INTRODUCTION PRESUMPTION ● Possession of stolen property of another LAW ● Rape act alleged against another ● Set of reasonable rules of conduct promulgated by competent authority for the compliance of all CHAPTER 1: OBLIGATIONS and for the promotion of the common good. ARTICLE 1156. An obligation is a juridical necessity to GENERAL CLASSES OF LAW: give, to do, or not to do. I. DIVINE LAW II. MORAL LAW OBLIGATION III. NATURAL LAW ● Derived from the Latin word obligatio which IV. PHYSICAL LAW means a tying or binding V. STATE LAW ● A tie of law or a juridical bond by virtue of which one is bound in favor of another to render BRANCHES OF THE GOVERNMENT: something - may consist in giving a thing, doing ● All functions are equal and independent of each a certain act, or not doing a certain act other ● Civil Code of the Philippines: Book 4 I. LEGISLATIVE ○ Main source general oblicon provisions ● Creates the law ● Approves presidential appointments ➜ JURIDICAL NECESSITY ● Congress, Senate, House of ● In case of non-compliance, the courts of justice Representatives may be called upon to enforce its fulfillment II. EXECUTIVE ● Enforces the law PRESTATIONS: ● Signs laws, appoints federal judges ● To give - real obligation ● President, Vice President, Cabinet ● To do - positive personal obligation III. JUDICIAL ● Not to do - negative personal obligation ● Interprets the law ● Decide if laws are constitutional, can NATURE OF OBLIGATIONS overturn rulings by other judges I. CIVIL OBLIGATION ● Supreme Court, Other federal courts ● The creditor/ obligee has a right of action in courts of justice to enforce their CLASSES OF POSITIVE LAW: performance I. HUMAN POSITIVE LAW/ STATE LAW ● Obligations we assume as citizens ● NATIONAL LAW ● Enforceable by law through the courts ● ORDINANCES (LGUS) II. NATURAL OBLIGATION ● ADMINISTRATIVE REGULATIONS ● Based on natural law (IRR) ● Do not grant a right of action to enforce their performance CLASSES OF NATIONAL LAW: ● When converted from Civil Obligation, I. SUBSTANTIVE/ PROCEDURAL/ ADJECTIVE juridical necessity has been LAW extinguished; will have to be voluntarily ● Provides and enumerates certain rights performed and imposes obligations ● Source of our rights and obligations ➜ PRESCRIPTIVE PERIODS: ● How we can fight or assert our rights ● Period when the law allows creditor to enforce ● Ex. Civil Code, Family Code civil obligation II. PUBLIC/ PRIVATE LAW ● If creditor does not go to court within the period, ● The relationship of the government to its the civil obligation is converted into a natural citizens obligation ● Ex. Revised Penal Code, The ○ 10 Years - Written Contracts Constitution ○ 10 Years - Obligation created by law ○ 6 Years - Oral Contract LEGAL PRESUMPTIONS: ○ 5 Years - Not fixed by law I. CONCLUSIVE PRESUMPTION ○ 4 Years - Negligence ● Knowledge of the law ○ Ignoratia Legis non Excusat ● Estoppel ○ The inability to deny what has been ESSENTIAL REQUISITES OF A VALID OBLIGATION: ARTICLE 1157. OBLIGATIONS ARISE FROM: 1. PASSIVE SUBJECT I. LAW ● Debtor/ Obligor ● Imposed by the law itself ● He who has a duty ● Ex: Obligations to pay taxes/ support 2. ACTIVE SUBJECT one’s family ● Creditor/ Obligee II. CONTRACTS ● He who has a right ● Arise from agreement/ stipulation of the 3. OBJECT OR PRESTATION parties ● Subject matter of the obligation; may ● Ex: Obligation to repay a loan consist in giving, doing, or not doing III. QUASI-CONTRACTS 4. JURIDICAL/ LEGAL TIE/ EFFICIENT CAUSE ● Arise from lawful, voluntary, and ● Binds/ Connects the parties to the unilateral acts - which are enforceable; obligation no party will benefit at the expense of ● Determined by knowing the source of another the obligation ➜ SOLUTIO INDEBITI ● Payment of what is not owing FORMS OF OBLIGATION: ● Ex: Overpayment must be returned 1. Oral ➜ NEGOTIORUM GESTIO 2. In Writing ● A form of spontaneous voluntary agency 3. Partly Oral in which an intervenor acts on behalf 4. Partly in Writing and for the benefit of a principal, but without prior consent ➜ GENERAL RULE ● Ex: Neighboring house on fire ● Law does not require any form in obligations IV. CRIMES/ ACTS/ OMISSIONS PUNISHED BY arising from contracts LAW ○ Obligations arising from other sources ● Arise from civil liability which is the do not have any form at all consequence of a criminal offense ● Ex: Obligation