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OBLIGATIONS AND CONTRACTS

JANUARY 2007
MIDTERM REVIEWER
1156. An obligation is a juridical ncssit!
to gi"# to do# or not to do.
JURIDICAL NECESSITY juridical tie c!""!te t#at
i" ca$e !% "!"c!&'lia"ce( t#ere )ill *e le+al
$a"cti!"$,
A" !*li+ati!" i$ "!t#i"+ &!re t#a" t#e
dut- !% a 'er$!" .!*li+!r/ t! $ati$%- a
$'eci%ic de&a"da*le clai& !% a"!t#er
'er$!" .!*li+ee/ )#ic#( i% *reac#ed( i$
e"%!rcea*le i" c!urt,
DAMA0ES $u& !% &!"e- +i1e" a$ a
c!&'e"$ati!" %!r t#e i"jur- !r #ar& $u%%ered *-
t#e !*li+ee %!r t#e 1i!lati!" !% #i$ ri+#t,
2 2INDS 34 35LI0ATI3N
6, CIVIL 35LI0ATI3N a" !*li+ati!"( i% "!t
%ul%illed )#e" it *ec!&e$ due a"d
de&a"da*le( &a- *e e"%!rced i" c!urt
t#r!u+# acti!" *a$ed !" la),
2. NATURAL 35LI0ATI3N a $'ecial 7i"d !%
!*li+ati!" )#ic# ca""!t *e e"%!rced i"
c!urt *ut )#ic# aut#!ri8e$ t#e rete"ti!" !%
t#e 1!lu"tar- 'a-&e"t !r 'er%!r&a"ce
&ade *- t#e de*t!r *a$ed !" e9uit- a"d
"atural la), .i,e, )#e" t#ere i$ 're$cri'ti!"
!% dut- t! 'a-( $till( t#e !*li+!r 'aid #i$
due$ t! t#e !*li+ee t#e !*li+!r ca""!t
rec!1er #i$ 'a-&e"t e1e" t#ere i$
're$cri'ti!"/
ELEMENTS 34 35LI0ATI3N
6, ACTIVE SU5JECT .Credit!r : 3*li+ee/ t#e
'er$!" )#! i$ de&a"di"+ t#e 'er%!r&a"ce
!% t#e !*li+ati!"
2, ;ASSIVE SU5JECT .De*t!r : 3*li+!r/ t#e
!"e *!u"d t! 'er%!r& t#e 're$tati!" !r t!
%ul%ill t#e !*li+ati!" !r dut-
<, ;RESTATI3N . t! +i1e( t! d!( !r "!t t! d!/
$u*ject &atter !% t#e !*li+ati!" c!"duct
re9uired t! *e !*$er1ed *- t#e de*t!r
=, E44ICIENT CAUSE t#e JURIDICAL TIE
)#ic# *i"d$ t#e 'artie$ t! t#e !*li+ati!"
$!urce !% t#e !*li+ati!",
;RESTATI3N
6, T3 0IVE deli1er- !% a t#i"+ t! t#e
credit!r .i" $ale( de'!$it( 'led+e(
d!"ati!"/
2. T3 D3 c!1er$ all 7i"d$ !% )!r7$ !r
$er1ice$ .c!"tract %!r 'r!%e$$i!"al
$er1ice$/
<, N3T T3 D3 c!"$i$t$ !% re%rai"i"+ %r!&
d!i"+ $!&e act$ .i" %!ll!)i"+ rule$ a"d
re+ulati!"$/,
INJURY )r!"+%ul act !r !&i$$i!" )#ic#
cau$e$ l!$$ !r #ar& t! a"!t#er
DAMA0E re$ult !% i"jur- .l!$$( #urt(
#ar&/
115$. Obligation ariss %ro& ' (1) la*+ (,)
contracts+ (-) .uasi/contracts+ (0) acts or
o&issions 1unis2d b! la*+ (5) .uasi/
dlicts.
LAW i&'!$ed *- la) it$el%
C3NTRACTS ari$e %r!& $ti'ulati!"$ !% t#e
'artie$> &eeti"+ !% t#e &i"d$ : %!r&al a+ree&e"t
?UASI@C3NTRACTS ari$e %r!& la)%ul( 1!lu"tar-
a"d u"ilateral act$ a"d )#ic# are e"%!rcea*le t!
t#e e"d t#at "! !"e $#all *e u"ju$tl- e"ric#ed !r
*e"e%ited at t#e eA'e"$e !% a"!t#er
DELICTS ari$e %r!& ci1il lia*ilit- )#ic# i$ t#e
c!"$e9ue"ce !% a cri&i"al !%%e"$e
?UASI@DELICTS .t!rt$/ ari$e %r!& da&a+e
cau$ed t! a"!t#er t#r!u+# a" act !r !&i$$i!"(
t#ere *ei"+ "! %ault !r "e+li+e"ce( *ut "!
