Obligations and Contracts – Dissolution of Contract

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.