of a thief to return the car RIGHT stolen by him ● Power a person has under the law ➜ CIVIL LIABILITY ● Demand from another any prestation ● Seeks to right the wrongful act committed by one person against WRONG another ● Cause of action ➜ SCOPE OF CIVIL LIABILITY: ● Omission of one party due to violation of legal ● Restitution (Restoration of something rights lost or stolen) ● Term Injury is also used ● Reparation for damage caused ○ Violation of legal right of another ● Indemnification for consequential damages (Payment for damages ESSENTIAL ELEMENTS OF LEGAL WRONG/ suffered by the aggrieved as a result of INJURY/ CAUSE OF ACTION: the crime) ● Legal right in favor of a person (Creditor/ ➜ CRIMINAL LIABILITY Obligee/ Plaintiff) ● Involves the government taking action to ● Correlative legal obligation (Debtor/ Obligor/ punish an individual who violated the Defendant) law ● Act/ Omission in violation of said right by the ● Every person criminally liable is also defendant with resulting injury/ damage to the civilly liable plaintiff V. QUASI-DELICTS OR TORTS ○ If any elements is absent, the complaint ● Arise from damage caused to another becomes vulnerable to a motion to through an act or omission dismiss on the grounds of failure to state ● Negligence resulting to harm/ a cause of action Unintentional ● Ex: You are still responsible for OBLIGATION VS AGREEMENT accidentally injuring someone ● In OBLIGATION, there is already a juridical ➜ REQUISITES OF A QUASI-DELICT: necessity, legal or juridical tie ● Act or omission ● In an ordinary AGREEMENT there is no juridical ● Fault or negligence tie at all ● Damage caused ● Proximate cause ● No pre-existing contract CLASSIFICATION OF OBLIGATION SOURCES: CRIME VS. QUASI-DELICT LAW AND CONTRACTS ● The only two sources since obligations arising CRIME QUASI-DELICT from quasi-contracts, crimes, and quasi-delicts are really imposed by law. Criminal/ Malicious intent/ Only Negligence ➜ EMANATING FROM LAW Criminal negligence ➜ EMANATING FROM PRIVATE ACTS ● Licit Acts (Case of contracts and Affects public interest Concerns private interest quasi-contracts) ● Illicit Acts (Punishable by law in case of delicts, Criminal and civil liability Only civil liability or not punishable in case of quasi-delicts) Purpose is punishment Purpose is ARTICLE 1158. Obligations derived from law are not indemnification to the presumed. offended party ARTICLE 1159. Obligations arising from contracts have the force of law between the contracting parties and Cannot be settled by the Compromised as any should be complied with in good faith. parties themselves other civil liability CONTRACTUAL OBLIGATIONS Guilt of accused must be Fault or negligence only ● Obligations arising from contracts or voluntary proven beyond need to be proved by agreements reasonable doubt preponderance of ● Contracts are valid & enforceable evidence CONTRACT ● Meeting of minds between two or more parties CHAPTER 2: NATURE AND EFFECT OF ● One binds himself with respect to the other, to OBLIGATIONS give or to tender service (1) OBLIGATION TO GIVE COMPLIANCE IN GOOD FAITH ● Compliance in accordance to the agreement or ART. 1163. Every person obliged to give something is terms of the contract also obliged to take care of it with the proper diligence of a good father of a family unless the law or the stipulation QUASI-CONTRACTUAL OBLIGATIONS of the parties requires another standard of care. ● No party will benefit at the expense of another ● Not a proper contract; No consent (A) SPECIFIC PROPERTY ● Physically segregated from others of the same KINDS OF QUASI-CONTRACTS: class I. NEGOTIORUM GESTIO ● Debtor cannot substitute it with another object, ● No consent but there’s an obligation although it is of the same kind and quality, ● Voluntary management without the without the consent of the creditor knowledge/ consent of the latter ● Debtor must deliver fruits, accessions, and II. SOLUTIO INDEBITI accessories even when not stipulated (from the ● Unduly done/ By mistake time of perfection to the time of delivery) ● No one shall enrich himself unjustly at someone's expense DUTIES OF DEBTOR IN OBLIGATION TO GIVE A ➜ REQUISITES: DETERMINATE THING: ● No right to receive object delivers 1. Preserve or take care of the thing due ● Object was delivered by mistake 2. To deliver the fruits of the