PRIV LAW: Law of obligations

Concept

Meaning of obligation: To give, To do, Not to do.

Debt: legal duty to comply.

Liability: legal power of the creditor to enforce the compliance.

Sources of obligations

  • Law. (art. 1.1. SCC)

  • Contracts. (Force of law amongst parties)

  • Quasi-contracts. (arts. 1888 and 1895 SCC)

  • Acts and omissions that constitute criminal offenses or tort.

  • Unjust enrichment.

Classification of obligations

Positive and negative

  • Debtor to give.

  • Debtor to do.

  • Debtor to avoid doing.

Specific and generic

  • Specific: determined things or services.

  • Generic: homogeneous things or services.

Means and result

  • Means: due diligence.

  • Results: certain thresholds.

One-off and periodic

  • Unique obligation.

  • Periodic, repetitive act

Alternative or facultative

  • Debtor to execute one alternative amongst several.

  • Debtor has the ability to terminate the obligation by doing another

Divisible or indivisible

  • Divisible: execution portioned.

  • Indivisible: nature of obligation makes it impossible to apportion.

Settled or unsettled

  • Settled: the amount is already determined or is determinable by a straightforward calculation.

  • Unsettled: amount is unacknowledged.

Money obligation

Based on the delivery of money, not the delivery of a good or service or the avoidance to do something else.

Interest payment

  • Based on the calculation of interest – income of money.

  • Ordinary and default.

Plurality of subjects

  • Presumption of several liability.

  • Difference between joint and several liability.

Modification of obligations

  • life cycle of an obligation: Creation of obligation → (Compliance) Termination

  • obligations can be modified prior to termination.

  • Source: modification agreement.

    • Freedom of will

Types of Modification of obligations:

  • Modificative novation.

  • Extinctive novation.

Modalities

  • Change of object.

  • Change of party (e.g., creditor/debtor). Transfer/assignment. Litigious credits

Termination of obligations- Causes

  • Payment,

  • Compliance .

  • Loss of thing

  • Condonation .

  • Confusion of rights

  • Compensation

  • Novation

  • Nullity

  • Termination .

  • Condition subsequent .

  • Final term

  • Death .

  • Mutual dissent

  • Unilateral desist act

Breach of obligations- Types:

  • Delay

  • Definitive breach

  • Uncomplete compliance or inexact compliance

Remedies

Delay:

  • Specific performance and damages.

  • Termination and damages.

Definitive breach:

Impossibility with or without debtor’s fault: termination and damages.

Uncomplete compliance or inexact compliance

Subjects

  • Compliance with person other than creditor: specific performance.

  • Compliance intuitu personae: reject and damages.

Circumstances

  • Early performance: reject.

  • Other place: reject, specific performance and damages

Object

  • Inexact performance, aliud pro alio, wrong lex artis: specific performance (sometimes termination) and damages.

  • Lack of conformity: reparation/substitution, termination.

  • Claim for defects: depends.

Security of assets to comply with obligations

Concept: universal patrimonial responsibility

  • All debtor’s present and future assets are subject to compliance of obligations.

  • Even if this has not been agreed in writing.

  • Exceptions:

    • Unseizable assets.

    • Agreement limiting or waving the universal patrimonial responsibility.

  • Assets of third parties:

    • Asset claim (tercería de dominio) by third party.

    • If not: acquisition a non domino.

Accesorum sequitur sortem rei principalis. Guarantees (real rights) follow the main obligation.

Ranking: concept of bankruptcy and ranking of claims. In a bankruptcy, the creditors claims have different rankings according to bankruptcy law.

Guarantees of obligations

Penalty

  • Contingent: due to delay or breach.

  • Agreement: can be agreed by the parties.

  • Limits:

    • Autonomy of will (remember the limits).

  • Classification:

    • Sanction penalty: creditor can claim both the main obligation and penalty.

    • Sustitutive penalty: creditor can claim only the penalty.

    • Facultative penalty: the debtor can alternatively pay the penalty.

Down payment. Can be lost if then the obligation is not performed.

Retention. Seller retains ownership.

Exception: exception non adimpleti contractus. No party is required to perform an obligation if the counterparty is breaching the agreement

CLAIMS

  • Specific performance or in natura (for specific obligations).

  • Equivalent performance (for generic obligations).

  • Termination (this claim is not combinable).

  • Damages.

  • Discount in price.

  • Subrogation (claim debtor’s rights).

  • Direct claim (specific events).

  • Pauline claim (revocation of debtor’s gratuitious acts or in consilium fraudis).

  • Sell of goods (specific transport contracts)