c!"tractual relati!" eAi$t$ *et)ee" t#e 'artie$
BB 2 $!urce$ !% !*li+ati!"$> la) a"d c!"tract 9@
c!"tract( delict$( a"d 9@delict$ are i&'!$ed *-
la),
1153. Obligations %ro& la* ar not
1rsu&d. Onl! t2os (1) 41rssl!
dtr&ind in t2is cod or (,) in s1cial
la*s ar d&andabl# and s2all b
rgulatd b! t2 1rc1ts o% t2 la* *2ic2
stablis2s t2&+ and as to *2at 2as not
bn %orsn# b! t2 1ro"isions o% t2is
cod.
U"le$$ $uc# !*li+ati!"$ are EC;RESSLY
'r!1ided *- la)( t#e- are "!t de&a"da*le
a"d e"%!rcea*le( a"d ca""!t *e 're$u&ed
t! eAi$t,
T#e Ci1il C!de ca" *e a''lica*le
$u''let!ril- t! !*li+ati!"$ ari$i"+ %r!&
la)$ !t#er t#a" t#e Ci1il C!de it$el%,
S'ecial la)$ re%er t! all !t#er la)$ "!t
c!"tai"ed i" t#e Ci1il C!de,
1155. Obligations arising %ro& contracts
2a" t2 %orc o% la* bt*n t2
contracting 1artis and s2ould b co&1lid
*it2 in good %ait2.
C3NTRACT &eeti"+ !% &i"d$ *et)ee" t)!
'er$!"$ )#ere*- !"e *i"d$ #i&$el%( )it# re$'ect
t! t#e !t#er( t! +i1e( t! d! $!&et#i"+ !r t! re"der
$!&e $er1ice +!1er"ed 'ri&aril- *- t#e
a+ree&e"t !% t#e c!"tracti"+ 'artie$,
VALID C3NTRACT it $#!uld "!t *e a+ai"$t t#e
la)( c!"trar- t! &!ral$( +!!d cu$t!&$( 'u*lic
!rder( a"d 'u*lic '!lic-,
I" t#e e-e$ !% la)( a 1!id c!"tract d!e$
"!t eAi$t a"d "! !*li+ati!" )ill ari$e %r!&
it,
35LI0ATI3NS ARISIN0 4R3M C3NTRACTS
'ri&aril- +!1er"ed *- t#e $ti'ulati!"$( clau$e$(
ter&$ a"d c!"diti!"$ !% t#eir a+ree&e"t$,
I% a c!"tractD$ 're$tati!" i$ u"c!"$ci!"a*le
.u"%air/ !r u"rea$!"a*le( e1e" i% it d!e$
6 7anna 8ag9asi :ag
1
OBLIGATIONS AND CONTRACTS
JANUARY 2007
MIDTERM REVIEWER
"!t 1i!late &!ral$( la)( etc,( it &a- "!t *e
e"%!rced t!tall-,
I"ter'retati!" !% c!"tract i"1!l1e$ a
9ue$ti!" !% la),
C3M;LIANCE IN 033D 4AITE c!&'lia"ce !r
'er%!r&a"ce i" acc!rda"ce )it# t#e $ti'ulati!"$
!r ter&$ !% t#e c!"tract !r a+ree&e"t,
4ALSI4ICATI3N 34 A VALID C3NTRACT !"l- t#e
u"aut#!ri8ed i"$erti!"$ )ill *e di$re+arded t#e
!ri+i"al ter&$ a"d $ti'ulati!"$ $#!uld *e
c!"$idered 1alid a"d $u*$i$ti"+ %!r t#e 'artied t!
%ul%ill,
116;. Obligations dri"d %ro& .uasi/
contracts s2all b subjct to t2 1ro"isions
o% c2a1tr 1# titl 1$ o% t2is boo9.
?UASI@C3NTRACT juridical relati!" re$ulti"+
%r!& la)%ul( 1!lu"tar- a"d u"ilateral act$ *-
1irtue !% )#ic#( *!t# 'artie$ *ec!&e *!u"d t!
eac# !t#er( t! t#e e"d t#at "! !"e )ill *e u"ju$tl-
e"ric#ed !r *e"e%ited at t#e eA'e"$e !% t#e !t#er,
T#ere i$ "! c!"$e"t c!"$e"t i$
;RESUMED,
6, NE03TI3RUM 0ESTI3 juridical relati!"