thing III. OTHER EXAMPLES 3. To deliver its accessions and accessories ● Articles 2164 to 2175 4. To deliver the thing itself ● Recovery may be allowed on the basis 5. To answer for damages in case of non-fulfillment of a quasi-contract or breach ORDINARY DILIGENCE OWNERSHIP ACQUIRED BY DELIVERY ● Diligence of a good father of a family ● Transfer of the thing from one person to another ● No presumption of fault with transfer of rights ● Damage or injury must be proved first ● Obligation to deliver arises from the time of the ● Obligor must take care of the determinate thing perfection of the contract from the time of perfection until delivery; ● “He shall acquire no real right over it until the preservation same has been delivered to him.” ● Standard diligence when there is no stipulation ○ Creditor does not become the owner between the parties until the specific thing has been ➜ CONTRACT OF DEPOSIT delivered to him ● Safekeeping a property; no degree of diligence ● No Delivery prescribed by law (ordinary diligence) ○ Proper action of creditor is not for recovery but one for specific EXTRAORDINARY DILIGENCE performance or rescission of obligation ● Another standard of care ● A higher degree of diligence ART. 1166. The obligation to give a determinate thing ● Prima facie of fault includes that of delivering all its accessions and ● Obligee does not need to prove the negligence accessories, even though they may not have been of obligor mentioned. ● If the debtor exercises only ordinary diligence, he will be liable. RIGHT OF CREDITOR TO THE FRUITS: ➜ CONTRACT OF LOAN ● From the time the obligation to make delivery ● Deposits in the bank arises ➜ COMMON CARRIERS / TRANSPORTATION ● From the nature of their business and for FRUITS reasons of public policy, should observe ● Product of something extraordinary diligence in the vigilance over the goods and for the safety of the passengers TYPES OF FRUITS: I. NATURAL FRUITS NOTE: ● Spontaneous products of the soil, ● Different degrees of diligence may be agreed young, and other products of animals upon by parties (this is legally binding), but such without human intervention diligence cannot be underperformed. ● Ex. Grass, Trees, Young animals ➜ GENERAL RULE II. INDUSTRIAL FRUITS ● The debtor is NOT liable if his failure to preserve ● Product of by lands of any kind through the thing is not due to his fault or negligence but the cultivation of labor to fortuitous events or force majeure. ● Ex. Sugar cane, Vegetables, Rice III. CIVIL FRUITS ART. 1164. The creditor has a right to the fruits of the ● Derived by virtue of a juridical relation thing from the time the obligation to deliver it arises. ● Arising from the use or enjoyment of a However, he shall acquire no real right over it until the property same has been delivered to him. ● Ex. Rent of buildings; Price of leases; Life annuities or similar income PERSONAL RIGHT ● A right that may be enforced by one person on ACCESSIONS another, such as the right of a creditor to ● Produced by, incorporated, or attached to the demand delivery of the thing and its fruits from thing; naturally or artificially the debtor ● Things incorporated into the determinate thing ● Has a definite active subject (the person who ● Ex. House on a land; Rents of a building has a right) and a definite passive subject (the ● Not necessary to the principal thing person who was the obligation) ● Cannot be demanded by anyone, only the ACCESSORIES creditor ● Attached to the thing as an ornament or to make it complete REAL RIGHT ● Things joined or included with the principal thing ● A right or power over a specific thing which is for embellishment, better use, or completion enforceable against the whole world ● Also used in the sense of a right (right to the ● Interest over ownership or possession without a fruits and/or accessories of a thing) definite passive subject ● Ex. Key of a house; Frame of a picture ● There is a definite active subject (the person ● Accessory and principal must go together who has a right) (B) GENERIC PROPERTY: RIGHTS OF CREDITOR: ● A thing cannot be pointed out with particularity ● Request performance of obligations ○ “Genus nunquam perit” (A generic thing ● Demand payment of damages if refused never perishes) ● Ask another person to do it for the account of ● Debtor can give anything