Obligations II

Natural Obligations origin

Arise from circumstances in which the law implies a particular moral duty to render a performance

Contracts made for performance of natural obligations are …

ONEROUS, not gratuitous. Occurs when obligor promises to perform a natural obligation. Legally enforceable.

Situations that create natural obligations

civil obligations extinguished by prescription or bankruptcy, obligations incurred by someone with discernment but no legal capacity, donations that are null for lack of form (including testaments)

Effects of natural obligations

Not enforceable by judicial action. Obligor has duty and obligee has rights, but the obligee cannot bring an action to force performance

If an obligor performs a natural obligation freely…

he cannot reclaim or recover performance on grounds that it was not enforceable

Who can owe a natural obligation

Only natural persons who possess a “moral compulsion”

Legal obligation definition

Legal relationship where an obligor is bound to render a performance in favor of another, the obligee

Three types of performance in legal obligations

To give, to do, not to do

Where do legal obligations arise from?

Contracts, declarations of will (juridical acts), and the law

Contracts require

Offer and acceptance

Do juridical acts require acceptance?

No. This includes donations mortis causa

Where do quasi-contracts originate?

The law

Types of quasi contracts

Management of affairs of another, Unjust enrichment, payment of a thing not owed

Management of affairs of another, basics

A person (manager) acts without authority to protect the interests of another (owner) in the reasonable belief that the owner would approve of the action if made aware of the circumstances

management of affairs of another, requirements

Must be a necessity or the owner must derive a benefit; manger must notify owner of his management and wait for owner’s direction unless there is immediate danger; manager must act as a prudent administrator and is liable for failing to do so

Management of affairs of another, elements

1- Emergency Action taken, 2 - Reasonable belief that owner would approve, 3- protection of interests, 4- manager had no authority

Unjust enrichment, basics

A person is enriched without cause at the expense of another, they are bound to compensate them

Enrichment means…

Assets increased or liability decreased

For unjust enrichment there must be…

A causal relationship between one party’s enrichment and the other’s impoverishment

Unjust enrichment is a subsidiary remedy

No other remedy must be available. Can be alleged as an alternative theory to recovery.

Payment of a thing not owed, basics

Someone pays a price or delivers a thing for the discharge of an obligation that does not exist. Never a valid obligation from the start. concerns mistaken belief of the existence of a debt

Payment of a thing not owed, requirement

Payment lacks any legal basis

Effects of Legal obligations

1- Give obligee right to enforce performance, 2- give obligor right to have the obligation discharged after full performance, 3 - Obligations must be performed in good faith.

Classifications of the object of the obligation

To do, to give, not to do

Obligations to give

An obligation to create or transfer a real right over a thing. Can be onerous or gratuitous

Obligations to give or transfer ownership occurs

by the mere exchange of consent

Obligation to give, preceding obligations

Obligation to give can be preceded by an obligation to do, like create or manufacture

Obligation to give, accessory obligations

Obligation to deliver, obligation to preserve and care for the thing until it is delivered

obligation to give, effects of failure

Failure to perform entitles obligee to specific performance

Obligation to do, basics

Performance of some positive act by a party to the contract or a third party. Residual category - it is is not an obligation to give or not to do it is an obligation to do.

Strictly personal obligations

Obligee has a particular interest in having the obligor perform due to the obligor’s skill, expertise, or talent. Court unlikely to award specific performance.

If an obligation to do is NOT strictly personal…

Court will usually grant specific performance.

Obligations to do that include delivering thing…

Can be enforced by specific performance. Other obligations at discretion of court

Obligation not to do

Agreement that an obligor refrain or abstain from doing something they would normally have the right to do.

Is obligation not to do is breached….

Specific performance usually available through an injunction

Categories of guarantee of the obligor

Result or means

Obligation of result, basics

Performance or object of obligation is precisely determines and a definite result should be achieved

What type of obligation objects are always obligations of result?

Obligations not to do and obligations to give

Obligation of result, failure

If there is a failure to reach the result, there is a breach. Carries presumption that the obligor is at fault.

Obligation of result, rebuttable presumption

Obligor has burden to prove accidental or uncontrollable event prevented them from achieving promised result.

Obligation of means, basics

Obligor expected to use best possible means available to act with utmost care and diligence in performing but without guaranteeing definite results.

Obligation of means, failure

Obligor only in breach if negligent.

Object of means, burden of proof

Obligee bears burden of proving obligor did not act with care an diligence because performance cannot be objectively measured.

Categories of who obligation may be forced against

Real or personal

Real Obligations, definition

Duty correlative and incidental to a real right over a thing. Enforceable against a property, not the owner

When does a person have a real obligation

when he owns or possesses a thing on which there is a real right that another person holds in said property (ownership, mortgage, servitude)

Effects of real obligations

Real obligations follow property, even when real right is transferred. Successor may only be freed of real obligations by abandoning or alienating the property. If the thing is destroyed, the real obligation is extinguished

Particular successors of property

Are subject to real obligations, but not personal obligations

Personal obligations

Involves a duty correlative to personal rights (duty on the person). Right that a person has to bring against another person. Obligations someone enters as themselves.

Effects of personal obligations

Not transferred to successors (unless obligor and successor agree to that). If a right against a third party is associated with a property, successor may not get that right.

