Obligations Outline--Fall 1998

I. Obligation
A. Defined in Article 1756 of the Civil Code
1. duty= performance of a task that is recognized by the law.
2. obligor has a duty to perform a right for the obligee
3. When law speaks of obligation, speaks only of persons known as obligees
and/or obligors.
4. When relationship of obligations exists, puts into effect all issues of Title III
of civil code.
B. Obligation by Agreement--Contract (Article 1906)
1. In LA, law results from statute and custom. Custom involves longevity
and a perception of the force of law.
2. When statute and custom are absent, equity is in force.
II. Sale
1. Defined in article 2439.
2. Both parties,seller and buyer, have both duties and rights. Most contracts involve
reciprocal duties and promises.
III. Lease
1. Defined in article 2669.
2. lessor-obligor, lessee =obligee.
a. Lessor gives enjoyment of a thing (possession) to the lessee for a fixed price.
b. Tenant gives lessor money for enjoyment (possession).
c. Lessor is bound to be obligor to give use of thing to tenant in order to be obligee of
tenant’s payment.
3. In most leases, obligor’s status is contingent upon willingness to be obligee of tenant
4. Perfection of bilateral contract requires reciprocity. W/O, have no lease or sale. article 1908
In bilateral situation, performance must be specified.
IV. Unilateral Contract (Article 1907)
A. Only one party has obligation, other has right. Example is donation.
V. Obligations by Agreement (Contracts) contract=K
A. Must have four elements for contract to be valid.
1. Capacity--legal right to enter into contract (article 1918) Anyone has capacity
except for unemancipated minors, interdicts, and deprived of reason.
2. Valid contractual object--performance that the obligor is bound to render.
Must be lawful, possible, and determined or determinable.
3. Consent
4. Valid cause--Reason why person binds him/herself.
B. Consent usually manifested in Offer and Acceptance.
1. Offer is willingness to be bounded by a contract and an invitation to another to
join in the contract.
2. Acceptance is tantamount to saying “I do”.
C. Key Question is determining when offer and acceptance was made and did parties
intend to be bound.

Cases:
1. Belgard v. Collins: D’s building destroyed. P, a surveyor, offers to help get larger settlement from ins. company for
25% of 2nd check from ins. Question over whether D agreed to contract orally. Rule: Oral contracts require clear
meeting of minds to be enforced.
2. North LA Milk Producers Assn. v. Southland Corp.: P delivers milk to D on regular basis. D wants more money for
milk and writes letter to P. Agreement on price never reached as evidenced by conflicting correpsondence. Question is
whether price from D was valid offer? Rule: Offer must have three parts: 1. design to give party right to conclude the
contract, 2. offeror’s intent to obligate himself, and 3. serious intent. Must be clearly delineated.
3. Illinois Central v. International Harvester: P. leased land to D to sell trucks. D moved and subleased property against
will of P, owner of land. P let many months pass before objecting to lease. Question over whether silence constituted
assent. Rule: Silence not enough for implied consent in matter of leases. Article 2710 states that lessee is bound to take
care of leased property as own. In bilateral K, duties of lessor and lessee are correlative, lessor only has duty as long as
lessee performs his duty.
VI. Offer and Acceptance
Cases:
Marine Ins. Co. LTD v. Rehm: Klein parked car in D’s lot, where car was stolen. Rule: Paid parking lot is treated as
depositary. Article 2937 says depositaries are to treat things in their charge as their own and guard accordingly. Liable
when do not exercise requisite amount of care.
Cashio v. Amco Transmissions: P parked car in lot belonging to D and gave money to D’s employee. car stolen upon P’s
return. No ticket received to identify car. Rule: Depositary relationship raises the presumption of lack of due care on
part of depositary. Burden of proof on D to prove did not act recklessly. D did not post sign IAW LSA 9:2783, therefore,
D liable.
Johnson v. Capital City Ford: D took out ad saying could buy 54 car and trade in in one year for 55. P bought 54 and
later refused 55. Did ad constitute valid offer? Court ruled it did saying (article 1801), party making offer is assumed to
continue in offer unless, at the time of assent, offeror signifies change. Acceptance completes contract and may not be
changed w/o assent of both parties.
North Central Utilities v. Walker Community Water System: P offered bids for water dist. system. P alleges D is a
public utility bound by public bidding laws. P had lowest bid. Rule: Not a valid offer. Offers for bids in LA are only
invitiations to make offers.

VII. Consent
A. Meeting of the minds, and willingness to be bound. Offer and acceptance do not have to be I
in a particular form.
B. Silence as a form of consent
1. Rule of form--medium (article 1927)
2. No form mandated for offer and acceptance.
a. unless fomalities prescribed by law (article 1839) Immovable prop.
b. or both parties agree to K executed in specific form. (art. 1947)
not bound until form is executed.
C. Time delays
1. specific legal rules exist for this situation.
2. Have certain amount of time to assert rights of performance. If not rights are
considered waived. Called prescription. Laches-rules governing time period for
actions.
3. Assent by silence (art. 1947)
D. Offer has to be precise and complete so taht party can accept by consent. Also has to convey
intent to confect K.
VIII. K’s recognized and governed by Code
A. Nominate contract--one recognized by law and has certain requirements
(article 1914)
B. Lease
1. must have as elements 1. thing, 2. price, 3. consent. If one element missing, is
an invitation to negotiate.
2. Sale transfers ownership. Lease transfers use.
Cases:
Schulingkamp v. Aicklen: D sent irrevocable offer to P. Sent withdrawal of offer prior to P’s acceptance. Offer had no
time limit for acceptance. Offer did not state time of acceptance, so offer is valid for “reasonable time”. up to court to
decied reasonableness of time.
Mayers v. Burger King Corp.: P fell while working on renovations for D. D third partied P’s employer. Employer was
to cover D for any liability regarding its work. did not do so. Employer tried to get out of liability stating D did not
accept offer in “reasonable time”. Contract said offer valid for “at least 45 days. 54 days passed. Reasonable time.
Contract valid. “at least” signified manifest intent to delay.
W.M. Heroman v. Saia Electronics: P wanted renovations. D submitted bid to general contractor. D refused to do work
at price stated. P had to get work from other sources. Rule: Subcontractor’s bid to general contractor is implicitly
irrevocable.

IX. Offer
A. Offeror’s freedom to rescind offer.
B. Code says there is K when have offer and acceptance (Art. 1927). Does not define.
C. Parol evidence rule: when K is in writing, have to assume it is complete such that
 other evidence is excluded if it negates or varies K.
D. Rule of merger: May enter into more than one instrument. If all provisions not in final
instrument, then can argue offeror not bound to perform.
E. Irrevocable offer
1. In common law, offeror is able to revoke anytime before acceptance.
2. In codal systems, once someone empowered to confect by acceptance, offeror
is bound to give offeree time to accept offer.
F. Duration of Offer
1. All offers have duration. Offer dies if not accepted.
2. Whether or not offer can be revoked prior to natural death depends on
classification as revocable or irrevocable.
E. Irrevocable Offer
1. Contains a specific period of time for acceptance.
A. Makes offer irrevocable during that time.
B. Offer expires if not accepted during that time.
2. If no specified time, must have a manifestation of intent to give offeree
a delay for acceptance. Expires after “reasonable” time.
F. Revocable Offer
1. Is the residual category. When offer is devoid of evidence of irrevocability, it is
revocable.
2. Can be revoked anytime prior to acceptance.
3. Duration is “reasonable” time. (article 1931)
G. If either party dies or becomes incapacitated, the offer lapses despite time limitations.
H. Heritability of K.
1. Article 1765 defines. Usually defined from obligee’s point.
2. General presumption of heritability unless specifically limited by K or its nature.
I. Offers not heritable because there has been no acceptance, thus, no contract.
J. If a period of time stated, offer is irrevocable. Is also true if someone makes oral statement
indicative of intent for delay. “think about it for a day or two.”
X. Subcontractors and Bids
A. According to Heroman, offeror is bound by the declaration of his will to enter into a K.
Subcontractor bound by that offer in any case where it is irrevocable. General contractor
not bound until acceptance of general bid.
B. This is a resolutory contract. One that may not be enforced until an uncertain event occurs.
C. Use of bid of subcontractor by general contractor forms K of suspensive conditions. When
suspensive condition occurs, K enforcable. If not, K never enforcable.
D. Irrevocable offer for Sub because period of time necessary for acceptance.
E. K becomes effective when Sub notified that K was awarded to gen. con.
XI. Acceptance by Performance
A. Acceptance to be manifested by particular act.
B. Acceptance by completion of act rather than through communications.
XII. Acceptance by Revocable Offer
A. Acceptance effective upon transmission.
B. When offer leaves the hands of the offeree, acceptance is complete.
C. Is this way because offeree’s position is fragile.
XIII. Option Contract
A. Option different from irrevocable offer because is a K. Offeror will be bound by offer for a
particular unit of time and offeree is not.
B. Option creates rights and duties. Irrevocable offer does not.
C. No heritability of offer. IS right for Option. Unaccepted offer is strictly personal. (art. 1932)
D. No contract until grantee exercises right in option.

XIV. Acceptance

1. Ryder v. Frost: P and D partners. Incurred debt. Ryder to settle debt of partnership. Compromised by Frost. D.
wrote letter to say would pay debts for $500.00. Question is was offer ever accepted. Court said yes. Acceptance
requires no specific form. P performed and this was acceptance of terms of letter. Rule: Offer may be accepted by
performance. When accepting by performance, no K until performance begins. Only works when this is the intention of
offeror because might not be comms to offeror.

Code Articles
1939--Acceptance by Performance
Acceptance happens and K begins upon commencement of performance. Have to have outright statement by offeror that
this is intention.
Usage: Customary practices in an industry. Agreement or practice or by nature of contract. “contemplated”=once
commencement starts, person bound by K and must finish performance. Acceptance and formulation of K occur
simultaneously.
1940--Acceptance by Completion
Acceptance happens and K begins upon completion of performance. Failure to give adequate notice of commencement
of performance makes offeree liable for damages. This so because no comms required for acceptance. Breach of that
duty does not negate K. Offeree in fragile position because he has to complete performance before offeror is required to
perform. Offeree protected because he can pull out at any time prior to completion. Offeree is performing before
obligation exists. Commencement of performance under 1940 creates irrevocable offer for the reasonable time necessary
to complete performance.

1. Evertite Roofing Corp. v. Green: P claims breach of contract by D. D claims no valid acceptance. K effective upon
signing by authorized official (not true here) OR commencement of work. Truck shows up, D turns P’s employees away.
Court ruled D liable because of “commencement of work”. Commenced when truck first started to be loaded, which was
before other company for D started work. had to pay profit P expected to receive. Irrevocable offer accepted upon
transmission by offeree. Revocable offer accepted upon receipt by offeror.

A. No form for acceptance required unless immovable involved. This requires writing for
both offeree and offeror.
B. Can also have requirement for form of accptance if agreed to by both parties.
C. Can agree not to be bound UNTIL writing executed.
D. If parties agree orally to be bound, and have a writing to that effect, they were bound at the
time of the oral agreement.
XV. Essential Elements to K (Consent)
A. Sale: price and thing
B. Lease: Rent and thing to be leased. Duration not required. If not specified, Assumed to be
month to month.
C. Failure to agree on NON-essential element does not affect validity of contract.
D. NON-essential elements can become essential based on discussions.
E. Performance that does not express term due immediately (article 1777)
F. For K, parties only have to agree on essential elements.
G. Agreement to be bound MUST be present on essential elements and those other elements
parties deem important enough to have agreement on.
CAUSE
I. Cause--A reson why a party binds himself. Looking to see that motive was legal and that what party
received was in line with motive.
A. In common law, promissor would have to receive benefit to have K.
B. In civil law, if one agrees to be bound, is bound unless there is some illegality requiring
court intervention or made some mistake regarding situation of promise.
C. Function of cause and consideration identical: Helps courts decide what promises to enforce.
D. Three areas where Cause plays big role.
1. Illegality--Enforcement causes situation that may be illegal, immoral, or against
public good.
2. Protect Freedom of Will--Agreement may suffer from some mistake that tainted
expression of will by entering into something that may be impossible to acheive.
3. Classification of contracts--”Other” oriented contracts treated differently than “me”
oriented contracts.
II. Onerous v. Gratuitious Contracts
A. Onerous K--Each party receives some benefit
B. Gratuitous--One party obligates self with not expectation of benefit from other party.
C. Civil Code places more formality on gratuitous K’s because only promissor has obligation
 to perform. Usually requires authentic act. (Art. 1833).
1. Authentic act=notarial act. requires execution before notary public and two
witnesses.
2. Intended as cautionary device to require obligor to understand that gratuitous
K is irrevocable and enforcable.
III. Cause as a psychological exercise
A. Forces judge to ask “why” parties bound themselves.
B. Cause can be a continuum. from Purely subjective to purely objective.
1. Objective--To receive performance of other party.
2. Subjective--Underlying reasons for contract. (ex. color of car, speed, etc.)
IV. Donations
Code Articles
Art. 1467, Methods of acquiring and disposing gratuitously.
Art. 1468 Inter-Vivos Donations- gift is irrevocable
Art. 1469 Mortis Causa donations (wills)--gifts that take place at death and is revocable until that time.
V. Donations Inter Vivos
A. Three kinds
1. Purely onerous--made purely from liberality (love and affection)
2. Onerous donation--Burdens w/charges on donee.
3. Remunerative--Desire to recompense donee for services already rendered.
B. Form requirements: art. 1536
1. Act before notary public and two witnesses for all donations of immovables
or incorporeals (rent, rights, etc.)
2. Not necessary for gifts of corporeal movables.
VI. Donations Mortis Causa
A. Form Requirements: Art. 1570
B. No form other than last will and testament. May take many names.

Cases:
1. Spanier v. DeVoe: P brought action to annul act of conveyance. P claims was not signed by notary but by individual
acting in capacity of commissioner (not notary). As donation was of immovable property, required authentic act. Since
not signed by notary, not authentic act, therefore, act is null and void.

VII. Manual Gift Exception

A. Applicable when a gift is a corporeal movable
1. Corporeal movable--Negotiable instrument-commerce paper that represents
obligations. Papers themselves are subject movement in commerce.
2. Mortgage=security interest in property. Will signify this in writing through
signing an instrument.
3. Promissory note=promise to pay money.
4. Is negotiable if promise to pay payee or transferee.
5. Negotiabiltiy hinges on transferability.
B. Have to deliver to person with intention of of divesting self (donor) or that property
irrevocably and permanently.
C. Negotiable instruments as corporeal movables.
1. Donations, if negotiable instruments such as promissory notes, checks, CD’s and
other drafts, may be made by donor negotiating instrument through endorsement
and delivery to donee.
D. Authentic act not required for donation of corporeal movable. Delivery to donee and intent
to divest self of property sufficient.
E. Donation is of the right, not the paper commerating it. Paper and right become synonomous.
1. Creditor has right to enforce execution=incorporeal.
2. Legislature overruled Succession of Miller by saying that negotiable instruments can
be donated through negotiations rather than by authentic act, i.e. endorsement and
delivery are sufficient.
3. Legal rights are inherently corporeal.
 F. Negotiable instruments now governed by commercial code. Cash is now susceptible to
manual gift although it actually represents a note or credit. Cash represents underlying
promise of government to pay.
1. Joint savings account-accessability by joint holders precludes delivery and would not
be a manual gift, thus, not a donation.
2. Intent to donate and possession by donee must occur simultaneously to have valid
manual gift.
Hypothetical
Relative writes check. Before cashed by payee, relative dies. Was there a valid donation through medium of check?
One must consider the difference between creating a negotiable difference and one that already exists. Negotiability
premised on unconditional promise to pay and is subject to payee’s desire to transfer.
Transfer and origination of negotiable instruments are treated differently. For the check, is considered a donation inter
vivos. Manual gift requires a gratuitious cause-intent to divest self irrevocably and permanently of ownership of thing.
Even delivery of signed check does not constitute manual gift. Once person cashes the check, then manual gift is
complete. Delivery of corporeal movable is evidence of intent to divest of property. Once delivered, to be a gift,
property must not be accessible to donor. Can not be divested of property if it is acceptable to donor. If check given and
donor dies, check itself is not an incorporeal movable. At point of time woman dies, then do not have completed
donation because intent (essential element) dies with donor.

Cases:
1. Succession of Lawrence: L made nephew alternate payee of bank account. L dies and money sits in bank. No
confected gift because money in bank. Money ruled to be onerous donation. Burden charged on donee must be less in
value than the gift given by donor. If burden surpasses gift by 1.5 then is not a donation.
2. Perry Jr. v. Perry Jr.: P was recipient of shares of stock in D’s company. called for cash and monthly payments.
When D could no longer make payments, P sued. D, as P’s father, rescinded donation for ingratitude based on P’s suit
against D.
3. Thielman v. Gahlman: Decedent promised land to D to care for him. P, decedent’s daughter, argues that no donation
took place for lack of form. Court ruled this was an onerous contract. D to provide for decedent and burial at death. D
did this. No form required. Also does not require the application of formula regarding value of gift. Unusual case in that
Court found no liberality on part of decedent at all. In most familial transactions, courts usually find at least some
liberality in gifts.

