Does not give rise to the presumption of remission of debt b. Relationship between a principle and accessory obligation Page 35 of 70

I.

II.

III.

IV.

Notes: Remission contract is in principle gratuitous and its constitutes a liberality as it takes an asset out of the creditor patrimony. - Remission does not always reflect a liberal intent - Remission is gratuitous - A gratuitous remission is subject ot the rules of donation with one expectation o Remission is only an indirect liberality o Not subject to the requirement of form authentic act is not necessary - if remission is afflicted with the obligees death, the formalities of a last will or testament are required. Case Law: Succession of Forester In Succession of Forestor, the creditor wrote cancelled on the notes and notified some of the debtors but not all. Those that were notified could assert that once they were advised, presumptively the law says this is remission. Those that were not notified, there is an obstacle in extinguishing the debt. However, the court took care of the debtors. Todays code w/ regard to presumptive acceptancesays remission of debt occurs when debtor receives the communication. Once a debtor is advised, an expressed acceptance of remission is unnecessary. There is presumed acceptance.

Hicks v. Hicks - The law recognizes a difference between donations and remissions of debt. - This is clearly a remission of debt to def by his mother. - Art2199The remission of debt is either conventional, expressly granted, or tacit, when the creditor voluntarily surrenders to the debtor the original title & there is no required form for the remission of debt. - In this case, the six notes were canceled and given to the def by his mother, thus creating a remission of debt. Remission means forgiveness. No form is prescribed, it can be passive. - Art 1888The remission by the obligee extinguishes the obligation and then the remission may be expressed as passive. - Art 1889gives rise to the presumption that the creditor means to remiss the debt. Sometimes, there may be reason to entrust a title for a purpose other than extinguishing a debt. If there is no other evidence, remission will be the presumption. If other explanations negate the intention to extinguish the debt, then it is not remised. - Art 1890Acceptance of remission is assumed to begin when remission received by obligee. Some debtors do not want a debt remised. Remission is resulting from an agreement, although usually passive, of creditor and debtor. If someone extinguishes a debt, but person dies before letter saying this was given to debtor, then there is difficulty. A remission of debt is effective when the obligor receives the communication of the obligee. If remission is a consensual act between 2 parties, the death would have occurred before the acceptance. Hurley v. Hurley Page 36 of 70

The note was based on an onerous donation, with no intention on the part of the pl to give a free gift or remit the debt represented by the note donated, unless the def complied with the condition imposed and accepted. Since this is an onerous agreement, the pl claim that it was not based on authentic form is unwarranted. Also, this is not remission of a debt so the note can be placed back under the control of the pl. Thus, noncompliance by the def does not allow the def to keep the note.

Jamison v. Ludlow If one promises to pay a prescribed debt, the new promise without a new consideration is binding. A certified bankruptcy is discharging, but a moral duty is cause to support a new agreement to pay. Consent by fraud is one contention. Another and more appropriate contention to these facts was that there was an additional promise made. New promise differentiated from a gratuitous promise. If this case decided under todays legislationArt 1847a promise to pay a debt prescribed must be in writing.

Section 3. Transaction or Compromise La. C.C. art. 3071 A transaction or compromise if an agreement between two or more person, who for preventing or putting an end to lawsuit, adjust their difference by mutual consent, in the manner which they agree on, and which every one of them prefers to hope of gaining, balanced by the danger of losing. A. General Principles a. Definition of Transaction b. Requirements i. Existence of litigation (dispute) ii. The intention of putting an end to it iii. Reciprocal concession of the parties (onerous) c. Existence of Litigation or prospect thereof i. Judicial if the litigation has already commence, the transaction or compromise is called judicial ii. It is necessary that there has been no final judgment entered iii. This would mean the suit had be solved iv. extra-judicial the litigation has not just state, though a transaction or compromise may prevent it d. Intention to put an end to litigation i. There is no valid transaction or compromise without the agreement contemplating the end of the litigation ii. Real or possible Page 37 of 70

e. f. g. h.

iii. Rendering the lawsuit unnecessary Reciprocal Concessions Nature of the Contract Cause in the Transaction or compromise i. To put an end to the litigation Acts Transaction or compromise has an aleatory quality because each party is hoping their concession will; not be as great as the other pary, thus they are taking a risk. This is distinguishing feature of C/T Ks from remission. In remission Ks the sacrifice is made by only one party. IN C/T;s each party has two causes: i. End of the lawsuit ii. Concession of the other party as reason why he obligates himself.

Art. 1861 Partial Performance: If the amount of an obligation to pay money is disputes in part and the obligor is willing to pay the undisputed party, the obligee may not refuse to accept that part. If the obligee is willing the to accept the undisputed part, the obligor must pay it. If either case, the obligee preserves his right to claim the disputes part.

B. Transaction or Compromise and Accord and Satisfaction Case Law: Meyers v. Acme Homestead Assn To whom a check is tendered containing such a stipulation, must either accept or reject the stipulation and may not obtain the benefit of the check and at the same time, avoid the obligation resulting from the stipulation by adding other stipulations intended to nullify the first. The pl claim dismissed. **Accord and satisfactionif a claim is not liquidated, the payment of the amount admittedly due, coupled w/ a stipulation that the payment constitutes a full settlement. Class Pl was aware of stipulation written on check b/c he scratched through the words in full and final settlement before depositing it. Basis of courts decision that any liability was discharged. Actions speak louder than wordsif deposit check, then accept agreement to legal consequences transcribed on the document. If person in good faith believes that he paid something in full and other party deposits check, then the payment made in full.

RTL Corporation v. Manufacturers Enterprise The parties modified their agreement. Art 1901a contract is the law between the parties and cannot be revoked or modified unless by mutual consent of the parties.

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Art 3071persons may enter a contract of transaction or compromise to adjust their differences by mutual consent for the purpose of preventing or putting an end to a lawsuit. Manu made an offer to RTL of full payment, but RTL did not accept this. RTL immediately contacted Manu. And said this was partial payment. Manu. Remained silent on the phone, but this constitutes agreement. Subsequent negotiations between the parties show that the check was not considered final payment.

Whether or not the guy modified the stipulations on the check, the outcome is the same. The debt was discharged either way. His modification did not change the previous agreementin the 1st case example Sometimes the court gets reasoning from other states, who require bargaining for obligations. If the minimal amount in which the party could in good faith believed to be the maximum of his account, if the creditor takes the money the debt is discharged. In this case, the people who paid the lesser amount in good faith believed that is all they owed and the creditor takes the lessor sum, the rest of the alleged debt is discharged. If not, lawsuit. Remission says if do agree to remiss a debt, remission is basis for dischargegratuitous. Counterif what is paid is all that a good faith person believes this is all that needs to be paid, then any greater indebtedness is discharged. Burger case These two cases are differentiated. Silence was pointed out that the manager agreed to modification. Ct says if strings are attached and take the money, regarded as agreed to strings. Chapter VI Vices of Consent

Consent is invalid when it has been given through error, extorted by duress, or obtained by fraud because the consent is impaired, defective and tainted by a vice that affects its freedom. I. An Epilogue on Lesion a. Consent and Freedom i. Socially harmful to hold that a declaration of will produces legal effects always ii. Even if the person who made it does not obtain through it what he really wanted

La. C.C. art. 1948:Consent may be vitiated by error, fraud or duress La. C.C. art. 1949: error vitiates consent only when it concerns a cause without which the obligation would not have been incurred and that cause was known of should have been known to the other party. (1) The vice of error results from a persons subjective belief (2) The vice of duress, especially through violence is objective (3) The vice of fraud is both subjective and objective because it consists of an error, subjective in origin, that has been induced through a scheme designed for that purpose, a scheme that must be proved as an objective circumstance. Page 39 of 70

3 Principles of Concern: (1) Protection of the individuals will (his autonomy) (2) Promoting the stability and security of transactions (3) Promoting the social policy of discouraging various types of anti-social behavior - Fraud: want to discourage deceit in procuring consent - Duress: want to prevent threats of violence from procuring consent

Section 1. Error La. C.C. art. 1949-1952 Art. 1949: Error vitiates consent only when it concerns a cause without which the obligation would not have been incurred and that cause was known or should have been known to the other party. Error results from a subjective belief on the part of a person. The will the underlines the reason why we are entering into a contract. You can consent but the consent may not be valid with fully knowledge of what the contract is about. Is there Relief for Error? - What type? - How? - What is the error dependant? Note: Was the error excusable or inexcusable? Has the other party changed his position and how important is that change? Did the party seeking rescission investigate before entering into the K? o Was this partys conduct reckless or negligent? o If this party breaches his duty, this may provide less Ds as discussed in 1952

Examine what the other party knew or should have known and whether he had some capacity to help the party in error. - did he know the cause of the party in error? - Under 1953, if he knew of the cause then he is guilty of fraud Art. 1950 Error that concerns cause: Error may concern cause when it bears on (1) the nature of the contract, or (2) the thing that is the contractual object, or (3) A substantial quality of that thing, or (4) The person, or (5) The qualities of the other party, or (6) The law, or (7) Any other circumstance that the parties regarded, or (8) Should have in good faith regarded as the cause of the obligation. Errors can be in fact or law Page 40 of 70

Remember the other party must have known or should have known that the cause with error was on that the party which would not have obligated himself.

