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Obligations Outline

Professor Picou

Spring 2005

I. IntroductionWhat is an Obligation?

1. La. C.C. art. 1756: (quote this directly on final) An obligation is a legal relationshipwhereby a person, called the obligor, is bound to render a performance in favor ofanother, called the obligee. Performance may consist of giving, doing, or not doingsomething.

a. something that the law or morals command a person to do, made effectiveby imposition of a sanction for failure to obey/ comply

b. written instrument, where (1) party contracts with (2) for payment of sumof money (value)

c. legal bond binding two persons where, the creditor or obligee, is entitled todemand from the other, a certain performance

d. legal relationship where the obligor is bound to render performance in favorof the obligee

Every obligation contains a duty, but not every duty amounts to an obligation

2. La. C.C. art. 1757Sources of Obligations: Obligations arise from- Contracts (La. C.C. art 1906)- other declarations of will.- directly from the law (La. C.C. art. 1757) , in instances such a

(1)wrongful acts,(2)management of the affairs of another,(3)unjust enrichment(4)other acts or facts.- management of the affairs of another

- unjust enrichmenta. has a duty to be performed by a person in addition to a corresponding right

by the obligee to demand performance of that duty.

Obligor = bound to perform Obligee = demands performance

b. Patrimonial Right: the right that an obligation gives a creditor or obligee,the satisfaction of an obligee need for performance needs to be satisfied.The legal relationship is often referred to as a credit right or patrimony.

c. This right can be transferred or assigned.Patrimony the sum of a persons assets and liabilities; the net assests of a person

3. La. C.C. art 1758: Effects of an obligationA. the obligee has the right to

(1)Enforce the performance that the obligor is bound to render (specificperformance)

(2)Enforce performance by causing it to be rendered by another at theobligors expense (obligor pays someone else)


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(3)Recover damages for the obligors failure to perform, or his defective ordelayed performance (damages)

B. the obligor may have the right to(1)obtain the proper discharge when he had performed in full(2)Contest the obligees action when the obligation has been extinguished or

modified by a legal causeNote: There is not obligation without cause

C.Natural Obligations v Real Obligation:1. La. C.C. 1760Moral Duties that may give rise to a natural obligation:

a. A Natural obligation arises from circumstances in which the law implies aparticular moral duty to render a performance

Note: the statement natural indicates that this a quasi-legal relationshipb. Art. 1761Effects of a Natural Obligation

- Not enforceable by Judicial action- May not give rise to reclamation (exception: duress, fraud, or error)- A contract made for the performance of a natural obligation is an

onerous one.

2. La. C.C. 1763 {Real obligation} Definition: An real obligation is a dutycorrelative and incidental to a real right

D. La. C.C. art 1759Good Faitha. Good faith shall govern the conduct of the obligor and the obligee in whatever

pertains to the obligation(a)Parallel article 1983 Contracts must be performed in good faith

II. ContractsWhat is a Contract?

1. La. C.C. 1906: Definition of contract; A contract is an agreement by two or moreparties whereby obligation are created, modified or extinguished

2. La. C.C. 1907: Unilateral contracts; A contract is unilateral when the party whoaccepts the obligation of the other does not assume a reciprocal obligation.

3. La. C.C. 1908: Bilateral or Synallagmatic contract; A contract is bilateral, orsynallagmatic, when the parties obligate themselves reciprocally, so that theobligation of each party is correlative to the obligation of the other.

(a)The obligation to one party is the cause of the other parties obligation(b)La. C.C. Art. 19114. La. C.C. 1909Onerous contract; a contact is onerous when each of the parties

obligate themselves reciprocally, so that the obligation of each party is correlative tothe obligation of the other.

5. La. C.C. 1910Gratuitous Contract; A contract is gratuitous when one partyobligated himself towards another for the benefit of the latter, without obtaining anyadvantage in return.

a. Loan for suretyship, mandate, deposit donation


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b. Donor depletes his patrimony.c. Donation (La. C.C. art. 1536)

B. The (4) Elements of a ContractIf all four elements of a contract are not meet then a contract is null (Art. 2029). All fourelements must be present for contract to be enforceable

- Capacity (art. 1918)- Consent (art. 1927)- Cause (art. 1966)- Object (art. 1971)

Capacityto enter into an agreement,- sufficient age, age of discernment- we presume that all people have the capacity until we find out otherwise- a mental capacity to take care of themselves- except all unemancipated minor, interdicts and persons who not of the mental capacity at

the time of contracting

- capacity is the rule and incapacity of the exceptionConsent=> establishing the offer and acceptance, LA C.C. Art. 1927Cause=> Lawful Cause- an obligation can not exist without a lawful cause- cause is a reason why a person obligates themselvesDeterminable Object=> The object of the contract is an understanding of the ideas ofgiving, doing or not doing (the object of performance).- The obligation to give is one whereby the obligation binds herself to transfer to the

obligee the ownership of a thing or to grant him some other real right in a thing.- The obligation to do is one whereby the obligor binds herself to carry out or execute an

act or series or acts other then the transferring of a real right, such as a making or

manufacturing something or rendering service.- The obligation not to do is one whereby the obligor bind herself to abstain from

undertaking a certain course of action.

Personal Rights and Real Rights both are part of a persons patrimony

Real right - requires only one subject, the holder, who exerts direct and immediate powerover the thing which is the object of the right. Absolute bec/ its exerted directly over a thing.

- One person and attached to an object.Personal right enforceable between two parties, but dies w/ a person

Patrimonial rights in certain situations, these rights may be transferred;patrimony of debtor is the common pledge of the creditor (creditor may seize debtorspatrimony)

2 types of creditors:1. Secured creditor (obligee)2. Unsecured creditor (obligee)


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Secured creditor this person has a mortgage on immovable property and creditor would seizeland, then if thats not sufficient, then creditor could go after debtors partimony to satisfy default ofloan.

Unsecured creditor has an obligation which is NOT secured by any mortgage; only right he hasto enforce his loan is the obligors patrimony

Salles v Stafford, Drebes and Roy, Inc A contract can override the code if the parties agree toit and as long as it is not consent to illegal activity; K must be made in good faith.

potestative condition depends entirely upon the will of the obligorHarrison v. Gore- filed suit against old coach for sexual harrassment, but this was really a tortcase, not a K case.

CHAPTER TWO: CONSENT (the 2nd requirement for a valid K)

Union of the parties willConsent: La. C.C. art. 1927; A contact is formed by the consent of the parties establishedthrough offer and acceptance. Unless the law prescribes a certain formality for the intendedcontract, offer and acceptance mau be made orally, in writing, or by action of inaction thatunder the circumstances is clearly indicative of consent. Unless otherwise specified in theoffer, there need not be conformity between the manner in with the offer is made and themanner in which the acceptance is made.

- If an offeror purposes a conclusion of a contract and the offereeaccepts then you have a contract.

- To constitute a true offer this has to be sufficiently precise andcomplete.

- Offers can be either expressed or implied;- Newspaper advertisements and catalogs, generally do not constitute

an offer; is there a true intent of the offeror to conclude a contract upreceipt of the consent of the offeree

- You can have two different offers, an irrevocable offer and revocableoffer

Consent has 2 meanings:1. A partys assent to the terms and conditions of a projected K, given w/ the intent of

creating legal effects (consent can be in the nature of an offer) but this is a restrictivedefinition.

2. The accord (agreement) of the parties will on the projected K or meeting of the mindsFOUR elements for a valid CONTRACT:

1. Parties must have legal capacity to contract.2. Parties mutual consent must be freely given.3. There must be lawful cause or purpose.4. The object of the contract must be lawful, possible, and determined.


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Expressing Consent:

Express consent consent conveyed by words whether verbal or writteni. WORDS? it must be clear to prevent misunderstanding and it must be

looked at as a whole and not taken out of context.

By conduct consent through ACTS and WORDSi. implied consent mere action w/o words may demonstrate consent

provided that the action occurs in circumstances that suggest thatimplication (may be established by law, if not, then its left up to thediscretion of the court).

ex. receiveing and using goods sent by a merchant implies a promiseto pay a reasonable price even though none was named in the order

ii. SILENCE? consent may be conveyed by a partys inaction or silence The surrounding circumstances must be very clear in order to

corroborate a presumption that a partys silence amounts to anexpression of his consent. ex. Can use previous transationsbetween parties (trade usage may also come into play).

Mutual Expression of consent:1. Belgard Construction Co. v Collins

a. There needs to a meeting of the minds for a formation of a contract.

- The tendering of a acceptance in an untimely manner, would then make that acceptancea counteroffer, left to the consent of the other party (offeror), who then becomes theofferee.