VIII. Aleatory Contracts

A. K that depends on performance of uncertain event. One of the parties must perform
unconditionally. The other’s performance is due only upon an uncertain event.
B. In Thielman, an aleatory K was in place because the death of the uncle was an uncertain
event. Classification is useful only when describing the promise or performance that must
take place should the uncertain event occur.
IX. Subscription
A. Promise to pay a charity @ some time in the future. Legal impediment to collection?
B. Promise of gift is not a gift. Usually lacks an authentic act and thus becomes unenforcable.
C. LA wanted to encourage giving to charities, so courts found these subscriptions to have an
onerous casue, thus, was a contract, and could be enforced.
X. Detrimental Reliance
A. Article 1967 governs. Says that a party is obligated to pay when making a promise in a
serious manner to a party that then relies on that promise to his detriment and other party
was reasonable in so relying.
B. For charities, rely on promise of donations to carry out activities. Comes into play because
charities often do not have money to expand or construct. Once started, detrimental reliance
kincks in for charity.
C. Last sentence destroys notion of detrimental reliance. Requires that more than gratuitous
cause be present for subscriptions. Language in caselaw indicates subscriptions are a separate
area of law and they will be enforced by the State.

Case:
Flood v. Thomas: Lee owes Flood money. Court found gratuitous cause here. Promise to pay debt of third
party is valid when done in writing. Is enforcable. Is a gratuitous cause. A donation divests the donor of property and
invests it in donee. A # of indirect liberalities exist where the cause is the same, but rather than donation, do it through
some indirect method.

XI. Debt of Third Party

A. Indirect donation. There is gratuitous cause, but the medium in not a direct donation. Use
indirect medium of an onerous contract with a gratuitous cause. Frees it from certain
formalities of donations.
XII. Absence and Failure of Cause
A. Failure of Cause-- Cause once existed, but somehow ceased to exist.
1. In failure, K will stand if risk of loss is on buyer.
2. Risk of loss stays w/seller until delivery (art. 2467)
3. In case of sale, where delivery impossible due to destruction, failure occurs
and relieves buyer of obligation to purchase. Seller cannot perform due to
destruction, relieving buyer of obligation.
4. Article 2467 is permissive. If seller contractually binds buyer for risk before delivery
then he is responsible for performing enven though the seller has not yet taken
possession of thing.
5. Can contractually assume risk above and beyond what is present in Code unless
public policy prevents it.
B. Article 2004--Cannot shift risk of loss to other if it involves damage or injury.
1. Whether or not one has contracted away risk will determine remedies available to
injured party.
2. Applies only to intentional contact.
C. Absence of Cause--Happens when cause expected to come into existence, but never does
1. Closely related to conditional contract.
2. Performance depends on occurrence of uncertain event.
3. Must be uncertainty over the event itself.
(buy a house contingent on loan approval)
4. If performance not owed until uncertain event occurs, called suspensive condition
5. If performance due immediately, but terminates when uncertain event occurs, called
resolutory condition.
6. Absence of cause usually involves suspensive condtion, and if condition does not
occur, then party is excused from performance.

Cases:
1. USF&G v. Crais: Johnson stole money from company. Friends agreed to be liable to company for it to avoid J from
going to jail. P indemnifies stolen amounts. Court imposed pre-existing duty rule: Cannot bind one’s self to perform
something that other party already has legal duty to perform. P was bound to pay money to bank regardless of friends’
offer to pay the stolen money.

XIII. Sale of a future thing (thing not yet in existence)

A. Condition: Uncertain events upon which performance rests.
B. Article 2450 governs.
C. Is a suspensive contract for future condition. If condition happens, performance due
immediately.
D. If condition fails to materialize, obligation is extinguished.
E. Seller has risk of loss.
XIV. Sale of a hope
A. Article 2451 governs. Hope may be a valid object of sale.
B. No suspensive condition exists and performance is still required on part of buyer.
C. Buyer has risk of loss
D. Sale of hope does not mean that buyer assumes all risk. Seller will take all reasonable
action to prevent loss by all reasonable events.
E. Subject to both parties’ expectations.

Cases:
Losecco v. Gregory: P bought orange crops from D. Bought them two years in future. Freeze occurred in first year
killing all orange trees. P was excused in first year because trees could not produce. Cause was lacking. Had to pay for
second year because contract said “buyer assumes all risk”. Court looks at the following factors to determine if is sale of
hope or future thing: 1. Language-words like “may” indicate sale of hope. 2. past dealings between parties-if one of the
parties is a speculator, may indicate sale of hope. 3. Discount-more heavily discounted, more evidence buyer assuming
comparable risk. 4. provisions of contract for return and terms.

F. Sale of future thing is the norm.

G. In sale of hope, thing is not purchased, but the expectation or right to thing.
H. Impossibility-art. 1873=obligor not liable when performance impossible
fortuitous event=failure of suspensive condition.
I. If prepayment made and fortuitous event occurs, party entitled to return of money.
J. Partial impossibility-person entitled to money commensurate w/impossibility.
XV. Unlawful Cause
A. Lawful cause and lawfulness of object-2 different ideas.
1. object=performance expected of other party.
2. cause=reason person binds himself.
3. Easier to prove unlawfulness of object.
B. Cause much more subjective than object.
C. Many of these cases decided on “public policy” reasons. Court acting as public conscience
D. Courts have power to strike down contracts for “public policy reaons. can be penal statute
or moral directive.

E. Clean hands Doctrine--Where cause is unlawful, dismiss the suit and bar relief for any party.
To take any action at all would be to become involved in illegality. Do not want courts
involved in illegality.

Cases:
1. McMahon v. Hardin: PI working for P to get dirt on husband in divorce. D’s fee depended on success of divorce
settlement that was contingent on D’s pi work. Court invalidated contract as against public morals by encouraging
divorce.
2. Cohn v. Baccich: Two men involved in bidding. Competitors stopped and drew lots. Conspiring to stop bidding
illegal. Person acting on behalf of P agreed to honor flip of coin. D got fruits of thing bought but refused to pay amount
agreed upon. Court tried to uphold position of P, doing the right thing, but honoring contract even though was P’s rep
that rigged the bid. This was immoral. Court ruled illegality not close enough to P, and thus P is entitled to relief. Court
says implicitly that illegality is a continuum and it is up to the courts to draw that line. To have invoked the clean hands
doctrine would have been to reward the wrongdoers.

Applying the Theory of Cause

I. Natural Obligations
A. Legal right to compel specific performance stripped away from obligee. Obligor still has
duty to perform.
B. Meets definition of obligation in that one is identified who owes the duty and one to whom
the duty is owed. Right of enforcement not present.
C. Once obligor makes a new promise, it is enforcable even if arising out of a natural oblig.
D. Promise to pay debt extinguished by prescription needs to be in writing.
E. Natural obligations are onerous.
F. Code art. 1761, in telling natural obligation is onerous, is telling that it requires no specific
form. Exceptions as provided by law (prescribed debt, immovable property, etc.)
Code Articles:
1760: Duty is owed to a distinct person, and not the world. Obligee cannot force performance, but if rendered, cannot be
reclaimed by obligor.
1761: One owes the duty, but cannot compel performance.
1762: Examples: Liberative prescription (statute of limitations) cuts off legal remedy or creditor, but not natural
obligation of debtor to pay bill. Nullity of will for lack of form creates natural obligation on part of heirs to follow
contents of will.
Cases:
1. Thomas v. Bryant: P’s son went to drug rehab. D, son’s stepfather, agreed to pay half of bill. Never did. D had no
legal obligation to child, but when does have natural obligation arising out of friendly relationship and affection. Natural
obligation can be a cause for a civil obligation. IF a person makes a promise to fulfill a natural obligation, then is binding
and enforcable.
2. Service Finance Co. of BR v. Daigle: P sues for chattel mortgage, but D claims bankruptcy. P claims D, in phone
call, reaffirmed debt, thus, obligated himself. If person makes a promise to repay a prescriptive debt, promise must be
clear, unequivocal, etc.

II. Liberative prescription

A. period of time after which obligation is extinguished.
1. Interruption of prescription--Clock starts over at beginning.
a. Acknowledgment interrupts prescription. Gives creditor break.
b. Partial payment is acknowledgment.
2. Suspension--stops clock but can start back at point stopped.
B. Prescription accrues in favor of obligor.
1. If he makes new promise to pay, obligor abandons rights under prescription.
C. Remission
1. Legal right to enforce debt, but obligee chooses not to.
2. 99% occur for liberality.
3. Cause usually gratuitous, but law imposes no form requirement. Follows
doctrine of 3rd party debt. Donation is indirect.
4. Obligee just allows the money/property to remain in the patrimony of obligor.
5. Obligee does not have to accept, but it is assumed unless answered negatively.
6. Remission of debt considered 3rd party contract.
7. Article 1889 governs. Any voluntary return of original instrument to debtor
gives rise to presumption of remission.
Case:
Stoll v. Goodnight Corp.: P took 3rd party check as payment which came back NSF. Mgt of D told P to pay for check.
She did. Then was fired. Promise to pay back was enough to elevate natural obligation to civil obligation.

III. Transaction or Compromise (article 3071)

A. Agreement between two parties with special cause of preventing or putting an end
to a lawsuit. Can be brought forward before suit is filed or if one pending.
B. Can be effected anytime before final judgment is passed.
C. Parties adjust their differences by mutual consent.
D. Has to be a compromise (each party gives something up)
E. Must be either a writing (not authentic act) or open recitation in court.
F. article 3073 says compromise covers only those issues intended by parties.
G. article 3078, compromise is equal to final judgment. Very difficult to undo compromise.
H. accord and satisfaction involves one side giving up claim completely. Not found in Code.
I. article 1861. partial performance may be refused. Generally, person may retain rights after
partial payment.
Case:
Meyers v. Acme Homestead Assn.: P has money in homestead and he applied for liquidation of shares. Took over a
year. In that time, dividends were declared. D gave P check for principal that read “paid in full”. When check is offered
in situation where dispute is involved, check is an offer. If cashed, that constitutes acceptance, and dispute is resolved.
Elements of when “paid in full” works
1. Dispute as to one of two amounts.
2. Check issued w/notation delineating “paid in full.”
3. If payee, cashes check, dispute resolved.

Vices of Consent

Code Articles:
1948: three types of vices of consent: a. error, b. fraud, and c. duress. Focus is on free will. It is said not
to be present if one of these three vices is present.
1949: 2 requirements for error to nullify a contract: 1. Error must be of cause w/o which the obligation would not have
been entered into (primary cause). 2. Cause was known or should have been known to the other party. To get remedy, is
better to make party aware of primary causes for entering contract.
1950: reduces 22 articles into one. Error may concern cause when it bears on nature of K, or the contractual object or
substantial element of thing, or the person or qualities of thing, or anything else regarded as a cause.
1951: No remedy in court if seller willing to make thing good.
1952: Innocent party can have expenses returned. rescission.

1. Error
A. read code artilces above.
B. 1949 requires other party know cause, not mistake.
C. Threshold requirement is knowledge of cause.
D. Mutual error
1. No special place in Code.
2. Mutual error may be shared or it may be misunderstanding. One party things one
thing, and other party thinks another.

Cases:
1.Oil City Realty v. Bordelon: D bought house from people. D wanted house specifically for adding 4th bedroom. Did
not communicate this to seller. When found out zoning restrictions would prevent this, D refused to buy house. D should
have put this cause into K. Would have been protected then. The more subjective the primary cause, the more important
it is to inform seller of that cause.
2. Lyons Milling Co. v. Cusimano: D ordered telegram flour from “lyons”. P thought flour was only to be shipped from
Lyons since D stated willingness to pay from shipping from there. Court ruled there was mutual error as to what “Lyons”
meant. One meant to purchase flour from there. Other thought it meant to ship the flour from there. Mutual error meant
no meeting of minds, thus, no K.
3. Calhoun v. Teal: P sold 250 acres of land. When P had it surveyed, surveyor had 50 acres missing. P made good on
deal by giving 50 more acres. Subsequent survey held all land to be there. Court ruled that mutual error was present, and
that when it is, either party may ask for rescission.
4. Ouachita Air Conditioning v. Pierce: P suing to get price of A/C compressor. Wanted York, but P put in different
one. D had another York put in and refused to pay P. Court ruled that P should have known of D’s desire since he
originally called York dealer, and D should have also asked what brand D wanted. Courts require that expectations to be
reasonable to vitiate K, even though not found anywhere expressly in Code.
5. Deutschmann v. Standard Fur Co., Inc.: P ordered fur coat with certain specifications. D. ordered coat, which did not
meet with P’s expectations. Coat P wanted could not be made, but D did not tell P this. Court said D, as expert, should
have known P’s desires were unattainable, and he should have told P this. P tried to speak plainly to make primary cause
known. D should have inquired further if unclear.
6. Marcello v. Bussiere: D wants to buy a bar. P sells business to D as well as leases bldg. D wants to buy liquor license
but is turned down. D stops paying lease. Court ruled that P knew or should have known that primary cause for entering
into K was to open bar, which requires liquor license. Further, P knew license would be denied. Was error, not fraud.
Court says “clear and convincing” evidence needed to prove fraud, even though Code says only preponderance required.
Court does this because penalties are much more substantial.
7. C.H. Boehmen Sales Agency v. Russo: P wants new bldg for business. D has property to sell. Zoning restrictions
prevent modifications to bldg desired by P, but D says nothing. This renders the building unusable to P. Court ruled that
P should have known that primary cause was to renovate building and that when P could not, would not have entered into
contract. K rescinded.
8. Bischoff v. Brothers of the Sacred Heart: P got teaching K at D’s school. Did not disclose that he was divorced.
Court ruled was not fraud on P’s part, but he should have known D would not have hired him if P was divorced to teach
religion class. Was error of person. This means misrepresentation as to some substantial quality of the person.
9. Wise v. Prescott: P was a passenger on a bus hit by D’s car. P signed compromise with D’s insurance Co. for
$105.00. Court ruled this was a case of not understanding nature of K. P was elderly and in hospital when signed.
Was told this would not affect final outcome of case. Would not have signed if he knew was a final settlement. Very
unusual case in that person that did not read K was granted relief. Court looking to protect the interest of the small guy.
10. Voitier v. Antique Art Gallery: P bought painting said to be authentic Inness. P found was not authentic and tried to
get return of money. D refused. Court found for P saying no meeting of the minds was present when P found out
painting was fake.

II. Fraud
 A. Inclusive of overt lies and omissions which deceive.
B. Remedies for fraud include attorney fees and damages (rare) due to quasi-illegal nature.
C. article 1953 defines. Misrepresentation or suppression to cause unfair advantage or loss.
D. Fraud is induced error where one party is at fault.
E. article 1954 says fraud not applicalbe when fraud easily discernible unless one party
relying heavily on advice of other party.
F. fraud may concern “any substantially influenced cause of consent”. lesser standard
than primary cause of error.
G. article 1956, fraud of third person vitiates K.
H. Fraud only need preponderance of evidence, but courts look for more. “clear and convincing
proof” beyond a reasonable doubt.
I. Party entitled to damages and attorney’s fees.

Cases:
1. Orr v. Walker: Two neighbors fighting over land. D works with person P hates to try to get land from P. P wants act
of a sale annulled for fraud. Court ruled for P, saying fraud may result in causing inconvenience to one, rather than
financial loss. D and other person were trying to inconvenience P. therefore, fraud exists.
2. Overby v. Beach: P wants to annul documents selling property to her. Warranty as to rents collectible not in deed.
Found that rents were too excessive. Court ruled that D should have told P that rents were too high. If error intentional,
then fraud. Puts risk on seller.

III. Duress
A. article 1959 governs. Consent vitiated by external force overtaking free will.
B. Consent must be vitiated by REASONABLE fear fo unjust and considerable injury to party’s
person, property, or reputation. Must look to characteristics such as age, health, etc in
determining reasonableness.
C. article 1960, threat can be against family member or 3rd person. if 3rd person, must have
close relationship with that to be duress.
D. article 1961 duress may be performed by third person. other party in K need not know.
E. article 1962, duress not applicable when performing lawful act or exercising legal right.
act lawful in appearance only may be fraud.
F. article 1964, attorney’s fees and damages allowed.

Cases:
1. Cooper v. Oteri: D has property stolen. P agrees to pay for property after D found out P was seducing wife. P claims
duress. Court ruled for D saying that P and D had friendly relations up until AFTER agreement regarding money was
signed. Duress must exist at time of executing K.
2. Wilson and Adams cases were asking court to cut slack based on people having hard time in their lives. Court refused.
Situational and emotional duress not actionable.

Object of Contract

Code articles:
1971: can contract for any object that is lawful or determinate.
1972: Object is possible or impossible basedon its nature.
1973: Object must be determined as to its kind. Quantity may be undetermined as long as it is determinable. 1975 says
output measured in good faith.
1974: Determination of quantity may be left to third person. If not done, courts will do it.
1976: Future things may be object of K except for succession. Done to prevent people from killing someone to get at
succession.

I. Object
A. has to do with meeting of the minds as to what kind of performance is to be rendered. Parties
must come to agreement to this.
B. Unlawful object more useful when object itself is lawful, but underlying cause is not.
(buying house to sell drugs)
C. Courts have discretion to strike down K as object being against public policy.
Cases:
1. Commerce Insurance Agency v. Hogue: court ruled no indeterminacy as to what was sold.
2. State v. Lewis: Plea bargain case. D thought was immune from prosecution. P thought state was to get valuable
information. Mistake as to object. K voided.

