Security and Pledge – Default

Security and Pledge – Default

Art. 31258. Enforcement of pledge of a movable. If agreed in a written contract of pledge of a movable, the pledgee may, upon failure of performance of the secured obligation, dispose of the thing pledged at public auction or by private sale, but he shall act reasonably in disposing of the thing and shall account to the pledgor for any proceeds of the disposition in excess of the amount needed to satisfy the secured obligation. Otherwise, the pledgee may cause the sale of the thing pledged only by having it seized and sold under judicial process.

Art. 3140. Nullity of agreement of forfeiture. Unless expressly permitted by law, a clause in a contract providing in advance that ownership of a thing given as security will transfer upon default in performance of the secured obligation is absolutely null. A clause in a contract obligating the owner of a thing to give it to an obligee in payment of a debt upon a future default in performance of an obligation is absolutely null.