Obligations
I. Chapter I – Theory of Obligation
A. C.C. Article 1756 – Obligations; definition
1) An obligation is a legal relationship whereby a person, called the obligor, is bound to render a performance in favor of another, called the obligee. Performance may consist of giving, doing, or not doing something
2) Every obligation contains a duty, as a necessary element, but not every duty amounts to an obligation
3) There is in every obligation an active subject, the creditor or oblige, to whom the right to demand performance belongs, and a passive subject, the debtor or obligor, who is under the duty to perform
4) Classifications of Obligations
a. obligation to give – obligor binds himself to transfer to the oblige the ownership of a thing
b. obligation to do – obligor binds himself to carry out or execute an act
c. obligation not to do – obligor binds himself to abstain from undertaking a certain course of action
Salles v Stafford – When a proposal for the sale of property provides a
provision which allows the Δ, at his discretion, to cause a new map or
resurvey to be made of the property, providing the same number of
square feet and location be retained, the agreement of the sale is not a
nullity for uncertainty of the property sold or as containing a potestative
condition.
B. Sources of Obligations – C.C. Article 1757
1) Obligations arise from contracts and other declarations of will. They also arise from the law, regardless of a declaration of will, in instances such as wrongful acts, the management of the affairs of another, unjust enrichment and other acts or facts.
2) Four sources
i. contracts – willful and lawful acts where people agree to bind themselves by obligation
ii. quasi-contracts – without agreement of persons involved which is necessary for the formation of a contract
iii. delicts – intentional torts
iv. quasi-delicts – negligent acts (unintentional torts)
Harrison v Gore – When a student is molested and sexually harassed by a
former coach and the alleged act occurred 8 years before the institution
of a suit, the nature of the duty breached determines whether the action is
in tort or in contract. If in tort, a one year prescriptive period applies and
10 years if in contract.
II. Chapter Two – Consent
C.C. Art 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 made orally, in writing, or by action or inaction that under the circumstances is clearly indicative of consent. Unless otherwise specified in the offer, there need not be conformity between the manner in which the offer is made and the manner in which the acceptance is made.
A. Four elements required for a valid contract
a. parties must have legal capacity to contract
b. parties’ mutual consent must be freely given
c. there must be a lawful cause or purpose
d. the object of the contract must be lawful, possible and determined or
determinable
Belgard d/b/a Belgard Construction Co. v Collins – If a store owner who
has suffered damage to property due to a tornado, has a belief that a
contractor is merely submitting a bid on the job, while the contractor
believes he has by his actions been hired as a consultant, there is not a
“meeting of the minds”, thus no valid contract has been formed.
B. Expressing Consent
a. Express – words (verbal or written)
b. Implied – conduct or performance
c. Silence or inaction
North LA Milk Producers v The Southland Corp -When a merchant, on
request, sends a price list to a customer who orders goods in accordance
with the price list, there is a contract formed between them for the price
and upon conditions mentioned in the price list. (Implied consent)
Marine Ins. Co., Ltd of London, Eng v Rehm – A proprietor of a parking
lot who collects fees for parking automobiles is considered a
compensated depository and is obligated to take as good care of the deposited cars as he would his own.
Cashio v Amco Transmission – When a person parks his vehicle in an unattended lot, with signs posted informing of same and retains his keys, a contract of deposit does not exist, one is hiring or letting out space, thus releasing the lot from the obligations or responsibilities of a depository for losses.
Note Statute: 1. Retain keys
2. Person knows lot is unattended
C. The Offer
1) Unilateral declaration of will that a person, the offeror, addresses to another, the offeree, whereby the former proposes to the latter the conclusion of a contract
2) Advertisement in newspapers catalogues sent by mail, handbills
1) mere invitations to invite negotiations or entice offers
2) In Louisiana, may constitute an offer susceptible of giving rise to a binding contract upon acceptance when involving contests and prizes
3) Offer may be made by action without words and, under certain circumstances, even by inaction
Johnson v Capital City Ford Co. Inc. – When a car dealer places a news-
paper advertisement to lure customers onto his lot and the wording used in
the advertisement is specific to the offer; the offeror is bound by the obligation previously offered by him in exchange for the act which the obligee has performed in response to the offer.
North Central Utilities, Inc. v Walker Comm Water System, Inc. – Requests for bids are considered only as invitations to others to make offers. For a proposal to constitute
revocation sent by a faster means.
3) Revocable Offer – operate in good faith
When the offeror does not specify a period of time for acceptance, or when he does not otherwise manifest an intent to give the offeree a delay within which to accept, the offer may be revoked before it is accepted.
4) Liability for Revocation of an Irrevocable Offer
1) LA courts do grant recovery of the full contractual benefit when offers intended as irrevocable are untimely revoked, thereby affording protection to the positive contractual interest, or expectation interest.
2) A contract may be formed under the law of LA in spite of the dissent of one of the parties.
E. Option Contracts
1) An option is a contract whereby the parties agree that one of them, the grantor of the option or offeror is bound by his offer for a specified period of time and that the other, the grantee of the option or offeree, may accept or reject the offer within that time.
2) How do options contracts and irrevocable offers differ?
(a) Option Contracts
· is a contract
· does not expire at death
· can be assigned
(b) Irrevocable offer
· is not a contract
· expires at death of either the offeror or the offeree
· cannot be assigned
Glover v Abney- Π says Δ, when alive, created an option contract to sell
land within 5 years. If it was an irrevocable offer then there is no agree-
ment (thus no option), only a unilateral declaration of will. To be valid as
as option, the instrument must be supported by a valuable consideration.
The instrument does not recite a consideration and evidence showed there
was no consideration, thus merely a naked promise to sell.
3) Specified Period of Time
(a) In LA law, thus, a specified time is a requirement for the validity of an option. There is no such requirement for a valid irrevocable offer.
(b) An option may be valid, though no time has been specified for its duration, when it is given in connection with another contract that has a specified duration of its own. In that case the option is valid for as long as the other contract remains in force.
Example: An option contained in a lease is valid for the
duration of the lease even if no time has been
specified for the option.
