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Obligations and Contracts – Rules of Interpretation

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Obligations and Contracts – Rules of Interpretation

Art. 2045. Determination of the intent of the parties. Interpretation of a contract is the determination of the common intent of the parties.

Art. 2046. No further interpretation when intent is clear. When the words of a contract are clear and explicit and lead to no absurd consequences, no further interpretation may be made in search of the parties’ intent.

Art. 2047. Meaning of words. The words of a contract must be given their generally prevailing meaning. Words of art and technical terms must be given their technical meaning when the contract involves a technical matter.

Art. 2048. Words susceptible of different meanings.Words susceptible of different meanings must be interpreted as having the mean­ing that best conforms to the object of the contract.

Art. 2049. Provision susceptible of different meanings. A provision susceptible of different meanings must be interpreted with a meaning that renders it effective and not with one that renders it ineffective.

Art. 2050. Provisions interpreted in light of each other. Each provision in a contract must be interpreted in light of the other provisions so that each, is given the meaning suggested by the contract as a whole.

Art. 2051. Contract worded in general terms. Although a contract is worded in general terms, it must be interpreted to cover only those things it appears the parties intended to include.

Art. 2052. Situation to which the contract applies. When the parties intend a contract of general scope but, to eliminate doubt, include a provision that describes a specific situation, interpretation must not restrict the scope of the contract to that situation alone.

An 2053. Nature of contract, equity, usages, conduct of the parties, and other contracts between same parties. A doubtful provision must be interpreted in light of the nature of the contract, equity, usages, the conduct of the parties before and after the formation of the contract, and of other contracts of a like nature between the same parties.

Art. 2054. No provision of the parties for a particular situation. When the parties made no provision for a particular situation, it must be assumed that they intended to bind themselves not only to the express provisions of.the contract, but also to whatever the law, equity, or usage regards as implied in a contract of that kind or necessary for the contract to achieve its purpose.

An 2055. Equity and usage. Equity, as intended in the preceding articles, is based on the principles that no one is allowed to take unfair advantage of another and that no one is allowed to enrich himself unjustly at the expense of another. Usage, as intended in the preceding articles, is a practice regularly observed in affairs of a nature identical or similar to the object of a contract subject to interpretation.

Art. 2056. Standard-form contracts. In case of doubt that cannot be otherwise resolved, a provision in a contract must be interpreted against the party who furnished its text. A contract executed in a standard form of one party must be interpreted, in case of doubt, in favor of the other party.

Art. 2057. Contract interpreted in favor of obligor. In case of doubt that cannot be otherwise resolved, a contract must be interpreted against the obligee and in favor of the obligor of a particular obligation. Yet, if the doubt arises from lack of a necessary explanation that one party should have given, or from negligence or fault of one party, the contract must be inter­preted in a manner favorable to the other party whether obligee or obligor.

Obligations and Contracts – Dissolution of Contract

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Obligations and Contracts – Dissolution of Contract

Art. 1875. Fortuitous event. A fortuitous event is one that, at the time the contract was made, could not have been reasonably foreseen.

Art. 1876. Contract dissolved when performance becomes impossible. When the entire performance owed by one party has become impossible because of a fortuitous event, the contract is dissolved. The other party may then recover any performance he has already rendered.

Art. 1877. Fortuitous event that has made performance impossible in part. When a fortuitous event has made a party’s performance impossible in part, the court may reduce the other party’s counter-performance proportionally, or, accord­ing to the circumstances, may declare the contract dissolved.

Art. 2013. Obligee’s right to dissolution. When the obligor fails to perform, the obligee has a right to the judicial dissolu­tion of the contract or, according to the circumstances, to regard the contract as dissolved. In either case, the obligee may recover damages. In an action involving judicial dissolution, the obligor who failed to perform may be granted, according to the circumstances, an additional time to perform.

Art; 2014. Importance of failure to perform.A contract may not be dissolved when the obligor has rendered a substantial part of the performance and the part not rendered does not substantially impair the interest of the obligee.

Art. 2015. Dissolution after notice to perform. Upon a party’s failure to perform, the other may serve him a notice to perform within a certain time, with a warning that, unless performance is rendered within that time, the contract shall be deemed dissolved. The time allowed for that purpose must be reasonable according to the circumstances. The notice to perform is subject to the requirements governing a putting of the obligor in default and, for the recovery of damages for delay, shall have the same effect as a putting of the obligor in default.

Art. 2016. Dissolution without notice to perform. When a delayed performance would no longer be of value to the obligee or when it is evident that the obligor will not perform, the obligee may regard the contract as dissolved without any notice to the obligor.