- La. C.C. art. 1947: Consistently followed by jurisprudenceForm contemplated byparties; When in the absence of a legal requirement, the parties have contemplated acertain form, it is presumed that they don not intend to be bound until the contract is

executed in that form.

Expressing Consent: usually there is no real requirements to the way in which a person accepts:Note: For the transfer of immovables, there must be written documentation.

- La. C. C. art. 1936: Reasonableness of manner and medium of acceptance; A medium ora manner of acceptance is reasonable if:

o it is the one used in making the offero one customary in similar transactions at the time and place the offer is received,

unless the circumstances known to the offeree indicate other wise.

- La. C.C. art 1939: Acceptance by performance; When an offer invites an offeree toaccept by performance and, according to usage or the nature of the terms of the contact,it is contemplated that the performance will be completed if commenced, a contract isformed when the offeree begins the requested performance

- La. C.C. art. 1940 Acceptance only by complete performance When according tousage or the nature of the K, or it own terms an offer made to a particular offeree can beaccepted only by rendering a completed performance, the offeror cannot revoke theoffer, once the offeree had begun to perform, for the reasonable time necessary to


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- Acceptance by performance (La. C.C. art. 1939)(1)The effect of beginning performance (delivering the milk) is that the offier is not

revocable for a reasonable time (Art. 1928)(2)When there is no specifice wording to the effect of (Art. 1940) we assume

acceptance under 1939.

Offer: La. C.C. arts. 1928 1932 An offer in a unilateral declaration of will, it has to propose theconclusion of a contract.

- To constitute an valid offer, it must be sufficiently precise, and complete so that theintended K can be concluded by the offerees expression of his own assent, therebygiving rise that mutual consent of the parties. An offer can be expressed or implied.

Offerors will must be declared (projected outward) Declaration must be addressed to the person w/ whom the offeror intends

to contract.- If offer lacks precision NOT an offer, but an invitation to offer; invites negotiation to

contract.- If offeree changes terms? Counteroffer

OFFER 3 requirements1. the design to give the other party the right of concluding the K

by his assent2. the offerors intention to obligate himself3. a serious intent

- Offer can be made to one person or, if properly communicated, to the general public Offer may be made by:

words (spoken or written) action w/o words Can be express or implied

Irrevocable Offer (La. C.C. 1928);An offer that specifies a period of

time for acceptance is irrevocable during that time. When the offer manifestsRevocable Offer (La. C.C. art 1930);An offer not irrevocable underCivil Code Article 1928 may be revoked before it is acceptedExpiration of offer by death or incapacity of either party (La. C.C. art1932);An offer expires by the death or incapacity of the offeror or theofferee before it had been accepted

Offers to the public Ads and invitations to negotiate

In LA ad may be an offer if accepted in special situations ex. offer of a prize orannouncement of the terms of a contest (ex. auction sales)

BUT, generally in LA, an ad is regarded as an invitation to negotiateo ex. ad that certain goods are for sale at a certain price

Offer may be made w/o words and may be made by inaction

ex. taxicab waiting for passengers at a taxi standKs are binding bec/ law is protecting the wills of the parties bec/ you can bound yourself withyour free will


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Case Law

Johnson v. Capital City Ford Co. Inc.=> Based on advertisement for sale and trade in of vehicles.In Louisiana and elsewhere a newspaper add may constitute an offer, acceptance will consummate acontract and create an obligation to perform the terms of the published offer. Acceptance of an offermay be made by silence; implied or expressed by words, but acceptance based on consent to an

offer creates a valid contract and is binding.- La. C.C. art 1944: Offer of reward made to the public; An offer of a reward made to the

public is binding upon the offeror even if the one who performs the requested act doesnot know of the offer

North Central Utilities, Inc. v. Walker Community Water System Inc. => A request for bids forthe sale of an object is not an offer but an invitation to make an offer.

- Unequivocal words, expression of mere intent, do not make an obligation- For an offer, a proposal must firmly reflect the intent of the author to enter into a

contract. Ds advertisement was merely an intent to sell and does not constitute an offerto accept the highest bid.

Duration of the Offer

A proposition to enter into a K is not intended to remain open indefinitely or for anunreasoanble amount of time

If an offeror has named a period of time, he is bound by his offer during that time If NO period of time is named, then the minimum REASONABLE period is

assumedReasonable period? This is:

o time necessary for the offer to reach the offereeo Plus, the time necessary for the offerees reply to get back to the offeror

C. Irrevocable Offer (La. C.C. 1928);An offer that specifies a period of time for acceptanceis irrevocable during that time. When the offer manifests- Expiration (La. C.C. art. 1929) An irrevocable offer expires if not accepted within the

time prescribed in the preceding Article- Expiration relieves the offeror of the need to revoke. If the offer expired and the offeree

accepts after then the acceptance will be deemed a counter-offer, governed by art. 1943.- Effective Acceptance (La. C.C. art. 1934); An acceptance of an irrevocable offer is

effective when receivedby the offeror. i.e. a written acceptance:

(1) if when comes into the possession of the addressee(2)someone else authorized by him to receive it,(3)deposited in a place the addressee has indicated

2. Does the offer specify a time? Then it is irrevocable (1928)3. If doesnt specify, did the offeror manifest intent? Then it is irrevocable (1928)4. Neither, then it is revocable and governed by 1930.Notes:

(1)An offeror who specifies a time for acceptance which is too long under thecircumstance is not bound beyond a reasonable time.

(2)Determining Intent, to delaya. Nature of the contract


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i. Is it a gratuitous or onerousii. Is it a promise for a promise or a promise for an act?

b. Situation of the Partiesi. Are they face to face?

ii. Are they at a distance?iii. How do they communicate?iv. Do they have prior dealings?v. Circumstances of the case

- Everything that might influence the manifestation of the offeror.IRREVOCABLE OFFER. An offer is irrevocable in two situations:

If an offer specifies a period of time for a acceptance it is irrevocable during thattime. (Art. 1928)

If the offeror manifests an intention to given the offeree a delay within which toaccept, without specifying a time, the offer is irrevocable for a reasonable time.(Art. 1928)

REVOCABLE OFFER. All other officers are revocable and can be revoked before acceptance.

(Art. 1930) Revocation of a revocable offer is effective if received by the offeree before acceptance.

Case Law

Schulingkamp v. Aicklen=> Court concluded that in this case, 36 days after the offer was madewas a reasonable time and the P had ample time to accept before the withdrawal was sent, thereforethe D was entitled to revoke.

Meyers v. Burger Kind Corporation=> An offer specifies a period of time for acceptance isirrevocable during that time period. When the offer manifests an intent to give the offeree a delaywithin which to accept, without specifying a time, the offer is irrevocable for reasonable time.

- The use of the words at least does not make a definite time and therefore BurgerKings signature and allowing parkway to begin renovations indicates acceptance donein a reasonable time.

W.M. Heroman & Co. Inc. v Saia Electronic, Inc. => It is customary that subs bids are irrevocableand the court found that Ds bid was irrevocable until such bid by the general contractor to theowner had been declined or the project been abandoned, provided an unreasonable time had notelapsed

A general contractor who relies on a bid by a subcontractor = there is an issue here ofirrovocable offer. Usually the ct. will allow a LONG PERIOD of time for this type of casebec/ of the nature of the business.

2. Revocable Offer (La. C.C. art 1930);An offer not irrevocable under Civil Code Article1928 may be revoked before it is accepted

- Expiration of revocable offer (La. C.C. art. 1931); A revocable offer expires if notaccepted within a reasonable time

- Effective Acceptance of a revocable offer: (La. C.C. art. 1935) Unless specified by theoffer or the law, an acceptance of a revocable offer, manner and by a medium suggestedby the offer or in a reasonable medium, is effective when transmitted by the offeree.


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What is considered an effective transmission is to be determined by thecourts, according to business practices.

- Time when revocation is effect (La. C.C. 1937); A revocation of a revocable offereffective when received by the offeree prior to acceptance.

Art. 1931: Expiration of an Irrevocable Offer: A revocable offer, expires if not accepted in a

reasonable time.

Art 1935: Time when acceptance of a revocable offer is effective: Unless otherwise specified by theoffer or the law, an acceptance of a revocable offer, made in a manner and by a medium suggestedby the offer or in a reasonable manner and by a reasonable medium, is effective when transmittedby the offeree.

Art. 1937: Time when revocation is effective: A revocation of a revocable offer is effective whenreceived by the offeror prior to the receipt of acceptance.