of the same class as the debtor, with damages long as it is of the same kind ○ If poorly done, be undone ○ Neither of superior nor of inferior quality when not specified or implied from ART. 1168. When the obligation consists in not doing, purpose or intent of parties and the obligor does what has been forbidden him, it ● Fruits, accessions and accessories are NOT shall also be undone at his expense. included ● In case of debtor’s failure to deliver on time, the (3) OBLIGATION NOT TO DO creditor can demand delivery ● Duty of an obligor to abstain from an act ● In case of debtor’s failure to comply with ● No delay in negative personal obligation demand, the creditor may ask another to deliver at the expense of debtor with damages RIGHTS OF CREDITOR: ● Request to undo what has been done DUTIES OF DEBTOR IN OBLIGATION TO GIVE A ● Demand payment of damages if refused GENERIC THING: ● Ask the Court to task another person to undo it 1. Deliver a thing of quality intended by parties for the account of the debtor, or if cannot be 2. To be liable for damages in case of fraud, undone, obligation is converted to an indemnity negligence, or delay, in the performance of the for damages obligation, or contravention of tenor CHAPTER 2: NATURE & EFFECT OF OBLIGATIONS REMEDIES OF CREDITOR IN REAL OBLIGATIONS ➜ SPECIFIC REAL OBLIGATION (1) PERFORMANCE OF OBLIGATIONS ● Demand specific performance/ fulfillment with a ➜ IRREGULAR right to indemnity for damages ● Obligation has been performed but it was not in ● Demand rescission or cancellation with a right to accordance with the tenor of obligation; liability recover damages is not absolved ● Demand payment of damages only ● Ex. Delivered incorrect subject ➜ GENERIC REAL OBLIGATION ➜ INCOMPLETE ● No necessity to compel delivery ● Obligation was incompletely performed ● Right to recover damages in case of breach or ● Debtor is not excused from any liability, still, the violation obligation is not faithfully performed
ART. 1167. If a person obliged to do something fails to (2) FRAUD OR ‘“DOLO”
do it, the same shall be executed at this cost. It may be ● Deliberate or intentional act of evading the usual decreed that what has been done poorly be undone. performance of an obligation ● Liability for fraud when already committed can (2) OBLIGATION TO DO be waived or forgiven, but liability for future fraud ● Course of action the debtor must perform CANNOT be waived ● OTHERWISE, converted to indemnity for ➜ CAUSAL FRAUD damages ● Cause of defect in obligation is fraud itself; ○ Refuses or fails to do it deception to secure consent ○ Poorly does it ● Committed in the perfection of contract ○ Does it in contravention of tenor ● Voidable Contract ● Ex. Fraudulent claims, Insidious words PERFORMANCE BY A THIRD PERSON. ● Remedy: Annul Contract and claim damages ➜ COMPELLING PERFORMANCE BY DEBTOR ➜ INCIDENTAL FRAUD ● Prohibited as per the 1987 Constitution: ● Midleading but deceit was not serious Constitutional right against involuntary servitude ● Committed in the performance of an obligation ➜ INDEMNIFICATION OF CREDITOR FOR DAMAGES to another resulting in breach ○ An exemption from liability for damage ● Valid Contract ● Remedy: Specific performance, Compel the ➜ RIGHT AGAINST INVOLUNTARY SERVITUDE debtor to do what is obliged, Claim damages ● No involuntary servitude in any form shall exist WAIVER OF LIABILITY FOR PAST FRAUD except as a punishment for a crime whereof the ● Valid as the law encourages forgiveness party shall have been duly convicted. WAIVER OF LIABILITY FOR FUTURE FRAUD ● Every condition of enforced or compulsory ● Void as the law won’t encourage bad faith service of one to another (3) NEGLIGENCE OR “CULPA” EXEMPTING OR JUSTIFYING CIRCUMSTANCES FOR ● Failure to observe the ‘diligence of a good father NON PERFORMANCE: of a family,’ unless otherwise required I. FORTUITOUS EVENT OR ‘CASO FORTUITO’ ● Unlike fraud, negligence is unintentional due to ● Any event impossible to foresee or lack of skills or foresight impossible to avoid ● Future negligence can be waived as long as ● Obligation considered as performed or NOT done in bad faith cancelled; extinguished obligation ➜ CONTRACTUAL NEGLIGENCE/ CULPA II. PRESUMPTION OF PERFORMANCE OR CONTRACTUAL PAYMENT ● Negligence resulting in non-performance of a ● Prima Facie: Law presumes that