Art. 2017. Express dissolution clause. The parties may expressly agree that the contract shall be dissolved for the failure to perform a particular obligation. In that case, the contract is deemed dissolved at the time it provides for or, in the absence of such a provision, at the time the obligee gives notice to the obligor that he avails himself of the dissolution clause.

Art. 2018. Effects of dissolution. Upon dissolution of a contract, the parties shall be restored to the situation that existed before the contract was made. If restoration in kind is impossible or impracticable, the court may award damages. If partial performance has been rendered and that performance is of value to the party seeking to dissolve the contract, the dissolution does not preclude recovery for that performance, whether in contract or quasi-contract.

Art. 2021. Rights of third party in good faith
Dissolution of a contract does not impair the rights acquired through an onerous contract by a third party in good faith. If the contract involves immovable property, the principles of recordation apply to a third person acquiring an interest in the property whether by onerous or gratuitous title.

Art. 2024. Contract terminated by a party’s initiative. A contract of unspecified duration may be terminated at the will of either party by giving notice, reasonable in time and form, to the other party.

Obligations and Contracts – Nullity

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Obligations and Contracts – Nullity

Ar.t. 2029. Nullity of contracts. A contract is null when the requirements for its formation have not been met.

Art. 2030. Absolute nullity of contracts. A contract is absolutely null when it violates a rule of public order, as when the object of a contract is illicit or immoral. A contract that is absolutely null may not be confirmed. Absolute nullity may be invoked by any person or may be declared by the court on its own initiative.

Art. 2031. Relative nullity of contracts. A contract is relatively null when it violates a rule intended for the protection of private parties, as when a party lacked capacity or did not give free consent at the time the contract was made. A contract that is only relatively null may be confirmed. Relative nullity may be invoked only by those persons for whose interest the ground for nullity was established, and may not be declared by the court on its own initiative.

Art. 2032. Prescription of action. Action for annulment of an absolutely null contract does not prescribe. Action of annulment of a relatively null contract must be brought within five years from the time the ground for nullity either ceased, as in the case of incapacity or duress, or was discovered, as in the case of error or fraud. Nullity may be raised at any time as a defense against an action on the contract, even after the action for annulment has prescribed.

Art. 2033. Effects. An absolutely null contract, or a relatively null contract that has been declared null by the court, is deemed never to have existed. The parties must be restored to the situation that existed before the contract was made. If it is impossible or impracticable to make restoration in kind, it may be made through an award of damages. Nevertheless, a performance rendered under a contract that is absolutely null because its object or its cause is illicit or immoral may not be recovered by a party perform e -m be recovered, however, when that party invokes the nullity to withdraw from the contract before its purpose is achieved and also in exceptional situations when, in the discretion of the court, that recovery would further the interest of justice. Absolute nullity may be raised as a defense even by a party who, at the time the contract was made, knew or should have known of the defect that makes the contract null.

Art. 2034. Nullity of a provision. Nullity of a provision does not render the whole contract null unless, from the nature of the provision or the intention of the parties, it can be presumed that the contract would not have been made without the null provision.

Art. 2035. Rights of third party in good faith. Nullity of a contract does not impair the rights acquired through an onerous contract by a third party in good faith. If the contract involves immovable property, the principles of recordation apply to a third person acquiring an interest in the property whether by onerous or gratuitous title.

Obligations and Contracts – Performance

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Obligations and Contracts – Performance

Art. 1983. Law for the parties; performance in good faith. Contracts have the effect of law for the parties and may be dissolved only through the consent of the parties or on grounds provided by law. Contracts must be performed in good faith.

Art. 1984. Rights and obligations will pass to successors. Rights and obligations arising from a contract are heritable and assignable unless the law, the terms of the contract or its nature preclude such effects.

Art. 1985. Effects for third parties Contracts may produce effects for third parties only when provided by law.

Ar.t. 1854. Extinction by performance. Performance by the obligor extinguishes the obligation.

Art. 1855. Performance by a third person. Performance may be rendered by a third person, even against the will of the obligee, unless the obligor or the obligee has an interest in performance only by the obligor. Performance rendered by a third person effects subrogation only when so provided by law or by agreement.

Art. 1856. Valid transfer of object of performance. An obligation that may be extinguished by the transfer of a thing is not extinguished unless the thing has been validly transferred to the obligee of performance.