D. Third Party Beneficiary: Obligee can transfer rights to third person. Third party can agree to
be bound for either benefits or duties of K. No promise on 3’s part to perform.
1. tripartite relationship.
2. obligee directs obligor to direct performance to third person.
3. obligee=stipulator, obligor=promissor.
4. another way to make indirect donation.
5. may be onerous or gratuitous. may be done from liberality to pay debt or to pay off
a debt of obigee.
6. Is a relationship between promissor and stipulator which is onerous and between
stipulator and beneficiary which may be either gratuitous or onerous.
7. If beneficiary is an obligee of stipulator, stipulation cannot be refused.
Code articles:
1978: allows third party arrangement. Once 3 accepts, cannot change K w/o his permission.
1979: stipulation may be revoked only prior to acceptance.
1981: stipulation gives 3 right to demand performance.
1982: promisor can defend failure to perform against beneficiary as he would against stipulator.
nonperformance of stipulator excuses promisor.

Andrepont v. Acadia Drilling Co.: P granted verbal lease to to grow soy. D granted mineral lease, drills, and damages
P’s crops. Provision stated all crop damage to be paid by D. P claims was 3rd party beneficiary or lease, i.e. was
covered by crop provision. Court ruled in P’s favor.
Wagner and Truaz Co. Inc. v. Barnett Enterprises Inc.: Have to have some relationship between 3rd party and stipulator
AND intent to make third party beneficiary of performance.

II. Promesse de Porte-Fort

A. is the obligor that is stipulating. Agreeing that third person will render the performance.
B. K is still between obligor and obligee.
C. Is the duty that is transferred, not the benefit.
D. Obligee has no action whatsoever against 3rd party. Only against obligor.
E. 3rd party not made full-blown partner to K as with third party beneficiary.
F. LA law is lenient when one confers a benefit to 3rd person. Less so when one imposes
a duty on that 3rd person.
G. Obligation has to be heritable to be xferred. Obligee can transfer entire right. (subrogation)
article 1825 governs. Transfer of obligation from vantage point of obligee.
H. Only way beneficiary has no action against obligor would be if beneficiary agreed to that.
Beneficiary substituted for obligor. Called novation.
1. Novation is an extinguishing on one obligation by substitution of another. (art. 1879)
2. 2 types.
a. Obligor remains the same, but object of K changes--objective novation.
b. Obligors are substituted--subjective novation.
c. Article 1880: novation must be clear and may not be presumed.
I. Assumption of an obligation is always going to trigger a third party beneficiary. Will also
generate dual liability. Upon accepting, obligee has two parties to go after.

DEFAULT
I. Obligor to perform whenever parties agree that performance to be due. So long as this was clear,
obligor should know that obligee will suffer damages if performance not rendered.
A. article 1989--obligor has to be put in default as prerequisite for liability ffor damages
due to delay.
B. article 1990--when term for performance clearly spelled out or fixed, default occurs by
arrival of that term or date.
C. Happens when
 1. term is fixed
2. term unfixed but clearly discernible from circumstances.
D. Only time obligee has obligation to give notice to debtor of performance is when legitimate
question exists as to time period for performance.
E. Term for performance (art. 1777)
1. term can either be express or implied by K. Due @ time agreed upon or when nature
of K implies. 2nd para: if not subject to a term, performance due immediately.
F. Certain or uncertain Time (art. 1778)
1. term is either certain or uncertain.
a. uncertain when time not fixed, but determinable by either intent of parties
or occurrence of future and uncertain event.
b. if term not determinable, performance due in a “reasonable time”.
c. suspensive condition--EVENT must be uncertain.
G. Certain term
1. art. 1990--when term fixed or clearly determinable, when term arrives, obligor in
default.
2. only time default needed is when term is not clearly determinable by facts.
H. Remedies.
1. Have to ask if breach exists. Breach=failure to perform (art. 1994)
a. total nonperformance
b. defective performance
c. delay in performance
2. can also ask for damages resulting from breach.
a. delay damages (moratory damages) (result of delay)
b. compensatory damages (damages meant to sub for performances)
3. Two remedies for breach
a. specific performance
b. dissolution
I. Ways to put party in Default
1. In letter to obligor.
2. Orally in front of two witnesses.
3. Express provision in contract.
4. By filing suit.

Cases:
1 Moran v. Wilshire Ins. Co.: Allegations of suit enough to put in default. do not need request for performance.
2. Melancon v. Texas Co.: Court finds 15 months of not paying rent unreasonable when industry standard is monthly
payments. Right to seek dissolution is not absolute. Court in its discretion can force obligee to accept obligor’s
performance.

DISSOLUTION

I. If a party fails to perform, other pary has right to judicial dissolution. More of a right to “ASK”.
A. Court may grant obligor more time to perform.
II. Parties can also regard K as dissolved. (extra judicial dissolution.) Just walk away from K.
A. Even in extra-judicial dissolution, party may wind up in court over right to walk away from
K. Court, however, does not have discretion to grant extra time for performance.
B. Judicial dissolution=judicial discretion.
C. good faith usually the yardstick by which appropriateness of dissolution measured.
III. Express Dissolution
A. Dissolution happens upon nonperformance (art. 2017)
B. Requires notice.
IV. Dissolution w/o notice
A. available when delayed performance would be of no value to obligee.
B. Usually occurs when timely performance important.
C. applies to all types of non performance.
D. Frees obligee from his own performance and allows him to refuse performance from obligor.
E. also available when evident obligor will not peform. (anticipatory dissolution)
V. Dissolution w/notice (art. 2015)
A. Party can warn that performance is due in a certain time and when not met, K will be d
deemed dissolved.
VI. Effects of Dissolution
A. parties are restored to situation before K made.

Cases:
Mennella v. Kurt S. Schon BAI, Ltd.: Title of painting reverted back to gallery after put into default by letter with term
and notice. Restored parties back to positions before K took place.

VII. Specific Performance

A. Remedy in alternative to dissolution. Cannot have both.
B. Entitled to moratory damages (delay).
C. Desired remedy in LA.
D. Art. 1986 governs:
1. party has right to ask if party
a. fails to deliver a thing
b. does not do an act.
c. does not execute instrument
2. any other object, remedy @ discretion of court.
E. Hard to get someone TO DO something. Court usually just awards damages.

#I. OBLIGATIONS IN GENERAL

1. Civil Code System
Common Law - 1066 AD England, Britian, 49 of US states, Australia, India
law emanates from cases; judge made law

Civil Law - 533AD Rome, Italy, France, Spain, & Louisiana

law emanates from statutes or codes; judges just apply the law

Secondary sources of law: Jurisprudence or case law and custom; When there is no case law we go to the writings of
scholars:
1700's Pothier: Professor of University of Paris wrote a/b civil law system and about French law prior to Code
Napoleon (which our codes are based on)

1800's Toullier: wrote French civil law & code Napoleon. Many revisions in 1825 came from Toullier writings.
Adds a lot to Obligations section

1900's Planiol

1803: Louisiana was civil law state. The rest of the country wanted La. to become a common law state. Act of
congress authorized President Jefferson to take possession of La. he appointed Claiborne to exercise all powers of the
existing government. Claiborne temporarily affirmed the existing laws in La.. He thought common law should be
introduced to the state.
Louisiana opposed the common law. Livingston headed this

1804: French civil code is enacted

1808: Louisiana adopted the first civil code digest; summary of the codes in force compilers had a draft of the French
Civil code (code Napoleon);
 70% was based upon provisions from Napoleonic Code, 15% was based on French statutes and doctrinal works. 15%
on spanish material.
Continuing arguments between theoreticians about 1808 digest - was it Spanish or French law
No doubt the phraseology was from French civil code

1825: First revision of civil code - no great changes. Used 1808 digest as a base (which used Code Napoleon as
base). 1825 code was originally written in French so in case of translation disputes French translation rules.

1870: The next substantial revision of Louisiana Civil Code; modernized - deleted slavery section from property

1984: Continuing revision - extended over 12-13 years. Sections revised in pieces by different groups of people so
run into problems right hand does not know what the left hand is doing

1998:
Book I persons
Book II things & ownership
Book III methods of acquiring ownership
Obligations I - Title III & IV of Book III

Title III - obligations in general

obligations arising by: (con venio - meeting of law)
operation of the law
contractually -
conventionally - duties arising from coming together of two minds

Title IV obligations arising by conventionally or contracts

2. Public vs. Private Law

Public Law - between citizens and the government ie. constitutional Law
Private Law - between people ie. sales, contracts, obligations, successions, marriage & family

3. Substantive vs. Procedural Law

Substantive - the rules that affect peoples lives - torts, obligations
Procedural - how we go about enforcing those rights - civil procedure

Obligations
part of the private law of the substantive tradition. Regulates law between private persons

4. Cause of action
A. Process in petitioning court in a cause of action
3 parts of the petition:
Caption
Body - factual allegations
Prayer for relief

3 copies:
clerk of court
notification for the sheriff to be delivered to the Δ
personal file for lawyer

B. Types of cause of action

a. Parties had a contract and Δ breached the contract
Can a party who is not a part of a contract sue for breach of contract?
Δ’s defense against π’s cause of action:
no cause of action - even if what π alleges is true the law still doesn’t afford relief or no cause of action (common law
= demurrer)

5. Latin or French translations

 A. Intuitu personae - persona
B. Culpa in comprehendo - fault in contracting; duty to tell someone who thinks u have an offer or contract to tell
them you do not

II. OBLIGATION - DEFINITION (1756)

1. An obligation is a legal relationship (rather than a mere duty to perform) or “civil obligation” (obligation
enforceable by law) whereby a person, called the debtor or obligor, is bound to render a performance in favor
of another called the creditor or obligee. Performance may consist of giving, doing or not doing something
ie. Two persons make a contract of sale, one of them, the buyer may demand from the seller delivery of the things
sold, and the seller may demand payment

2. Modern approach views obligations as credit rights

3. The obligor owes a duty to the obligee. Most contracts both parties are both obligors and obligees = bilateral

4. (1757) Obligations arise from contracts and other declarations of will. They also arise from the law, regardless
of will, in instances such as: wrongful acts, the management of affairs of another, unjust enrichment

5. Every obligation is either personal or real

A. Obligations not transferrable or heritable are strictly personal
I am painting your portrait

6. (1758) Obligation may give obligee the right to

A Specific performance - traditional preferred remedy- by that person or another
B. Damages if specific performance is impractical
ie. I paint your portrait, we fight, probably will fulfill contract through damages b/c if I have specific
performance as remedy your picture will be ugly

7. (1759) Good faith shall govern the conduct of the obligor and the obligee in whatever pertains to the obligation

8. (1760) a natural obligation arises from circumstances in which the law implies a particular moral duty to render
performance (imperfect obligation - old code)

9. Patrimony is the entirety of someone’s assets

Connection that exists between obligation and patrimony. The right that an obligation gives the creditor or
obligee is a patrimonial right - the purpose is the satisfaction of the creditor’s economic needs.

The relation existing btwn spouses who owe each other a duty of fidelity, the obligation is called institutional.
Institutional obligations lack the patrimonial aspect. They are not part of a person’s patrimony and so may not
be transferred.

A. (3182) Whoever has bound himself personally, is obliged to fulfill his engagements out of all his property,
movable and immovable, present and future.
(3183) The property of the debtor is the common pledge of his creditors, and the proceeds of its sale must be
distributed among them ratably unless there exist among the creditors some lawful cause of preference

9. Statute of limitations
A. (3467) prescriptions run against all persons unless exception by law
B. (3468) prescription runs against minors, interdicts and incompetants unless exception by law
C. Contracts - 10yr
D. torts - 1yr

Harrison v. Gore - 8 yrs later Π claims school teacher molested her,Δ. Tried to say school had a contract w/her to keep
environment safe - 10yr. SC said no, this is a tort - 1year prescription.
She claimed (2317) we are responsible for damages we cause and for persons acts that cause damages of whom we are
answerable for or have in our custody.
III. KINDS OF OBLIGATIONS
1. Real Obligations (1763) duty correlative and accidental to a real right (mortgage)
2. Strictly Personal and Heritable Obligations(1765 - 1766)
A Strictly Personal (1766) Performance can be enforced only by the obligee or against the obligor; performance
requires special skill of obligor; personal services; intended for the benefit of obligee exclusively.
B. Heritable (1765) performance may be enforced by a successor of the obligee or against the obigor; Every
oblig. is heritable xcept otherwise contrary in contract; transferable btwn living persons
3. Conditional Obligations (1767- 1776) - oblig. dependent on an uncertain event; if condition must occur w/in a
fixed time and it doesn’t the condition has failed; no time stipulated = reasonable time. Condition = no event
then if no event in fixed time = condition fulfilled. No time stipulated = it is certain no event will occur =
condition fulfilled
A. Suspensive - Obligation can’t be enforced until the uncertain event happens ie. I will hire your PR company
if the president is impeached.
a. Condition based on whim of obligor makes oblig. null (1770)
B. Resolutory - obligation can be immediately enforced but will come to an end when the uncertain event
happens. ie. I will hire you now but if I lose my job our oblig. will come to an end.
(1). Potestative Condition based on the will of the obligor must be fullfilled in good faith ie. if I want to or
chose to. A typical employment contract is tacitely resolutory
4. Obligations with a term (1777 - 1785)
A. (1777) A term for the performance of an obligation may be express or it may be implied by the nature of the
contract
(1) Performance of an obligation not subject to a term is due immediately
(a) Nevertheless, the obligee must allow the obligor a period of time to complete the performance that is
commensurate w/its nature (time necessary to wrap or crate)
B. (1778) A term for the performance is a period of time either certain or uncertain. It is a certain time when it
is fixed. It is uncertain when it is not fixed but is determinable either by the intent of the parties or by the
occurrence of a future and certain event.
(1) It is also uncertain when it is not determinable, in which case the obligation must be performed w/in a
reasonable time
C. A term is presumed to benefit the obligor unless the agreement or the circumstances show that it was
intended to benefit the obligee or both parties
5. Obligations with Multiple persons - several, Joint, solidary (most likely arises w/obligor) (1786 -1806)
A. (1786) When an obligation binds more than one obligor to one obligee or binds one obligor to more than
one obligee, or binds more than one obligor to more than one obligee, the obligation may be several, joint
or solidary

B. (1790) An obligation is solidary for the obligees when it gives each obligee the rt to demand the whole
performance for the common obligor (more than 1).
ie. Jim and John are bound to you for $100. You can collect the full $100 from either one of us. If you
collect the full $100 from Jim. John is bound to pay Jim $50. Jim has the right of retribution.
(1) Look at what was intended if there is no specification in the contract for who will pay what and how
much.
(2) Remission of debt (1792) vs. Remission of solidary (1802) -
(a) Remission of debt by one solidary obligee releases the obligor but only for the portion of that
obligee.
i (1888) - Remission of debt by an obligee extinguishes the obligation. That remission may be
express or tacit.
(b) Remission of solidary - an obligee who receives a partial performance from an obligor
separately preserves the solidary obligation against all his obligors after deduction of that
partial performance. Must be express
i. (1804) 3 obligors solidary bound to obligee for $100. The obligee can collect the $100 from
anyone of us but each other, we are bound to owe our 1/3 share
6. Conjunctive and Alternative Obligations (1807 - 1814)
A. Conjunctive (1807) An obligation is conjunctive when it binds the obligor to multiple items of performance
that may be separately rendered or enforced. Each item is regarded as the object of a separate obligation. (I
offer to sell tie for $5 and offer my coat for $20 you can look at these as two separate obligations. I offer to
sell my tie and coat for $25 - together - You can’t say I’ll buy the tie for $5 that is a counteroffer).
 B (1787) When each of different obligors owes a separate performance to one obligee, the obligation is several
for the obligors (several in common law means La. solidary)
(1). A several obligation produces the same effects as a separate obligation owed to each obligee by an
obligor or by each obligor to an obligee.(the performance owed by each obligor has a different object =
several. ie. one obligor owes delivery of the thing and another owes payment.
(2) Prescription runs on each separate obligation.
(a) The 2 obligors are not mutually bound. I owe you one obligation separate from the other guys
obligation

C. (1788) When different obligors owe together just one performance to one obligee but neither is bound for the
whole, the obligation is joint for the obligors.
When one obligor owes just one performance intended for the common benefit of different obligees,
neither is entitled to the whole performance, the obligation is joint for the obligees.
ie. Joint obligors for $100. Jim owes $50, John owes $50. If you sue Jim you can only get $50 out of him.
(Viril share = equal division; division is viril unless otherwise stipulated