E. Option contracts: 1933, An option is a contract wherby the parties agree that that the offeror is

bound by his offer for a specified period of time and that the offeree may accept within the time.- The offer requires the consent of both parties- The contractual object in an option K is the time allowed in order to accept and not

accept an offer or in essence make a contract.- O.K. is preliminary to another K. It is entered in contemplation of another contract that

may come into existence.- A K containing a promise to make another K later- Unilateral promisea. Option Ks v. irrevocable offers? ***ON FINAL

Option K Irrevocable Offer-Is a K - Is not a K

-Does not expire at death -Expires at death

-Can be assigned -Cannot be assigned

-MUST have a specifiedperiod of time

- only an OFFER

-Dont need consideration bec/hes bound by his free will

- The grantee in an option contract is in a better position than the offeree of an irrevocableoffer.

- The difference is the amount or lack of consent. In an O.K. you already have the consentof both parties

- There must be a specified time for a valid O.K.- The promise not to redraw the offer, by its very nature if not by definition implies a

promise to give thought to the offer and reach a decision => consideration

Effectiveness of the offer:- The acceptance of an irrevocable offer is effective upon receipt.- By its nature, an O.K. is irrevocable ofr a specified period of time


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- Acceptance under an O.K. must be regarded as effective at the moment of receiptRight to Accept, rejection and Counteroffer Under an Option

- Counteroffer: implies a rejection of the original offer and puts an end to the right toaccept it

- Rejection under O.K:o An obligee is privileged to avail himself of the obligation under the option contracto In making a rejection before the specified time, the obligee is expressing his intent to

renounce the obligation or terminate the option contract- Counteroffer:

o If the intent is to counterpropose rather then inquire about the possible consent ofmodification of the offer then it is renounced or terminate

o If the intent of the obligee is merely to inquire about a possible modification of theoffer it does not extinguish his right to accept the other offer.

Case Law

Glover v. Abney=>- Did the D make an agreement or irrevocable offer?- C.C. art. 2462: To be valid as an option instrument must be supported by valuable

consideration

Chapter III: Consent (Contd.)

II. General Principles Revisitedi. Art. 1928 consent can be expressed by the offeror or offeree in any way unless the law

prescribes a certain formality. An example of this formality is found in the sale ofimmovable property which the law requires by in writing.

ii. Art. 1939- Binding when performance beginsiii. Art. 1940- period of irrevocability not binding until completediv. Art. 1941 duty to give notice unless offeror knows or should knowA. The Acceptance

Acceptance and Offer: correlative actsB. Manner and Medium

a. May be made in a special manneri. An offeree who wants to accept must do it in the manner prescribed in the

offerii. If no manner is prescribed then a medium us a manner of acceptance it is

reasonable1. the one used for making the offer2. one customary in similar transactions3. at the time when and the place where, the offer is received4. Therefore if the offer is received through a faster means of

communication is would be reasonable to convey the acceptancethrough a slower means

iii. If no manner is specified and the offeree has special knowledge ofcircumstances that call for a particular manner or medium of acceptance, the


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acceptance made in another manner or by a different medium would not beeffective

C. Communicationa. A persons will has no existence at law if it is not declared and therefore unknownb. Two questions to ask with considering acceptance:

(1)whether the acceptance is effective only when communicated to the offeror.1. bound only upon learning of acceptance2. in communication my amount to a wavier of acceptance

(2)Whether parties are negotiating face to face or at a distance?1. if no delay is given for acceptance, an acceptance must be given before

the end of the communication2. this applies to telephone conversations and other instantaneous

communicationD. Parities at a Distance and Time of Contract Formation

a. The Declaration theory: sees the contract formed at the moment the internal will ofthe acceptor is generated in his mind.

b. Second Theory: considers the contract formed at the moment of transmission, that is,when the party who accepts parts whit the letter containing the acceptance

c. Third Theory: considers the contract formed only at the moment the offeror actuallyearns of the acceptance

d. Louisiana has adopted both, transmission and reception theories.E. Acceptance of a Revocable Offer

a. The acceptance of a revocable offer made in manner and by the medium suggestedby the offer, or made in a reasonable manner and by a reasonable medium, iseffective once it had been transmitted by the offeror.

b. If the offeror has transmitted a message of revocation at the time the offereetransmits his acceptance, a contract is nevertheless formed, since a revocation is not

effective until received by the offeree.i. Whether an act constitutes effective transmission of acceptance is a question

answered in the light of circumstances.ii. Once the offeree has done whatever is reasonable and customary for his

message of acceptance to start in the direction of the offeror, the acceptanceof a revocable offer is effective, and therefore a contract is formed.

F. Acceptance of a Irrevocable Offera. Named Medium: the offeree must follow that prescription and the acceptance will

only be effective when received in that modei. This protects the offeror, thus, is sheltered against the surprise of a contract

formed without his knowledge

b. No Medium: a written acceptance is received when it comes into the possession of aperson authorized by the offeror to receive it or in a place that the offeror hasindicated.

c. This does not apply when a place is merely suggestedG. Overtaking an acceptance with rejection

a. Question: Whether the offer, to which the overtaken acceptance was given, isirrevocable or revocable.

i. Irrevocable: it is possible to overtake the acceptance with a rejection


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1. both the acceptance and the rejection are effective upon reception bythe offeror

2. so therefore which ever reaches the obligor firstii. Revocable: a rejection received after the acceptance of a revocable offer has

been transmitted amounts to an offer from the offeree to dissolve the contract

already concluded, an offer which the original offeror is of course free toaccept or reject.

H. Overtaking of a rejection by an Acceptancea. If the offeror receives an acceptance, a rejection that arrives later, though transmitted

before the acceptance, does not prevent the formation of a contract.b. When the offer is revocable, the acceptance is effective upon transmission, but the

rejection is effective only upon rejection.c. Whether the offer is revocable or irrevocable, if the offeree attempt to overtake fails

so that his acceptance is received after reception of the rejection, that untimelyacceptance must be regarded as a counteroffer.

I. Acceptance by Performancea. When the offer requires an express acceptance the offeree may not accept in a

different manner.b. Bilateral/Commutative: the acceptance, directly and indirectly, expresses the

offerees promise to render the performance the offeror has requested in return forhis own.=> promissory acceptance

c. Unrequested Acceptance: the offeree may choose to go ahead and render theperformance requested in the offer, without making a promissory acceptance. Ineither case performance by the offeree is an effective acceptance.

d. When the offeror invites an offeree to accept by performance, a contract is formedwhen the offeree begins the requested performance.

i. The offerees intent must be to complete the performance he commencedii. When the nature of the contract is such that the offeree cannot fail to realizethat if he starts to perform the offeror will expect him to complete the

performance started.J. Acceptance Only be Completed Performance

a. According to usage, or the nature or the terms of an intended contract, only acompleted performance can be regarded as acceptance of the offer

b. This is based off of cases of uncertainty or doubti. The relevant feature of situations of that kind is an element of uncertainty or

doubt.ii. The intended contact does not come into existence until the offeree renders a

completed performance

iii. The offeror cannot revoke the offer, once the offeree has begun to perform,for the reasonable time necessary to complete the performance.iv. The offeree is not bound, however, to complete the performance he has

begunc. This analogous to an O.K. where the offeror is bound not to revoke the offer for a

period of time while the offeree is free to accept or notK.Notice of Commencement of Performance


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a. When the parties are at a distance so that the offeror cannot immediately learnwhether performance has been started by the offeree, the latter must give the offerorprompt notice that he has commenced to perform.

i. the case of the offeree not giving notice, the contract may still be enforceablebut the offeree will be responsible for any damage that might have incurredby the offeror due to the lack of notice.

L. Acceptance by Silencea. Acceptance by Silence may be adequate for consent, therefore adequate for

acceptanceb. There only occur when for special circumstances when the offerees silence leads the

offeror to reasonable believe a contract has been formed.M.Acceptance Must Conform to the offer

a. An effective acceptance must be in accordance with the terms of the offerb. An acceptance not in accordance with the terms of the offer is not valid as such but

only as a counteroffer.c. No contract of sale may comes into existence if offer and acceptance differ on thing

or the price.

d. If the acceptance limits, conditions or modifies the offer, it is itself considered a newoffer and gives the one who made the original offer the right to withdraw.

e. An acceptance may contain a term that, though not in accordance with the offer, maynot indicate dissent on the part of the offeree but rather a request addressed to theofferor for modification or reconsideration of the offer.

i. This will not prevent the formation of the contractf. Acceptance by Performance: in this case, an acceptance that does not conform to the

offer may also amount to a breach of contract.g. The Mirror Image Rule => strict interpretation

N. Counteroffer and Rejectiona. A counteroffer is a new offer addressed by an offeree to the offeror of an original

offer involving the same matter and proposing terms that are different from thosecontained the original offer.

b. A rejection is an expression of the offerees intention not to accept the offer made tohim and is effective by the offeror.

i. An effective offer puts an end to the offeree ability to acceptii. An offer comes to the end upon rejection

iii. A counteroffer is a rejection of the original offer1. to become a contract the counteroffer must be accepted by the offer2. thus the power of acceptance has been transferred3. exception: a reply to an offer that is not an acceptance is not always a

rejection or counteroffer

a. may be a reply for clarificationb. suggestionc. inquiry etc.d. this does not extinguish the offerees power of acceptance as

long as the offer is not revokede. The intent of the offeree must be looked at

O. Duty to AcceptCase Law:


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Ryder v. Frost- Art. 1940 Acceptance only be complete performance: An offer made to a particular

offeree can be rendered by performance but must be completed in the reasonable timenecessary. This based off of usage or the nature of the contra, or its own terms. Theofferee is not bound to complete the performance, where the offeror is bound to keep the

offer open until the completion or tender of the performance.- Art. 1941: Notice of commencement of performance: once the performance has begun

constituting acceptance or rendering the contract irrevocable the offeree must givenprompt notice to the offeror unless the offeree knows or should have known of theperformance. If the offeree fails to give notice he is liable of the damages caused.

