Obligation and Contracts

Obligation

A legal relationship between 2 or more persons (or a person and the state); Every juridical act that a notary prepares is one.

An Obligation Exists When:

A person is bound to take or not take an action (the obligor) in favor of another (the obligee) - may be created voluntarily or may be imposed by law; the performance or duty is legally enforceable.

An Obligation Can Arise From:

Contracts law (such as a vendor's lien); wrongful acts (such as a judgment lien); the management of affairs of another (such as tutorship); unjust enrichment; other acts or facts.

Commutative Obligations

A simultaneous right to take (or not take) an action and simultaneous right to enforce obligations against the other party.

Mutual Obligors and Mutual Obligees

If a person has a simultaneous right to take (or not take) an action and simultaneous right to enforce obligations against the other party, the parties are called these.

A Contract

An agreement between 2 or more parties where obligations are created, modified, or extinguished.

Real Right

A right in a thing that is good against the world; unless otherwise prohibited, is heritable.

Real Obligation

Describes the relationship between a person and a thing; incurred as a result of a real right.

Real Right

A right in a thing that is good against the world.

A Real Obligation:

Creates rights in immovable property; owner of that property may assert that right against other persons; may also be understood as ownership and its dismemberships. (Ex. Servitude and Mortgage)

A Heritable Obligation

An obligation that may be transferred by: Donation, Sale, Assignment, or another means (Ex. Testamentary Donation)

Rebuttable Presumption

It is taken to be true unless someone can prove otherwise.

Heritable

Transferable between living persons, not inheritable, and enforceable against the successors of the original obligors and obligees.

Strictly Personal Obligation

Is only enforceable by the original obligee or against the original obligor, and is not heritable; on the part of the obligor if it requires the special skill of the obligor; on the part of the obligee if it is intended for the exclusive benefit of that obligee

Conditional Obligations

An obligation whose occurrence depends on an uncertain event; the uncertain event can be suspensive or resolutory.

Suspensive Condition

An obligation that is Not enforceable unless and until that uncertain event occurs; condition precedent; (Ex. a father may obligate himself to employee his child once the child has graduated from college).

Resolutory Condition

An obligation that is immediately enforceable but comes to an end if an uncertain event occurs; (Ex. a mother gives a son a vehicle unless he moves to a foreign country).

Conditions in Conditional Obligations May Be:

Expressly defined by the parties, set forth in the contract; Implicit in the nature of the contract, anticipated by an ordinary person; Implicit by the intent of the parties Determined by Law.

Potestative Condition

Suspensive conditions that depend on the will or whim of the obligor are unenforceable. (Ex. I will buy your car if I like it - this is not a true obligation).

Subrogation

It is where a third person is substituted in place of another person for their rights and duties; This happens a lot for insurance purposes.

Subrogor

The person whose rights and duties are transferred.

Subrogee

The person to whom the rights and duties are transferred.

Subrogation can Occur:

By consent (by contract - in writing) or by operation of law.

Two Most Common Requirements of Form:

Authentic Act and the Private Signature Duly Acknowledged.

A " True Copy"

A copy of an Authentic Act certified by the Notary Public before whom it was originally passed, is given the same effect as an original.

Act Under Private Signature

An act in writing signed by the parties; It is signed by, but does not necessarily have to be written by, the parties; and does not have to be signed in front of a notary; Also called a Private Act.

Act Under Private Signature, Duly Acknowledged

An act that Is originally executed without a Notary present; A party thereafter acknowledges the signature before a Court, or before a Notary and two witnesses.

Contract

An agreement where at least two people create, modify, or extinguish an obligation or mutual obligations; Unless prohibited by law, are dissolvable only by consent of the parties; may have effects for third parties.

Absolutely Null Contract

Violates a rule of public order (illicit or immoral); The action (time to file a lawsuit) never expires; act may not be confirmed; will be deemed never to have existed; being declared null must restore parties to the position they were in before the contract was made or if impossible, courts may award damages.

Relatively Null Contract

Violates rules intended to protect private parties; is null but may be confirmed or reformed; may only be invoked by the person for whom the nullity exists; the court can be cured through confirmation.

Types of Contracts

Nominate and innominate.

Nominate Contracts

Have special names, like lien release or sale; they may have special forms or requirements.

Innominate Contracts

Are not named.

Unilateral Contract

One party incurs an obligation.

Bilateral or Synallagmatic Contract

Two or more parties are involved; the parties obligate themselves reciprocally; the obligation of each party is correlative to the obligation of the other; the reason that the parties obligated themselves is in return for the obligation of the other.

Onerous Contract

A contract where the obligor and obligee bound themselves for a benefit.

Gratuitous Contract

A contract where the obligor binds himself to benefit the obligee or some other person.

Commutative Contract

When the performance by one party is correlative to the performance by the other party, ex. like I will babysit your child Thursday if you babysit mine on Tuesday.

Aleatory Contract

When some or all of one party's performance depends on an uncertain event, ex. I will buy all of the beads you catch at this parade, or I will buy all of the pearls from the oysters harvested from this oyster bed.

Principal and Accessory Contracts

A contract whose obligation is secured by an accessory contract; The accessory contract is entered into to provide security for the principal contract; ex. a sale with a mortgage; The sale is the principal contract, the mortgage is the accessory contract; The accessory cannot exist without the principal.

Requirements for Formation for Contracts

Louisiana has the 4 C's that every valid contract requires: Capacity - Consent - Cause Certain legal object.

Capacity

All persons are presumed to have contractual capacity except for: Unemancipated minors - Interdicts - persons deprived of reason at the time of contracting.

Unemancipated Minors

They may contract for necessities for his support, education, or business; any other contracts made by unemancipated minors may be rescinded.

Fully Emancipated Minor

They have full contractual capacity.

Consent

The voluntary agreement to assume obligations made through offer and acceptance.

Meeting of the Minds

The parties must have the same understanding of the words of the contract.

Error

When the parties think they are agreeing to something but each has a different thing in mind but only when a "cause" is concerned Ex. Sold building for dance studio but Agent left that out of contract and City denied permit.

Duress

Physical, financial, or emotionally - consent is not freely given if directed at the person making the contract or the spouse, parent, or child of that person.

Fraud

The misrepresentation or suppression of the truth to make the contract happen; Does not exist if a person could easily have found out the truth.

Cause

The reason why someone obligates themselves; An obligation or contract cannot exist without it; must be legal and moral; Should be in any contract but is not required.

Detrimental Reliance

A party may be obligated by a promise that he knew or should have known would cause reliance on it to their detriment and the other party was reasonable in so relying Ex. Agreeing to buy puppy and then preparing for to find the breeder sold to someone else.

Object (Certain Thing)

The action or the thing which is the subject of the contract or obligation; legal, possible or determinable; future things may be the objects.

Ratification

Is where there is an obligation entered into on an obligor's behalf by another person, and the obligor accepts his obligation, either expressly or tacitly; retroactive to the date of the confirmed or ratified obligation.

Fortuitous Event

One that was not foreseen at the time of the contract, like a hurricane; The other party may recover any performance he has already rendered.

Dissolution after Notice to Perform

If a party fails to perform, he may be served with a warning that he must complete performance within a time or the contract will be dissolved.

Dissolution Without Notice to Perform

If the performance has been delayed and is no longer useful, the obligee may regard the contract as dissolved (Ex. like a photographer not showing up until after the wedding).

Express Dissolution Clause

Parties may expressly agree upon terms for dissolution in their contract.

Effects of Dissolution

The parties shall be restored to their position as before the contract; if partial performance was done, partial payment should be made.