)#ic# ta7e$ 'lace )#e" $!&e*!d-
1!lu"taril- - &a"a+e$ t#e 'r!'ert- a%%air$
!% a"!t#er )it#!ut t#e 7"!)led+e !r
c!"$e"t !% t#e latter !)"er $#all
rei&*ur$e t#e +e$t!r %!r "ece$$ar- a"d
u$e%ul eA'e"$e$ i"curred *- t#e latter %!r
t#e 'er%!r&a"ce !% #i$ %u"cti!" a$ +e$t!r,
2, S3LUTI3 INDE5ITI $!&et#i"+ i$ recei1ed
)#e" t#ere i$ "! ri+#t t! de&a"d it a"d it
)a$ u"dul- deli1ered t#r!u+# &i$ta7e
!*li+ati!" t! retur" t#e t#i"+ ari$e$ !" t#e
'art !% t#e reci'ie"t,
1161. Ci"il obligations arising %ro& cri&inal
o%%nss s2all b go"rnd b! t2 1nal
la*s# subjct to t2 1ro"isions o% Articl
,1$$# and o% t2 1rtinnt 1ro"isions o%
C2a1tr ,# :rli&inar! in 7u&an Rlations#
and o% Titl 13 o% t2is boo9# rgulating
da&ags.
E1er- 'er$!" cri&i"all- lia*le %!r a %el!"-
i$ al$! cri&i"all- lia*le .art, 600( R;C/
CRIMINAL LIA5ILITY INCLUDES>
6, RESTITUTI3N re$t!rati!" !% 'r!'ert-
're1i!u$l- ta7e" a)a- t#e t#i"+ it$el%
$#all *e re$t!red( e1e" t#!u+# it *e %!u"d
i" t#e '!$$e$$i!" !% a t#ird 'er$!" )#!
#a$ ac9uired it *- la)%ul &ea"$( $a1i"+ t!
t#e latter #i$ acti!" a+ai"$t t#e 'r!'er
'er$!" )#! &a- *e lia*le t! #i&,
2, RE;ARATI3N 34 TEE DAMA0E CAUSED
c!urt deter&i"e$ t#e a&!u"t !% da&a+e>
'rice !% a t#i"+( $e"ti&e"tal 1alue( etc,
<, INDEMNI4ICATI3N 43R C3NSE?UENTIAL
DAMA0ES i"clude$ da&a+e$ $u%%ered *-
t#e %a&il- !% t#e i"jured 'art- !r *- a t#ird
'er$!" *- rea$!" !% t#e cri&e,
T#e ac9uittal !% t#e accu$ed i" t#e
cri&i"al ca$e !" +r!u"d !% rea$!"a*le
d!u*t d!e$ "!t 'reclude t#e %ili"+ !% a
$u*$e9ue"t ci1il acti!",
116,. Obligations dri"d %ro& .uasi/dlicts
s2all b go"rnd b! t2 1ro"isions o%
c2a1tr ,# titl 1$ o% t2is boo9# and b!
s1cial la*s.
?UASI@DELICT .cul'a a9uilia"a/ a" act !r
!&i$$i!" * a 'er$!" )#ic# cau$e$ da&a+e t!
a"!t#er +i1i"+ ri$e t! a" !*li+ati!" t! 'a- %!r t#e
da&a+e d!"e( t#ere *ei"+ %ault !r "e+li+e"ce
*ut t#ere i$ "! 're@eAi$ti"+ c!"tractual relati!"
*et)ee" 'artie$,
RE?UISITES>
6, !&i$$i!"
2, "e+li+e"ce
<, da&a+e cau$e t! t#e 'lai"ti%%
=, direct relati!" !% !&i$$i!"( *ei"+ t#e
cau$e( a"d t#e da&a+e( *ei"+ t#e e%%ect
F, "! 're@eAi$ti"+ c!"tractual relati!"$
*et)ee" 'artie$
4ault !r Ne+li+e"ce c!"$i$t$ i" t#e !&i$$i!" !%
t#at dili+e"ce )#ic# i$ re9uired *- t#e "ature !%
t#e !*li+ati!" a"d c!rre$'!"d$ )it# t#e
circu&$ta"ce$ !% t#e 'er$!"( ti&e( a"d !% t#e
'lace,
TEST 34 NE0LI0ENCE
Did t#e de%e"da"t( i" d!i"+ t#e alle+ed "e+li+e"t
act(( u$e t#e rea$!"a*le care a"d cauti!" )#ic#
a" !rdi"ar- 'rude"t &a" )!uld #a1e u$ed i" t#e
$a&e $ituati!"G
BASIS D<LICTS =>ASI/
D<LICTS
6, INTENT Cri&i"al:&alici!u
$
Ne+li+e"ce
2, INTEREST A%%ect$ ;U5LIC
i"tere$t
A%%ect$ ;RIVATE
i"tere$t
<, LIA5ILITY Cri&i"al a"d ci1il
lia*ilitie$
Ci1il lia*ilit-
=, ;UR;3SE ;ur'!$e
'u"i$#&e"t
I"de&"i%icati!"