- In this case the commencement of the performance began before the D actually made hisoffer.

Evertite Roofing v. Green- Art 1930: Revocable Offer: An offer not irrevocable under the C.C. may be rocked

before it is accepted

- Art. 1928 states that if the offer manifest the intent to give a delay in acceptance it isirrevocable for a reasonable amount of time

- What is reasonable time dependsa more or less upon the circumstances surrounding eachparticular case.

- Art. 1939: Acceptance by performance: A contract is formed when the offeree begins therequested performance.

- In this case the court found not there was contract and because the offeror did not notifythe offeree of his intent to use another company, the offeror was liable for damages

o The court find that the loading and transporting of equipment was thecommencement of performance

- Art. 1994: Obligor liable for failure to perform: A obligor is liable for the damages causeby his failure to perform a conventional obligation.

A failure to perform result from nonperformance, defective performance, or delay inperformance.

- Art. 1995 Where the object of the contract is anything but the payment of money, thedamages due to the creditor for its breach are the amount of the loss he has sustained,and the profit of which he has been deprived.

Cardinal Wholesale Supply Inc., v. chaisson-

Ambrose v. M & M Dodge No Contract

- La. C.C. 1938, a written acceptance is received when it comes into the possession of theaddressee or of a person authorized by him to receive it, or when it is deposited in aplace the addressee has indicated is the place for this or similar communications to bedeposited for him.

-Section 7. Acceptance and Terms of the Offer

I. Acceptance must conform to the Offer


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a. Generally an effective acceptance must be in accordance with the terms of the offer.b. Accpetance not in accordance with the terms of the offer is not valid as such but only

as a counteroffer.c. A properly shown lack of conformity must to the conclusion that no contract has

been formed, unless special circumstances indicate that the lack of conformity isonly apparent.

i. Lack of consentii. No Meeting of the minds

d. term not in accordance, may not indicate dissenti. may be a request

ii. does not prevent the formation of a contract.e. acceptance by performance

i. non-conformity in performance may also be a BOCii. Can be regarded as rejection and or a counteroffer

f. Mirror Image rule = Common v. Civiliani. Strict interpretation

ii. May lead to unfair resultsiii. Louisiana = an acceptance may be deemed in conformity even if its terms are

not in absolute accordance with the offer.

Case Law:

Rodrigue v. Gebhardt New Offer- A modification in the acceptance of an offer constitutes a new offer which must be

accepted in order to become a binding contractElmer v. Hart

- No meeting of the mindsSection 8. Form

a. Freedom of Forma. It is rare that a law prescribes that consent must be expressed in a certain formb. The sale of immovable property

i. In writingii. By authentic act

1. Signed by both parties2. in front of two witnesses and3. signed by a notary

1. Art. 1839: Transfer of Immovable Property: a transfer of immovable property must be madeby authentic act or by act under private signature.2. Art. 1947: Form contemplated by the parties When, in the absence of a legal requirement,

the parties have contemplated a certain form, it is presumed that they do not intend to bebound until the contract is executed in that form.

a. This codifies the jurisprudence created in Breaux.b. This is a strong but rebuttable presumption

Case Law:


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Breaux Brothers Construction Company v. Associated Contractors Inc.- Was a valid contract entered into by the parties?- Where it has been agreed between the parties that an agreement shall be reduced to

writing the contract is not complete until it is written and signed by all the parties- Even if all of the terms of the alleged contract has been verally agreed upon, no valid

contract would have existed between the parties because the intention to reduce thecontract into writing suspended the final consent until it is reduced to writing and signedby all the parties.

Barchus v. Johnson Sale of Immovable Property (No Acceptance)- According to provisions under C.C. art. 2440, 1839, all contracts relative to the transfer

of immovable property MUST be in writing.- Therefore, although the P has an option contract to accept the offer to buy the property

for 30 days has not acceptance before the Ps purported acceptance, the acceptance wasover the phone and not valid.

- The written instrument for the sale did not occur until after the 30 day timer period.

Chapter IV CAUSEArticles 1966 1970

Section I. General Principles: In primitive law, agreements gave rise to an action only exceptionallybecause a rule prevailed according to which no agreement was enforceable unless good reasonswere given to justify enforceability.

Art. 1966: No Obligation without Cause: An obligation cannot exist without a lawful cause

Art. 1967: Cause Defined Detrimental Reliance: Cause is the reason why a party obligates himself.A party may be obligated by a promise when he knew or should have known that the promise wouldcause the other party to rely on that promise to his detriment and the other party was reasonable inbelieving so. The other party may be able to recovery damage in so much as to prevent injustice(limited to the amount of the reliance). Reliance on a gratuitous contract made without requiredformalities is not reasonable.

Art. 1968: Unlawful Cause: The cause of an obligation is unlawful when the enforcement of theobligation would produce a result prohibited by law or against public policy.

I. Definitiona. Terminologyi. Motive, Purpose, End, or reason on obligate himself.

ii. Something that stimulates the willSection 2. Cause as a Criterion for the Classification of Contracts: Articles 1906-1917

A. Cause of the Obligation and Kind of Contracta. Distinguishing as onerous contract from a gratuitous contract


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i. Onerous = because the reason that prompts the parties to bind themselves isto obtain an advantage in return.

ii. Gratuitous = because the reason the prompts the party to bind himself is toconfer a benefit on the other party

b. Bilateral or Synallagmatici. If there is reciprocal obligation incurred by the other party

c. Commutativei. If it is because of the Performance of the other partys obligation

d. Aleatoryi. If the reason is because the party wants to protect himself against a risk that

may or may not occur, or to procure an advantage that may not materialize.B. Invalid Gratuitous Contract but valid onerous contract

a. An act, as a donation may be invalid because of lack of proper form but may still bean onerous contract

i. If can be shown that a donation not in proper form was given as recompensefor service rendered in the past or fulfillment of a natural obligation, though it

may be an invalid donation, it is classified as valid onerous contract.ii. A charitable subscription is an example

C. Invalid Onerous Contract but Valid Gratuitous Contracta. Par excellenceb. If there is no price and no price was intended

i. The onerous contract is invalid but may be a gratuitous contractii. i.e. If there is a intention to donate immovable property

iii. and the invalid sale was made by authentic act, the invalid onerous contract isvalid donation

D. Invalid Onerous Contract and Invalid Gratuitous Contract.a. If there is no causeb. No required formc. Even if there is a donative intentd. Gift = if not made by authentic acte. No valid donation

Gratuitous Contracts

I. Donations Inter Vivos (Between living persons)Articles 1467-1469, 1493, 1494, 1570, and 1571

Art. 1467: Methods of Acquiring or Disposing Gratuitously Property can neither be acquired nor

disposed of gratuitiously, unless by donation inter vivose or mortis causa, made in the formshereafter established.

Art. 1540: Donation Effective from date of Acceptance: A donation inter vivos shall be binding onthe donor, and shall produce effect only from the day of its being accepted in precise terms.

a. Requirement of form


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Art. 1536: Donation of immovable or incorporeals, form required: An act, shall be passed before anotary public and two witnesses of every donation inter vivos of immovable property or incorporealthings, such as rents, credits, rights or action, under the penalty of nullity.