Art. 1857. Performance rendered to the obligee. Performance must be rendered to the obligee or to a person authorized by him. However, a performance rendered to an unauthorized person is valid if the obligee ratifies it. In the absence of ratification, a performance rendered to an unauthorized person is valid if the obligee has derived a benefit from it, but only for the amount of the benefit.

Objections and Contracts – Cause

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Objections and Contracts – Cause

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.

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

Art. 1969. Cause not expressed. An obligation may be valid even though its cause is not expressed.

Art. 1970. Untrue expression of cause. When the expression of a cause in a contractual obligation is untrue, the obligation is still effective if a valid cause can be shown.

Obligations and Contracts- Object

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Obligations and Contracts – Object

Art. 1971. Freedom of parties. Parties are free to contract for any object that is lawful, possible, and determined or determinable.

Art. 1972. Possible or impossible object. A contractual object is possible or impossible according to its own nature and not according to the parties’ ability to perform.

Art. 1973. Object determined as to kind. The object of a contract must be determined at least as to its kind. The quantity of a contractual object may be undetermined, provided it is deter­minable.

Art. 1974. Determination by third person. If the determination of the quantity of the object has been left to the discretion of a third person, the quantity of an object is determinable. If the parties fail to name a person, or if the person named is unable or unwilling to make the determination, the quantity may be determined by the court.

Art. 1975. Output or requirements. The quantity of a contractual object may be determined by the output of one party or the requirements of the other. In such a case, output or requirements must be measured in good faith.

Art. 1976. Future things. Future things may be the object of a contract. The succession of a living person may not be the object of a contract other than an antenuptial agreement. Such a succession may not be renounced.

Obligations and Contracts – Consent

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Obligations and Contracts – Consent

Art. 1927. Consent. 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.

Art. 1948. Vitiated consent. Consent may be vitiated by error, fraud, or duress.

Obligations and Contracts – Capacity

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Obligations and Contracts – Capacity

Art. 1918. General statement of capacity. All persons have capacity to contract, except unemancipated minors, interdicts, and persons deprived of reason at the time of contracting.

Revision Comment 1984: Art.1918 formulates the general principle that capacity is the rule; the lack of it, the exception.

Art. 27. General Legal Capacity. All natural persons enjoy general legal capacity to have rights and duties.

Revision Comment (b): The general legal capacity of a natural person is contrasted with his capacity to acquire rights and assume obligations by virtue of juridical acts.

Art. 28. Capacity to make juridical acts. A natural person who has reached majority has capacity to make all sorts of juridi­cal acts, unless otherwise provided by legislation.

Art. 1922. Fully emancipated minor. A fully emancipated minor has full contractual capacity.

Art. 1923. Incapacity of unemancipated minor; exceptions. A contract by an unemancipated minor may be rescinded on grounds of incapacity except when made for the purpose of providing the minor with something necessary for his support or education, or for a purpose related to his business.

Art. 1924. Mere representation of majority; reliance. The mere representation of majority by an unemancipated minor does not preclude an action for rescission of the contract. When the other party reasonably relies on the minor’s representation of majority, the contract may not be rescinded.

Obligations and Contracts – Contract Classifications

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Obligations and Contracts – Contract Classifications

Art. 1907. Unilateral contracts. A contract is unilateral when the party who accepts the obligation of the other does not assume a reciprocal obligation.

Art. 1908. Bilateral or synallagmatic contracts. A contract is bilateral, or synallagmatic, when the parties obligate themselves reciprocally, so that the obligation of each party is correlative to the obligation of the other.

Art. 1909. Onerous contracts. A contract is onerous when each of the parties obtains an advantage in exchange for his obligation.

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

Art. 1911. Commutative contracts. A contract is commutative when the performance of the obligation of each party is correlative to the performance of the other. A

rt. 1912. Aleatory contracts. A contract is aleatory when, because of its nature or according to the parties’ intent, the performance of either party’s obligation, or the extent of the perfor­mance, depends on an uncertain event.

Art. 1913. Principal and accessory contracts
A contract is accessory when it is made to provide security for the performance of an obligation. Suretyship, mortgage, pledge, and other types of security 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.

Obligations and Contracts – General effects of contracts

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Obligations and Contracts – General effects of contracts

Art. 1983. Law for the parties; performance in good faith. Contracts have the effect of law for the parties and may be dissolved only through the consent of the parties or on grounds provided by law. Contracts must be performed in good faith.

Art. 1984. Rights and obligations will pass to successors. Rights and obligations arising from a contract are heritable and assignable unless the law, the terms of the contract or its nature preclude such effects.

Art. 1985. Effects for third parties. Contracts may produce effects for third parties only when provided by law.