the pre-existing obligation (Breach of Contract: possession of a collateral or pawned Liability for damages) property means payment was made ➜ CRIMINAL NEGLIGENCE/ CULPA CRIMINAL III. USURIOUS TRANSACTION/ INTEREST ● Negligence resulting in commission of a crime ● Usury means collecting or charging (Imprisonment, Fine, or both, with Liability for interest in excess of what the law allows damages) ● A stipulation for the payment of usurious ➜ CIVIL NEGLIGENCE/ CULPA AQUILIANA interest is void ● Negligence which by itself is the source of an ● Usury is now legally non-existent obligation ➜ REQUISITES TO COLLECT INTEREST ● Quasi-delict or tort (Liability for damages) ● Payment of interest must be expressly stipulated (4) DELAY/ DEFAULT OR “MORA” ● The agreement must be in writing ORDINARY DELAY ● The interest must be lawful ● Mere failure to perform an obligation on time LEGAL DELAY IMPORTANT ● Failure to perform an obligation on time, which ● Unlike fraud, negligence is unintentional due to constitutes a breach of obligation lack of skills or foresight ● Gross Negligence shows bad faith and amounts KINDS OF DELAY to malice; Rules on Fraud shall apply ➜ MORA SOLVENDI ● Default committed by debtor in performing his OBLIGATIONS AND CONTRACTS obligation (Breach of Contract: Liability for CHAPTER 3: KINDS OF OBLIGATIONS interest and/or damages) ➜ MORA ACCIPIENDI (1) PURE & CONDITIONAL OBLIGATIONS ● Default committed by creditor in accepting the ➜ PURE OBLIGATION debtor’s performance of obligation (Liability for ● One that does NOT have a condition or a period damages sustained by debtor as a result) ● Immediately demandable ➜ COMPENSATIO MORAE ➜ CONDITIONAL OBLIGATION ● Both debtor and creditor are in default (No one ● One that has a condition attached to the is liable to another) obligation ● Applicable to uncertain events REQUISITES OF DELAY ● Not immediately demandable prior to condition; ● Failure to perform on time, Demand made by Debtor cannot be expected to perform the creditor, Failure to comply obligation until the condition arises ● General Rule: No Demand, No Delay ➜ CONSTRUCTIVE FULFILLMENT ● If the debtor prevented the fulfillment of the EXCEPTIONS OF DEMAND condition, the law will consider the condition ● Law provides so (Paying Taxes) fulfilled ● Stipulation says so (If not done by _, ● Ex. Debtor did not buy a lottery ticket automatically debtor is in default) ➜ CONDITION ● Time is of the essence (Deadline was given) ● Future and uncertain event ● Demand would be useless (Obligation was ● Past event unknown to the parties spoiled; determinate thing cannot be delivered ● If at the time of the constitution of the past event anymore) is unknown, then it is a condition IF verifiable ● In reciprocal or bilateral obligations, when one ● Causes the obligation to arise/ cease party performs his part (In a contract of sale, ● Ex. If I win the lottery I will give you 1M when one part of obligation is done delay begins)
(5) CONTRAVENTION OF TENOR OF OBLIGATION
● Defective performance of an obligation ➜ KINDS OF CONDITIONS E. MIXED CONDITION A. SUSPENSIVE CONDITION ● Depends partly upon the will of one of ● No obligation until the condition the parties AND partly upon chance or happens the will of a third person ● Suspends the creation of the obligation ● Valid unless an impossible condition is ● Not immediately demandable attached ● Ex. If I win the lottery I will give you 1M F. IMPOSSIBLE CONDITION ➜ LID RULES IN SUSPENSIVE CONDITIONS ● An impossible condition would make an obligation null & void ● Impossible if physically impossible or LOSS legally impossible (contrary to law) ● Ex. I will give you 1M if you can go to No Debtor Fault Extinguished obligation the moon by foot ● Ex. I will give you 10K to find me a meth Debtor Fault Damages supplier ➜ COMPOUND OBLIGATION IMPROVEMENT ● In one obligation there are several smaller obligations By Nature/ Time Inure to Creditor’s Benefit ● Obliging in different ways Debtor’s Expense No reimbursement; ➜ Apply to Divisible & Indivisible Obligation Subject to removal G. POSITIVE CONDITION ● Occurrence before a designated time DETERIORATION ● Ex. I’ll give you 10k if I earn 1M in a month No Debtor Fault Creditor suffers H. NEGATIVE CONDITION ● Non-occurrence before a designated Debtor Fault Rescission + Damages time (or Damages only) ● Ex. I’ll give u 1M if I do not get sick in a span of 10 years