Case Law:Spanier v. De Voe: (Price claimed by D = $5; a donation in disguise)

- If the price is out of proportion with the value of the thing, it is a donation. (Art. 2464)- A donation acquires validity and the rule of law with both parties, two witnesses, and a

notary public signing an authentic act.- Exception: negotiable instrumentsthrough deliverysuch as promissory notes,

deposit certificates, checks, stock transfers- Immovables, incorporeals, and movables require authentic act. Court held the transfer

was not authentic

Art. 1836: An act under private signature, though acknowledged, cannot substitute for an authenticact when the law prescribes such an act.

b. Manual Gift

Art. 1539: Manual Gift- The Manual gift, that is, the giving of corporeal movable effects,accompanied by a real delivery, is not subject to any formality

- A donation inter vivos of a corporeal thing can be validly made without formality otherthan the real delivery of the thing

o Money is a corporeal moveable and therefore can be donated by manual gifto Automobileso Stuffed Teddy Bear

c. The Donative Intent

Art. 1468: Donation Inter Vivos: Definition: a donation inter vivos is an act by which the donordivests himself, at present and irrevocably of the thing given, in favor of the donee who accepts it.

Art. 1910: Gratuitous Contracts: A contract is gratuitous when one party obligates himself towardsanother for the benefit of the latter, without obtaining any advantage in return.

Although mere delivery of a corporeal movable is sufficient to effect a change in ownership, thedonee of a manual gift must of a manual gift must show by strong and convincing proof that thedonor had the intent to irrevocably divest himself of the thing and that delivery was made

d. Purely Gratuitous, Onerous and Remunerative DonationsArticles: 1523 1526

Art. 1523: Gratuitous, onerous and remunerative Donations; definitions: There are three kinds ofdonations inter vivosl

The donation purely gratuitous or that which is made without condition and merely fromliberality

The onerous donation, or that which is burdened with charges imposed on the donee


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The remunerative donation, or that the object of which is to recompense for servicesrendered.

Art. 1524: Onerous Donation: The onerous donation is not a real donation, if the value of the objectgiven does not manifestly exceed that of the charges imposed on the donee

Art. 1525: Remunerative Donation: The remunerative donation is not a real donation, if the value ofthe services to be recompensed thereby being appreciated in money, should be little inferior to thatof the gift.

- usually involved family donations or close relationships whereas natural obligations,such as fulfillment of past debt does not.

- The motives are different in each case- Family = give something to a love one because of kindness as well as in gratitude for

services rendered- Other = pay off debt

Art. 1526: Onerous and Remunerative Donations. When Rules Applicable: In consequence, the rule

peculiar to donations inter vivos do not apply to onerous and remunerative donation, except whenthe value of the object given exceeds by one-half of the charges or services.

Art. 1536: Donation of immovables or incorporeals, form required: An act shall be passed before anotary public and two witnesses of every donation inter vivos of immovable property orincorporeal things, such as rents, credits, rights or action under the penalty of nullity.

Onerousnot gratuitous; Transferor puts strings on the transferRemunerativetransferee already done the wonderful things that motivate the transfer to thetransferee

Questions to Ask when Considering if a something is a donation:1. Did he deplete his patrimony? (Amount donated)2. Did he obligate himself for the benefit of another without getting anything in return?3. Did he bestow his liberality?4. If the answer is yes, then must be authentic act to complete the donation (1536)

Succession of Lawrence:

This case involves an onerous donation because the value of the gift was about equalto the services and the charges (Art. 1524). Art. 1526 says that rules applying to pure donations donot apply to onerous donation. Therefore, no formal authentic act was required. The intent ofLawrence was to give the money to his nephew. Therefore, the money is his nephews and not partof Lawrences succession.***Weak link is existence of inter vivos act of transfer. Making someone a co-party in a jointaccount is a transfer of ownership. Book talks about nephew did all of this stuff for uncle and thevalue of these services are high.


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Revocation:

Art. 1468: Donations made inter vivos are irrevocableArt. 1469: Donations mortise causa are revocable until deathArt. 1559: Causes for Revocation or Dissolution Donations inter vivos are liable to be revoked ordissolved on account of the following causes:

1. Ingratitude2. Non-fulfillment of conditions3. Non-performance of the conditions4. The legal or conventional return

Art. 1560: Revocation for ingratitude Revocation on account of ingratitude can take place only inthree following cases:

1. If the donee has attempted to take the life of the donor2. If he has been guilt of cruel treatment of grievous injuries toward him3. If he has refused him food in time of distress.

Perry Jr. v. Perry, Sr.- Art. 1560Provides for revocation of a donation on account of ingratitude if the donee

has been guilty toward the donor of cruel treatment, crimes, or grievous injuries.- In juries include any act naturally offensive act to the donor.- This does not involve the enforceability of fathers promise. Father asking for the court

not to uphold the rest of the judgment b/c father has another injunction to revoke thedonation.

- Donations can in certain circumstances be revoked b/c of ingratitude.- A typical situation to enjoin the injunction for judgment.

II. Other Gratuitous ContractsArticles 2891, 2893, 2894, 2926, 2995, and 2992

1. The distinguishing feature of donation is depletion of donors patrimony. Other gratuitous Ksdiffer from donation inter vivos because they are not a liberality. These other Ks are not subjectto a requirement of a formality, nor are they subject to collation or reduction.

Liberality = depletes the patrimony of the lender, depository, or of the mandatory. Thereforethese contracts are not subject to the same formalities.

B. Invalid donation But Valid Onerous Contract

I. Innominate Contract = an un-named contractArt. 1914 : Nominate and innominate contracts: Nominate contracts are those given a specialdesignation such as sale, lease, loan, or insurance.

Innominate contracts are those with no special designation.

Theilman v. Gahlman


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Donation inter vivos are not the only gratuitous contracts regulated by the LA Civ. Code. Loanfor use or consumption, deposit, and mandate are other gratuitous contracts included. They aredifferent than a donation inter vivos because they are not a liberality since they do not depletethe patrimony of the lender, depository, or mandatory. These contracts are not subject to aformality.

These are nominate gratuitous contracts. Due to contractual freedom, parties may also enterinto innominate gratuitous contracts, such as when one engages to render services for free to theother (charity workdonation of services).

*Donation inter vivos requires authentic action because it is a depletion of ones patrimony,which requires legal enforcement and protection.

The court found that this alleged donation, was subject to a lack of form, but is actually a validonerous contract of an innominate kind. (It is immaterial that the contract fall under somecategory of contract in the Civil Code)

Art. 1848: Testimonial or other evidence not admitted to disprove writing: Testimonial or otherevidence may not be admitted to negate or vary the contents of an authentic act or an act underprivate 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 wasmodified by a subsequent and valid oral agreement

Pg.126 In a few instances, instead of regarding the provision of services for elderly as acontractual commitment, the court sees it as a donation with strings attached. Differencebetween donation subject to charge versus onerous donation.. Art 1523-1526.

1526If element is given where the services are way more than the money value, it is notonerous but gratuitous. If person dies before money value of the care is less than the moneyvalue of the gift for those services, then it is a donation. If no authentic form, no transfer.

Louisiana College v. Keller- Rule of lawAn obligation according to the Code is not less binding, though its cause

is not expressed. (The papers do not say the def. cause. It could have been the benefitsof a college near his home for his children, or a spirit of liberality, or to be seen as agood citizen). Whatever it is, the promise binds him if he consented freely and thecontract had a lawful object. In contracts of beneficence, the intention to confer abenefit is s sufficient cause or consideration.

- In both the cases, the court holds that these promises are enforceable because theyare not truly donations.

- Reliance isnt a basis for enforcement. Ct is trying to differentiate this situation w/ casesin which promises are deemed not gratuitous and therefore, enforceable.

- Pg. 129Ct sees there is many other causes rather than purely generosity. This holdsdef promise binding. If it would have had the authentic form, it is okay to classify asgratuitous. If no formality, must differentiate gratuitous cases to cases that could findother reason but generosity to classify the case.

- Pg. 129 last sentence wrong. The intention of conferring a benefit is a sufficientconsideration or reason, provided that the requisite formalities for such a gratuitouscontract are present. This setting is differentiated from Happy Birthdayconsiderations. Contracts of beneficence are contracts gratuitous.


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Baptist Hospital v. Cappel (Charitable Subscriptions)

Charitable subscriptions are enforceable because of policy reasons- we want to encouragesubscriptions and party may reply on the promise

Charitable subscription promises are cases that establish that a limited category of arguably

gratuitous donations are enforceable even though not in authentic form. Societal benefit.

Rule of LawIf some of the plans of a contract is changed, but the purpose is served, the donatorscause or benefit is not lessened, the donator is not injured, than he is bound by his contract. UtilizesLA College case.

In both of these cases, there was a change in position of the recipient. Neither case looks at thereliance that a change of position occurred. The promise is what counts. The promise would bebound by bargaining or gratuitous reliance upon promise before the promise was revoked. Inthis case, most states would regard the promise as having been relied upon in the aggregate, sothere was a reliance once project has begun.

LA promises are enforceable as soon as they are made. They could be differentiated from thepure gratuitous promise. Cite these promises that are in charitable subscriptions can bedifferentiated from most gratuitous promises, which can then be enforced w/o authentic form.