F,
C3M;R3MIS
E
Ca""!t *e
c!&'r!&i$ed
Ca" *e
c!&'r!&i$ed
H, 0UILT ;r!1ed *e-!"d
rea$!"a*le d!u*t
;re'!"dera"ce
!% e1ide"ce
Basis Cul1a Cul1a
6 7anna 8ag9asi :ag
,
OBLIGATIONS AND CONTRACTS
JANUARY 2007
MIDTERM REVIEWER
A.uiliana
(=uasi/dlict)
Contractual
(Brac2 o%
contract)
6, NATURE
34
NE0LI0EN
CE
Direct(
$u*$ta"ti1e
a"d
i"de'e"de"t
I"cide"tal t! t#e
'er%!r&a"ce !% t#e
!*li+ati!",
2,033D
4ATEER 34
TEE 4AMILY
DE4ENSE
C!&'lete a"d
'r!'er de%e"$e
.'are"t$(
+uardia"(
e&'l!-er$/
N!t c!&'lete a"d
'r!'er de%e"$e i"
t#e $electi!" !%
e&'l!-ee$,
<,;RESUM;
TI3N 34
NE0LI0EN
CE
N!
're$u&'ti!"
i"jured 'art-
&u$t 'r!1e
"e+li+e"ce !%
t#e de%e"da"t,
T#ere i$
're$u&'ti!"
de%e"da"t &u$t
'r!1e t#at t#ere
)a$ "! "e+li+e"ce
i" t#e carr-i"+ !ut
!% t#e ter&$ !% t#e
c!"tract,
116-. <"r! 1rson obligd to gi"
so&t2ing is also obligd to ta9 car o% it
*it2 t2 1ro1r dilignc o% a good %at2r
o% a %a&il!# unlss t2 la* or t2 sti1ulation
o% t2 1artis r.uirs anot2r standard o%
car.
S'ea7$ !% a" !*li+ati!" t! care !% a
DETERMINATE t#i"+ .t#at i$ !"e )#ic# i$
$'eci%ic a t#i"+ ide"ti%ied *- it$
i"di1idualit-/ )#ic# a" !*li+!r i$ $u''!$ed
t! deli1er t! a"!t#er,
DUTIES 34 DE5T3R>
6, ;re$er1e !r ta7e care !% t#e t#i"+$ due,
a, DILI0ENCE 34 A 033D 4ATEER a
+!!d %at#er d!e$ "!t a*a"d!" #i$
%a&il-( #e i$ al)a-$ read- t! 'r!1ide
a"d 'r!tect #i$ %a&il- !rdi"ar- care
)#ic# a" a1era+e a"d rea$!"a*l-
'rude"t &a" )!uld d!,
*, AN3TEER STANDARD 34 CARE
eAtra!rdi"ar- dili+e"ce 'r!1ided i"
t#e $ti'ulati!" !% 'artie$,
c. 4ACT3RS T3 5E C3NSIDERED
dili+e"ce de'e"d$ !" t#e "ature !%
!*li+ati!" a"d c!rre$'!"d$ )it# t#e
circu&$ta"ce$ !% t#e 'er$!"( ti&e(
a"d 'lace,
De*t!r i$ "!t lia*le i% #i$ %ailure t! deli1er
t#e t#i"+ i$ due t! %!rtuit!u$ e1e"t$ !r
%!rce &ajeureI )it#!ut "e+li+e"ce !r
%ault i" #i$ 'art,
2, Deli1er t#e %ruit$ !% a t#i"+
<, Deli1er t#e acce$$i!"$:acce$$!rie$
=, Deli1er t#e t#i"+ it$el%
F, A"$)er %!r da&a+e$ i" ca$e !% "!"@
%ul%ill&e"t !r *reac#
1160. T2 crditor 2as a rig2t to t2 %ruits
o% t2 t2ing %ro& t2 ti& t2 obligation to
dli"r it ariss. 7o*"r# 2 s2all ac.uir
no ral rig2t o"r it until t2 sa& 2as bn
dli"rd to 2i&.
3)"er$#i' i$ tra"$%erred *- deli1er- )#ic#
c!uld *e eit#er actual !r c!"$tructi1e,
T#e re&ed- !% t#e *u-er #e" t#ere i$ "!
deli1er- de$'ite de&a"d i$ t! %ile a
c!&'lai"t %!r JS;ECI4IC ;ER43RMANCE
AND DELIVERYK *ecau$e #e i$ "!t -et t#e
!)"er !% t#e 'r!'ert- *e%!re t#e deli1er-,
ACTUAL DELIVERY actual deli1er- !% a t#i"+
%r!& t#e #a"d !% t#e +ra"t!r t! t#e #a"d !% t#e
+ra"tee .'re$!"all-/( !r &a"i%e$ted *- certai"
'!$$e$$!r- act$ eAecuted *- t#e +ra"tee )it# t#e
c!"$e"t !% t#e +ra"t!r .realt-/,
C3NSTRUCTIVE TRADITI3N re're$e"tati1e !%
$-&*!lical i" e$$e"ce a"d )it# i"te"ti!" t!