A. Error and Consent a. Error is a false representation of reality b. May result from ignorance or a wrong belief. i. Since consent if the expression of the persons will, consent will be ineffective ii. Only when the error is one that would effect the consent of the parties c. No valid contract can be made without valid consent of the parties Oil City Realty v. Bordelon Art. 1949In order to invalidate a contract due to error, the error must relate to the principal cause for making the contract and the other party must either know or should have known this principal cause . Art 1950 An error may concern a cause when it bears on the nature of the contract, or the thing that is the contractual object or a substantial quality of a thing If pl proceeded under an error of fact b/c they thought the lot was free from servitudes but it was burdened w/ a 30-ft way of passage. Therefore, the thing the pl contracted for what different than what they understood it to be. They testified the principal cause for the contract was b/c of lot size so they could build on. However, this was never communicated to the def or the agent. From the nature of the transaction, it could not have been known to the def what the pl principal cause was. The usual reason for buying a house is to obtain a place to live. The evidence shows the property fits this reason. This court does think the def should be held to have known that the pl wanted to build on and that their planned building would spill onto the right of passage. Pl to pay the costs of fees. Use 1949 and 1950. Sellers sue for breach of contract. Def claims didnt know servitude was there and they needed the yard.

B. Mutual Error a. The Problem of Mutual Error Nullity is declared if the mistake between parties is mutual. The problem is when mistake is unilateral o A good faith party in a unilateral mistake my still recover o The law does not require that the mistake be mutual o This is grounds for nullity, but the party in good faith suffers the injustice b/c they though the contract fulfilled all the requirements for its validity. If this happens, the def has grounds to recover damages If the party who is not mistaken induced the other party to be mistaken, then the case is one of fraud and resolves itself. o Party who does not disclose his true interest need not be protected If the party who is not mistaken did not contribute to the other partys mistake and is in good faith, then how is this remedied?

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1. 2. 3.

3 situations of this problem: Mutual mistakecontract can be annulled at request of either party Unilateral mistake by one party when the other is in bad faithFraud, etc. Unilateral mistake by one party when the other is in good faiththe mistaken party has a right to be heard, but the other party will be entitled to damages if the contract is annulled.

Calhoun v. Teal (1949-1952)error that is a mutual mistake of both parties can be annulled at the request of either party. The pl has the option of receiving payment in specific performance or pecuniary . If def would have sold to a 3rd party, the 3rd party would be protected and the def would have to pay the pl. Art 2299establishes a right to recovery in instances when something is paid under the belief it is relieving a debt. Then it is discovered the debt not owed after all. A lends B money, B never repaid this money. The prescriptive period has run. Then B pays A the money and later wants it back b/c would not have paid if he knew the prescription has run. B claims error. However, 1761 provides that this is a natural obligation and whatever is freely performed by a natural obligation may not be reclaimed. Comment b to 1761 states that freely means that the performing party acted w/o fraud or violence. It does not allow reclaimed b/c of error. The framers of the legislation regarded payment b/c of error as to prescription cant get back.

Wilson v. Levy - 1848 Testimonial or other evidence may not be admitted to negate or vary the contents of an authentic act or private signature. - However, in the interest of justice, evidence may be admitted to prove the vices of consent or prove that the written act was modified by a subsequent and valid oral agreement. - This was a mutual mistake on the part of both parties. Either party is permitted, in a suit between the parties to contract, so as to make it express truly and correctly the intention of the parties, provided the rights of 3rd parties have not intervened. - The error or mistake must be mutualthe burden is on the one seeking the reformation to prove the error and this must be proven by clear proof. The def proved the land was included in the description of the property sold by her through mutual error. Therefore, the deed to the land is reformed. Class Not too uncommon for mistakes in description, even w/ notarized versions. Position of def was that both of the parties knew that pl should not have the extra 30 acres. There was reform to make the deed say what it was supposed to have said in the 1st place. 1848Evidence necessary to succeed in an action for reformation must be strong and pl must carry burden to prove the error. Clear proof must be shown. The only error here was assuming the document correctly stated what the parties wanted to do. The transaction was carried out okay. There was no vitiated consent once the document was reformed. As a consequence of reformation, the court enforces the contract the way both the parties wanted, so no vitiated consent. If court did not reform K, then seller would have vitiated consent to what she wanted. Page 42 of 70

Court decrees a reformation and it did so with the effect of amending the document for less land to be transferred.

Saunders v. NO Public Service Compromises are favored by law and the burden of proving the invalidity of a compromise is on the party attacking the contract. The mere fact that a bad bargain was made is not in itself a sufficient ground for invalidating the compromise. However, since an essential element of every contract is consent by the parties w/ regard to a matter mutually understood, by the free exercise of will, a contact may be invalidated if the consent was produced by error. The only error that invalidates a contract is an error which was a principal cause for making the contract. In this case, the principal cause of making the contract of compromise was the fact, relied on by both parties on the basis of medical diagnosis that the pl injuries were minor. The parties probably would not have settled for $100 if they had known the pl true condition. Therefore, the contract is invalidated based on a mutual mistake of fact as the principal cause for the parties consent.

Class 3071Transaction or compromiseone articles says a compromise has the authority of a thing adjudged.

Mutual Error and Misunderstanding In both situations, the results are the same. Misunderstanding is reserved where each party attributes a different meaning to a certain word. Since a contract is based on mutual consent, it is clear that this consent is lacking when the parties had different things or meanings in their minds.

Case Law: Lyons Milling v. Cusimano - The def insistence on a certain grade and quality of flour was not based on a mere whim or pretext for avoiding a contract. - An error with regard to a thing that is a subject of a contract does not invalidate the contract, unless the error bears upon the substance or some substantial quality of the thing. The pl demand is rejected and costs go to pl. - Court felt judgement should be in def favor. He had flour tested and expert witness shows that it not good for pasta. Prior experience showed that pl pasta had been good. IF find that both parties truly believed what they testified they believed, no basis to render judgment against the def. His beliefs are more reasonable than that of the competing party. - If detrimental reliance on the part of the party not making the error, then may award damages. Must look at reliance if the party who relied did not know or should not have known of mistake.

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Unilateral Error v. Bilateral/Mutual Error Art. 1949 Comment(D): The granting of relief for error presents no problem when both parties are in error, that is, when the error is bilateral. When that is the case the contract may be rescinded as when the parties misunderstood each other at the time of contracting when they were misinformed because of a third party Ouachita Air Conditioning, Inc v. Pierce Requisite consent to a contract is lacking when there is an error in fact. To vitiate consent, the error of fact must pertain to the principal cause for making the agreement and no error in cause can invalidate a contract unless the other party knew or should have known that it was the principal cause for the contract. Error to a thing invalidates a contract only when the substance or substantial quality is different from the principal cause of the thing contracted for. In this case, there was error as to the quality of the object, the manufacturer of the a/c and that this quality was the principal cause for the contract. While the seller, although in good faith, did not have actual knowledge this was the principal cause, he should have been aware that the buyer would want the same unless otherwise stated. The court does not grant the pl the payment he seeks. There is no consensus as to the type of a/c. This is a situation where each had a distinct view or perception concerning what the terms of the K were. Ct cannot recognize any legal relationship b/c cannot hold ones views higher than the other. Could take into account that one party is a professional and the object is expensive. However, dont need to talk in terms of one party having known or should have known b/c there was never an agreement to the object. Ct handles by stating that even if the installers views are a little bit more reasonable, since he is a professional, he should have investigated what the customer wanted.