Art. 1967Cause is the reason why a party obligates himself. Reliance upon a gratuitouspromise made w/o required formalities is not reasonable. This is despite a change in position.Ex. In writing, land that has been mine is now yours. You go out and paint property. Later, Idie and kids want property. Their position would be that it was not writing in authentic form, sotransfer is not gratuitous donation. So I would have to find some explanation for the transfer thelegal system would be able to distinguish the transfer from a gratuitous donation. I cannot justsay I relied or changed position on this property. Then the message is that it was a gratuitoustransfer and is unreasonable.

III. Debt of Another Party

Case Law:Flood v. Thomas- the court find that the debt of another is a sufficient consideration to support a contract

of surety, or a promise to pay it- Art. 1847: parol evidence is inadmissible to establish a promise to pay the debt of a

third person- Art. 1823: Assumption by agreement between obligee and third person: An obligee and

a third person may agree on an assumption by the latter of an obligation owned byanother to the former. That agreement must be made in writing (since parol evidence is

inadmissible). That agreement does not effect release of the original obligor.- Art. 1821: The unreleased obligor remains solidarily bound with the third person.- Art 1978: Third Party Beneficiary

Art. 3035: Definition of Suretyship: Suretyship is an accessory contract by which a person bindshimself to a creditor to fulfill the obligation of another upon the failure of the latter to do so.


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Art. 1913: Principal and Accessory Contracts: A contract is accessory when it is made to providesecurity for the performance of an obligation. Suretyship, mortgage, pledge, and other types ofsecurity agreements are examples of such a contract.

When the secured obligation arises from a contract, either between the same or other parties,that contract is the principal contract.

A promise of surety is subject to a suspensive condition. Meaning that the obligor will not be calledon to pay until the another person fails to pay.

Flood involves a promise to pay. A promise to pay is not subject to a suspensive condition. Thepromise is perfect from the outset not subject to any condition.

IV. Services rendered in the pastMay be an onerous contract rather than a donation invalid for lack of form.

V. Invalid Onerous Contract but Valid Donation

Case Law:DOrgenoy v. Droz transfer of immovable property- Rule of lawSince intention to transfer, ct said not gratuitous so not need authentic

form.- Other instances which transfers were upheld and formalities present, but transaction not

onerous as claimed.pg. 136 Disguising a donation as a sale is not legal.- Upheld donation as one b/c admitted intent to transfer and act is in authentic form.- Spanier v. Ndevoesale was held to constitute a donation and null b/c not in authentic

form

Section 3. Absence of Cause

- If there is no cause, the obligation is ineffectual.- If at the time of contract of sale is made, the thing of which is the object has beendestroyed, the buyer cannot acquire something which no longer exists. His obligationthen lacks cause and is no longer an obligation.

- If the obligation is contracted based on threats or violence, cause is absent. There mustbe a true reason or true will to enter into the obligation.

- The cause of an obligation may be only partially absent. If the thing sold has perishedonly in part at the time of the sale, the buyer may free himself if he wanted the thing inwhole. He also may accept a reduced obligation to buy the part of the thing that remains

Art 1966: An obligation cannot exist without lawful cause. Art 1966

***A cause may exist at the inception of an obligation and then fail. When such is the case theobligation ceases to exist. Ex. When a leased thing is destroyed, the leasees obligation to payrent ends since he no longer has a cause.***A cause may fail only in part. If a leased thing is only partially destroyed, if the reason to bindhimself to pay rent was not to obtain the whole enjoyment, the leasee may accept a reduced rentequal with that part of the thing that still exist.

***If one partys performance becomes impossible, the cause of the others obligation fails if thecontract is commutative,but not if the contract is aleatory.


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Art 1967: Cause if the reason why a party obligates himself.CauseArt. 1967Detrimental reliancereliance on a gratuitous promise made withoutformalities is not reasonable. Cause is the reason why someone obligates himself. What role doescause play in the enforceability?

Art. 1767: Suspensive or Resolutory Condition: A conditional obligation is one dependent on anuncertain event. If the obligation may not be immediately enforced but will come to an end whenthe uncertain event occurs., the condition is resolutory.

Case Law:United States Fidelity v. Guaranty Co. v. Crais

- on to repay a failed check- this is considered a nature obligation because she felt compelled by a moral duty to repay

her employer- Therefore she can not invoke the payment of thing not do.- The payment did not arise from coercion and therefore you can recover for the payment in

this caseNotes:

Consideration: a valuable consideration may, in general terms, be said to consist of either income right, interest, profit or benefit accruing to the party who makes the contract, or someforberarance, detriment, loss, responsibility or act or labor or service on the other side and if eitherof these exist, it will furnish a sufficient valuable consideration to sustain the making or indorsing ofa promissory notes in favor of the payee or other holder.

Carpenter v. Williams:- When ones cause or motive for entering the obligation ceases to exist or failed, the contract

becomes unenforceable.

- The buyer communicated his reluctance to the seller, and the seller still allowed the buyer tosign the papers.- When the employer rethinks the need to make the employee stay so close, the buyer wants to

move back to Lafayette- Just b/c a seller knows why one wants something, it doesnt mean the contract is dependable

on the true cause. This case is atypical.

- The assumption mistaken provides basis for relief if the contract depends uponassumption. The buyer should bear the risk of the accuracy of his assumption. Theobligation to be enforceable must have a lawful cause. If you can succeed in convincing

the judiciary that you dont have a cause, the obligation will not be enforceable.

Losecco v. Gregory:- Art. 1897 Sale of Future Things

o A future thing may be the subject of a contract of sale. In such a case the coming intoexistence of the thing is a condition that suspends the effects of the sale. A party whothrough fault, prevents the coming into existence of thing is liable for damages.

- Art 1912 comment( e )o Sale of Hope A hope may be the object of a contract of sale. Thus, a fisherman

may sell a haul of his need before he throws it. In that case the buyer is entitled to


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whatever is caught in the net, according to the parties expectations and even ifnothing is caught, the sale is valid.

- Art. 1870 Failure of Cause Subsequent to Contract o Where the consideration f cause of the contract really exists at the time of make it,

but afterwards fails, it will not affect the contract if all that was intended by theparties has been carried into effect at the time. The destruction of property sold, after

the sale is perfected, without the fault of the seller, is a case governed by this rule.(a)The sale of a hope is an aleatory contract(b)The case under article 2451 is hope

- A sale may be aleatory not only because if its nature, but also because of the intention of theparties. The parties intent must be scrutinized in order to determine whether the contact isthe sale of a future thing or the sale of a mere hope.

- Fortuitous Act: an act of God, not a foreseen risk of growing orange in Louisiana- The seller only contracted to take the risk of foreseen risks

Section 4: Unlawful CauseArticles: 11, 12, 2030, 2033, 2983, 2984

Art. 1968 Unlawful Cause: the cause of an obligation is unlawful when the enforcement of theobligation would produce a policy prohibited by law or against public policy.

Contracts with an unlawful cause are absolutely null.Art. 2030 Absolute Nullity of the Contract a contract is absolutely null when it violates a rule ofpublic order, as when the object of a contract is illicit or immoral. A contract that is absolutely nullmay not be confirmed. Absolute nullity may be invoked by any person or may be declared by thecourt on its own initiative.

Art. 2031 Relative Nullity of contract A contract is relatively null when it violated a rule intended

for the protection of private parties, as when a party lacked capacity or did not give free consent atthe time the contract was made. A contract that is only relatively null may be confirmed. Relativenullity may be invoked only by those persons for whose interest the ground for nullity wasestablished, and may not be declared by the court on its own initiative.

Art. 2032 Prescription of Action Action for annulment of an absolutely null contract does notprescribe. Action of annulment of a relatively null contract must be brought in 5 years from the timethe ground for nullity either ceased, as is the case of incapacity or duress, or was discovered, as inthe case of error or fraud. Nullity may be raised at any time as a defense against an action on thecontract, even after the action for annulment has prescribed.

Art. 2033 Effects An absolutely null contract, or a relatively null contract that has been declarednull by the contract, is deemed never to have existed. The parties must be restored to the situationthat existed before the contract was made. If it is impossible or impracticable to make restoration inkind, it may be made through an award of damages.

(1)May not be recovered by a party who knew or should haveknown of the defect that makes the contract null

(2)May be recovered when that party invokes the nullity towithdraw from the contract before the purpose is achieved


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(3)Exceptional Circumstances: would further the interest ofjustice

(4)Absolute nullity may be raised as defense by a party howat the time of the contract, know or should have known ofthe defect that makes the contract null.