B. RESOLUTORY CONDITION (2) OBLIGATIONS WITH A PERIOD
● Existing obligation until the condition ● One that has a period attached to the obligation happens ● Fixes the efficaciousness/ time of the obligation ● Extinguishes the obligation and ● Period is presumed to be for the benefit of both terminates the rights upon fulfillment of debtor and creditor unless otherwise provided the condition ● Courts can fix the period if uncertain ● Immediately demandable ● “LID” Rules apply to suspensive period ● Ex. I will give you a weekly allowance ● Ex. I will give u 10k on December 31, 2023 until you finish your first degree ● Ex. I will give u 50k when X dies C. POTESTATIVE CONDITIONS ● Dependent exclusively to the will of one ➜ PERIOD of the parties ● A future and certain event ➜ DEPENDENT ON WILL OF CREDITOR ● Fixes the time of the obligation ● Valid & Enforceable ● Retains the juridical necessity ➜ DEBTOR “INIVA” ● Ex. I will give you 10k if you want it ➜ Benefit of a period is lost ➜ DEPENDENT ON WILL OF DEBTOR ● Null & Void ● Insolvency or bankruptcy ● As if parties did not agree on anything; ● Not furnish the creditor the guaranties/ securities No juridical necessity promised (collateral) ● Ex. I will give you 10k if I want to ● Impaired the guaranties/ securities D. CASUAL CONDITION ● Violates any undertaking in relation to the period ● Depends on chance or the will of a third ● Attempts to abscond (evade/ flee) person ● Valid ● Ex. I will give you 10k if our candidate wins a major award in the Miss Universe (3) DISTRIBUTIVE OBLIGATIONS ➜ GENERAL RULE ➜ ALTERNATIVE OBLIGATION ● Penal clause shall substitute indemnity for ● Only one out of various things is due or damages demandable (Either/ or) ● A distributive obligation, compound in nature WHEN DAMAGES + PENAL CLAUSE CAN BE ● Choice between the prestations given belongs to DEMANDED: the obligor ● Contrary stipulation of the parties ● Creditor cannot be compelled to part of one and ● Debtor’s refusal to pay penalty part of another ● Debtor is guilty of fraud ● If creditor’s acts prevent the debtor from making a choice - Debtor may rescind with damages IMPORTANT ➜ FACULTATIVE OBLIGATION ● An obligation can only be pure, conditional, or ● Original obligation may be substituted; Valid with a period ● Only one have been agreed upon ○ It may fall into more than one ● Substitution classification ● In law, always assume the good facts of life (4) JOINT & SOLIDARY OBLIGATIONS ➜ JOINT OBLIGATION PERIOD VS CONDITION ● Whole obligation is to be paid or fulfilled ➜ PERIOD proportionately by the different debtors and/or is ● Certain Event (Certain Fulfillment) to be demanded proportionately by the different ● Future Event creditors. ● Fixes the time of the obligation ➜ CONDITION ➜ SOLIDARY OBLIGATION ● Uncertain Event (Uncertain Fulfillment) ● Each one of the debtors is bound to render, ● Past/ Future Event and/or each one of the creditors has a right to ● Causes the obligation to arise/ cease demand entire compliance with the prestation
(5) DIVISIBLE & INDIVISIBLE OBLIGATIONS
● Recall that an impossible condition would make an obligation null & void ➜ Apply to Compound Obligations ➜ DIVISIBLE OBLIGATION ● Can be performed separately and independently of each other ● IF there is an impossible condition in one of the obligations, the remaining obligations (without the impossible condition) stand to be valid ➜ INDIVISIBLE OBLIGATION ● The obligations comprising it cannot be separated from one another ● IF there is an impossible condition, the entire obligation is considered null & void
(6) OBLIGATION WITH A PENAL CLAUSE
● Accessory undertaking/ obligation, in case of breach, to insure performance = penal clause ● Created to insure respect & commitment of performance on time ➜ PENAL CLAUSE ➜ EQUITABLE REDUCTION OF THE COURTS ● Irregular/ partial performance or penalty is unconscionable ● Despite agreement by parties, courts may see unfairness in the created obligation ● In unconscionable penalties, courts may equitably reduce the penalty if there is irregular or partial performance because INTENTION to comply is there ● Ex. I borrowed 10k, and in case of a breach I will pay 1M as a penalty in addition to the principal
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