deli1er t#e !)"er$#i',
4RUITS>
6, NATURAL $'!"ta"e!u$ 'r!duct$ !% t#e
$!il( t#e -!u"+ a"d !t#er 'r!duct$ !%
a"i&al$
2, INDUSTRIAL 'r!duced *- la"d$ !% a"-
culti1ati!" !r la*!r
<, CIVIL t#!$e deri1ed *- 1irtue !% juridical
relati!",
1165. ?2n *2at is to b dli"rd is a
dtr&inat t2ing# t2 crditor @ &a!
co&1l t2 dbtor to &a9 dli"r!. I% t2
t2ing is indtr&inat or gnric# 2 &a!
as9 t2at t2 obligation b co&1lid *it2 at
t2 41ns o% t2 dbtor. I% t2 obligor
dla!s or 2as 1ro&isd to dli"r t2 sa&
ting to t*o or &or 1rsons *2o do not
2a" t2 sa& intrst# 2 s2all b
rs1onsibl %or an! %ortuitous "nt until 2
2as %%ctd t2 dli"r!.
DETERMINATE TEIN0
$!&et#i"+ )#ic# i$ $u$ce'ti*le !%
'articular de$i+"ati!" !r $'eci%icati!"
!*li+ati!" i$ eAti"+ui$#ed i% t#e t#i"+ i$
l!$t due t! %!rtuit!u$ e1e"t$,
INDETERMINATE TEIN0
$!&et#i"+ t#at #a$ re%ere"ce !"l- t! a
cla$$ !r +e"u$
!*li+ati!" t! deli1er i$ "!t $! eAti"+ui$#ed
*- %!rtuit!u$ e1e"t$,
REMIDIES 43R 4AILURE 34 DELIVERY
.deter&i"ate t#i"+/
6, C!&'lai"t %!r $'eci%ic 'er%!r&a"ce a"
acti!" t! c!&'el t#e %ul%ill&e"t !% t#e
!*li+ati!",
2, C!&'lai"t %!r re$ci$$i!" !% t#e !*li+ati!"
acti!" t! re$ci"d
<, C!&'lai"t %!r da&a+e$ acti!" t! clai&
%!r c!&'e"$ati!" !% da&a+e$ $u%%ered
A$ a +e"eral rule( J"! 'er$!" $#all *e
re$'!"$i*le %!r t#!$e e1e"t$ )#ic# c!uld
6 7anna 8ag9asi :ag
-
OBLIGATIONS AND CONTRACTS
JANUARY 2007
MIDTERM REVIEWER
"!t *e %!re$ee"( !r )#ic#( t#!u+#
%!re$ee"( are i"e1ita*le( eAce't>
a, i" ca$e$ eA're$$l- $'eci%ied *- t#e
la)
*, )#e" it i$ $ti'ulated *- t#e 'artie$
c, )#e" t#e "ature !% t#e !*li+ati!"
re9uire$ a$$u&'ti!" !% ri$7
A" i"deter&i"ate t#i"+ ca""!t *e !*ject !%
de$tructi!" *- a %!rtuit!u$ e1e"t *ecau$e
+e"u$ "e1er 'eri$#e$,
1166. T2 obligation to gi" a dtr&inat
t2ing includs t2at o% dli"ring all its
accssions and accssoris# "n t2oug2
t2! &a! not 2a" bn &ntiond.
ACCESSI3NS %ruit$ !% t#e t#i"+ !r additi!"$ t!
!r i&'r!1e&e"t$ u'!" t#e 'ri"ci'al,
ACCESS3RIES t#i"+$ i"cluded )it# t#e 'ri"ci'al
%!r t#e latterD$ e&*elli$#&e"t( *etter u$e( !r
c!&'leti!"
E!)e1er( t#e 'artie$ &a- $ti'ulate t#e
certai" acce$$i!"$ !r acce$$!rie$ )#ic#
$#all *e eAcluded a$ t#e- #a1e %reed!& t!
$ti'ulate,
116$. I% a 1rson obligd to do so&t2ing
%ails to do it# t2 sa& s2all b 4cutd at
2is cost. T2is sa& rul s2all b obsr"d i%
2 dos it in contra"ntion o% t2 tnor o%
t2 obligation @ it &a! b dcrd t2at
*2at 2as bn 1oorl! don b undon.
TEREE SITUATI3NS>
6, De*t!rD$ %ailure t! 'er%!r& a" !*li+ati!"
@ credit!r &a- d! t#e !*li+ati!"( !r
*- a"!t#er( at t#e eA'e"$e !% t#e
de*t!r
@ rec!1er da&a+e$
2, ;er%!r&a"ce )a$ c!"trar- t! t#e ter&$
a+reed u'!"