D. (1789) When a joint obligation is divisible, each joint obligor is bound to perform, and each joint obligee is
entitled to receive, only his portion.(she & I are mutually bound to pay you$100 = divisible)
When a joint obligation is indivisible, joint obligors or obligees are subject to the rule governing solidary
obligors or solidary obligee. (2 persons selling a truck)
(1) When a joint obligation is indivisible we call it solidary b/c if two of you are selling a truck that you
mutually own you can’t split up a truck You can enforce the contract under either person.
7. Divisible and indivisible obligation (1815 - 1820)
A. (1815) An obligation is divisible when the object of the performance is susceptible to division
An obligation is indivisible when the object of the performance, b/c of its nature or b/c of the intent of
the parties, is not susceptible of division.
B. (1816) When there is only one obligor and only one obligee, a divisible obligation must be performed as if it
were indivisible
C. (1817) A divisible obligation must be divided among successors of the obligor or of the obligee
(1) Each successor of the obligor is liable only for his share of a divisible obligation
(2) Each successor of the obligee is entitled only to his share of a divisible obligation
D. (1818) An indivisible obligation w/more than one obligor or obligee is subject to the rules governing solidary
obligations (more than one obligor - all are responsible for the whole
E. (1819)An indivisible obligation may not be divided among the successors of the obligor or of the obligee,
who are thus subject to the rules governing solidary obligors
or solidary obligees
F. (1820) A stipulation of solidarity does not make an obligation indivisible

IV. TRANSFER OF OBLIGATIONS

1. Assumption of obligations
A. (1821)An obligor and a third person may agree to an assumption by the latter of an obligation of the former.
To be enforceable by the obligee against the third person, the agreement must be in writing
(1) The obligee’s consent to the agreement does not effect a release of the obligor
(2) The unreleased obligor remains solidarily bound with the third parties
B. A person who, by agreement with the obligor, assumes the obligation of the latter is bound only to the extent
of his assumption
(1) The assuing obligor may raise any defense based on the contract by which the assumption is made
C. (1823) An obligee and a third person may agree on an assumption by the latter of an obligation owed by
another to the former. That agreement must be made in writing. That agreement does not effect a release of
the original obligor
2. Subrogation (1825 - 1830)
A. (1825) the substitution of one person to the rights of another. It may be conventional or legal
B. (1826) When subrogation results from a person’s performance of the obligation of another, that obligation
subsists in favor of the person who performed it who may avail himself of the action and security of the
original obligee against the obligor, but is extinguished for the original obligee
(1) An original obligee who has been paid only in part may exercise his right for the balance of the debt in
preference to the new obligee
 C. (1827) An obligee who receives performance form a third person may subroate that person to the rights of the
obligee, even w/o the obligor’s consent. That subrogation is subject to the rules governing the assignment of
rights
D. (1828) An obligor pays a debt with money or other fungible things borrowed for that purpose may subrogate
the lender to the rights of the obligee, even without the obligee’s consent. The agreement for subrogation
must be made in writing expressing that the purpose of the loan is to pay the debt
E. Subrogation can take place by operation of the law.
(1) the new obligee may recover form the obligor only to the extent of the performance rendered to the
original obligee. The new obligee may not recover more by invoking conventional subrogation

V. TYPES OF CONTRACTS
1. Obligation v. Contract
A. Contract is an agreement by 2 or more parties whereby obligations are created, modified, or extinguished.
B. Obligation is a duty which may rise out of a contract
2. Commutative (1911) - a contract is commutative when the performance of the obligation of each party is
correlative to the performance of the other
A. There is a distinction between correlative obligations and correlative performances, which make the contract
not only bilateral but also commutative.
3. Bilateral - the parties obligate themselves reciprocally, so that the obligation of each party is correlative to the
obligation of the other. (The obligation of each party is the cause of the other)
4. Unilateral - a contract is unilateral when the party who accepts the obligationof the other does not assume a
reciprocal obligation
5. Onerous (1909) - a contract is onerous when each of the parties obtains an advantage in exchange for his
obligation. Bilateral vs. onerous - each party motivated by his promise in obtaining something in return.
6. Gratuitous (1910) - one party obligates himself towards another for the benefit of the latter, w/o obtaining any
advantage in return
A. Failure of cause - gratuitous contract is enforceable while an onerous contract is unenforceable
B. Must be in authentic form
7. Aleatory (1912) - A contract is aleatory b/c of its nature or according to the parties’ intent, the performance of
either party’s obligation, or the extent of the performance, depends on an uncertain event ie. Life insurance
policy - both parties are taking a risk
A. (1912) Contract dependant on some uncertain event
B. (2451) Sale of a hope. A hope may be the object of a contract f sale. Thus a fisherman may sell a haul f his
net before he throws it. Buyer is entitled to whatever is caught even if nothing is caught
8. (2439) Sale is a contract whereby a person transfers ownership of a thing to another for a price in money.
The thing, the price, and the consent of the parties are requirements for the perfection of a sale.
A. (2464) The price must be fixed by the parties in a sum either certain or determinable through a method
agreed by them. There is no sale unless the parties intended that price to be paid.
(1) The price must not be out of all proportion with the value of the thing sold. Thus the sale of a plantation
for a dollar is not a sale, though it may be a donation in disguise.
B. All things corporeal or incorporeal, susceptible of ownership, may be the object of a contract of sale, unless
the sale of a particular thing is prohibited by law

9. (1913) Principle and Accessory contracts

A. Accessory - made to provide security for the performance of an obligation; if principle falls, so does
accessory (Suretyship, mortgage, pledge and other types of security agreements are examples of accessory
contracts)
B. The secured obligation made from a contract is the principal contract

10. (1914) Nominate and innominate contracts

A. Nominate contracts are those given a special designation such as a sale, lease, loan, or insurance
B. Innominate contracts are those with no special designation nor are they subjected to
 special regulations

11. (3071) a transaction or compromise is an agreement between two or more persons, who, for preventing or
putting an end to a lawsuit, adjust their differences by mutual consent, in the manner which they agree on, and
which every one of them prefers to the hope of gaining, balanced by the danger of losing
A. This contract must be either reduced into writing or recited in open court and capable of being transcribed
from the record of the proceeding. The agreement recited in open court confers upon each of them the right
of judicially enforcing its performance although its substance may thereafter be written in a more convenient
form

VI. REQUIREMENTS FOR A CONTRACT TO BE VALID - (1831) a party who demands performance of a
contract has the burden of proving the existence of the obligation
A party who claims that an obligation is null, or that it has been modified or extinguished must prove the nullity
or modification or extinction.

A. Capacity
B. Object
C. Consent
D. Cause
E. Form

VII. CAPACITY
1. Parties incapable of contracting
(1918) - All persons have capacity to contract except: unemancipated minors, interdicts, and persons
deprived of reason at the time of contracting (mentally ill, drunks, senile people, and drug sedated)

2. (1919) A contract made by a person w/o legal capacity is relatively null and may be rescinded only at the request
of that person or his legal representative
A. Unemancipated minors -
(1) 18 is age of majority
(1922)However a fully emancipated minor has full contractual capacity

(2) (1923)A contract may be rescinded on the grounds of incapacity except when made for the purpose of
providing the minor w/something necessary for his support or necessary for education, or for a purpose
related to his business. ie. Minor buys a guitar for his business - he is bound. However you could
probably argue what is meant by his business. May want to look at the legislative intent in making this
statute apply to business.

(3) (1924) A contract made with a minor who represents himself as of age is valid for the benefit of the
contracting party who relied in good faith upon that representation

B. Interdicts -

C. Persons deprived of reason at time of contracting - this is designed to include all of the varieties of
derangement that have been acknowledged in La jurisprudence (maladies affecting intelligence,
drunkenness, drug sedation)

(1) (1925) Rescission of an onerous contract entered into by a person deprived of reason can only be
obtained upon showing that the capable person knew or reasonable should have known that he was
dealing w/ a person deprived of reason.
A person may rescind a gratuitous contract on the basis of his incapacity w/o showing that the other
party knew or should have known of that incapacity.

(2) (1926) A contract made by a noninterdicted person deprived of reason at the time of contracting may be
attacked after his death on the ground of incapacity:
(a) only when the contract is gratuitous or
(b) it evidences lack of understanding or
 (c) was made w/in 30days of his death or
(d) when application for interdiction was filed before his death

2. Rescinding contract when one person does not have capacity to contract
A. (1919) Right to plead rescission
A contract made by a person w/o legal capacity is relatively null and may be rescinded only at the
request of that person or his legal representative.
A contract made by an interdict after the date of successful application for interdiction is relatively null.
The action to rescind the contract is available only to the interdict or his curator. The action to rescind a
contract by an interdict is susceptible of prescription - the period of which begins to run from the day that
the interdiction is removed.

B. (1920) - a party ignorant of the incapacity of the other party, may require from that party, if the incapacity
has ceased or from the legal representative if it has not, that the contract be confirmed or rescinded.

C. (1921) Upon rescission of a contract on the ground of incapacity, each party or his legal representative shall
restore to the other what he has received. When restoration is impossible, the court may award
compensation to the other party to whom restoration cannot be made.

VIII. OBJECT (1971)

1. Object of the contract is not the thing itself but the performance the obligor is bound to

2. Sometimes called Prestation - (performance due in an obligation by an obligor)

3. The true object of an obligation is a performance that the creditor expects and the debtor must render: It is not the
thing that the debtor is supposed to give or to do or even abstain from doing, but his act of giving, doing or
not doing.

4. (1971) Parties are free to contract for any object that is lawful, possible and determined (certain) or
determinable.
ie. Contract of sale: I am selling u my business, I tell you its great. You don’t know for yourself. You give me
money. NO CONTRACT b/c uncertain what you are getting. (2439) Sales is a contract whereby a person
transfers ownership of a thing to another for a price in money. The thing, the price and the consent of the
parties are requirements for perfection of a sale. However just b/c someone made a bad bargain the crt wont
overturn it.

5. (1972) A contractual object is possible or impossible according to its own nature and not according to the
parties’ ability to perform
Possible or impossible = perfect or imperfect
Perfect - enforceable in law
Imperfect - not enforceable in law but may have some effects
ie. (1760) - A natural obligation arises from circumstances in which the law implies a particular moral duty to
render a performance
ie. I say to 9 year old - “I will take you to the zoo on Saturday” this person can’t understand this obligation

6. (1973) The object of a contract must be determined at least as to its kind. The quantity of a contractual object
may be undetermined, provided it is determinable.
d. (2439) Sale is a contact whereby a person transfers ownership of a thing to another for a price in money.
The thing, the price, and the consent of the parties are requirements for the perfection of a sale.

7. (1976) Future things may be the object of a contract (however the succession of a living person may not be the
object of a contract)

Salles v. Stafford - sold portion of land in soon to be developed subdivision. Made payments but later says the object of
contract was not certain. SC said object of contract is sufficiently certain - size sold was specific and determinable, ten
 lots same sq ft. in same sq. of subdivision. You could debate the court is wrong b/c land is so uncertain. There is so
much on it.

Commerce Insur.Agency v. Hogue: Δ and Π contracted to buy Π’s book of business. Δ claims that neither the parties
nor the contract clearly state what was being bought or sold. CA Holding: Contract is valid b/c object of the contract
was determinable. (1973) - the object of a contract must be determinate @ least to kind; however the quantity of a
contractual object may be undetermined provide it is determinable.
What would happen if when Δ takes over Π calls all the clients and says Δ is an idiot don’t do business with him. (2054)
When the parties made no provision for a particular situation, it must be assumed that they intended to bind themselves
not only to the express provisions fo the contract, but also to whatever the law, equity or usage regards as implied in a
contract of that kind or necessary for the contract to achieve its purpose.

State v. Lewis. Δ plea bargains a lower sentence in exchange for info. Δ did not give the info so plea bargain invalid
SC Holding: Plea Bargain invalid b/c the agreement between the Π and Δ can be dissolved for failure of cause, since
both parties signed the agreement in the belief they had bargained for something other than what they actually got.
However state can’t use things Δ says in a plea bargain b/c they are involuntary.

Liles v. Bourgeois: Π had agreement with Δ that he would get contingency fee dependant upon how much $ he could
get from grandmothers succession. SC Holding. (1976) Future things may be the object of a contract. HOWEVER the
succession of a living person may not be the object of a contract even if it is made w/dieing persons consent. When I
promise to leave you something and it is not in my will you have to sue my estate and prove that I promised this.

IX. CONSENT (1927) - established through offer and acceptance

1. Meeting of the minds - uniformity of intentions of the contracting parties
A. (2045) Interpretation of a contract is the determination of the common intent of the parties (a contract that
does not express the true intent of the parties is a simulation 2025)
(1) What did the parties have in mind. Their minds should be in accord b/c they are aimed at the same thing
B. There are special circumstances where silence is applicable
(1) (2688) - If after the lease of a predial estate has expired, the farmer should still continue to possess the
same during one month w/o any step taken by lessor or lessee to cause him to deliver up the possession
of the estate, the former lease shall continue subject to the same clauses and conditions which it
contained; it shall continue only for the year following
(2) (2689) If the tenant of a house or of a room should continue possession for a week after the lease has
expired, w/o opposition by lessor, the lease shall be presumed to have continued and can not be
compelled to move through notice in writing at least 10 days before expiration of the month

2. Expressing consent
A. (1927) A contract is formed by the consent of the parties established through offer and acceptance. Unless
the law prescribes a certain formality for the intended contract offer and acceptance may be:
(1) May be oral, in writing, by action, inaction that clearly indicates consent
(2) Does not have to be conformity between the manner in which the offer is made and the manner in which
acceptance is made
B. However if the law says the contract has to be in writing (sale of immovable) the offer and the acceptance
must be in writing
C. (1936) A medium or a manner of acceptance is reasonable if it is one used in making the offer or one
customary in similar transactions at the time and place the offer is received, unless circumstances known to
the offeree indicate otherwise
D. (1939) When an offeror invites an offeree to accept by performance and, according to usage or the nature or
the terms of the contract, it is contemplated that the performance will be completed if commenced, a
contract is formed when the offeree begins the requested performance
E. (1942) When, b/c of special circumstances, the offeree’s silence leads the offeror reasonably to believe that a
contract has been formed, the offer is deemed accepted
F. (2687- 2689) Lease presumed for one year when not specified and can stay one year if after a month of the
expiration of lease, lessor says nothing

3. Offer
A. Offer is a unilateral declaration of will that a person (offeror) addresses to another (offeree) whereby the
offeror proposes to the offeree the conclusion of a contract. The offerors will must be declared and
projected outward and must be addressed to the offeree. (ie if X told Y that he was going to make an offer to
Z. Z could not accepted that offer upon learning of the conversation b/c no offer was made to him)
B. expression of serious intent
(1) A declaration of will must be sufficiently precise and complete so that the intended contract can be
concluded by the offeree’s expression of his own assent. (Sale must be sufficiently precise as to the
thing to be sold and the price. Lease must be sufficient concerning the thing to be leased and the rent
and time to start)
(2) If the offeror’s declaration lacks a minimum of preciseness then his declaration is not a true offer but
rather an invitation to negotiate a prospective contract
(3) An offer may be made to several person however the offeror may incur liability if he does not make each
offeree aware that the offer is made to others
C. In order to be legally operable and to create power of acceptance, the offer should contain all of the terms of
the contract itself.
D. Offer must fulfill:
(1) the design to give the other party the right of concluding the contract by his approval
(2) the offerors intention to obligate himself
(3) a serious intent
(a) If (a) is missing, it is not an offer but an invitation to negotiate. If (b & c) are missing it is likely the
offer is not one creating a legal obligation but rather a proposition in jest.
E. gives the offeree the right to conclude (make) a contract by assent (agreement)
F. form- (1927) unless the law prescribes a certain formality for the intended contract, offer and acceptance may
be made orally, in writing or by action or inaction
immovable must be in writing offer and acceptance
G.(1932) - an offer expires by the death or incapacity of the offeror or the offeree before it has been accepted.
H. A written revocation, rejection, or acceptance is received when it comes into the possession of the addressee
or person authorized or deposited in place indicated by offeror
I. Offer can’t generally be assigned (ends upon death of offeror/ee) - parties can contract around this though
(option contract is heritable)

J. Irrevocable Offer - (1928) An offer that specifies a period of time for acceptance is irrevocable during that
time
(1) When the offeror manifest an intent to give the offeree a delay w/in which to accept, w/o specifying
time this is a reasonable time (varies w/each situation; if no time is specified look at the intent of the
parties)
(2) Acceptance is effective when received by the offeror (offeror does not have to have knowledge of
receipt)
(3) If no time specified then it expires if not accepted w/in the reasonable time. (Be careful GRAY ZONE).
ie. June 1. Jim send offer, irrevocable for 10days to sell land for $10,000. John called Jim June 9 and
said I accept its in the mail. John puts acceptance in the mail June 9 but it does not get to Jim until
June 11. NO CONTRACT. However, the Courts may introduce the oral testimony to vary the written
contract. Immovable offer and acceptance must be in writing.
(a) Reasonable time -
i. consider the people contracting. Are they professionals?
ii Distance btwn parties - how long to mail
iii. Custom of making this contract in past
iv. What is being sold - is it a volatile object, if so, reasonable is sooner rather than later
(4) usually strictly personal, not heritable or transferable
(5) Louisiana courts do grant recovery of the full contractual benefit when offers intended as irrevocable
are untimely revoked
(a) It is consistent with detrimental reliance as a reason for a party to incur liability, since such an offer
seems to invite the offeree to place warranted reliance on the offeror’s intention not to revoke the
offer during the time named, a reliance that may cause the offeree to change his position to his
detriment
(b) an offeror is bound not to revoke an irrevocable offer, but only from the time that offer comes to the
knowledge of the offeree (revocation must be sent by faster means than the offer)
 K. Revocable Offer - (1930)An offer not irrevocable under (1928 )may be revoked before it is accepted.
Unless it specifically says this is a revocable contract it is really irrevocable), revocable = primarily when
offeror expects immediate answer. (1) Rault says there really is no such thing as a revocable offer b/c every
offer is intended to be open for a period of time
(2) Acceptance is effective when transmitted by offeree (risk of transmission is placed on the offeror)
(3) Acceptance must be made in a medium suggested or by reasonable medium (reasonable = same as offer
or customary)
(a) Expires if not accepted w/in a reasonable time - offer may be revoked anytime - but revocation is
effective when received by offeree.