C. Unilateral Error Deutschmann v. Standard Fur Co Error that concerns Cause (art. 1950) -> Error may concern a cause when it bears on the nature of the contract, or the thing that is the contractual object or a substantial quality of that thing, or the person or the qualities of the other party, or the law or any other circumstance that the parties regarded as a cause of the obligation. Steps in examining error: o Identify the error => error in fact, the P would not have obligated herself had she been informed that what she wanted was impossible o What was the Ds knowledge? Did he know or should he have known of the cause without which P wouldnt have obligated himself? (This is a look at the other partys perspective) => D in this case she have explained it was impossible o What the Ds error excusable? => the D in this case was an expert

Art. 1952 Rescission: Liability for Damages A party who obtains rescission on the grounds of his own error is liable for the lose thereby sustained by the other unless the latter knew or should have known of the error. Page 44 of 70

Marcello v. Bussiere - Evidence is insufficient to establish fraud. - Pl say that during negotiations, seller represented that business was a growing concern, temporarily closed for repairs, when in fact it had been closed b/c of the revocation of the liquor license. - The pl did not prove beyond a preponderance of evidence that this was fraud. The evidence only shows the seller stated he knew of no reason why the purchasers could not secure the required license. - Therefore, the seller did not misrepresent the closure. - Error in the cause of the contract invalidates the contract only if the error is based on the principal cause w/o which the contract would not have been made. Error of the cause invalidates the contract if the other party knew or should have known the principal cause of the agreement.(1950) - *In this case, the couple wanted to run a bar and the liquor license is essential for the operation of business. This principal cause was known or should have been known to the seller. Therefore, there was an error in fact that was the principal cause of the agreement, known to the def. This means the contract should be rescinded. Def takes court costs. Again, seems like fraud b/c def withheld the truth about the liquor license, but the courts have not held this as fraud. C.H. Boehmer Sale Agency v. Russo - Error invalidates consent only when it concerns the principal cause w/o which the agreement would not have been made and the cause was known or should have been known to the other party (1949). - Def knew pl cause for the agreement that they needed to expand. Def knew the zoning status of the property, but did not tell pl. Therefore, the pl can recover their deposit and court costs go to the def. - Feels consent vitiated or undermined by error b/c he thought the property could be used for something it couldnt be. They wanted a non-conforming use out of zoning ordinances. - Could be (1953) from silence of telling pl that the modifications they wanted to make were in contention w/ the zoning ordinance. In these circumstances, the court ruled the assumption was one concerning cause. Universal Iron Works v. Falgout Refrigerators The def erroneously believed that the contract created an obligation for the installation of a/c only. Unilateral error of fact is sufficient to prevent the formation of contract. (1950)Error may concern a principal cause when: o 1. It bears on the nature of the contract (is it a sale or a lease). o 2. The thing that is the contractual object (are we selling A or B). o 3. Substantial quality of that thing. o 4. Substantial quality to the person or the qualities of the other party or o 5. Substantial quality of law or any other circumstances that the parties regarded or should have regarded in good faith as a principal cause of the obligation. Page 45 of 70

A party is not entitled to relief when the error he made is inexcusable b/c it is the result of his own negligence: **First have to have consensus an agreement was made. Cant enforce a promise until enforce there was a promise to begin w/. No error unless consensus. Error as to the nature of K as the concept of this is usually understood, concerned the incredibility unlikely situation when 2 parties thought there was different kinds of K. Nothing in there requiring a person resisting the recognition of the K had a reasonable reason to believe.

Shreveport Great Empire Broadcasting v. Chicoine The fact that the def failed to read the contract is not a defense. It is well settled that the person who signed the written contract is presumed to know its content, whether he actually read it or not. Signatures to contracts are not mere ornaments. B/c the def failed to adequately express his wishes and failed to have them included in the contract, does not mean that the def can avoid his obligation to the pl. Agreements legally entered into have the effect of law on the parties. Def must pay the pl and court costs. Parole evidence is inadmissible unless there is something ambiguous in the contract that requires the knowledge of the intent of the parties

Citizens Bank of LA v. James Error in a contract must be in respect to the object of the agreement, the identity or quality of the object. Lesion rescinds certain, limited transactionsdifference between market value and price paid. LA law says it is unavailable in case of movables. In the case of immovables, it is available only to the transferor of the immovable and only if got less than of the value of the item Lesion only available if someone parting w/ land in bargain transaction. If cant do it thru lesion, shouldnt be able to rescind K b/c of an erroneous error of market value.

D. Cause concerned in Error 1. Error as to the person Art. 1950: Case Law: Biscoff v. Brother of the Sacred Heart - When a party knows of the error as to the cause, the court will almost always find the K to be null - There resulted an error of fact as to the person or character of the pl which was a major consideration for the def making the contract. - Pl knew he may not be hired b/c the Catholic faith frowns upon divorce. The pl bad faith caused error so the contract is void. This could be considered a fraud case (1953). The court addresses fraud, but states it is error. What is suppression of truth? An affirmative duty to tell but dont is the suppression of truth. I have an affirmative duty to tell the truth if I known that you believe something other than the truth. Page 46 of 70

- Mistake as to the character or quality of person not apply between spouses, even if one has disease other was not aware of. II. Error in the Nature of the contract a. La. C.C. art. 1950

Case Law: Wise v. Prescott - In a situation where a person does not understand the nature of a contract, then your signature means nothing (1950). - Pl signed it b/c she was led to believe it was a gift. - This type of rush release is frowned upon by most legislatures, but our state has not. - Therefore, we cannot invalidate it b/c it was made in a short time. - However, the court is justified in recognizing the high potential for error in this type of release. - A contract w/ a person w/ a weak mind or for an inadequate consideration is fraud. III. Case Law: Voitier v. Antique Art Gallery - Mutual Error by the seller and the buyer as to the artist thus dramatically changing the value of the painting - A contract can be invalidated for a unilateral error as to the fact which was a principal cause for making the contract when the party knew or should have known it was the principal cause. - This is an error as to the substantial quality of the object that is the principal cause. - Therefore, the pl has a right to the rescinding of the contract on the basis of unilateral error. IV. Error of Law a. Error of Law i. No one can avail himself of ignorance of the law. 1. Ignorance of the law is of no avail b/c otherwise a person could invoke it in order to escape application of a law 2. that would have a negative effect on him. ii. In LA, the code distinguishes between ignorance of the law, which is no excuse, and mistake of the law, which under certain circumstances is recognized as a valid excuse. iii. Error of law 1. a misunderstanding or misinterpretation 2. led a party into erroneous understanding of the contractual object. 3. An error of law is useful where proof is needed b/c a party can show a misunderstanding of a point of law, which can lead to an error of fact. iv. Not every error of law leads to the invalidation of a contract. Usually, compromises may not be annulled in LA. v. An error of law can nullify a contract only when it is the principal cause of the obligation. Exceptions Error in substance of contract

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1. Compromiseagreement w/ the objective of preventing or ending doubtful litigation in a manner agreed upon by the parties b/c each prefers this instead of the chance of gaining considered w/ the chance of losing. Ignorance cannot nullify the compromise b/c this ignorance is the motive for the contract: the parties would rather agree among themselves than run the chance of gaining or losing. These can be revoked if it is an error of fact. 2. Judicial confessionsThese can also be revoked if an error of fact, but not under the pretext of error of law. This is b/c it is impossible to prove the error of law was the principal and determining cause of the judicial confession. It may have had as its object either a fact or a debt which proof did not exist or was doubtful. Case Law: Hill v. Hill A compromise settlement is intended not to bring about a decision of the questions of law in dispute, but to pretermit them. A contract made for the purpose of avoiding litigation, cannot be rescinded for an error of law.