@ !rder !% t#e c!urt t! u"d! t#e $a&e
at t#e eA'e"$e !% t#e de*t!r
<, ;er%!r&a"ce i" a '!!r &a""er
@ !rder !% t#e c!urt t! u"d! t#e $a&e
at t#e eA'e"$e !% t#e de*t!r
1163. ?2n t2 obligation consists in NOT
DOING and t2 obligor dos *2at 2as bn
%orbiddn 2i&# it s2all also b undon at 2is
41ns.
1165. T2os obligd to dli"r or to do
so&t2ing incur in dla! %ro& t2 ti& t2
oblig judiciall! or 4trajudiciall! d&ands
%ro& t2& t2 %ul%ill&nt o% t2ir
obligation.
7o*"r# t2 d&and b! t2 crditor s2all
not b ncssar! in ordr t2at dla! &a!
4istsA
1. ?2n t2 la* or obligation so
41rssl! dclars+
,. ?2n %ro& t2 natur o% t2
contract# ti& us t2 ssnc and
&oti"ating %actor %or its
stablis2&nt+
-. ?2n d&and *ould b uslss
(1rstation is i&1ossibl)+
0. In rci1rocal obligations# %ro& t2
&o&nt on o% t2 1artis %ul%ills 2is
obligation+
5. ?2n t2 dbtor ad&its 2 is in
d%ault
3RDINARY DELAY &ere %ailure t! 'er%!r& a"
!*li+ati!" at t#e a''!i"ted ti&e,
LE0AL DELAY .DE4AULT/ ta"ta&!u"t t! "!"@
%ul%ill&e"t !% t#e !*li+ati!" a"d ari$e$ a%ter a"
eAtrajudicial !r judicial de&a"d )a$ &ade u'!"
t#e de*t!r,
2INDS 34 DE4AULT>
6, M3RA S3LVENDI dela- !" t#e 'art !% t#e
de*t!r t! %ul%ill #i$ !*li+ati!"
RE?UISITES>
a, %ailure !% t#e !*li+!r t! 'er%!r&
!*li+ati!" !" t#e DATE a+reed
u'!"
*, de&a"d .j:ej/ *- t#e credit!r
c, %ailure t! c!&'l- )it# $uc# de&a"d
E44ECTS>
a, de*t!r lia*le %!r da&a+e$ a"d
i"tere$t$
*, de*t!r lia*le %!r t#e l!$$ !% a
t#i"+ due t! a %!rtuit!u$ e1e"t
2, M3RA ACCI;IENDI dela- !" t#e 'art !%
t#e credit!r t! acce't t#e 'er%!r&a"ce !%
t#e !*li+ati!"
E%%ect$>
a, credit!r lia*le %!r da&a+e$
*, credit!r *ear$ t#e ri$7 !% l!$$ !%
t#e t#i"+
c, de*t!r "!t lia*le %!r i"tere$t %r!&
t#e ti&e !% credit!rD$ dela-
d, de*t!r relea$e #i&$el% %r!& t#e
!*li+ati!"
<, C3M;ENSATI3 M3RAE dela- !% t#e
!*li+!r$ i" reci'r!cal !*li+ati!",
E%%ect> t#e de%ault !% !"e c!&'e"$ate$
t#e de%ault !% t#e !t#er t#eir re$'ecti1e
lia*ilitie$ $#all *e !%%$et e9uita*le,
11$;. T2os *2o in t2 1r%or&anc o%
t2ir obligations ar guilt! o% %raud#
nglignc# or dla!# and t2os *2o in an!
&annr contra"n t2 tnor t2ro%# ar
liabl %or da&ags.
4RAUD .d!l!/ deli*erate i"te"ti!"al e1a$i!" !%
t#e %ait#%ul %ul%ill&e"t !% a" !*li+ati!"
NE0LI0ENCE .cul'a !r %ault/ 1!lu"tar- act !r
!&i$$i!" !% dili+e"ce( t#ere *ei"+ "! &alice(
)#ic# 're1e"t$ t#e "!r&al %ul%ill&e"t !% a"
!*li+ati!"
DELAY .&!ra/ de%ault !r tardi"e$$ i" t#e
'er%!r&a"ce !% a" !*li+ati!" a%ter it #a$ *ee"
due a"d de&a"da*le
C3NTRAVENTI3N 34 TERMS 34 35LI0ATI3N
.1i!lati!/ 1i!lati!" !% ter&$ a"d c!"diti!"$
$ti'ulated i" t#e !*li+ati!" t#i$ &u$t "!t *e due
t! a %!rtuit!u$ e1e"t,
6 7anna 8ag9asi :ag
0
OBLIGATIONS AND CONTRACTS
JANUARY 2007
MIDTERM REVIEWER
11$1. Rs1onsibilit! arising %ro& %raud is
d&andabl in all obligations. An! *ai"r o%
an action %or %utur %raud is "oid.