4. Acceptance
A. expression of serious intent (writing, words)
B. Concluding (making a contract)
C. In precise accord with the offer (any changes in the terms would be a counter offer)
(1) Look at the intent of the offeror. If there are numerous objects in the offer, was the offer mean to be
conjunctive or separate offers
D. Acceptance by performance offeror intends for offeree to accept this way
(1) (1939) Contract is formed when offeree begins performance (Rault thinks code screwed up b/c at what
point is mere preparation performance - buy materials to build the house). Performance is completed if
begun.
(2) (1940) When according to the usage or nature of the contract or its terms, an offer made to an offeree
can be accepted only be rendering a completed performance
(b) Offeror can not revoke once offeree performing for a reasonable time necessary to complete the
performance; offeree however is not bound to complete (if you come up w/cure for cancer, you can
start performance but you don’t have to continue, but there is no acceptance until you complete
performance)
(3) (1941)When commencement of performance constitutes acceptance or makes the offer irrevocable, the
offeree must give prompt notice of commencement to offeror or offeror should know that the
offeree has begun to perform. Failure of notice is liable for damages.

5. Option contracts -
A. (1933) an option is a contract whereby the parties agree that the offeror is bound by his offer for a specified
period of time and that the offeree may accept w/in the time (not just an offer) (parties agree to make a sale)
(1) Offer and acceptance; both agree on price an terms of option
(2) Heritable, transferable
(3) Rights under offer can be sold to 3rd party - unless strictly personal.
(4) (2620) Option to buy or sell - an option to buy or sell is a contract where a party gives to another the
right to accept an offer to sell or to buy a thing w/in a stipulated time (option for a indefinite term is
null)
An option must set forth the thing and the price and meet the formal requirements the sale
contemplates (ie. Option for immovable must be in writing)
(a) Once the option is exercised it is transformed into a contract to sell
(b) Perfection of a sale are needed for perfection of option = price, thing & consent
(c) Code says you need some sort of consideration (Rault thinks consideration can be implied)
(d) Code says that the requirement of a clearly stipulated time within which to option may be exercised
helps to distinguish the option from an irrevocable offer.
i. Rault disagrees with the phrasing of this
(e) Rault thinks counteroffer or rejection doesn’t always end the option, it depends on the facts. Ie. you
want to buy my shoes, offer open for 2 weeks, not right now (rejection) but option is still open
(f) A perpetual indefinite term is null
i. (2628) may not grant an offer for an immovable for longer than 10years - begins when I make
the right of first refusal

6. Right of first refusal (2625)- A party may agree that he will not sell a certain thing w/o first offering it to a
certain person; enforceable by specific performance
(a) heritable and assignable (Rault thinks it is dependant on the promisor)
(b) (2628) may not grant an offer for an immovable for longer than 10years
 ie. I promise before I sell this tie to someone else I’ll give you the option of buying at whatever price I
would lik to sell it for
ie. My dad offers to sell his property to me and my husband. We get divorced. My dad can argue that
rt. of first refusal is personal (inuitu persone)

7. Counteroffer is a rejection of an offer - acceptance not in accordance w/ terms of the offer

8. Offer of a reward made to public is binding upon the offeror even if the one who performs does not know of
the offer. Revocation of an offer of reward to public must be made by same or equally effective means.
Reward belongs to the first on giving notice of his completion of performance.

9. Offer to negotiate or bid is not an offer. Taxi - invitation to negotiate which elicits offers from those
interested in the service

10. Newspaper ads - offer? depends on what it says. Particular thing at a particular price. Even though the
terms may be precise a question remains whether the party making the proposition truly intends to make
contracts w/whomever accept.
(a) In Louisiana an advertisement proposing a contract, such as the announcement that certain goods are for
sale at a certain price should normally be regarded as an invitation to negotiate
(b) an ad is an offer as long as the offeror’s intent is clear enough
11. Imperfect offer: joke - didn’t intend to be legally bound, tentativeness

Belgard v. Collins: Π claims Δ owes money for oral contract made for consulting relative to the damage to Δ’s
building by a Tornado. Δ thought Π was just a contractor for construction. Π mentioned nothing a/b consulting. CA
Holding: no oral contract b/c no meeting of the minds, neither knew what the others intention was. There was not
a common intent(no consent). Also could argue (1971) the object of the contract was not certain. Also could argue
Form - oral contract over $500 need witness. (1966) - a contract can not exist w/o cause

North Louisiana Milk Producers Assoc. v. Southland Corp. Π customarily provided milk to the Δ. Π wrote a letter
to Δ saying by agreeing to accept milk from us you are agreeing to our prices. Δ said it would not accept those prices
however they continued to put in orders for milk. CA Holding: A price agreement was in tact and by requesting and
accepting the goods w/o a counteroffer the Δ was consenting to Π’s prices. Δ placed orders for a specific quantity w/o
conditioning order as to price. Each order constituted an acceptance of Π’s stated price.

Modification of concluded agreement requires the consent of both parties

Illinois Central Ltd. vs International Harvester. Δ was leasing property from the Π. The lease said no subletting
allowed. Δ sublet the property - month later Π agent asked to meet with Δ and Δ refused. For 16 months the Π accepted
rents from Δ then evicted Π. Δ claims the Π’s silence for 16 months was a tacit acceptance of the lease modification.
SC Holding: The will of the parties had not united on a modification of the lease. (3446) Implied consent of owner -
But this tacit consent must be inferred from circumstances, so strong as to leave no doubt of the owner’s intention; as if
he was present at the making of the contract, or if he himself delivered to the creditor the thing pawned.

Marine Ins. Co. V. Rehm. Klein parked car at Δ’s garage, and it was stolen(Π is Klein’s insurance co., they paid for the
stolen car and are now subrogated to Klein’s rights and therefore are suing the Δ b/c they were responsible for the car).
Δ claims that a ticket given in receipt of the car has a disclosure vindicating them from liability and is a contract. CA
Holding: The ticket does not constitute a contract. (2937) & (2938) the depositary is bound to use the same diligence in
preserving the deposit that he uses in preserving his own property and should be rigorously enforced. In Springer v.
Westcot, Π did not know the paper writing was a contract, and received it not knowing its contents, and thought it was
simply to trace his belongings. Π is not bound by it.

Cashio V. Amco Transmissions: Π parked car in Δ lot. Π retained his keys, had unrestricted access to his car and knew
the lot would be unattended and paid $3.00. There were no signs saying the lot owner not responsible and no ticket was
given. Π’s car was stolen. CA Holding: There was a depositary relationship (not a lease relationship). Δ is responsible.
Δ needed to post prominent signs saying he was not a responsible this was just a lease of space (if you retained keys and
had unrestricted access)
Johnson v. Capital City Ford Company: Δ put an ad saying “buy a 1954 Ford now trade even for a 1955 Ford when
1955 models come in” Π bought new 54 Ford with the intention of getting the 1955 Ford when the new models came in.
Δ says there was a clause in the contract saying no other agreement applies. (2056) In case of doubt, a provision in a
contract must be interpreted against the party who created the text. CA Holding: What is the motive of the
purchaser? To get a 1955 Ford. If he learned of the advertisement after the purchase this would not be the motive for his
buying the car. The advertisement denotes itself as an offer, the wording to the reader denotes a bonafide bargain offer
and it was certain and definite enough to constitute a legal offer. (1971 -1973). The Δ was under a duty to notify to the
Π of any modification of the newspaper offer. Crt says technically there were 2 different contracts 1) written agreement
2) Newpaper offer accepted by purchase of 1954 ford (1848) Oral or other evidence may not be admitted to negate
or vary the contents of an authentic act or an act under private signature. (It may be used to prove vice of consent
or a simulation or to prove that the written act was modified by a subsequent and valid oral agreement)

North Central Utilities Inc. V. Walker Community Water System - Δ advertised bids for the construction of a water
distribution system. Π claims that the ad was an offer and his bid was the lowest and should have been awarded. Π
brought suit for loss of profits. CA Holding: For a proposal to qualify as an offer, it must reflect the intent of the offeror
to give the other party the right to conclude the contract by assent. Where intent is not present the proposal is not an
offer but an invitation to negotiate. For a proposal to constitute an offer, it must firmly reflect the intent of the offeror to
enter a contract. Unequivocal words, expressions of mere intent, do not make an obligation.

Schulingkamp v. Aicklen - Δ sent a written irrevocable offer to purchase property of Π. The agreement provides that
the offer may remain open until the act of sale which is really a reasonable time. CA Holding: Since the offer does not
designate a specified time for the act of sale, we conclude it is irrevocable. (1928) - When offeror manifests intent to
give the offeree a delay w/in which to accept w/out specifying time, the offer is irrevocable for a reasonable time.
Although in this case offeror revoked the offer. Even if offeror did not revoke offer courts may have said too bad. Π did
not accept with in a reasonable time.

Glover v. Abney - Δ made a written offer agreeing to sell his land with in 5 years. Δ died. Π approached wife a/b
buying the property. CA Holding - b/c the Π gave the Δ no consideration for keeping the option open then it was just a
naked promise. Parties may agree that the grantee of the option will give the grantor, besides his consent, a corporeal or
incorporeal thing for consideration (This is common law now and used to be part of the civil law system) Under
current article (2620) consideration is not mentioned. This article changes the law it is effective in 1995 this case
was decided in 1926. Article (1765) all obligations deemed to be heritable unless the nature of the contract or the law
says otherwise. An irrevocable offer is not heritable. Offer is ended at the death of the offeree but the courts did
not go into this (they should have) Instead they went into (2462 - which was law at the time, but no longer exists)
Litvinoff says the Π did receive consideration by the Δ’s implied desire to buy. Rault doesn’t agree with Litvinoff b/c
he feels Litvinoff is making a statement that implied desire to buy is consideration. Civil law consideration is
counterperformance. Civil law consideration may simply be saying that I plan to buy it.

Ryder v. Frost. Π asks Δ to help him pay a $2000 debt. Δ says he will pay $500 of the $2,000 as soon as the settlement
is completed and erased from the court documents (suspensive offer). Π completed the settlement and demanded the
$500. Δ claims he was not aware of the commencement of the performance. (1941) was not around at the time. It says
the offeree must give prompt notice of the commencement of the performance. However if he does not give notice this
does not make the contract void. It simply opens up the offeree to liabilities to the offeror. SC Holding: Court says Π
did perform in a reasonable time. Given facts 50 days doesn’t seem unduly wrong to accept Frosts offer. Today
however under (1941) - offeree must give prompt notice of commencement and must give damages if Δ suffers
them - no damages suffered here. (Also note Π’s first offer to Δ I will try to pay $1000 if you pay the other - language
of “I will try” weakens it as an offer)

Cardinal Wholesale vs. Chaisson: Δ applied for credit guaranteed the debt, Π did not need guarantee. Δ’s sold
business and the business applied for credit - later went insolvent - Π wanted to use the partners old guarantee. CA
Holding: 8 years is too long, look at what the parties intended.

Ambrose v. M&M Dodge & Chrysler Dodge: Π and Δ were trying to compromise relative to Π’s defective car. Π
orally compromised, was about to sign papers but later found out Δ was not going to pay off loan. Π ripped up
compromise. SC Holding: (3071) a compromise has to be in writing in order to be valid. Just because the Π signed it
suggests that they planned to accept it but never did b/c it was never received by the Δ. Court implicitly found this offer
was an irrevocable offer b/c they applied the receipt rule. Oral compromise only holds up when compromise is made in
open court.
Ever-tite Roofing v. Green - Δ extended a written proposal to Π for a paint job. A time to accept was not specified. Π
had to get credit report on Δ. Thereafter Π went to the work site and found another crew there. The offer said accepted
when performance commenced or written acceptance received. CA Holding: b/c no stipulation of time to accept -
assume a reasonable time. Δ knew Π had to wait for credit check. Δ did not wait a reasonable time for acceptance.
Commencement of performance was when the roofing company loaded their truck. We might have had a situation
where we decide what constitutes acceptance but it was written in the contract. Unless the offer stipulates otherwise the
offeree does not have to give notice. However (1941) says offeree must give notice of commencement. If he does not
give notice he could be liable for damages. Would it make a difference if roofing company lived down the street
and loaded their truck - would that be commencement? Probably not. Really dealing w/ 2 different issues 1)
reasonable time 2) was there commencement of the performance. Damages: 1994 & 1995 - an obligor is liable for
damages caused by his failure to perform a conventional obligation. A failure to perform results from nonperformance,
defective performance, or delay. Damages are measured by loss sustained and profit deprived of the obligee.

Rodrigue v. Gebhardt: Π offered house for sale. Δ offered to pay a certain amount in written agreement. Π rejected &
made a counteroffer. Δ responded saying they accept for a different price. Π did not respond. CA Holding: Δ’s final
offer was a counteroffer not an acceptance - Π had to respond to this counteroffer to make it an acceptance. Acceptance
upon receipt and must be in writing b/c its an immovable.

Breaux Brothers vs. Associated Contractors: Π claims they had an oral agreement w/Δ for a bid. Δ claims they did
not agree on price and final contract was to be in writing. SC Holding: no contract. The will of the parties did no unite
on price. Neither party bound until the agreement is in writing. (1947) When in absence of legal requirement - parties
contemplate a certain form, it is presumed that they do not intent to be bound until the contract is executed in that form.
If later say hey do we agree w/o writing, yes - then it is binding w/o writing.

Barchus V. Johnson - Δ gave Π an option to buy property in writing, stipulating price and a 30 day option. 18 days
later Π called and said I accept. 36 days later Π made written acceptance. SC holding: Oral contract did not validate the
contract. Option to buy immovable must be evidenced by a written instrument. The acceptance must be in writing and
accepted before time elapsed. (2440) a sale or promise of a sale must be by authentic act or by act under private
signature. (1839) Immovable must be by authentic act or private signature HOWEVER An oral transfer of an immovable
is valid between parties when the property was delivered and the transferor recognizes the transfer under oath.

X. CAUSE (1966)
1. Cause is motive or reason for contracting; obligation can’t exist w/o lawful cause. Consideration is the common
law term for cause (consideration - someone planned to get something in return for his promise - its not
gratuitous its onerous)
A. Capacity and consent apply only to contracts; cause concerns all obligations
2. Principle cause - is a motive w/o which a person would not have obligated himself; the main motivating factor (I
want a live cow)
A. (1949) for me to rescind on error the error must apply to the principle cause.
B. If I can show fraud I can rescind on material or principal cause (I buy a car, no motor (principle) , no
cigarette lighter (material - might influence decision but won’t break it)
3. Material cause - subsidiary motive that influenced me to obligate (smaller cow - I really wanted bigger cow but I
will take the smaller cow.
4. ( 1967) Cause is the reason why a party obligates himself.
5. A party may be obligated by a promise when he knew or should have known that the promise would induce the
other party to rely on it to his detriment and the other party was reasonable in so relying.
A. Recovery may be limited to the expenses incurred or the damages suffered as a result of the promisee’s
reliance on the promise. Reliance on a gratuitous promise made without required formalities is not
reasonable
6. Cause is important for 2 reasons.
A. It classifies the contract (brings in formalities ie. gratuitous must be by authentic act. Is it onerous or
gratuitous so is it valid if it is not in authentic form?)
B. Assesses what happens when there is a failure of cause. - if I didn’t get what I bargained for (Orange crop
hypo. I contract to buy orange crop & there is a freeze. Do I still have to pay. We would look @ the intent
to what exent was the intent certain or aleatory)
 ie. I have a cow that is pregnant. You want a calf. Negotiate $300 price for whatever is born. Calf is
still born. Has there been a failure of cause. Who has to bare the loss

XI. FAILURE OF CAUSE

1. (1966) An obligation can not exist without a lawful cause
2. When we speak of failure of cause the tacit condition has to be a part of the contract.
3. (1970) When the expression of cause in a contract is untrue, the obligation is still effective if a valid cause can be
shown. Parole evidence may be admissible to show a valid
4. Look at the intention of the parties in contracting

Hypo: Absence of cause. I promise to give you $10 and you promise to mow my lawn if you want to. No cause
truly exists
Failure of Cause: Fortuitous event happened and there no longer is the thing to sell.

Things that keep a contract from being binding

1) Failure of cause
2) improper form

Hypo: I selling unborn cow. You want a calf. We contract for $200. The calf is still born. Was the intention to
buy a live cow or any cow. What if the cow is just scrawny? Maybe look at the FMV of a calf lets say FMV of
a average calf is $400 discount price may imply, I am really intending to buy or sell whatever is born.