Chapter VII Vices of Consent (Contd) Fraud, Duress Section 2. Fraud Articles 1953-1958 a. 1953 Fraud may result from misrepresentation or silence Fraud is: i. A misrepresentation of the truth OR ii. A suppression of the truth OR iii. Silence or inaction Made with the intention to obtain either i. unjust advantage ii. To case a loss or inconvenience to the other Fraud: i. concerns a circumstance that substantially influences consent ii. That induced error The party may be entitled to annulment b. Art. 1958 Damages: The party against whom rescission is granted because of fraud is liable for damages and attorney fees. i. Fraud is punished must more extensively than simple error (1952) ii. Comment B says: These Ds include loss sustained and full damages including profit, pecuniary ds and attorney fees c. Art. 1956 Fraud Committed by a third person: Fraud committed by a third person vitiates the consent of a contracting party if the other party knew or should have known of the fraud

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d. Art 1957 Proof: Fraud need only be proved by a preponderance of the evidence and may be established by circumstantial evidence e. Art 1954: Confidence between the parties: Fraud does not vitiate consent when the party against whom the fraud was directed could have ascertained the truth without difficulty, inconvenience, or special skill. This exception does not apply when a relation of confidence has reasonably (objective) induced a party to reply on the others ascertains or representations. f. Art. 1955. Error induced by fraud: Error induced by fraud need not concern the cause of the obligation to vitiate consent, but it must concern a circumstance that has substantially influenced that consent. Case Law: Griffling v. Atkins - The parties were on an unequal footing and the party possessing superior knowledge regarding the value or quality of the object is held to the exercise of the greatest caution in conducting himself and must not take undue advantage of the other party who is ignorant of the value or quality of the object. - Sims went to the store to have it tested. - It would have been fairer if he would have had more of an option to conduct his own investigation as to its value. - In this case, by disclosing only a part of which you may say to be the truth and suppressing the remainder, it is fraud. Note: The value of the thing substantially effected the buyers consent. Orr v. Walker - If one induces another through fraud to give his consent to a contract, the contract can be annulled. Orr would never have sold the def his land if he knew it for Talley. - He mislead the pl into thinking he bought land from Talley, showing a false deed to support this. - Even though complaining seller got market value, the property now owned by arch enemy. - Not have sold to B if knew. B showed A a deed, presenting himself as owner when it was really the ememys cause of action. Examine Art. 1954 - Could P have ascertained the truth without difficulty, inconvenience, or special skill? - He could have had the deed examined by an attorney or checked the public records - Does this qualify as being difficult or inconvenience - Is this more difficult than what the intervener had to do?

Overby v. Beach No difficult or inconvenient operation was required of the pl to discover the truth or falsity of the assertions of the def respecting the revenue production of the apartments.

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The pl is w/o a cause of action b/c the misrepresentation of the vendors was a false assertion respecting the value of the object of the contract which could not serve as a cause for rescission of the sale b/c the pl could have detected its falsity by inquiry The misrepresentation was not as to the value of the object of the contract but it concerned the quality of the object. The pl bought the apartments b/c of the misrepresentation of fact respecting the legal amount of rent the apartments were actually bringing in at the time of the sale. Pl not trying to find out how much rent it should produce, but how much it actually was. By the defs misrepresentation of the legally collectible rents, the result is fraud and rescission is allowed. Reversed. The courts require conclusive proof beyond a reasonable doubt of fraud, b/c fraud is such a serious charge. Harder to prove fraud, but easier to rescind once proved. Section 3. Duress I. Duress on the other hand is based off of the subjective. It is the most serious of vices of consent. Violence or threats are considered the type of anti-social behavior we most want to condemn. A. Art. 1959 Nature i. Consent is vitiated when ti have been obtained by duress of such a nature as to cause a reasonable fear of unjust and considerable injury to a partys person, property, or reputation. (This is an objective determination) ii. Age, health, disposition, and other personal circumstance of a person must be taken into account. in determining reasonableness of the fear. B. Art. 1960 Duress directed Against Third Person i. Duress vitiates consent also when the threatened injury is directed against the spouse, an ascendant, or descendant of the contracting party. ii. If the threatened injury is directed against other persons the granting relief is left to the discretion of the court. 1. Comment C: 2par, covers situations where the fear that is instilled is found upon friendship or other relationship either based on or productive of strong affection C. Art. 1961 Duress By Third Persons i. Consent is vitiated even when duress has been exerted by a third person. D. Art 1962: Threat Exercising a Right: i. A threat of doing a lawful act or a threat of exercising a right does not constitute duress. ii. A threat of doing an act that is lawful in appearance only may constitute duress E. Art. 1963 Contract With a Party in Good Faith i. A contract made with a third party to secure the means of preventing threatened injury may not be rescinded for duress if that person is in good faith and not in collusion with the party the party exerting duress. F. Art. 1964 Damages: i. When rescission if granted because of duress exerted or known by a party to the contract, the other party may recover damage and attorney fees.

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ii. When rescission is granted because of duress exerted by a third person, the parties to the contract who are innocent of the duress may recover damages and attorney fees from the third person. Case Law: Couder v. Oteri (No Duress) - States that a threat of doing a lawful act or a threat of exercising a right does not constitute duress. - Using threats through his council of legal proceedings is something that the def had a legal right to do. - There is no evidence of a resort to violence or assassination. Therefore, pl demand for the rescission of the note is rejected. Wilson v. Aetna Casualty & Surety ( No Duress) The pl was fully aware of his situation and voluntarily signed the agreement. Circumstances a person is in does not allow the rescission of a contract b/c of duress of an emotional or financial nature. Pls bargaining power to resist the def offer under strong emotional duress to accept it, is not grounds for rescission. A contract entered into under duress that would cause fear of great injury to person, reputation, or fortune is invalid, even if the person favored by the contract did not exercise the violence or make the threats and was unaware of the duress. A compromise is subject to rescission when executed under such duress (1959). This proceeds from a fear of force or violence which wipes out the freedom of consent

Adams v. Adams Consent is vitiated when it has been obtained by duress of such a nature as to cause a reasonable fear of unjust and considerable injury to a partys person, property, or reputation (1959). Age, health, disposition, and other personal circumstances of a party must be taken into account when determining the reasonableness of the fear (1959). However, a threat of doing a lawful act or a threat of exercising a right does not constitute duress (1962). Mr had a right to declare bankruptcy. Emotional and financial duress are not the type of duress constituting legal duress. Finally, Mrs did not prove reasonable fear injury to her person. There is no proof that the shaking she talked about had anything to do w/ the settlement.

Notes: One who, without error or duress, has paid an excessive demand, cannot maintain an action for repletion thereof. Articles 2301 and 2302 must be read together. Consent and Adverse Circumstances (New Trends with/n the law) 1. Today the court considers whether or not the person whose consent was obtained actually felt duress and wouldnt have entered into the agreement but for fear of considerable injury. 2. What was the cause of the obligation?

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A question arises when a person faces circumstances that are so harsh that in order to overcome them, he consents to a contract that imposes upon him an obligation which is excessively onerous either b/c he must promise to give too much or must resign himself to receive too little. Where the freedom of a partys consent is not restricted by duress consisting of a personal act of the other party, but results rather from circumstances that allow the other party to take an unfair advantage.

Case Law: Jordan v. City of Baton Rouge - A release or waiver has legal validity only if it possesses the essential elements of a contract, including consent. - The consent of each party to a contract must be the result of a free and deliberate exercise of each partys will. - The circumstances surrounding the execution of the release show that the pl did not freely consent to the document he signed. - He had no choice but to sign the form to get his car back. Therefore, the release is w/o effect. (Judgment releasing police is upheld but reversed releasing wrecker service). Lesion Article 1965 A. Article 1965 Lesion: A contract may be annulled on grounds of lesion only in those cases provided by law. a. Lesion may be invoked in i. Sale ii. Exchange- parties to the contract give to one another, one thing for another, whatever it be, except money iii. Partition a division of real property b. Lesion does not vitiate consent c. Art. 2665 d. Art. 2666 Chapter VIII Object of Contract Section 1. General Principles La. C.C. 1971-1977 A. General Information: a. Art. 1971 Freedom of Parties: Parties are free to contract for any object that is lawful, possible, and determined or determinable b. Art. 1972 Possible or Impossible Object: A contractual object is possible according to its own nature and not according to the parties ability to perform. c. Art. 1973 Object Determined as to kind: The object of a contract must be determined at least as to its kind. The quantity of a contractual object may be undetermined, provided it is determinable.