T! all!) $uc# )ai1er )ill "ece$$aril-
re"der t#e !*li+at!r- %!rce !% c!"tract$
illu$!r-,
T#e la) d!e$ "!t 'r!#i*it )ai1er !% a"
acti!" %!r da&a+e$ *a$ed !" %raud
alread- c!&&itted,
A"- deli*erate de1iati!" %r!& t#e "!r&al
)a- !% %ul%illi"+ t#e !*li+ati!" &a- *e a
'r!'er *a$i$ %!r clai& %!r da&a+e$ a+ai"$t
t#e +uilt- 'art-,
INCIDENTAL 4RAUD c!&&itted i" t#e
'er%!r&a"ce !% a" !*li+ati!" alread- eAi$ti"+
*ecau$e !% a c!"tract,
CAUSAL 4RAUD e&'l!-ed i" t#e eAecuti!" !%
c!"tract,
11$,. Rs1onsibilit! arising %ro&
nglignc in t2 1r%or&anc o% "r! 9ind
o% obligation is also d&andabl# but suc2
liabilit! &a! b rgulatd b! t2 courts#
according to circu&stancs.
C!urtD$ di$creti!" *ecau$e>
6, "e+li+e"ce de'e"d$ u'!" t#e
circu&$ta"ce$ !% a ca$e +!!d !r *ad
%ait# !% t#e !*li+!r &a- *e c!"$idered a$
)ell a$ t#e c!"duct !r &i$c!"duct !% t#e
!*li+ee
2, it i$ "!t a$ $eri!u$ a$ %raud,
Ne+li+e"ce lac7 !% %!re$i+#t !r 7"!)led+e
I&'rude"ce lac7 !% $7ill !r 'recauti!"
11$-. T2 %ault or nglignc o% t2 obligor
consists in 2 o&ission o% t2at dilignc
*2ic2 is r.uird b! t2 natur o% t2
obligation and corrs1onds *it2 t2
circu&stancs o% t2 1rsons# o% 2 ti&
and o% t2 1lac@ I% t2 la* or contract
dos not stat t2 dilignc *2ic2 is to b
obsr"d in t2 1r%or&anc# t2at *2ic2 is
41ctd i% a good %at2r o% a %a&il! s2all
b r.uird.
DILI0ENCE t#e atte"ti!" a"d care re9uired !% a
'er$!" i" a +i1e" $ituati!" a"d i$ !''!$ite !%
"e+li+e"ce,
NE0LI0ENCE c!"$i$t$ i" t#e !&i$$i!" !% t#at
dili+e"ce )#ic# i$ re9uired *- t#e "ature !% t#e
'articular !*li+ati!" a"d c!rre$'!"d$ )it# t#e
circu&$ta"ce$ !% t#e 'er$!"$( !% t#e ti&e( a"d !%
t#e 'lace,
2INDS !% DILI0ENCE>
6, DILI0ENCE 34 A 033D 4ATEER a +!!d
%at#er d!e$ "!t a*a"d!" #i$ %a&il-( #e i$
al)a-$ read- t! 'r!1ide a"d 'r!tect #i$
%a&il- !rdi"ar- care )#ic# a" a1era+e a"d
rea$!"a*l- 'rude"t &a" )!uld d!,
2, Dili+e"ce re9uired *- t#e la) +!1er"i"+ t#e
'articular !*li+ati!"
<, Dili+e"ce $ti'ulated *- t#e 'artie$
11$0. <4c1t in cass 41rssl! s1ci%id b!
t2 la*# or *2n it is ot2r*is dclard b!
sti1ulation# or *2n t2 natur o% t2
obligation r.uirs t2 assu&1tion o% ris9#
no 1rson s2all b rs1onsibl %or t2os
"nts *2ic2 could not b %orsn# or
*2ic2# t2oug2 %orsn# *r in"itabl.
43RTUIT3US EVENT a" !ccurre"ce !r
#a''e"i"+ )#ic# c!uld "!t *e %!re$ee" !r e1e" i%
%!re$ee"( i$ i"e1ita*le a*$!lutel- i"de'e"de"t !%
#u&a" i"ter1e"ti!" act !% 0!d,
M3RCE MAJEURE @ a" e1e"t cau$ed *- t#e
le+iti&ate !r ille+iti&ate act$ !% 'er$!"$ !t#er
t#a" t#e !*li+!r t#ere i$ #u&a" i"ter1e"ti!",
RE?UISITES 34 43RTUIT3US EVENT>
6, I"de'e"de"t !% t#e #u&a" )ill .!r at lea$t
!% t#e !*li+!rD$/
2, U"%!re$ee" !r u"a1!ida*le
<, 3% $uc# c#aracter a$ t! re"der it
i&'!$$i*le %!r t#e !*li+!r t! c!&'l- )it#
#i$ !*li+ati!" i" a "!r&al &a""er
4. 3*li+!r %ree %r!& a"-
'artici'ati!":a++ra1ati!" !% t#e i"jur- t!