Hypo: Failure of cause

A sells Black acre under private signature to B; not in authentic form for $10,000 and no where on the contract
does it say in consideration for. Years later B wants to sell the property for $15,000 to C. C’s attorney checks
the title and the act of sale which is not in authentic form. C won’t buy it unless A writes a notorized letter
saying the $10,000 sale was valid and was in consideration for the property. To induce A to sign the letter B
offers A $500.

Is the original $10,000 sale valid? Between A & B the sale is valid. The contract can be in any form if it is
onerous. A sale of property must be in writing does not have to be in authentic form.
A contract does not have to say in consideration for. So C doesn’t need a notorized letter b/c the sale was in
valid form and was valid so the $500 is not necessary - however C may still want it to make the sale.

Hypo: A’s parents are celebrating 50th wedding anniversary. Go to adlers to get silver tray engraved Mom and
Dad Happy 50th Love john. Dad and Mom break up before anniversary. Adlers calls I say I don’t need it now.
Am I bound to buy that tray even though my principal cause to buy no longer exists? Yes. However if I
mentioned to Adler’s when ordered that it was going to e a gift for Anniv. And if they don’t celebrate I won’t
need it. Doesn’t matter still have to buy. What is the meeting of the minds? “I won’t need if no Anniv. Is not a
resolutory condition - Adlers would have never agreed to that.

Absence of cause: No valid consideration or cause for either Π or Δ

United States Fidelity v. Crais: Johnson stole $ from bank. Π was a guarantor of the bank for employee thefts. Δ friend
of Johnson went into an agreement with Π to reimburse them for Johnson’s theft in consideration for avoiding charges
for theft on his friend Johnson. Δ then refused o pay the $500 he contracted for. SC Holding: Neither Δ or Π had
consideration for paying debt. Johnson’s obligation to Π was a previous existing contract, so the Π had no
consideration. Absence of cause there never was a true motive. USF & G was already bound to indemnify the bank
When you are already obligated to do something, you can’t have another contract to do what you are already obligated
to do. Not onerous b/c promissors are not getting anything for it. It is not gratuitous b/c it is not in valid form.
However if the Π was subrogated as a surety to the rights that the bank had against Johnson and the consideration of the
Δ’s contract was the promise to pay a 3rd parties debt there would be valid consideration. To make this legal: 1) put in
authentic form 2) Clearly articulate the cause 3) Release the rts. of Johnson. Rault thinks this is onerous and there was
consideration for Δ looking to get something for his friend.

Code does not allow parole evidence to change a written contract unless the express cause is not the true cause (1970)
Carpenter v. Williams: Transco demanded that Δ move closer to work. Δ contracted to buy Π’s house- Π knew why.
Transco changed his mind - Δ refused to buy house. CA Holding: The cause or motive Δ had for entering into buy-sell
agreement was to comply w/ Transco’s orders. Π was aware of this. When Transco rescinded order - the motive ceased.
Rault thinks this court is wrong - Δ’s principal motive is to buy that house and accessory reason is to buy the house b/c
work wants him to move. Court here allows parole evidence to expand a written contract (1970), but code really does
not allow parole evidence to change a written contract. If you are bound by a condition that was talked a/b that
condition would be a tacit condition.

Aleatory contract - ordinary risks or all risks, sale of a hope assume all risks
Losecco v. Gregory: Π paid Δ $4000 for a future crop of oranges and would pay an additional $4000 upon delivery.
Contract said Π assumes all risks. There was a great freeze destroying all orange trees. Π wants his $4000 back. SC
holding: Aleatory contract Δ deserves to keep the $4000. Sale of 2 hopes. However if the stipulation assume all risk was
not in contract - court may have said buyer only assumes ordinary usual risks - small crop, not as good, eaten by beadles
etc.

XIII. DETRIMENTAL RELIANCE (1967) - (Cause)

1. A party may be obligated by a promise when he knew or should have known that the promise would induce the
other party to rely on it to his detriment and the other party was reasonable in so relying. Recovery may be
limited to the expenses incurred or the damages suffered as a result of the promisee’s reliance on the promise.
Reliance on a gratuitous promise made w/o required
formalities is not reasonable.
2. Culpa in comprehendo - fault in contracting; duty to tell someone who thinks u have an offer to tell them you do
not
3. Detrimental reliance is a lot like tort law. I have an affirmative duty to let you know that a contract won’t happen
b/c you when you are relying on it
4. Problem occurs though in the last sentence of (1967). Reliance of gratuitous promise is made w/o the required
formalities is not enforceable under detrimental reliance. So what kind of case does detrimental reliance
apply to.

Hypo: Grandfather gives granddaughter contract for $ so granddaughter does not have to work. Granddaughter
quits school b/c she is relying on the $. Grandfather gets nothing in return for the promise - gratuitous. B/C of
the last sentence of (1967) you can’t rely on detrimental reliance in La b/c it is a gratuitous contract (common
law will allow you to rely on detrimental reliance w/a gratuitous contract

A. An onerous contract (not subject to form) - remedy is only applicable under contract law. Detrimental
reliance does not apply to any contract enforceable under contract law
B. A promise made to a pre-existing natural obligation is onerous - so detrimental reliance could apply
C. Clause in a contract intended to benefit someone else not privy to the contract = stipulation pour au trui.
This third person may be privy to detrimental reliance b/c the promise was not made to the third person but
that person depended on that performance

Hypo: A owes C $100. A selling boat to B for $2,000. A says to B “instead of giving me $2,000 give me
$1,900 and give C $100 (stipulation pour au trui). C then sues B for specific performance if contract
between A and B is unenforceable but C heard about the obligation between A & B before it became
unenforceable and detrimentally relied on the payment.

D. However an Onerous contract that is supposed to be in proper form but is not may be enforceable
under detrimental reliance

Louisiana College - pledges are not excluded from detrimental reliance b/c although it may be a gratuitous promise
the court held that a pledge does not have to be in authentic form. (Case law may say pledge is onerous but we really
know they are gratuitous)

Court allowed detrimental reliance. Today this gratuitous contract would not be covered under detrimental reliance
Herbert v. Mcguire - Π did not send bill to insurance in timely manner now Δ must pay. SC Holding: Π’s breach of
promise to take care of the insurance claim caused the Δ to suffer loss. Δ detrimentally relied on Π. Today this case
would not be decided this way b/c this is a gratuitous contract. You can’t use detrimental reliance in defense of a
gratuitous contract that needs to be in authentic form.

Δ recovered for detrimental reliance b/c can’t recover under contract law when person is dead and this was not a
gratuitous promise
Edinburgh v. Edinburgh: Ms. Dorseys house destroyed by hurricane. If Δ & Π agreed to fix it she would leave the
house in her will to Δ & Π. Δ fixed house. Δ & Π got a divorce. Ms. Dorsey left the house to Π only. SC Holding. Δ
assumed financial responsibilities for Ms. Dorsey and was under no obligation to assume these responsibilities but did so
in reliance upon getting the house. Δ can’t sue under contract law b/c Ms Dorsey is dead. You can’t sue for specific
performance when party is dead. Another issue: the original promise was oral and was not in the proper form. Can’t sue
to change a will.

Kenthley v. Draughon Business College: Π hired to teach 2 classes. Π started teaching 1 class and then added another.
Δ only paid for the 1 class. SC holding: Δ detrimentally relied on being paid to teach 2 classes.

Martin v. Schluntz: Π reduced Δ rent in anticipation of long-term lease. Lease was never signed but Δ left early. SC
Holding: Π is only allowed to recover the $50 a month. Rault thinks they could have found the reduced rent an onerous
promise.

XIV. UNLAWFUL CAUSE 1968, 2030, 2033, 2983, 2984

1.(1928) The cause of an obligation is unlawful when the enforcement of the obligation would produce a result
prohibited by law or against public policy
2. The succession of living person may not be the object of a contract

XV. DONATIONS - (cause)

Donations- Donations inter vivos and mortis causa have to be in authentic form (exception: manual gift)
1. Two kinds of Donations: intervivos and mortis causa
A. Intervivos (1523- 1526) - donor can not deplete his entire patrimony (1498)
(1) (1528) A donation inter vivos can comprehend only the present property of the donor. If it comprehends
property to come, it shall be null w/ regard to that.
(a) (1529) Donation intervivos made on conditions that are based on the sole will of the donor are null.

(b) If donor dies w/o disposing property, that object or sum shall belong to the heirs of the donor
(2) (1536) An act shall be passed before a notary public and 2 witnesses of every donation inter vivos of
immovable property or incorporeal things, such as rents, credits, rights, or actions, under the penalty of
nullity
(a) (1537) no feigned delivery of immovables given shall have effect against third parties
(b) (1538) A donation inter vivos even of moveable effects, will not be valid unless an act be passed of
the same as prescribed before. Such an act shall contain a detailed estimate of the effects given
(c) (1540) A donation inter vivos shall be binding on the donor, and shall produce effect only from the
day of its being accepted in precise terms
(1) The acceptance may be made during the lifetime of the donor by a posterior and authentic act,
but in that case the donation shall have effect, with regard to the donor, only from the day of
his notified of the act establishing acceptance
(c) (1541) If the donation has been executed, donee has corporeal possession, though not accepted in
express terms has full effect
(d) (1544) If the donee die before having accepted, the acceptance can not be made by his heirs, and the
donation remains w/o effect.
(3) (1523) 3 kinds of intervivos donations: purely gratuitous, onerous donation, remunerative donation.
Formality rules do not apply to onerous & remunerative donations.
(a) Purely gratutious donation must be in authentic form
(b) (1524) onerous donation - is not a real donation if the value of the object given does not manifestly
exceed that of the charges imposed on the donee.(ie I give you a tie worth $5 b/c you mowed my
lawn and it was worth $5) When the value of the object given exceeds by ½ that of the charges or
the services the onerous donation must be in proper form of a donation intervivos
(c) (1525) Remunerative donation - not a real donation if the value of the services to be recompensed
thereby being appreciated in money, should be little inferior to that of the gift. When the value of
the object given exceeds by ½ that of the charges or the services the remunerative donation must be
in proper form of a donation intervivos.
i. Notorization & authentic form needed if:
Object given > Charges + ½ charges
 HYPO: ( You mowed my lawn and it was worth $9 (never paid) so a year later I want to give you
$15 just cause I love you. $15 exceeds the $9 lawn mowing by ½ so actually that onerous or
remunerative donation must be in the proper form to be valid or your heirs can come after that
money)
$15 < $9 + $4.5 = $13.5

(If the thing I promised you at time of our contract is worth $149,000 and your work for me is
worth $100,000 after 3 years. The contract is onerous so doesn’t have to be in authentic form)
$149,000 < $100,000 + $50,000.

(Subscription for a pledge [Baptist Hospital & Louisiana College] are special contracts by reason of
custom and do not have to be in valid form)

(2) Heirs have a legitime. If I have 1 child that child has to get 1/4 of my estate. 2 children must get ½. This
means prior to my death I can’t give away (gratuitously) by donation that amount that was forced to
heirs. I can onerously contract to give away my patrimony before death.
(3) (1559) Donation inter vivos are liable to be revoked or dissolved on account of the following causes.
(a) Ingratitude of the donee
i. (1560) Revocation on account of ingratitude can take place only in 3 ways:
(1) If the donee has attempted to take the life of the donor
(2) Donee has been guilty towards donor of cruel treatment, crimes or grievous injuries
(3) Donee refused donor food

(b) The non-fulfillment of the eventual conditions, which suspend their consummation
(c) The non-perfomance of the conditions imposed on the donee
(d) The legal or conventional return
(4) Prior to 1982 there had to be an authentic act for donations intervivos for transfer checks, drafts stock
transfers, CD’s. After 1982 - no authentic act is necesaary

B. Mortis Causa - through last will and testament (1570)

(1) If I make a gift to you upon my death that is not a gift intervivos that is a gift mortis causa, it must be in
authentic form of last will and testament.

C. Exception for formalities of donations

(1) . Manual Gift (1539)- corporeal movable; not subject to any formality. Must be accompanied by
real delivery. Today you can make a donation of cash - manual gift.
(a) Rent Receivable are incorporeal so they don’t apply under 1539
(b) There has to be intent that the donee intended to donate the manual gift to you

Donation disguised as a sale still needs to be in authentic form

Spanier v. Devoe: Π decedent sold immovable property to Δ. The Π claims (2464) the price is wildly out of proportion
to the value of the property. So this is not a sale but a donation. What did the parties really intend. SC Holding: B/c
this was a donation disguised as a sale it must be in authentic form to be valid against third persons.

Remunerative donation- no authentic form needed

Succession of Lawrence: Heirs are contesting the donation inter vivos to Henry of money in his bank account. Heirs
say this was a mortis causa donation and failed to comply with the required testamentary formalities. SC Holding: B/c
Henry helped his uncle providing services that were in excess of $172,205 and the value of the bank account did not
exceed by ½ the services rendered. Thus this is a remunerative onerous donation and does not have to comply w/ the
formalities of donations. $172,205 < the charge + ½

Ingratitude revocation of inter vivos donation

Perry Jr. v. Perry Sr.: Δ made numerous donations to his son Π. Δ made a contract w/son to buy back stock @ $5000
intervals. Father’s company went out of business and son wanted payment of the stock. Father could not make payment
and son got a court order seizing fathers personal goods. Father sought a claim to revoke all donations mad to his son for
 ingratitude. SC Holding: (1559 & 1560) All donations are revoked on account of ingratitude can take place when
the donee “has been guilty towards the donor of cruel treatment, crimes or grievous injuries. Rault: You can’t
revoke an onerous contract for ingratitude though that is why it is important to be able to classify the type of contract

Innominate contract - allowed oral testimony to show true cause of contract (1970)
Thielman v. Gahlman: Uncle proposed to Δ that he would convey his real estate in New Orleans to him if he took care
of him and buried him. The Δ did take care of him and buried him. Uncle purported to transfer the property in writing
for $1. Π, uncles heir, claims, (1498) does not allow donating inter vivos an entire patrimony. If this was a sale it is
invalid b/c no price was stipulated. If it was a donation then it is invalid b/c it was not in authentic form. SC Holding:
There was a valid transfer through an innominate contract (1914) - this contract has no special designation it is not a
sale, lease, loan or insurance. This is an aleatory contract b/c it is not a thing for a thing but a thing for a promise. Its is
a valid contract b/c its is not gratuitous. It is onerous. There appears to be no unfair dealing and no great disproportion
between the value of the property conveyed and the consideration received (care for Uncle) Both parties expected to get
something for the others promise. The court in this case allowed oral testimony under (1848) - evidence may be
admitted to prove modification of a contract by a subsequent and valid oral agreement (normally oral testimony may not
be admitted to vary the contents of an authentic act). The contract was a sale for $1. Normally this would not be valid
but the Δ was allowed to show oral testimony that the consideration was his help to his Uncle. (1970) - when the
expression of a cause in a contract is untrue, the obligation is still effective if a valid cause is shown. The cause on the
face of the contract would appear to be the $1 but the true cause (1970) was for the Δ to take care of the Π. A man can
do as he pleases w/his own property through an onerous contract. If a contract is aleatory you can not assail it for lesion
b/c aleatory contract is unknown. He is buying a hope.

Exception: no form required for pledges. Normally gratuitous contracts must be in authentic form to be binding
Louisiana College v. Keller: Δ signed a pledge that he would donate $500. Δ later refused to pay the $500. SC
Holding: Although this really is a gratuitous contract and to be binding must be in authentic form, the courts make an
exception for pledges in writing.

Baptist Hospital v. Cappel: Δ signed a pledge for $500 on a pledge card. Later refuses to pay.
This is an onerous promise so it does not have to be in authentic form.

Paying debt of another today need to be written and no oral testimony allowed
Flood v. Thomas: Δ promised to pay debt of another owed to the Π. Δ only paid a portion and refused to pay the rest.
SC Holding: This case was decided before (1847) - which now says that Oral evidence is inadmissable to establish
either a promise to pay the debt of a third person or a promise to pay a debt extinguished by prescription. (1821) An
obligor and a third person may agree to an assumption by the latter of an obligation of the former. To be enforceable by
the obligee against the third person, the agreement must be made in writing. This court allowed oral testimony and
lack of written contract and held that Δ owed. This really is a gratuitous promise and should be authentic form. Court
says this is a onerous promise and does not need to be in authentic form.