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d. Art. 1974 Determination by a third person: IF the determination of the quantity of the object has been left to the discretion of a third person the quantity of an object is determinable. If the parities fail to name a person, of if the person named is unable or unwilling to make the determination, the quantity may be determined by the court. e. Art. 1975 Outputs or Requirements: The quantity of a contractual object may be determined by the output of one party or the requirements of the other. In such a case, output or requirements must be measured in good faith f. Art. 1976 Future Things: Future things may (permissive) be the object of a contract. The succession of a living person may not be the object of a contract other than an antenuptial agreement. Such a succession may not be renounced. i. Art. 2450 Sale of Future Things: A future thing may be the object of a contract of sale. In such a case the coming into existence of the thing is a condition that suspend the effects of a sale. A party who, through his fault, prevents coming into existence of thing is liable for damages. ii. Art. 2451 Sale of Hope: A hope may be the object of a contract of sale. Thus a fisherman may sell a haul of his net before he throws it. In that case the buyer is entitled to whatever is caught in the net, according to the parties expectations, and even if nothing is caught the sale is valid. Case Law: Commerce Insurance Agency Inc. v. Hogue Lilies v. Bourgeois Under Louisiana law, there is a general concept of quasi contractual obligations; it is consent based upon the principle that where there is an unjust enrichment of one at the expense or impoverishment of another, then the value of that enrichment or else, in some cases, the amount of the impoverishment must be restituted Section 2. Stipulation Pour Auturi or Third Party Beneficiary La. C.C. art. 1973-1982 A. The Tripartite Relation i. Art. 1978 Stipulation for a Third Party: A contracting party may stipulate a benefit for a third person called a third party beneficiary. Once the third party has manifested his intention to avail him elf of the benefit, the parties may not dissolve the contract by mutual consent without the beneficiarys consent. ii. Art. 1979 Revocation The stipulation may be revoked only by the stipulator and only before the third party has manifested his intention of availing himself of the benefit. If the promisor has an interest in performing however, the stipulation may not be revoked without his consent. iii. Art. 1981 Rights of Beneficiary and Stipulator The stipulation gives the third party beneficiary the right to demand performance from the promisor. Also the stipulator, for the benefit of the third party, may demand performance from the promisor.

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iii. Art. 1982 Defenses of the Promisor : The promisor may raise against the beneficiary such defenses based on the contract as he may have raised against the stipulator. 1. Art. 1982. Third Person (Promisor) Bound for Amount Assumed: A person who, by agreement with the obligor, assumes the obligation of the latter is bound only to the extent of his assumption. The assuming obligor may raise any defense based on the contract any which the assumption is made. Notes on Examination of 3rd Party Benefit: 1. What was the intention of the parties? a. The promisor makes a promise to the promise stipulator to render a performance to benefit the third party beneficiary b. Thus, the K is between the promisor and the promise stipulator to benefit the third party 2. Has the Beneficiary availed himself of the benefit? Legal Relationship 1. Must be writing 2. Art. 1821 Assumption by Agreement Between Obligor and Third Persons => particularized third party beneficiary 3. Release by the obligee does not release the obligor 4. The obligor may still be solidarily bound to the 3rd person 5. In this instance this not novation, this release does not happen by mere consent. Case Law: Pelican Well and Tool Supply Co. V. Johnson Andrepont v. Acadia Drilling Co. Inc. (1) The existence of a legal relationship between the promise and the third person involving an obligation owed by the promise to the beneficiary which performance of the promise will discharge (2) The existence of a factual relationship between the promise and the third person, where a. There is a possibility of future liability either personal or real on the party of the promise to the beneficiary against which performance of the promisee will protect the former b. Securing an advantage for the third party may beneficially affect the promise in a material way c. There are ties of kinship or other circumstances indicating that a benefit by way of gratuity was intended. Page 54 of 70

- The court here determines that the third party beneficiary was the result of a not only a legal relationship but a factual one as well. B. Incidental Beneficiaries i. May have been a incidental beneficiary but there was no stipulation por auturi to form a legal relationship Case Law: Wagner & Truax Co., Inc. v. Barnett Enterprises, Inc. - In general, a real estate broker cannot recover a commission unless he shows an agreement for the payment of compensation for his services - There must be contract of employment, either express or implies from the facts, and non one can claim compensation from one who did not employ him, however beneficial or valuable his services may prove. - Art. 1890: A person may also, in his own name, make some advantage for a third person the condition or consideration of a commutative contract, or onerous donation and if such third person consent to avail himself of the advantage stipulated in his favor, the contract can not be revoked. - The D must have had an intent to include or obligate himself to the third party in order to be held liable and an agreement to form. - Not every promise, performance of which may be advantageous to a third person, will creat in him an actionable right. The problem is to separate the cases where an advantage has been stipulated form those where the advantage relied upon is merely an incident of the contract between the parties.

Chapter IX Putting The Obligor in Default and Right to Damages Section 1. General Principles I. Comment i. An obligor who fails to perform his obligation without a valid cause makes himself liable for damages ii. Caused by his failure General Effects of Contracts: a. Art. 1893 Law for the Parties: Performance in Good Faith: Contracts have: i. The effect of law for the parties and ii. May be dissolved only through the consent of the parties or on grounds provided by law iii. Contracts must be performed in good faith 1. Good Faith: 1759l Good faith shall govern the conduct of the obligor and the obligee in whatever pertains to the obligation b. Art. 1984 Rights and Obligations Will Pass to Successors: Rights and obligations arising from a contract are heritable and assignable unless the law, the terms of the contract or its nature preclude such effects i. Art. 1756 0 heritable obligations and 1766 strictly personal obligations ii. 1984 the general rule is that obligations are presumed to be heritable Page 55 of 70

II.

c. Art. 1985 Effects for Third Parities: Contract may produce effects for third parties only when provided by law Notes: What to look out when examining 1. what type of failure to perform was there? 2. Was there only a delay or was there total non-performance? 3. Did the obligee receive performance or does he seek it from this suit and want damages for delay? III. Delay a. Art. 1989, Damages for delay: Damages for delay (moratory damages) in the performance of an obligation are owed from the time the obligor is put in default. Other damages (compensatory) are owed form the time the obligor has failed to perform. i. Art 1994 = Failure to perform may result from 1. Non-performance 2. defective performance 3. delay in performance b. Damage are only do for delay from the time the obligor has been put in default. Other damages are due form the time the obligor has failed to perform. i. Non-performance ii. Defective performance iii. Delay in performance c. Moratory Damages = can be recovered even if the performance is already rendered, although delayed. The object of compensation is for the injury caused because of the obligors untimeliness in performance. In the case of delay, the obligee may also receive compensatory damages. d. Exceptions: Mineral rights, you must put in default before you can recover for delay. e. Art. 1990 Obligor Put in Default by Arrival of a Term: When a term for the performance of an obligation is either fixed, or is clearly determinable by the circumstances, the obligor is put in default by mere arrival of that term. In other case, the obligor must be put in default by the obligee but not before his performance is due. Case Law: Firebound Corporation and K-dak Inc. v. Aetna Casualty & Surety Company - This was contract that included damages for delay, the obligor would have to pay $800 per day for delay - Art. 2010: an obligee may not avail himself of a clause stipulating damages for delay unless the obligor has been put in default. - The inclusion of a fixed term puts the obligor in default from that date onward. - When the other party is responsible for some of the delay, the obligorsdays of delay will be reduced by the obligees.

Art. 1991 Manner of Putting In Default: An obligee may put the obligor in default by: 1. A written request of performance or by Page 56 of 70

2. 3. 4.

An oral request of performance made before two witnesses or by Filing suit for performance or by A specific provision of the contract a. This is not a requisite to a suit for dissolution because the article does not apply to contract dissolution b. One will only need to use 1,2,3 when there is no fixed term or the term is not clearly determinable c. Putting in default is a request for performance

Art. 1992 Risk Dissolves Under the obligor: If an obligee bears the risk of the thing that is object of the performance, the risk dissolves upon the obligor who has been put in default for failure to deliver the thing. 1. Putting in default has the effect of shifting the risk from the obligee back to the obligor who has been put in default Art 1993 Reciprocal Obligations: In case of reciprocal obligations, the obligor of one may not be put in default unless the obligor of the other has performed or is ready to perform his own obligation Case Law: Electrodata Manufacturing Corporation v. The Doomed Stadium Hotel - The effect of the Ps failure to the D hotel in fault with respect to having the building fully wired with the system - Although plaintiff was supposed to install before being entitled to payment, the delay in plaintiffs performance was attributable to defendants delay in readying the building for the installation - Since the plaintiff failed to put the D in default he could not recover for the delay in performance.