II. Protection of Public Orderi. An obligation must not only have cause but that cause must be lawful.

1. A cause is illegal when it is forbidden by law2. It is immoral when ti runs counter to the moral standard of the

community3. It is against public policy when it is contrary to values recognized

as paramount by the community

ii. Cause allows the court to examine the parties subjective intent to see whythe bound themselves

iii. Cause v. Object1. Object is a performance consisting of transferring and delivering

the property sold to the buyer2. Where the reason that prompted the parties to bind themselves

may be intent to operate a brothel in the property sold.iv. The cause is illicit in obligations arising out of contract for the transfer of

property made for the purpose of defrauding creditorsv. Although you may have a lawful object with an unlawful cause you may

still have an unlawful object with an unlawful cause together in asynallagmatic contract.

Case Law:

Lamy v. Will- illegal w/ participation can not recover for.- The law grant no action for the payment of what has been won at gambling or by a bet,

except for games tending to promote skill in the use of arms, such as the exercise of gun andfoot, horse and chariot racing.

- An obligation without a cause, or with a false or unlawful cause can have no effect- Contra bonos mores(contrary to moral conduct) or public order- The courts consistently have refused to entertain either action to recover what has been won

or lost in gambling or demands for the collection of notes or other obligations given for agambling debt

- The only way the pl could recover, he must occupy the role of an innocent bystanderentirely unconnected with the gambling activity. The transaction was a part of the gamblingactivity so the pl is prevented from recovery or action.

-Lauer v. Catalanotto

- illegal w/o participation- Gambling took place in a state which it is legal does not grant the P a remedy to recover

such movies under Louisiana law


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- Louisiana public policy traditionally has considered gaming contra bonos mores and orstate constitution has been long directed the legislature to suppress gambling.

- To be constitutionally prohibited, gambling contract, there must be a mutual illegalintent to gamble and the inter of one party not communicated to or concurred in by the

other will not nullify the agreement.- Public policy does not allow ct action for the cause of gambling.- The cause is unlawful, so the obligation has no effect. The- As for as the loan made to the pl, the pl simply asked the def for money and the def was not

involved in the transaction for which the pl requested the money, which was gambling.

McMahon v. Hardin- Public Policy consideration- Contract so framed as to have effect only on condition that a divorce between the

parties should be granted are held illegal as to their object is to interest the party to be

benefited in procuring or permitting a divorce.- If the object to the contract is to divorce man and wife the agreement is against public policy

and void.

- Under LA law at time, only husbands debt is seized by community $. The only waydetective would get paid is if he gives evidence that husband cheating and if she wants adivorce. Public policy violated if enforcement. Now, community property can be seized fordebtdont have to get divorced for community assets to be available. So, today, cts wouldnot make this distinction.

-Graviers Curator v. Carrabys Executor

- Credit fraud- Art. 2026: Absolute Simulation a simulation is absolute when the parties intend that their

contract shall produce no effects between them. That simulation therefore can have noeffects between the parties.

- Art. 2027: Relative Simulation A simulation is relative when the parties intend that theircontract shall produce effects between them though different from those recited in theircontract. A relative simulation produces between the parties the effects they have intended ifall requirements for those effects have been made.

- A debtor hiding his assets from his from his creditor is considered contrary to publicpolicy.

- Art. 3182 Whoever has bound himself personally, is obliged to fulfill his engagements outof all his property

- Art. 3183 The property of the debtor is the common pledge of his creditors, and theproceeds of sale must be distributed to them

- Art. 2036 Revocatory Action An obligee (creditor) has the right to annual an act of theobligor, the causes or increases the obligors insolvency

- Art. 2044 Oblique Action If obligor increases his insolvency by failing to exercise aright, the obligee may exercise it himself.

Cahn v. Baccich- A contract to stifle competition is illegal and unlawful- The contract was found to be void because it subverts the policy of fair bidding and

protection of the integrity of action.


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Schwegmann v. Schwegmann- an agreement between cohabitants for services in exchange for sex are unenforceable

because they are against public policy

Section 5. Detrimental Reliance No one is allowed to go against the consequences of his own acts.

Art. 1938 An offer is made that is to accepted by performance the offeree relies on the promiseto his detriment when he commence performance. Earlier cause used detrimental reliance. Theofferee under 1939 is considered to have accepted as soon as he begins performance and under 1940the offeree is protected by a period of irrevocability to permit the offeree to complete.

Art. 1944 Offer of reward made to the public is binding upon the offeror this incorporates somenotions of detrimental reliance because the actor who relies on reward to his detriment is protected.

Art 1952 Rescission If a party obtains rescission of a K, for a vice of consent, such as simpleerror, he is liable when the error is his own for the loss sustained. The promisor is relived of the

obligation because it is relatively null but he nevertheless is till liable for the loss sustained.

I. Detrimental Reliancea. The Principle

i. A party may be obligated by a promise when1. Knew or should have known2. that the promise would induce the other party to rely3. to his detriment, and4. that party was reasonable in relying5. The recovery is limited to the expenses incurred or the damages

suffered as a result of the promisees reliance on the promise

6. Reliance on a gratitutious promise made without required formalitiesis not reasonablea. Is an additional grounds for enforceability (enforceability of

promises)b. Specific performance or loss sustained (may exceed expenses

incurred) and profitb. Problem and Solution at Common Law

i. In may instances a promise is made for which no consideration is given, andthe promise though the promise is not technically enforceable, relies on it tohis detriment

ii. Reasonablenessc. Detrimental Reliance and Civil Lawi. La. a promise is enforceable when

1. it gives rise to an obligation2. with a lawful cause3. not because it was supported by consideration

ii. the existence of a lawful cause is always presumediii. the party responsible for the offer should have known that reliance would be

induced by the publication.d. The Louisiana Jurisprudence


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e. Usefulnessi. granted whenever a promise is found enforceable

1. on grounds of reasonable reliance2. detrimental to the promise3. the same conclusion could be reached on different grounds, i.e. a

unilateral gratuitous contract of an innominate nature

ii. used for other reasons1. charitable subscriptions2. business, that is onerous contract

f. Reasonablenessi. if the promise excess the promisors ability to perform, reliance by the

promise would not be reasonable1. when the promisor engaged to give something beyond his means2. if it is not reasonable it will not be enforceable

ii. Reliance is also unreasonable when placed on the kind of gratuitous promisefor the validity for which a formality is required, and the promise has beenmade only informally

1. reliance on a gratuitous donation not made in authentic form is notreasonable

g. Recovery may be limited to the expenses incurred by the relianceh. Reliance by a Third Party, when the promise is such that its performance would

benefit a party other than the promisee it is foreseeable that the beneficiary may relyon the promise.

i. It is enforceable for the same reason it would be reasonable for the originalparties to recover

ii. When a contract contains a stipulation pour autruii. Detrimental ReliancePlace in the Civil Code

3 elements of estoppelan affirmative defense alleging good faith reliance on a misleadingrepresentation and an injury or detrimental change in position resulting on that reliance:

1. Representation by conduct or word.2. Justifiable reliance3. A change in ones position to his detriment.

Case Law:Hebert v. McGuire

- Detrimental Reliance v. Gratuitous Contract- Gratuitous Promise v A Gratuitous contract-

The have not given up any money are taken anything out your patrimony, this person if justbeing nice. When there is no money taken out of no where, the it is done by being nice. Isthere a certain type of form or donation inter vivos, does it need to be authenticated.

- the doctors office agreed before the surgery to file the claim, the promise was part of anenforceable contract.

- If the promise came after, the situation would be based on a more gratuitous promise, inwhich estoppel would not apply.

- Either way, the pl breach of promise to the def to take care of the insurance claim caused thedef to suffer the loss of insurance benefits.


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- The def are liable for the 20% the insurance would not have relieved them of.Edinburgh v. Edinburgh

- 1967 Comment (F): a promise to make a disposition mortis causa is enforceable againstpromisors estate when the formal disposition is not made

- a representation was made- justifiable reliance upon that representation- a change in position to ones determinant because of the reliant.,-

Kethley v. Draughon Business College Inc.- The Ds promise to pay hime more for teaching two course than for teaching one are

enforceable obligations under. La. C.C. art 1967- The court may grant specific performance or damages, in this case the pl will receive

damages.- Can ground reliance on a promise. Also, unjust enrichmentsomeone receives something

and another is impoverished by giving something. If there is no cause, the one impoverishedcan be owed something.

Martin v. Schluntz- Since there was no contract between the parties, the trial ct correctly assumed the lease was

month to month.

- The pl established detrimental reliance only for those months the tenant occupied thepremises. The pl is not deserving of alleged incurred expenses other than that which thetenant legally occupied the apartment.