Invalid onerous contract (price wildly out of proportion) but valid donation b/c in Authentic form;
D’Orgenoy v. Droz: Ramis sold land to D’Orgenoy. Ramis’ heirs claim this was a donation disguised as a sale. SC
Holding: Even if the price was wildly out of proportion the transfer is still valid as a donation b/c it was in valid form

XVI. NATURAL OBLIGATIONS - (cause)

1. (1761) A natural obligation is not enforceable by judicial action.
2. (1761) Whatever has been freely performed may not be reclaimed
3. A promise made to a natural obligation is a onerous promise; (imperfect obligation)

Hypo: X contracts to give Y $5000, the cause is mixed, in some ways it is a gift b/c X loves Y. In other
ways it may be to repay Y for prior services that were valued at $2000.
(1526) Remunerative donation - gift exceeds the prior remunerative service by ½ - so therefore it is gratuitous
and must be in authentic form
(1761) Natural obligation says it is onerous so it does not have to be in proper form

4. Old code a natural obligation is binding in conscience - you still owe it

 5. For a moral duty to make the transition into a natural obligation certain requirements must be present:
A. The moral duty must be felt towards a particular person not towards all persons in general.
B. Special circumstances must exist that allow the inference that the person feels so strongly a/b his moral duty
that his conscience would not be placated unless the duty is fulfilled
C. Must be calculable - the object must be of pecuniary value

Hypo: Loyola calls me after I graduate asking for money. I agree to give $500 but a few months later I change
my mind. Louisiana College and Baptist - made a pledge in writing. Gratuitous promises have to be in authentic
form. This is an exception - pledges just in writing not in authentic form.
This was over the phone, it is oral, not in writing (gratuitous contract must be in writing), not witness by a 3rd
person. For Louisiana College and Baptist to apply to this Hypo they would have to extend the exception to the
law to apply to oral contracts)

Thomas v. Bryant: David Thomas was admitted to hospital for drug and alcohol abuse. Δ agreed to pay half. Later Δ
said no he would not pay - lack of cause. SC Holding: Δ owes. For a Natural Obligation to be binding 1) has to be
toward a particular person, no society 2) the person feels he truly woes the debt 3) pecuniary in nature 4) recognition of
the obligation by the obligor must occur - by performing or promising to perform. Rault thinks the step dad should not a
moral duty to step son. Who has the burden of proof? He who is alleging this is a natural obligation. Rault thinks the
court is wrong for making the Δ pay based on detrimental reliance b/c it is a gratuitous promise. You can’t
detrimentally rely on a gratuitous promise.

Wortmann v. French: Husband was fooling around and felt a moral duty to give his wife some property. Husband
wants it back. SC Holding: the transfer was a natural obligation and can’t be returned. Rault: thinks a flaw in this is
that one of the requirements of a natural obligation is a specific pecuniary value. The court was stretching to come up
with a particular sum. Just cause the husband feels guilty does not create a natural obligation to the wife

Service Finance Co. v. Daigle: Δ went into bankruptcy but told Π that he’d continue paying the mortgage even though
doesn’t have to in bankruptcy. He made 2 payments then stopped. Π claims, Δ had a natural obligation. SC Holding:
Δ is not obligated to pay b/c an enforceable promise to pay a discharged debt may be made orally but the promise must
be direct, definite, express, clear, distinct, unambiguous & unequivocal. Rault: thinks Δ’s acknowledgment was express
and unambiguous if not what would be. He made a promise to pay and this promise is onerous.

Stoll v. Goodnight Corp: Π allowed a person to endorse a check for a third party and it bounced. Δ told Π that she did
not follow policy and it would be to her benefit to pay the money lost. She did and was later fired. SC Holding: Π
freely paid the money thus there was a natural obligation. Court says payment was made for a preexisting obligation.
Rault: says implicit promise may be implicit in employers words to your advantage which would imply good not bad.

XVII. VICES OF CONSENT - (1948) consent may be invalidated by error, fraud, duress and lesion.
1. (1949) - Error invalidates consent only when it concerns principle cause and that cause was known or should
have been known to the other party. Must prove by preponderance of the evidence 51%
A. A person can have 2 principle causes
B. In order to rescind the parties subjective principle cause must become objective
C. The idea that either party was in error to the motive or cause - theoretically there is no meeting of the minds.
However the court looks at the principal cause objectively - Did X know or should have known Y’s cause.
They take into consideration the other parties loss.
D. Three basic situations w/error
(1) Mutual Mistake - either party can rescind. Calhoun v. Teal
(2) One party is in error accompanied by bad faith of the other (ie bad faith party knew or should have
known the error)
(3) One party in error; the other party is in good faith
E. (1950) Error may concern a cause when it bears on the nature of the contract (sale or lease), or the thing
(are we selling A or B) that is contractual object or a substantial quality (false ascertation as to the value)
of that thing or the person or the qualities of the other party (intuitu persona) or the law or any other
circumstance that he parties regarded, or should in good faith have regarded as the principal cause of the
obligation.
 (1) Case law as to value does not fit under (1950) it is a fuzzy problem. Court seems to say “buyer
beware”. However if quality is falsely ascertained then error (I buy diamond but seller neglects to tell
me that there are flaws - suppression of the truth = fraud or error)

Hypo: 2 guys buddies in HighSchool. Keep in touch but haven’t seen each other for years. John wants to
open a jock shop asks Jim to be partner. Jim agrees. Jim comes in town and had a sex change. John can
rescind the contract b/c the intent of the parties was intuitu persona.

F. (1952) A party who obtains rescission on grounds of his own error is liable to pay damages (costs incurred,
turning down offers) to the other party unless the latter knew or should have known of the error.
The crt may refuse rescission when the effective protection of the other party’s interest requires the
contract be upheld. Crt there may grant reasonable compensation to party whom rescission was refused.

G. If a party by his own negligence created the error it may not be rescinded
H. (2520) - Civilian doctrine of redhibition - If the defect renders the product useless it must be presumed the
party would not have bought is if he’d known
I. (2521) - Civilian doctrine of redhibition does not apply to
(1) Defects known
(2) Defects that should have been known to a reasonably prudent buyer
(3) Defects that should have been uncovered by a simple inspection

Error can’t invalidate a contract unless it deals w/the principal cause

Oil City Realty v. Borderlon
Δ contracted to buy Π house but reneged b/c Π failed to tell them of a servitude. SC Holding:
In order to invalidate b/c of error, the error must relate to the principal cause for making the contract and the other party
must know or presume to know of this principal cause. (1949). The principal cause was to purchase the house b/c of lot
size. The apparent reason for agreeing to buy a house and lot is to acquire a suitable place to live.

Calhoun v. Teal: Δ bought 250 acres of land but got 300 b/c surveyor made a mistake. Π suing for error of fact. SC
Holding: Principal cause for giving 50 extra acres was b/c Π thought Δ was deficient in land. It is the Π’s option to
receive payment in kind or money. If Δ sold to a third party - third party would be protected - Δ would have to pay Π.

Wilson v. Levy: Δ accidentally include additional 30 acres in authentic act. Neither party thought the 30 acres should
be included SC Holding: can authentic act be overruled by error. (1848) - testimonial or other evidence may not be
admitted to negate or vary the contents of an authentic act or private signature. However in the interest of justice
evidence may be admitted to prove vices of consent or to prove that the written act was modified by a subsequent
and valid oral agreement.

Saunders v. NO public Service: Π injured on bus. Δ’s doctors looked at Π said your not hurt - $100 compromise. Π
injury never went away. CA Holding: (3071) - A compromise can be overruled if the consent was produced in error.
The only error that invalidates a contract is error in some point which was the principal cause(1949). The principal
cause of the compromise was that both parties relied on the diagnosis.

Lyons Milling Co. v. Cusimano: Π made order for cheese f.o.b. Lyons (where high glutan flour is) Δ thought f.o.b. was
just to pay freight not necessarily the specific kind of flour. Δ made an order to Π for high gluton flour. Π sent out a
low glutan flour needed to make macaroni and cheese. Π suing to be paid. SC Holding: An error w/regard to a thing
that is subject of a contract does not invalidate the contract unless the error bears upon the substance or substantial
quality of the thing. Rault thinks the subjective principal cause was to get high glutan flour. Should the Π know the
principal cause? Δ’s subjective principal cause became objective when court rescinded the transaction. To meet 1949
have to show 1) it was Δ’s subjective principal cause 2) and Π knew or should have known subjective principal cause.\

Oachita Air Conditioning v. Pierce: Δ wanted a/c he had a York seeking a York dealer he was told to call Π. Π
installed a Amana. Δ refuses to pay and wants Π to pick up A/C. CA Holding: Error to the thing invalidates a contract
only if it bears upon the substance or some quality of the thing that constitutes the object of the agreement and will
invalidate the contract if the qualities constitute the principal cause. The seller did not know principal cause but
should have known.
Unilateral Error
Deutschmann v. Standard Fur Company Inc. Π ordered coat from Δ. Π used jargon that was not consistent with coat
making jargon but Δ knew what she really wanted but he still ordered what she said. Coat came back wrong. Π wants
her deposit back. CA holding: Consent is lacking b/c there was an error of fact regarding the principal cause. (1950)
there was error w/regard to the substance or object of the agreement or substantial quality of the object. Can Δ collect
damages - (1952) - alludes that damages are not awarded if the Δ should have known about the error. Δ knew that the Π
was in error does not mean he knew or should have known Π principal cause for contracting. However if Δ knows of any
error of Π principal or secondary the courts still may not allow damages. This case kind of alludes to Fraud. If one
party has superior knowledge and they can avoid the other persons error the party w/superior knowledge has a duty to
do so.

Marcello v. Bussier: Δ’s entered an agreement to buy a bar in Gretna. Π neglected to tell them that they would not be
able to get the place zoned to sell liquor. SC Holding: The Δ’s motive was to purchase the bar as a business investment
w/o liquor license this motive was impossible. Π should have known the principal cause. No error in principal cause
can invalidate the contract unless the Π was appraised that it was the principal cause from the nature of the contract - it
is presumed he knew it. This case may also be a case for Fraud b/c Marcello suppressed the truth knowing Δ could not
get a license dicta of courts recognizes that this could be fraud but the courts have not ruled that this is fraud .

Boehmer Sales Agency v. Russo: Π wanted to purchase property from Δ for commercial use. Δ knew this. The
property was not zoned for commercial use. Π suing to retrieve $200 deposit. CA Holding: Δ knew Π purpose & knew
they needed to expand. Δ knew the zoning status of the property. (1949) - error invalidates consent only when it
concerns the principal cause w/o which the obligation would not have been incurred and the cause was known or should
have been known to the other party. Also a question of whether Π knew or should have known zoning laws and whether
he should have sought the truth under 2521 or whether seller should have disclosed this information. Rescinded on
error based on Δ’s suppression of the truth - Why not suppression of the truth under Fraud?

Universal Iron Works v. Falgout Refrigeration - Π trying to uphold an alleged bid. Δ claims he thought the bid was
only for a/c not a/c and heat - his bid was low b/c it only encompassed one aspect. CA Holding: Π can not hold Δ to a
contract that the Δ was unilaterally in error of facts. (1950) - error may concern a cause when: 1) it bears on the nature
of the contract (is it a sale or lease) or 2) the thing that is the contractual object (are we selling A or B) or 3) substantial
quality of that thing or 4) substantial quality to the person or the qualities of the other party or 5) substantial quality of
law or any other circumstance that the parties regarded. Or should in good faith have regarded, as a cause of the
obligation.

Shreveport Broadcasting v. Chicone: Δ signed contract thinking Π would get him 33 speaking arrangements however
this was not in the written contract. CA Holding: Signatures to contracts are not mere ornaments. (2057) - contracts
must be interpreted in favor of the obligor. Yet if the doubt arises from lack of necessary explanation that one party
should have given or from N or fault of one party, the contract must be interpreted in a manner favorable to the other
party whether obligee or obligor.

Citizens Bank v. James; Δ bought property he thought was a particular value but was not. The Δ was not in error as to
the existence of the thing which was the subject of his agreement or its identity or quality. Error as to the value of
property is not error of fact.

Bischoff v. Brothers of Sacred Heart : Π put that he was married on his teaching application to teach a religion class.
He was not married he was divorced then remarried. CA Holding: The court held that there resulted an error of fact as
to the person or character of the Π which was a major consideration for making the contract. Δ claims Π intentionally
concealed material facts which if known would have been the cause or motive for denial of employment.
Rault says another way to interpret this case is that this is a fraud case (1953) - fraud is misrepresentation or
suppression of the truth. The court addresses fraud - but it is error. Rault asks: What is suppression of the truth: Does it
mean every time I fail to tell the entire truth have I suppressed the truth. Rault feels that if you have an affirmative duty
to tell and don’t then that is suppression of the truth. I have an affirmative duty to tell the truth if I know that you
believe something other than the truth.

Wise v. Prescott - Π injured on bus. W/in 24hours Δ’s insurance agent comes to her and misleads her saying it’s a gift
and sign this for a rush release of $105. SC Holding: Court says in a situation where the person does not understand the
nature of the contract then your signature means nothing. Π signed it reasonably believed it was a receipt for a gift from
Δ. Error as to the nature of the contract (1950).
Voiter v. Antique Art - Π bought painting that Δ alleged was an original. Π got someone to check authenticity and it
was not. CA Holding: A contract can be invalidated for a unilateral error as to a fact which was a principal cause for
making the contract where the other party knew or should have known it was the principal cause. Error as to the
substantial quality of the thing

2. (1955) - Fraud - (1953) Fraud is misrepresentation or suppression of the truth made with the intention either to
obtain an unjust advantage for one party or to cause a loss or inconvenience to the other. Fraud may also result
from silence or inaction.

A. Remaining silent (not involving a expert) when one party knows the other party is in error - it doesn’t really
say this in the code. Courts have said this isn’t Fraud when it doesn’t involve an expert (crts didn’t rescind
the contract b/c of fraud) but dicta says this is wrong (Marcello, Boehmer)

B. Harder to prove fraud but it is easier to rescind a contract when fraud can be proved. It can be invalidated
even if it only involves the material cause
C. (1957) Fraud must be proved by preponderance of the evidence, 51%
D. Where there is a fiduciary relationship then it is “buyer beware”

Hypo: I sell painting for $10 person buys in good faith, later finds out it was worth $1MM can the contract be
rescinded. Rault says seller was in error. The price was the principal cause. Error as to value alone can not
rescind unless there is fraud. It is not just an error of value it is an error of fact. Rault guesses buyer should be
able to keep the painting. Sales of this sort are a bit aleatory (common law).

Hypo: Jewelry seller puts Zircons in w/diamonds. Someone buys the Zircons for a price 20 times the value.
Seller is making a tacit ascertation as to the value. Can’t really rescind on a tacit ascertation. Might rescind if
buyer asked is this price right are these diamonds?

Hypo: I get a bank loan to fix house really intend to fix house but use it for Gambling - Good Faith - no fraud. If
I lied and said I was going to use $ to fix house but knew I was going to use it to Gamble - Bad Faith - Fraud
Hypo: Future is unpredictable. If X owns land in the country and is thinking about selling it and Z says price
is too high and X says oh the city is expanding property value will increase. This is not Fraud.

Hypo: X selling gold bars out of the back of a truck. X never said it was gold but set it up as a situation where
purchaser thought it was gold (alluding that it is stolen - so hey get your gold but its stolen so shhhh - I’ll give
you a great deal) Price was 100 times its worth. X never said it was gold though. False assertion as to value is
buyer beware. Misassertion as to substantial quality of the thing is fraud.

Griffing v. Atkins: Sims found a diamond ring 4 years later Jackson who worked in a jewelry store told him to come in
and get in appraised. Collins, Griffen, Jackson were present when Sims came in. They told him the value was $130 b/c
it had flaws. SC holding: Where the parties are on an unequal footing and not dealing @ arms length, the one
possessing the superior knowledge regarding the value or quality must not take advantage of the other party who is
totally ignorant of the value or quality (1953 & 1954). Rault thinks dissent is correct. B/c they found there was no
collusion w/Griffin, Roumain, Collins. Griffin was not in cahotz - this was a fact finding. Griffin knowing that the ring
was worth at least $500 was the suppression of this knowledge on his part such a fraud as to justify rescission of the
sale.

Orr v. Walker: Orr and Talley adjacent land. Orr hates Talley and won’t sell him part of his land that is forsale. Talley
gets Walker to buy it and then sell it to him. SC Holding: A person may have his contract annulled when it has been
obtained through the practice of fraud by another designed to cause him inconvenience - the pecuniary loss is not
essential.

Overby v. Babins: Π bought property from Δ expecting to rent the property for $375 - Π bought property and later
found out the rent could only cap @ $277. SC Holding: No fraud b/c Δ did not deliberately misrepresent the legally
collectible rentals. Misassertion as to substantial quality of a thing is fraud. False assertion as to value is buyer beware.
 3. Duress. (1959) Consent is invalidated when it has been obtained by duress of such a nature as to cause a
reasonable fear of unjust and considerable injury to a party’s person, property or reputation
Age, health, disposition, and other personal circumstances of a party must be taken into account in
determining reasonableness of the fear.

Hypo: Sinking ship. Another ship comes says we will help you if you pay $1mm. Saving ship had no
affirmative duty to sinking ship. The saving ship did not create the sinking ships problem. Duress anticipates
something someone else does or a wrongdoing they do that causes your situation. If I did not create your peril I
have no duty to help you (common law). Civil law would probably try to find some way to finagle liability.

Cooper v. Oteri - Π slept with Δ’s wife and stole money from him. Π claims that the Δ threatened him with violence
to sign a 1year note for $3000. Δ really only had a letter sent from his attorney saying reoncile payment or you will be
sued. SC Holding (1962) - a threat of doing a lawful act or a threat of exercising a right does not constitute duress.
Using threats through counsel is something Δ had a legal right to use.

Wilson v. Aetna Casualty: Π injured by Δ’s client and signed a $5000 settlement. CA Holding: The Π was fully
aware of his situation, the nature and effect of the release and the extent of the claim compromised. His consent to the
release was voluntary. Circumstances that a person is in does not allow for rescinding a contract based on duress.