Categories of heritability

Heritable and strictly personal

Heritability only applies to personal obligations

Real obligations are always heritable

Heritable obligations, definition

Obligation is heritable when its performance may be enforced by a successor of the obligee or against the successor of the obligor. Can also be transferred between living persons

Heritable obligations, exceptions

Every obligation is heritable except when the contrary results from the terms or nature of the contract

Heritable obligations, effects

Allows successor to step into the shoes of the obligor or obligee. Most obligations to give are heritable. Things that benefit the obligee financially are usually heritable.

Successor in title

Someone who replaces a party during life through a transfer or upon death through succession

What does it mean to “step in the shoes” of the obligor or obligee

Successor acquires same rights as the original party had; Successor is bound by the same obligations as they original party had; the content of the obligations stay the same

Strictly personal obligations, definition

When performance can be enforced only by the obligee, or only against the obligor

Strictly personal as to obligor

Performance requires special skill or qualification of the obligor, obligation is presumed to be strictly personal. No substitution of obligor, extinguished at obligor’s death

Strictly personal as to obligee

When performance is intended exclusively for the benefit of the obligee. No substitution of obligee

Strictly personal to both parties

Performance inseparable from identity of both parties. Enforceable only between original parties. Extinguished upon death of either party

Questions to determine if obligation is strictly personal

Does performance require this obligor’s special skill or personal service? Was performance intended only for this obligee’s benefit? Would a substitute change the nature of the obligation?

Strictly personal obligation, effects

No specific performance for strictly personal obligations. If strictly personal to obligee, only obligee can enforce it. If strictly personal to obligor, can only be enforced against the obligor

Types of obligation transfers

Assignment, assumption, subrogation, novation

Transfer type: assignment

Positive act required and intent must be clear

Transfer Type: Assumption

Tacit consent allowed; positive acts required by conduct

Transfer Type: Novation

Positive act and express consent required

Transfer type: subrogation

implicit transfer by law

Classifications on whether it contains a condition

Suspensive condition and resolutory condition

Conditional obligations, definition

Obligation dependent on an uncertain event

Uncertain event

Event that might or might not occur. WHETHER the event will happen

Conditions require….

real uncertainty. Must operate in the future

If the condition for a conditional obligation has already occurred..

Obligation is treated as an unconditional obligation from the outset

Expressed conditions

Parties specifically say a condition applies

Implied conditions

By the law, by the nature of the contract, by the intent of the parties

Conditions implied by the law

When a buyer reserves view or trial of a thing bought and sale is not complete until buyer gives seller approval

Conditions implied by the nature of the contract

Sale of a future thing

Conditions implied by the intent of the parties

Offer to buy with cash and loan money is an implied obligation to apply for the loan (if loan is granted)

Suspensive conditions, definition

Obligation may not be enforced until the uncertain event occurs. No obligation exists until uncertain event occurs

Is a suspensive obligation a true obligation?

It is parties agreeing to the PLAN of an obligation coming into existence

If obligor performs before a suspensive condition has occurred

Performance was not due, so obligor can recover under theory of payment of a thing not owed

Obligee can protect their rights

Obligee can enjoin something that would disrupt the obligation if the uncertain event did occur

Does prescription run against a suspensive condition from the time the obligation is agreed on?

No, Prescription runs from the moment the uncertain event occurs

Suspensive condition, specific rules

Suspensive condition that is unlawful or impossible makes the obligation null; Suspensive conditions based on whim of the obligor make the obligation null

Impossible conditions

Not possible, no one in the world can do it. Includes things that only one person can do.

Conditions based on whim of obligor are null

Conditions based solely on whim of obligee are valid

Resolutory conditions, definition

Obligation may be immediately enforced but will come to an end when the uncertain event occurs

Resolutory conditions, effects

Obligation is due as soon as the obligation is entered into so obligee can demand performance immediately. Obligation is extinguished as soon as condition occurs. Dissolved as if it never happened

Resolutory conditions, specific rules

If resolutory condition is unlawful or impossible, obligation is still good (basically unconditional); If based on the will of obligor, must be fulfilled in good faith

Conditional obligations, Failing of condition

If a condition is supposed to happen within a certain time and it does not, the condition is considered to have failed (Positive conditions). If time wasn’t specified, it must be filled in a reasonable time or it fails. If it becomes clear the condition will not occur, it fails.

Conditional obligations, deemed fulfillment

Condition is regarded as fulfilled when it is not fulfilled because of the fault of a party with an interest in making sure it is not fulfilled

A party cannot benefit from preventing a condition

If a party intentionally or negligently causes a condition to fail, the law treats the condition as if it has occurred. Called “deemed fulfillment”

When condition is deemed fulfilled, obligation….

Becomes enforceable. Party not at fault only gets damages if specific performance has become impossible because of condition nonfulfillment

Conditional obligations, actual fulfillment

If condition s that an event shall not occur in a set time, it is fulfilled when the time passes without the event occurring or if it is certain the event will not occur. Fulfilled immediately

Retroactivity, general rule

Fulfillment of a condition has effects that are retroactive to the inception of the obligation

Retroactivity, suspensive conditions

Once the uncertain event happened, it is as if the obligation existed from the moment the agreement was made.

Retroactivity, resolutory conditions

Once the event happens, it is as if the obligation never existed at all. Obligor must return the thing and obligee return any price

Retroactivity, exceptions

Does not impair acts of administration or ownership of fruits produced while condition was pending, Does not impair rights of third persons acquired in good faith while condition was pending

Retroactivity exceptions, resolutory

Fulfillment of resolutory condition does not affect performance rendered before fulfillment

Classifications based on whether there is a term

Conventional, legal, judicial