Obligations and Contracts Reviewer - Vocabulary Flashcards (Pages 21-23)

Vocabulary flashcards covering key terms and definitions from Obligations and Contracts pages 21–23.

Waiver

Intentional relinquishment of a known right under an obligation; not produced by mere failure to assert a claim; may involve accepting defective performance to renounce the claim.

Acceptance of defective performance

Acceptance of incomplete or defective performance with knowledge of the defect and intent to treat the performance as complete, evidencing a waiver.

Third-party payment

A payment made by someone other than the debtor for the debtor's obligation; the payer may recover from the debtor the amount benefited, subject to limitations (e.g., debtor’s knowledge or opposition).

Consignation

Depositing money or property with court when payment to the creditor is not possible or there is dispute about entitlement, as a method to discharge the obligation.

Dation in payment

Delivery of ownership of a thing by the debtor to the creditor in satisfaction of a debt; considered a novation by change of object; for money debts, governed by the law of sales.

Novation

Substitution of a new obligation or new object for the old one, thereby extinguishing the previous obligation.

Indeterminate or generic thing; quality rule

If the obligation is to deliver a generic thing, neither superior nor inferior quality may be demanded; court decides if there is disagreement, based on purpose and circumstances.

Extrajudicial expenses

Costs arising from payment that are generally borne by the debtor; judicial costs governed by the Rules of Court.

Partial payments

Partial payments are generally permitted only for the liquidated portion; creditor may demand payment of the liquidated part; not applicable when multiple subjects or terms complicate the obligation.

Payment in money and currency

Payments must be in the currency stipulated; if not possible, in the legal tender currency; promissory notes or checks are not automatically valid as payment until cashed.

Legal tender

Currency that can be used to pay debts and cannot be refused by the creditor; status is set by law.

RA 529 modification

Law requiring monetary payments to be made in currency that is legal tender in the Philippines; stipulation for foreign currency is void but does not invalidate the entire contract.

Check as payment

A check is not legal tender; offering a check does not constitute a valid tender of payment.

Extraordinary inflation/deflation

If currency value changes unusually, the basis of payment is the currency value at the time the obligation was created unless otherwise agreed.

Place of payment

Where payment must be made; typically where the thing is or the debtor’s domicile; changes in bad faith may shift bearing costs to the debtor.

Application of payments

If a debtor owes several debts of the same kind to the same creditor, payment may be designated to a specific debt; all debts must be due and of the same kind; exceptions apply.

Payment to incapacitated or in possession

Payment to a person who is incapacitated or to a possessor appearing as creditor may still be valid if kept or beneficial to the creditor.

Payment after garnishment

Payment to the creditor after attachment or garnishment is void to the extent of the judgment; debtor may deposit funds in court (consignation) to relieve liability.

Wrong party payment

Payment to a non-creditor or unauthorized recipient is not a valid extinguishment of the obligation, unless the payment nonetheless benefits the creditor.