Adams v. Adams: seeking divorce Mrs. Adams claims she signed the settlement out of duress. Her X shoke her telling
her if she didn’t sign it he’d go bankrupt. She claims she was stressed and had to make a quick decision and if she failed
to aree to the settlement she would be faced w/huge debts with no way of paying them. A threat of doing a lawful act or
a threat of exercising a right does not constitute duress. No testimony the shaking was associated with the settlement.
Circumstance does not allow to rescind a contract based on duress.

Jordon v. City of BR. Π went to jail his car was impounded. To get it out he had to sign a release releasing the police
and wrecker service. Π signed and later found car was towed. CA Holding: Π had a perfect legal right to get car back.
Π did not freely consent to the contract. Modern approach - don’t look to duress but look to whether consent is freely
given - even though there is no duress. If consent was not freely given the contract should be annulled regardless of
whether duress has been exerted. (Louisiana does not seem to have adopted the modern approach) A threat made to a
person who finds himself in circumstances of economic compulsion is unlawful if it leads to an exchange of unfair terms.

4. Lesion (2589 - 2600) & (2664 -2666) & 814

A. Only applies to sale of immovables, partition of immovables and exchange of immovables
B. (2589) Lesion in Sale of immovable:
(1) The seller can rescind contract if he received less than ½ the FMV. Lesion can
be claimed only by the seller.
(2) (2590) time valuation for determination of lesion. There is confusion in the law. Courts look at what
the FMV at the date of the sale was. If oil is discovered 1 year later, Crt. Says they should have
factored potential oil in price.
(3) (2591) buyer can return immovable or keep immovable by giving to the seller a supplement equal to the
difference btwn the price paid and the FMV
(4) (2592) When buyer returns he must return fruits also from the time the demand for lesion was made.
(incl. Oil & gas) (seller must return price w/interest) if buyer keeps immovable he owes interest on the
supplement from the time a demand for rescission was made
(5) (2494) Immovable sold to 3rd person in good faith protects the third person. The original buyer has to
give the profit in the sale to the original seller. The profit given does not have to exceed the supplement
the original seller would have received. (Bad Faith - buyer owes damages)

ie. A - C $100,000 FMV $150,000 $50,000 differential

C - B $200,000 $100,000 profit
C owes A only $50,000
if
C - B $90,000 $10,000 loss
C owes A $0

(6) (2595) - lesion must be brought w/in a period of one year from the time of the sale
 (7) (2596) - if buyer leased property and then gave back property b/c of lesion. The buyer owes original
seller any diminution in value suffered by the immovable b/c of third person.
(8) (2597) the buyer is not liable to the seller for any deterioration or loss sustained by the immovable
before the demand for rescission was made, unless the deterioration or loss was turned into profit for the
buyer. The seller must reimburse buyer expenses of sale and expenses for improvement of immovable

C. Lesion in Exchange of immovable

(1) (2665) Rescission for lesion where immovable exchanged for movable. Only he who has parted w/the
immovable can bring suit. Different technically from (2589). Because in this case the person having
given the immovable may obtain rescission if the movables which he has received, are not worth more
than the ½ value of the real estate. (Movables not worth more than ½ the FMV can not be equal to)
Hypo: (2665) ie. FMV $100,000 movable equal $50,000. Are the $50,000 movables worth more than
the ½ of the FMV or $100,000 immovable? ½ of $100,000 = $50,000 not worth more
(2589) ie. FMV $100,000 cash paid $50,000. Is $50,000 cash paid less than ½ of the $100,000 FMV of
the immovable? ½ of the $100,000 = $50,000 and $50,000 was paid which is not less than ½ of the
FMV but is equal to ½

(2) (2666) If pay a balance w/an immovable and if the balance still exceeds by more than ½ the total
value of the immovable property. Guy who still has a balance can rescind the contract

D. Lesion in Conventional Partition of Immovables (814)

(1) Conventional partition is a voluntary partition - parties agree to a partition outside of the court
(2) Must be talking about immovable property b/c lesion as a vice of consent only applies to immovable
property
(3) Can be rescinded by the person who gets shorted on value
(a) Lesion exists if the value of the part received by a co-owner is less by more that 1/4 of the fair
market value of the portion he should have received.
1/4 of FMV - FMV > partitioned land value

Hypo: 2 co-owners land worth $100,000. After partition each should get land worth $50,000 worth of land.
If FMV = $60,000 and co-owner gets $50,000 no rescision
If FMV = $100,000 and co-owner gets $74,000.
1/4 of $100,000 = $25,000 - $100,000 = $75,000 > $74,000

XVIII. STIPULATION POUR AUTRUI

1. X may sell property to B and stipulate that B shall pay the price to C or X may donate property to B and stipulate
as a charge, that B shall give something to C.
2. Creditor stipulates while debtor promises
3. (1978) Once a third party avails himself of the advantage or benefit, the contract where that benefit was stipulated
can not be dissolved w/o the beneficiary’s consent
A. Acceptance of 3rd party can be implicit, express or tacit (filing a suit to enforce it would be acceptance)
4. Old code Stipulation Pour Autrui could only be commutative or onerous. New code implies it may arise out of
gratuitous contract as well.
5. Under civil procedure a lawsuit has to be brought by the true party in interest.
A. Stipulation Pour Autrui allows an exception to this rule when the benefit to the third party was the specific
intent of the stipulator not the general intent. (not incidental). Specific - purpose to hit you. General - not
my purpose to hit you but I did action that you would wind up getting hit. I may have intended to hit you
but it is not my purpose or specific intent.
B. Look at the relationship to figure out if A was specifically intending to hit C.
(1) A’s house is off the Hwy on dirt road. A enters a contract with B to pave the road. C’s house is on the
road too. C benefits to the paving incidentally. It is not my specific intent for him to benefit. So C has
no rights against B.
C. A has mortgage with C (bank), B wants to buy A’s house so B assumes A’s mortgage. The bank is the third
party and has a cause of action against B. A was specifically intending to benefit the bank. However A
remains liable to the bank. The bank can go after A or B
D. Try not to mistake a stipulation pour autrui for a subjective novation
(1). 2 types of novations: objective and subjective
 (a) Subjective - changes the subject of the contract and by the terms of that contract A would be out of
it. The bank would not be able to go after A
(b) Objective changes the object of the contract. New contract old contract extinguished. You owe me
$10 but I release you if you mow my lawn.
6. Stipulation Pour Autrui is an additional stipulation the third party does not have to be named in the original
contract; determinable
7. Does the promisor have to be awar that this is a benefit for the third party?
A. Cod e is not really clear on this point; Rault says though you really can’t have a Stipulation Pour Autrui w/o
the promisor knowing a/b it. C then could sue B w/o him knowing a/b it then (especially when A
specifically intended to benefit C)
8. The code does not say anything about form
A. There are 2 or 3 cases that say Stipulation Pour Autrui has to be in writing.
(1) However these cases are dealing with insurance contracts which have to be in writing anyway. So it is
not clear whether they have to be in writing b/c of stipulation Pour Autrui or b/c they are insurance
contracts Rault does not think it has to be in writing.
B. What happens when the contract from A to B is onerous but the stipulation to C is gratuitous.
(1) B/c the contract does not have to be in authentic form the stipulation is just a stipulation to the contract
and probably does not either

Pelican Well v. Johnson & Pundt: Reddit & Gray agreed to sell property to Pundt if Pundt would pay balance that
Reddit & Gray owed to Johnson w/in 10days. SC Ruling: A contracting party may stipulate a benefit for a 3rd person as
a 3rd party beneficiary. Once the 3rd party has manifested his intention to avail himself of the benefit the parties may
not dissolve the contract by mutual consent w/o the beneficiary’s agreement.

XIX. FORM- Burden of proof. 1831 - 1853

1. (1831) a party who demands performance of an obligation must prove the existence of the obligation
A party who asserts that an obligation is null, or that it has been modified or extinguished, must prove the
facts or acts giving rise to the nullity, modification or extinction. The party demanding performance bears the
burden of proving the obligation by a preponderance of the evidence
2. (1832) When the law requires a contract to be in written form, the contract may not be proved by testimony or
by presumption, unless the written instrument has been destroyed, lost or stolen

3. (1833) An authentic act is a writing executed before a notary public or other officer authorized to perform that
function, in the presence of two witnesses, and signed by each party who executed it, by each witness, and by
each notary public before whom it was executed.
The writing need not be executed at one time or place, or before the same notary or in the presence of the
same witness, provided that each party who executes it does so before a notary and in the presence of two
witnesses and each party, each notary and each witness signs it
A. An act that fails to be valid b/c of lack of competence or capacity of the notary or b/ defect of form may still
be valid as act under private signature
B. Authentic act is full proof against the parties, their heirs, successor by universal and particular title
C. An act under private signature does not substitute for an authentice act when the law prescribes such an act
D. 1833 - Authentic Act is full proof only b/c notary just checks authenticity of signatures - he’s not looking at
the content of contract.
4. A transfer of an immovable property must be made by authentic act or by act under private signature.
Nevertheless an oral transfer is valid between the parties when the property has been actually delivered and the
transferor recognizes the transfer when interrogated under oath.
A. Has effect to 3rd parties only after it is registered
5. Written agreement - signed by 2 parties - don’t necessarily need witnesses or notary
A. Compromise must be in writing or recited in open court
B. Mortgage has to be in writing
C. Sale of immovable has to be in writing
6. Less the $500 - oral, no witnesses, but still somehow must prove it.
7. (1846) Existence of oral contract exceeding $500 must be proved by @ least 1 witness and other corroborating
circumstances
8. Dead Man’s Statute - In order for a contract to hold up for a dead person it must be in writing (even if law does
not require that contract to be in writing)
 9. (1821) To be enforceable by third person’s the agreement must be made in writing.
10. (1839) oral transfers are not effective against 3rd parties
11. (1847) payment of a debt of a 3rd person or a promise to pay a debt extinguished by prescription must be in
writing; oral evidence is inadmissible to establish promise to pay the debt of a third person
12. Gratuitous contract has to be in authentic form unless it is a manual gift that is a corporeal movable
A. (1845) A donation inter vivos that is null for lack of proper form may be confirmed by the donor but the
confirmation must be made in the form required for a donation
(1) The universal successor of the donor may after his death expressly or tacitly confirm such a donation.
13. (2000) writing requirement for payment of attorney fees. Attorney fees are not recoverable as part of damages.
14. (1842) Confirmation is a declaration whereby a person cures the relative nullity of an obligation
A. An express act of confirmation must contain or identify the substance of the obligation and evidence the
intention to cure its relative nullity
(1) Tacit confirmation may result from voluntary performance of the obligation
15. (1843) Ratification - is a declaration whereby a person gives his consent to an obligation incurred on his behalf
by another w/o authority.
A. Express - evidence the intention to be bound
B. Tacit - accepts the benefit of that obligation
16. (1848) Testimonial or other evidence may not be admitted to negate or vary the contents of an authentic act
or an act under private signature. Nevertheless, in the interest of justice, that evidence may be admitted to
prove such circumstances as a vice of consent or a simulation, or to prove that the written act was modified by a
subsequent and valid oral agreement.
17. A judicial confession is a declaration made by a party in judicial proceeding. That confession constitutes full
proof against the party who made it.
A. A judicial confession is indivisible and it may be revoked only on the ground of error of fact

XX. EXTINCTION OF OBLIGATIONS

1. Performance
A. Imputation of payment - impute payment to the debt intended to be paid
B. Tender and deposit - is an offer to perform according to the nature of the obligation but obligee will not
accept that performance so obligor deposits it at the court
2. Impossibility of Performance - fortuitous event - event not reasonably foreseen
3. Novation -(1879)Novation is the extinguishment of an existing obligation by the substitution of a new one.
A. (1880) The intention to extinguish the original obligation must be clear and unequivocal. Novation may not
be presumed
B. (1881) Novation takes place when by agreement of the parties, a new performance is substituted for that
previously owed, or a new cause is substituted for that of the original obligation. If any substantial part of
the original performance is still owed, there is no novation
(1) Novation takes place also when the parties expressly declare their intention to novate an obligation
(2) Mere modification of an obligation, made w/o intention to extinguish it, does not effect a novation. The
execution of a new writing, the issuance or renewal of a negotiable instrument, or the giving of new
securities for the performance of an existing obligation are examples of such modification
C. Subjective Novation - (1882) Novation takes place when a new obligor is substituted for a prior obligor who
is discharged by the obligee. I that case, the novation is accomplished even w/o the consent of the prior
obligor, unless he had an interest in performing the obligation himselfe
4. Remission of debt - Express or tacit remission of debt by the obligee
A. (1889) An obligee’s voluntary surrender to the obligor of the instrument evidencing the obligation gives rise
to a presumption that the obligee intended to remit the debt
B. (1890) A remission of debt is effective when the obligor receives the communication from the obligee.
Acceptance of a remission is always presumed unless the obligor rejects the remission within a reasonable
time
5. Compensation - When 2 people owe each other sums of money or quantities of fungible things identical in kind,
and these sums or quantities are liquidated and presently due
6. Confusion - When the qualities of the obligee and obligor are united in the same person
7. Dissolution (2013)- When the obligor fails to perform, the obligee has a right to the judicial dissolution of the
contract or according to the circumstances, to regard the contract as dissolved. In either case, the obligee may
recover damages
A. In an action involving judicial dissolution, the obligor who failed to perform may be granted, according to
the circumstances an additional time to perform
 XXI. NULLITY (2029 - 2035)
1. (2029) A contract is null when the requirement for its formation have not yet been met
2. (2030) A contract is absolutely null when it violates a rule of public order, as when the object of a contract is
illicit or immoral. A contract that is absolutely null may not be confirmed.
3. (2031) A contract is relatively null when it violates a rule intended for the protection of private parties, as when a
party lacked capacity or did not give free consent at the time the contract was made. A contract that is only
relatively null may be confirmed
A. Relative nullity may be invoked only by those persons for whose interest the ground for nullity was
established and may not be declared by the court on its own initiative
4. (2032) Action for annulment of an absolutely null contract does not prescribe
A. Action of annulment of relatively null contract must be brought w/in 5 years from the time the ground for
nullity either ceased, as in the case of incapacity or duress, or was discovered as in the case of error or fraud.
(1) Nullity may be raised at any time as a defense against an action on the contract, even after the action for
annulment has prescribed.
5 (2033) An absolutely null contract, or a relatively null contract that has been declared null by the court, is deemed
never to have existed. The parties must be restored to the situation that existed before the contract was made. If
it is impossible or impracticable to make restoration in kind, it may be made through an award of damages.
A. A performance rendered under a contract that is absolutely null b/c its object or its cause is illicit or immoral
may not be recovered by a party who knew or should have knwn of the defect that makes a contract null.
The performance may be recoverd, however when that party invokes the nullity to w/draw from the contract
before is purpose is achieved and also in exception situations when in the discretion of the court, that
recovery would further the interest of justice
(1) Absolute nullity may be raised as a defense even by a party who at the time the contract was made, knew
or should have known of the defect that makes the contract null
6. (2034) Nullity of a provision does not render the whole contract null unless, from the nature of the provision or
the intention of the parties, it can be presumed that the contract would not have been made w/o the null provision

7. (2035) Nullity of a contract does not impair the rights acquired through an onerous contract by a third party in
good faith
A. If the cotract involves immovable property the principles of recordation appy

XXII. Hypos

Kim is an attorney who did legal work for elderly Ms.X . Oral contract for $100/hour. Kim did 10 hours worth of work
= $1000. Ms X was not able to pay. At the kindness of Kim’s heart she remitted the debt. Kim and Ms. X became
friends & Ms X helped Kim w/random chores such as cleaning and cooking. After a while Kim decided she needed Ms.
X’s help so made an oral contract to pay her $3,000 cash plus $100/month if Ms. X would continue helping her out
w/these chores. The next day Ms. X died.

Kim is suing Ms. X’s estate for $3,000 and $1,000 for the attorney fees.

Issues
1) $1000 attorney fees -
A. The contract between K & X was oral for over $500 need credible witness and other corroborating evidence. So not
valid and appears to be unenforceable under
the code
C. Dead man statute - can’t claim performance from a dead man if the contract is not in writing
D. Whenever you have a remission of debt - payment of that debt becomes gratuitous but if you say Hey if you do this
instead for me it is onerous
E. Maybe can say the remission of debt transfers into a natural obligation (when law implies a particular moral
obligation) Ms. X had a natural obligation to pay Kim.
2 effects of natural obligations.
Nothing can be recovered after it is performed and
promise to pay is onerous.
When Kim promised $3,000 to X promise was made w/o reference to the remitted debt.

2) $3000 -
A. oral contract over $500 need witness
B. could be seen as payment for previous services rendered.
C. Dead man statute - can’t claim performance from a dead man if the contract is not in writing
D. Ms. X did do some work for Kim over the years. If the $3000 exceeds by ½ the prior $1,000 owed then maybe can
conclude it was a donation - but must be in authentic form
E. Or can claim the $3,000 was for a pre-existing natural obligation making it onerous - does not have to be in authentic
form
F. There is a failure of cause if the $3,000 was given commutatively for the services.
G. Aleatory contract? Both parties are taking a chance when entering the contract