Section 3. Other Failures to Perform Notes: The C.C. states that other damages are owed from the time the obligor has failed to perofmr, rather than from the time he has been put in default. - compensatory damages o intended to compensate, o serve as a substitute satisfaction given in leiu of performance Moratory Damages o Follow follow a performance that has been or will be rendered o But is late

Alan v. Steers - P is due compensatory damages under Art. 1989 from the time the performance failed Page 57 of 70

No putting in default is necessary because this was not delay in damages This was total non-performance Art. 2016: Dissolution without notice to perform: When a delayed performance would no longer be of value to the obligee or it is evident that the obligor will not perform, the obligee may regard the K as dissolved. Section 4. Anticipatory Breach

Section 5. Methods for putting in Default Case Law: Moran v. Wilshire Insurance Company - While 1991 provides the manner of putting in default, it does not require a specific language in placing the obligor in default. - Allegations were sufficient to serve the function of putting in default - A suit does not have to be for specific performance to constitute a putting in default - If the obligee seeks damages for delay without requesting performance, such a demand, no doubt, will prompt the obligee to perform in order to minimize the damages he must pay, and the suit is thus an apt device for putting the obligor in default - Demands for the performance of a contract are not to be considered ineffective because couched in polite terms; all that is necessary is that the terms be sufficient to let the obligor know that performance for the contract is expected. Melancon v. Texas Co. - Art. 2710 the lessee is bound, to pay rent at the terms agreed on - Art. 2712 If he fails to pay the rent when die he may be expelled from the property - Rent is the primary motive for the contract, thus the payment in pursuance of the terms of the contract of lease, is an essential engagement on the part of the lessee, and his noncompliance with it given to the lessor the right to sue for the dissolution of the contract. - Art. 2050 When there is not fixed term, it may be executed immediately, unless from the nature of the act, a term, either certain or uncertain, must be implied. - Art. 1964 equity, usage and law maybe resorted to in such cases - Usage that which is generally practiced in affairs of the same nature with that which forms the subject of the contract. Chapter X Dissolution Notes: A contract is the private law of the parties. The binding force of a contract is brought to an end, however, by the expected performance of the parties obligation, or by the termination though the parties mutual consent, or by rescission for some reason that gives rise to nullity, or by dissolution for nonperformance. Section 1. General Principles.

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1.

Art. 2013 Obligees right to Dissolution: When the obligor fails to perform, the obligee has a right to the judicial dissolution of the contract or according to the circumstances, to regard the contract as dissolved. In either case, the obligee may recover damages. In an action involving a judicial dissolution, the obligor who failed to perform maybe graned according to the circumstances, an additional time to perform. i. There are two types of dissolution for failure to perform 1. Judicial dissolution 2. Extrajudicial dissolution; based on the circumstances vi. With Judicial the obligor may be given additional time to perform, this is based on the discretion of the court vii. The court will look at the following factors (1) Circumstances of the individual case (2) The good faith vel non of the obligor (3) Whether the obligor has a valid excuse for his failure Additional factors (No in C.C.) (4) Extent and gravity of the failure to perform (5) The nature of the obligors fault (6) The surrounding economic circumstances that may make the dissolution opportune or not viii. Not extra time with extrajudicial

Art. 2014 Importance of Failure to Perform: A contract may not be dissolved when the obligor has rendered a substantial part of the performance and the part not rendered does not substantially impair the interest of the obligee. Art. 2015 Dissolution After Notice To Perform: Upon a partys failure to perform the other may serve him a notice to perform within a certain time, with a warning that, unless performance is rendered within that time, the contract shall be deemed dissolved. The time allowed for that purpose must be reasonable according to the circumstances . The notice to perform is subject to the requirement governing qa putting of the obligor in default and , for the recovery of damages for delay, shall have the same effect as a putting of the obligor in default. No notice needed: Art. 2016 Dissolution without notice to perform. When a delayed performance would not longer be of value to the obligee or when it is evident that the obligor will not perform, the obligee may regard the contract as dissolved without any notice to the obligor. Art. 2017 Express Dissolution Clause: The parties may expressly agree that the contract shall be dissolved for the failure to perform a particular obligation. In that case, the contract is deemed dissolved at the time it provides for, or in the absence of such a provision, at the time the obligee gives notice to the obligor that he avails himself of the dissolution clause. Art. 2018 Effects of Dissolution: upon Dissolution of a contract, the parties shall be restored to the situation that existed before the contract was made. If restoration in kind is impossible or impracticable, the court may award damages. If partial performance has been rendered and that

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performance is of value to the party seeking to dissolve the contract, the dissolution does not preclude recovery for that performance, whether in contract or quasi-contract. a. Partial Performance = may still have dissolution (and recovery) b. Substantial Performance will only recover proportionately c. Dissolution of a K v. Partial Dissolution i. Continuous Contracts rent.lease ii. Periodic performance, requirements If dissolution is granted in either of these cases, it only extends to prospective performances. Not retroactive. Art. 2021 Rights of third Party in Good Faith: dissolution of a contract does not impair the rights acquired through an onerous contract by a third party in good faith. If the contract involves immovable property, the principles of recordation apply. 1. Dissolution takes not effect in agreement with the obligor and 3rd party Section 2. Judicial Dissolution Case Law: Wasseco Chemical and Supply co. v. Bayou State Oil Corporation - For this purpose the court takes into consideration: o The extent and gravity of the failure to perform alleged by the complaining party o The nature of the obligors fault o The good or bad faith of the parties involved o The surrounding economic circumstances that may make the dissolution opportune or not - upon consideration of all these factors, a choice must be made among several courses of action Scope of Judicial Discretion Case Law: Simpson v. Simpson - under the circumstances, based on equity the court did not abuse discretion in allowing the d more time to perform - the D has worked to make the repairs when asked and should be allowed to comply with the Ps request. 3. Dissolution By a Partys Initiative Case Law: Mennella v. Kurt S. Schon B.A.I., Ltd. - in a case where times in not of the essence and 2016 doesnt apply, the obligee seeks damages. - Putting in default is not necessary to have a dissolution

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Stevenson v. Lavalco, Inc. - An employee hired for a an indefinite term has no action against his employer for wrongful discharge. Ssection 4. Partial Dissolution

Chapter XI Specific Performance A. Art. 1986 Right of the obligee: Upon an obligors failure to perform an obligation to deliver a thing or not to do an act or to execute an instrument, the court shall grant specific performance place damages for delay if the obligee so demands. If specific performance is impracticable, the court may allow damages to the obligee. Upon the failure to perform an obligation that has another object such as an obligation to, the granting of specific performance is at the discretion of the court. Note: In civilian theory, specific performance is the primary remedy for the nonperformance of an obligation. Art. 1987 Right to Restrain Obligor: The obligor may be restrained from doing anything in violation of an obligation not to do. There are 3 types of injunctions: (1) Temporary Restraining Order (ex parte - 10 days) (2) Preliminary Injunction (hearing w/notice must show that he will sufferable irreparable injury) (3) Permanent Injunction Note: Irreparable injury is not necessary it is enough to do something in violation of an obligation

Chapter XII (429) Damages 1994-1997 Chapter XIV(484) Damages Non-Pecuniary Chapter XIV Kinds of Obligations Section 1. Real Obligations Art. 1763 Defintion: A real obligation is a duty correlative and incidental to a real right Art. 1764 Effects of Real obligations: A real obligations is transferred to the universal or particular successor who acquires the movable or immovable thing to which the obligation is attached, without a special provision to the effect. But a particular successor is not personally bound, unless he assumes the personal obligation of his transferor with respect to the thing, and he may liberate himself of the real obligation by abandoning the thing. Page 61 of 70

1. Mortgage is something that is transferred with act translative of sale or succession. 2. A real obligation will transfer to the acquirer of the thing to which it is attached without need of a stipulation to that effect. Thus, when a estate is burden with a servitude it is transferred. Case Law: Breaux v Laird - Not only the obligation but the right resulting form the contract relative to immovable property, passes with the property, - Thus the right of servitude in favor of immovable property passes with it, and thus also the heir or other acquirer will have the right to enforce a contract made for the improvement of the property by the person whom he acquired it. McGuffy v. Weil Section 2. Strictly Person and Heritable Obligations Art. 1765 Heritable Obligation: An obligation is heritable when its performance may be enforced by a successor of the obligee or against a successor of the obligor. Every obligation is deemed heritable as to all parties, except when contrary results from the terms or from the nature of the contract. A heritable obligation is also transferable between living persons Art 1766 Strictly Personal Obligations: An obligation is strictly person when its performance can be enforced only be the obligee or against the obligor. When the performance requires a special skill or qualification of the obligor, the obligation is presumed to be strictly personal on the part of the obligor. All obligation to perform personal services are presumed to be strictly personal on the part of the obligor. When the performance is intended for the benefit of the obligee exclusively, the obligation is strictly personal on the part of that obligee. All obligation are deemed heritable: What to examine to rebut: 1. Terms of circumstances of the contract 2. Nature of the contract Strictly Personal Aspects: 1. requires a special skill or qualification of the obligor a. Special skill b. Qualifications- a certain social standing or professional standing that make the obligor unique c. Personal services i. Marriage ii. Musician iii. Dancing lessons d. The performance is intended for the exclusive benefit of the obligee