Chapter VApplying the Theory of Cause

A Natural obligation is a sui generis type of obligation regulated by articles 1760-1762 of the La.C.C.;

Section 1. Natural Obligations

La. C.C. arts 1760, 1761, and 1762a. General Principles

i. Civil Obligations and Natural Obligations4. Natural obligations do not produce a civil obligation

A. meaning that performance can be enforcedB. The creditor can demand the debtor perform5. Natural obligation which are perform can not be recoveredA. The debtor can not recover any performance he rendered

voluntarilyi. Performing the obligation out of his own free will in

which case he may not reclaims that performancebecause the obligee has now a right to keep it


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ii. By giving the obligee a promise that he will render aperformance in which case the obligee now acquires aright to demand that performance.

iii. Requirements for turning a moral duty into a natural obligation1. the duty must be felt toward the particular person and not toward all

persons in general

2. The duty must be such that it can be fulfilled through renderingperformance whose object is pecuniary value.

Note:- A contract made for the performance of a natural obligation is onerous. A contract which

depletes the patrimony is not a donation but an onerous K.- A Natural Obligation: the party is not bestowing a liberality, rather he is acting out a sense

of obligation, a particular moral obligation which we want encourage the enforcement of,this we do not require any form.

Art. 1762: Gives examples of circumstances giving rise to a natural obligation. Non-exclusive, if it

is not in the list we must determine if the obligation natural or only moral.

1. When a civil obligation is extinguished by prescription or discharged in bankruptcy.**This distinguishes between mere generosity, which constitutes a gratuitous cause, and obedienceto a moral duty, which may determine the cause as onerous.Ex. After I declared bankruptcy, I never paid you any money I owed you. I transfer land or moneyto you because I never paid you. If I regret doing this or I die and my kids want to reassertproperty.Natural obligation is owed and it is onerous. The cause is generosity and it is not

authentic. 1761 states you cannot reclaim.

2. When an obligation has been incurred by a person, who, although endowed with discernment,lacks legal capacity

b. Moral Duty and Legal Dutya. The La. C.C. does not exactly define natural obligations

i. States that, they arise from circumstances in which the law implies aparticular moral duty to render performance

b. A moral duty is traditionally described as a duty of conscience, which hints at isdifference from a legal duty

c. A legal duty is correlative of a right to demand a performanced. A moral duty contrains from within while a legal one constraints from without

c. Moral Duty and Natural Obligationa. When a person feels a moral duty that is so strong toward another person that dutybecomes an element of a clearly identifiable relation called a natural obligation.b. Though an act of his own, the obligor may promote his natural obligation to the rank

of a civil one.

d. Turning a Moral Duty into a Natural Obligation- Requirmentsa. Felt toward particular personb. Special Circumstancesc. Pecuniary Value of the performance


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d. Recognition of the obligation by the obligore. May not impair public order

e. Reflection in Retrospect Judicial Discretiona. The idea of a natural obligation does not lend itself to a definitive and exclusive list.b. Great discretion must be exercised by the court in concluding thatc. A moral duty may become a structural part of a natural obligation

f. Cause and Natural ObligationCase Law:

Thomas v. Bryant- While a natural obligation is not judicially enforceable, it can serve as the cause or

consideration for a civil obligation- A K is gratuitous when one party obligates himself toward another for the benefit of the

latter- Not every moral duty will serve as a basis of a natural obligation

(1)the moral duty must be felt towards a particular person(2)has to feel so strongly about the moral duty that he truly feels he owes a debt(3)the duty can be fulfilled through rendering a performance where object is of

pecuniary value(4)Recognition of the obligation by the obligor must occur, either by performing the

obligation or by promising to perform(5)Can not be contrary to public order.

- A contract made of the performance of a natural obligation is onerousIt does not requiresthat the promise be made to the one whom the obligation is owed, so the K is onerous andenforceable under 1761

Wortmann v. French

- In order to revive a liability on a debt discharged in bankruptcy pr to create a newenforceable obligation, there must be an express promise to pay the specific debt, made tothe creditor or his agent and while no particular form or language is necessary, to constitutesuch a new promise there must be a clear, distinct, and unequivocal recognition and renewalof the debt as a binding obligation, anything short thereof being insufficient, as, for example,the mere acknowledgement of the discharged debt, or the expression of hope, desire,expectation or intention to pay or revive the same.

II. Effectsa. Preliminary Remark:

i. The true effect of a natural obligation is indistinguishable from itsfunction

ii. Which is to serve as the cause required for a validity of a civilobligation

b. Performance not recoverablei. Outside of compulsion, fraud or duress performance for a natural

obligation is not recoverableii. Fraud make invalid whatever act is involves

iii. This counts for fraud performed by a third personc. Promise to perform = An Onerous Contract


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i. In La, a contract for a natural obligation form an onerous contract.Case Law:

Service Finance Co. of Baton Rouge Inc., v. Daigle- Any promise made to pay a debt must be made before the discharge of the bankruptcy

through formal means- In order to revive liability on a debt discharged in bankruptcy or to create a new enforceable

obligation, there must be an express promise to pay the specific debt, made to the creditor orhis agent.

- While no particular form or language is required, for there to be a new promise, thelanguage must be a clear and distinct recognition and renewal of the debt as a bindingobligation.

- An oral promise can not be implied simply from conduct recognizing the debt and the wordsmust be direct, definite, express, clear, distinct, and unambiguous.

- The creditors acceptance of an offer to make a new contract for the payment of thedischarged debt creates an enforceable contract.

- The def words of an intention to pay was nothing more than an acknowledgement of a moralobligation to pay the debt.

- The def. words and actions did not constitute an affirmation to pay the debt as enforceableobligation. Therefore, this was not an unambiguous promise but a mere recognition of amoral obligation.

Note: The defendant could not have recovered any monies paid.

Art1847-- A promise of oral evidence is inadmissible to establish either a promise to pay thedebt, the debtor can defeat by saying the promise has to be written.

Under LA law, if promise unquestionably was made to pay the debt, the promise is binding.The basis for the courts determination that the debtor was not obligated to pay the debtdischarged in bankruptcy was that the pl failed to prove the promise was clearly made. Hadthey proved it, the promise would be enforceable. This possibly could have been proved that

the promise was made through testimony. Art 1847Some promises can be proved by testimonial evidence, but others require written,

and some require authentic form. With regard to land, need promises in writing. This articlerefers to promises to pay debts to 3rdparties and prescribed debts, but does not expressly talkabout bankruptcy debts. However, it is likely by analogy to prescribed debt

Stoll v. Goodnight Corporation

- A natural obligation is not enforceable by judicial actionart 1761.- It arises by a moral duty to render a performanceart 1760.- The existence of a natural obligation serves to be an onerous agreement which wouldotherwise by considered gratuitous.- There are 5 criteria that give rise to a natural obligationart 1762 (see above).- The pl satisfies these criteria.- A natural obligation cannot be enforced by judicial action, but once a debtor recognizes and

freely performs in response to a natural obligation, he cannot recover or reclaim what hasbeen done or paidart 1761.


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- The only time recovery is allowed is when the natural obligation was paid under the effectsof fraud or violence, not mistake.

- Pl paid the loss w/o serious challenge after the manager referred her to the manual. Her fearof losing her job is not sufficient to render her decision involuntary or freely performedwithin the meaning of the civil code. She voluntarily made the payment out of a moral dutyand cannot recover her payment.

Succession of Jones:- the court found that the cheap rent and other service that Ms. Poche supplied, supported the

$5,000 gift and was an onerous contract not a donation- Donation natural obligation

Muse v. St. Paul Fire and Marine Inc- the court said that the enforceable obligation of an indigent to pay a hospital that rendered

services to him is actual obligation and payment pursuant to a natural obligation can not berecovered by an action in court.

Factors and Traders Co. v. New OrleansAny promise to pay a debt must be made before the discharge of the bankruptcy through

formal means.

Section 2. Remission of DebtLa. C.C. art 1888-1892

I. Meaning Terminology, Effecta. A remission of debt by an obligee extinguishes the obligation

i. A remission of debt is a voluntary abandonment or renunciation of thecreditor right

ii. It releases the debtor of his obligationII. Express or Tacita. The remission of a debt may be express of tacit

i. Expressed: Orally or in writingii. When a creditor makes manifest to his debtor a clean intent to accept a

certain sum in full payment o f a fee owned, he makes a voluntary remissionof any part of that debt in excess of the acknowledged amount

iii. Tacit: when the credit speaks no words,1. destroying the instrument that evidences the obligation in the presence

of the debtor2. giving a receipt for full amount owed without having received

payment

3. returns to the debtor the instrument that evidence the obligationcanceling the debt for service rendered.III. Presumption of Remission

a. Acceptance of a remission is always presumedb. This presumption is rebuttable

i. Unless the obligor rejects the rem

obligations 1[1]

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