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Case Law: In Re Minor Female Child - Parental rights are strictly personal and such are not heritable - The care and custody of a child does not devolve as a matter of right to one who is not parent Bogart v. Caldwell - The performance of the obligor in this case was not intended to be exclusively beneficial to that obligee/obligor relationship - It financially benefits the heirs as well as it have benefited the decedent - Standard for whether its personal as to the obligee. o Can the heirs benefit form the obligation - The obligation not to operate a motion picture theatre does not exist for the personal gratification of the obligee and is productive of financial benefit to the heirs of the obligee. It is not the sort of personal obligation that ends w/ the death of the obligee. - Can the benefit not to compete extend to anyone else who owned the benefit. D not sell but died. - Construction of agreementdoes the obligation not to compete extend beyond the lifetime of the gentleman. - Only reference is to sale. Some obligations when A owes particular performance and B dies, and Bs heirs want A to perform for them, A can say no. However, not competing benefits any owner of property. Therefore, it is heritable. - A benefit not to compete is not a benefit that only will be good to the people to whom it was made. It will benefit heirs as well. Person who was seeking to enforce the agmt not to compete was the widow. The ct substituted his lifetime for hers. The issue is what should be identified is the duration and not whether or not it will benefit heirs. Larocca v. Larocca - The source is a contract. - Divorce is a strictly personal right - But, the consequences are heritable (community property) - The obligation of gratitude is heritable as to the obligee because it benefits the heir too Section 3. Simple or Conditional Obligations La. C.C. arts. 1767-1776 Note: A condition is a future and uncertain events that gives rise to, or puts an end to the existence of an obligation. Situations of this sort call very close analysis in order to determine whether the element that appears on the surface as a condition, regardless of the manner in which the parties named it, it a true condition or only a bargained for performance. I. Art. 1767 Suspensive and Resolutory Conditional obligation is one dependent on an uncertain event. If the obligation may not be enforced until the uncertain event occurs, the condition is suspensive. If the obligation may be immediately enforced but will come to an end when the uncertain event occurs, the condition is resolutory. Page 63 of 70

A. If its an obligation without a condition it is a simple obligation. i. Conditional: Dependent on an uncertain event. Future or uncertain event, but it need not be future it can already have happened, yet be unknown to the parties, as long as it is uncertain. ii. Test of Enforceability. Counterperformance v. Condition 1. Fulfillment of condition can be neither a. Demanded b. Enforced 2. Counterperformance can be Art. 1768 Expressed and Implied Conditions: Condition may be either expressed in a stipulation or implied by law, the nature of the contract, or the intent of the parties. Art. 1771 Obligees Right Pending Condition: The obligee of a conditional obligation, pending fulfillment of the condition, may take all lawful measure to preserve this right Art 1775 Effects Retroactive: Fulfillment of a condition has effects that are retroactive to the inception of the obligation. Nevertheless, that fulfillment does not impair the validity of acts of administration duly performed by a party, nor effect the ownership of fruit produced while the condition was pending. Likewise, fulfillment of the condition does not impair the right acquired by third persons while that condition was pending. Art. 1759 Unlawful or impossible condition: A suspensive condition that is unlawful or impossible makes the obligation absolutely null. A resolutory condition that depends solely on the will of the obligor must be fulfilled in good faith - whim; purely protestative condition, this obligation does note exist and the entire contract is null. I will sell you my house if I feel like it - Will; simply protestative condition. Weights the interest of the obligor and does not make the contract null. If I move to Paris, I will sell you my house Art. 1772 Fault of a Party: A condition is regarded as fulfilled when it is not fulfilled because of the fault of the of a party with an interest contrary to the fulfillment. Case Law: A. Suspensive Condition George W. Garis Transfer, Inc. v. Harris - -P to buy certificate if Public Service approves and D must relinquish rts if approved. - Both ptys must petition Commission, but D does not. (breach of K). - P got Commission to say that but for the withdrawal of D petition, transfer would have been approved. - DO WE HAVE A K FIRST, THEN THIS OBLIGATION AROSE FROM THE K? D says since commission not approved, D not owe P anything. - The D can not profit from his own wrongdoing. - Under 1772 one who makes a promise subject top a condition cant prevent fulfillment to avoid the obligation. Page 64 of 70

Note: Every condition must be performed in a manner that is probable that the parties wished and intender that it should be. It is clear, then, the law does not permit the party whose obligation depends on a condition, to allege the non-performance of that condition in defense, where it was through his fault it was not performed. Bacon v. Ford - Condition not fulfilled before the expiration of the term. Court held that the contract was null. B/c a suspensive condition of the K was not fulfilled b/4 the expiration of the term for performance, the K is null and the obligations are unenforceable. D argue that the K was subject to the suspensive condition that they would be able to borrow the funds w/ which to purchase the house and that the condition was not fulfilled before the K expired. If the condition is that an event shall occur within a fixed time and that time elapses w/o the occurrence of the event, the condition failed. When a purchaser, thru no fault of his own, is unable to obtain a loan upon which the agreement is conditioned, the obligations imposed by the agreement are not binding upon the parties

B. Resolutory Condition Manuel v. Shaheen - Was boat vendor or boat buyer responsible by being the owner of the boat at time of accident resulting in injury to P? The insurance policy of the boat vendor would provide coverage of the people who were water skiing at the time the boat was its property. - Dad pays for itsuggests finality of sale. - Tr ct rules that dad owner and rule in favor of liability insurance of boat vendor. - P appeals, arguing issue of fact concerning existence of arrangement that title of boat had remained w/ dealer. Ct rejects. RESOLUTORY condition kicked about. C. Condition that depends upon the whim of the obligor S. Gumbel Realty and Securities Co., v. Levy - Art 1770suspensive and resolutory conditions. Suspensive conditions depends solely on the whim of the obligor makes obligation null. Suspensivenot enforced until uncertain event. Resolutorycomes to end when uncertain event. - Do not have to have symmetry National Safe Corp v. Benedict & Myrick, Inc. A reasonable interpretation of the K btwn P and D contemplated that D would accept the advice and assistance of P in training its service personnel and to build up its business. Therefore, P solicitation to offer one of D employees to work for P is not good faith performance of the K. P should not have done this. Therefore, P breached K w/ D. Page 65 of 70

Section 4. Obligations with a Term Art. 1777 Express or Implied Term: A term for the performance of an obligation may be express or it may be implied by the nature of the contract. Performance of an obligation not subject to a term is due immediately Art. 1778 Term for performance: A term for the performance of an obligation is a period of time either certain or uncertain. It is certain when it is fixed. It is uncertain when it is not fixed but is determinable either by the intent of the parties or by the occurrence of a future or certain event. It is also uncertain when it is not determinable, in which case the obligation must be performed within a reasonable time. Art 1779 Term Presumed to Benefit the Obligor: A term is presumed to benefit the obligor unless the agreement or the circumstances show that it is intended to benefit the obligee or both parties. Art. 1780 Renunciation of a Term: The party for whose exclusive benefit a term has been established may renounce it . Determining a Term: Art 1784 Term for Performance not Fixed: when the term of performance of an obligation is not marked by a specific date but is rather 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 vent that markes the beginning of the term, and it includes the last day of the period. Art 1785 Performance on Term: Performance on term must be in accordance with the intent of the parties, or with established usage when the intent cannot be ascertained. - the code looks a the intent of the parties - Usage second Conjunctive and Alternative Obligations Art. 1807 Conjunctive Obligation: An obligation is conjunctive when it binds the obligor to multiple items of performance that may be separately rendered and enforced. In that case, each item is regarded as the object of a separate obligation. The parties may provide that the failure of the obligor to perform one or more items shall allow the obligee to demand the immediate performance of all the remaining items. Art. 1808 Alternative Obligation; An obligation is alternative obligation. The penalty clause is an accessory obligation to ensure the performance of the principle obligation. Art. 1809 Choice Belong to the Obligor: when an obligation is alternative, the choice of the item of performance belongs to the obligor unless it has been expressly or impliedly grantes to the obligee. Case Law: Castano v. Bellina The P were entitled to renounce the term of the note providing payment over 15 yrs and D could not require payment of a penalty when P chose to prepay note. This is b/c the party for whose exclusive Page 66 of 70

benefit a term has been established may renounce it. Any compromise was w/o lawful cause and is null. P only paid penalty b/c they were forced to pay off the D and secure a new loan. A cause is unlawful when the enforcement of the obligation would produce a result prohibited by law or a/g public policy. The P payment of the penalty was conditional that the D be found legally entitled to it. Therefore, the P can recover the penalty amount. Class 1777performance not subject to a term accomplish performance. commence performance NOW. Reas time to

in this case, obligors had agreed upon time for the remainder of the payment of the price-15 yrs. Obligors wanted to prepay before arrival of term, creditor not want to happen. Code says about the identity of the term benefits the obligors, so the obligor can waive the term and the creditor has an obligation to receive performance. 1780Party for whose exclusive benefit a term has been est may renounce it. 1779term presumed to benefit the obligor unless the agreement or circumstances show it was intended to benefit both parties. In this case, the court applied the general rule. Found no basis for concluding the term there for the benefit of the creditor or obligee. --include express provision concerning prepayment. --when borrow money at bank, many times the note will say On or before (date), I promise to pay.. This language designed to signify that the person can pay early and if it is tended, it is the banks obligation to receive money. In contrast, On (date) shows there is a stipulation preventing prepayment. We would look to the code to see whose benefit the term is. IN A LENDING OF MONEY, THERE IS NO EXTRAORDINARY CIRCUMSTANCE THAT WILL MAKE A TERM FOR THE BENEFIT OF BOTH THE PARTIES INSTEAD OF JUST THE BORROWERS. Caston v. Womans Hospital Foundation Inc. Thought term was year-to-year. D thought agreement for an indefinite time so long as service, quality of pictures, and public relations of program satisfactory. When P in operation for a few days, chief of pediatrics ordered operation stopped. D feels administrator authorizing operation w/o authority. Ct finds he wasnt. For a valid K need: Parties legally capable of King, consent legally given, certain object which forms the matter of agreement, lawful purpose. D feels it was a potestative condition in K b/c there was nothing in K to bind P to take photos and sell them. This not true b/c he would do this to his detriment and breach K. The reasons D said he stopped it were not within the control of the P. There was a valid communtative K and it was breached by the D. P says b/c there was no specific term for the K and it was for an indefinite period of time so P failed to receive reasonable notice of the termination. P could recover whatever he would have made during a reasonable notice of termination = 6 months. Section 5. Conjunctive and Alternative Obligations An obligation is conjunctive when it contains several things united by a conjuntion to indicate all of them are equally the object or the matter of the engagement; for one often joins in the same act two are more things that are both due. (I promise to give you my bull, my horse, and Page 67 of 70

$100. I am bound to give all these things w/o the power to discharge myself by giving one of them). There is a single debt, a single obligation under a collective name. There are several if I promise different things, each under a collective name (my books, my toys). I can pay the sum at different times (installments). Payments of rents, interest due on a sum of money forms as many debts as there are maturity dates. Alternative obligations promise two or more things in such a way that the debtor is obliged to give only one of them. The things in the K are separated by a disjunctive. (I promise to give you my horse, or my bull, or $100). 1807Conjunctive obligationsalaries, wages, rents have presented situations where the obligations to pay particular payments or installments in segments are regarded as conjunctive. *New provisionif there is a certain amount of delinquency then the creditor may accelerate the indebtedness. No longer a term for repayment. Cts gave effect w/o such a provision, but just put in there anyway. Gardiner v. Montegut P contends he was employed by D at a salary of $100 a month and that the salary for the last 8 months was not paid, but that he owed D $200only asking ct for recovery of $600. D denied P had been employed by him but that he gave employment as manager of his business purely out of friendship for P and not b/c of the need for his services. D told P that he would not pay him any more salary but that P could remain on premises to conduct his own business. D files prescription of 1 and 3 years. Prescription of 1 year in not applicable but the 3 yr prescription is for salaries of overseers, clerks, and secretaries. Payments made to P did not operate such an interruption. P employed for service by the day and the amount due to him was not one obligation, but an accumulated aggregation of obligations maturing from day to day. Each service constituted a distinct obligation, prescribable when one year from the date upon which had been earned had elapse. ****it is well established that where wages or salaries or rents earned on a periodical basis, the amount due for each period represents a claim separate and distinct from each of the others, and that prescription is unaffected concerning any other similar claim. It is also settled that payments, unless imputed by instruction or by agreement, must be applied to the oldest of the claims. In this case, there was not one debt divided into several Art. 1893 Compensation extinguish Obligations: Compensation takes palce by operation of law when teo persons owe to each other sums of money ot quantities of fungible things indentical in kinds and these sums or quantities are liquidated and presently due. In such case, compensation extinguishes both obligations to the extent of the lesser amount. Delays of grace do not prevent compensation. Art. 1864 Imputation by Obligor- A obligor who owes several debts to an obligee has the right to impute payment to the debt he intend to pay The obligors intent to pay certain debt may be expressed at the time of payment or may be inferred from circumstance known to the obligee. Art 1867 Imputation by Obligee An obligor who has accepted a receipt that imputes payment to one of his debts may no longer demand imputation to another debt, unless the obligee has acted in bad faith.

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Art. 1868 Imputation Not made by the Parties When the parties have made no imputation, payment must be imputed to the debt that is already due. If several debts are due, payment must be imputed to the debt that bears interest. If all or non, of the debts are due to bear interest, payment must be imputed to the debt that is secured. If several unsecured debts near interest, payment must be imputed to the debt that, because of the rate of interest, is most burdensome to the obligor. If several secured debts bear no interest, payment must be imputed to the debt that, because of the nature of the security, is most burdensome to the obligor. If the obligor had the same interest in paying all debts, payment must be imputed to the debt that became due first. If all debts are of the same nature and became due at the same time, payment must proportionally imputed to all. Madere v. Cole P filed suit a/g D for the purchase price of a puppy ($350) or for the dissolution of the sale and the return of the puppy. P agreed to provide a stud for D female poodle. The fee for this was $150 in advance or pick of the litter. The litter consisted of 2 puppies, but one died. D brought it to P but expressed desire to keep the puppy. She was told that the puppy would ordinarily be sold for $350 but since she owned puppys mom, she could buy it for $250. D could not buy it for $250, and P said she could return the puppy and get her $ back. However, D did not want to return the puppy. She stopped payment on the $250 check and mailed another for $150. P never negotiated the 2nd check and filed suit. The initial option belonged to D. B/c D not pay $150 in advance she chose to discharge her obligation by delivering the pick of the litter. When D did not pay the money, P assumed she chose to give them her chance to pick from the litter. Since one of the two puppies dies w/o fault of D, P were obligated to accept the 2nd puppy in satisfaction of the obligation. Once the K of sale had been perfected, D obligated to pay price and when she failed, P entitled to sue to compel payment or dissolve sale. Class Normally, have situation where an obligor says I will do this or I will do that at my option Sometimes you get the situation where the obligor says to the obligee, you do this or that at your whim, and I will abide by the K either way. If the understanding was to be made btwn the owner of the male dog and the girl owner is to allow male dog owner the pick of the litter, then I would assume that there must be some advertisement as such. Your first figure that this is the issue that the ct will discuss, however, the ct found that the K was one that afforded the male dog owner a decision that was precluded by the death of the 2nd dog. B/c there was no decision available to the male dog owner, the price of the dog was reduced (the seller was to provide the buyer a choice) Section 6: Several, Joint, & Solidary Obligations OBLIGATIONS W/ MULTIPLE PERSONS: A. Several Obligations When each of different obligors owes a separate performance to one obligee, the obligation is several for the obligors. When one obligor owes a separate performance to each of different

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obligees, the obligation is several for the obligees. 1 K but several obligations. Like several Ks. Bound by same instrument but several obligations. A several obligation produces the same effects as a separate obligation owed to each obligee by an obligor or by each obligor to an obligee. As if he entered into several different Ks. The incidents of each legal bond has no impact by the others (insolvency, prescriptive interruption, incapacity).

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