t#e !*li+ee ."! "e+li+e"ce !r i&'rude"ce/
ECE;TI3NS>
6, W#e" it i$ eA're$$l- $ti'ulated t#at #e
$#all *e lia*le e1e" i% "!"@'er%!r&a"ce !%
t#e !*li+ati!" i$ due t! %!rtuit!u$ e1e"t$
2, W#e" t#e "ature !% t#e !*li+ati!" re9uire$
t#e a$$u&'ti!" !% ri$7
<, W#e" t#e !*li+!r i$ i" dela-
=, W#e" t#e !*li+!r #a$ 'r!&i$ed t#e $a&e
t#i"+ t! t)! !r &!re 'er$!"$ )#! d! "!t
#a1e t#e $a&e i"tere$t
F, W#e" t#e '!$$e$$!r i$ i" *ad %ait# a"d t#e
t#i"+ l!$t !r deteri!rated due t! %!rtuit!u$
e1e"t
6. W#e" t#e !*li+!r c!"tri*uted t! t#e l!$$ !%
t#e t#i"+,
11$$. >surious transactions s2all b
go"rnd b! s1cial la*s.
USURY c!"tracti"+ %!r !r recei1i"+ i"tere$t i"
eAce$$ !% t#e a&!u"t all!)ed *- la) %!r t#e l!a"
!r u$e !% &!"e-( +!!d$( etc,
SIM;LE L3AN !"e !% t#e 'artie$ deli1er$ t!
a"!t#er( &!"e- !r !t#er c!"$u&a*le t#i"+ u'!"
t#e c!"diti!" t#at t#e $a&e a&!u"t !% t#e $a&e
7i"d a"d 9ualit- $#all *e 'aid,
USURY LAW &a7e$ t#e u$urer$ cri&i"all- lia*le
i% t#e i"tere$t c#ar+ed !" l!a"$ are &!re t#at t#e
li&it 're$cri*ed *- la),
T#i$ la) i$ re'ealed Circular N!, L0F !%
t#e Ce"tral 5a"7 #a$ eA're$$l- re&!1ed
t#e i"tere$t ceili"+$ 're$cri*ed *- t#e
USURY LAW,
6 7anna 8ag9asi :ag
5
OBLIGATIONS AND CONTRACTS
JANUARY 2007
MIDTERM REVIEWER
11$6. T2 rci1t o% t2 1rinci1al b! t2
crditor *it2out rsr"ation *it2 rs1ct to
t2 intrst# s2all gi" ris to t2
1rsu&1tion t2at said intrst 2as bn
1aid.
T2 rci1t o% a latr install&nt o% a dbt
*it2out rsr"ation as to 1rior install&nts#
s2all li9*is rais t2 1rsu&1tion t2at
suc2 install&nts 2a" bn 1aid.
T! *e $ure )rite t#e i"tere$t a"d t#e
date$ c!1ered *- $uc# 'a-&e"t i" t#e
recei't,
11$$. T2 crditors# a%tr 2a"ing 1ursud
t2 1ro1rt! in 1ossssion o% t2 dbtor to
satis%! t2ir clai&s# &a! 4rcis all t2
rig2ts and bring all t2 actions o% t2 lattr
%or t2 sa& 1ur1os# sa" t2os *2ic2 ar
in2rnt in 2is 1rson+ t2! &a! also
i&1ugn t2 acts *2ic2 t2 dbtor &a! 2a"
don to d%raud t2&.
REMEDIES AVAILA5LE T3 CREDIT3RS 43R TEE
SATIS4ACTI3N 34 TEEIR CLAIMS>
6, EAact %ul%ill&e"t )it# ri+#t t! da&a+e$
2, EA#au$ti!" !% t#e de*t!rD$ 'r!'ertie$ $till
i" #i$ '!$$e$$i!" )rit !% attac#&e"t
.*e%!re jud+&e"t/ !r )rit !% eAecuti!" .%!r
%i"al jud+&e"t "!t -et eAecuted/
3. ACCI3N SU5R30AT3RIA a" acti!" )#ere
t#e credit!r )#!$e clai&$ #ad "!t *ee"
%ull- $ati$%ied( &a- +! a%ter t#e de*t!r$
.<
rd
'er$!"/ !% t#e de%e"da"t de*t!r,
=, ACCI3N ;AULIANA a" acti!" )#ere t#e
credit!r %ile$ a" acti!" i" c!urt %!r t#e
RESCISSI3N !% act$ !r c!"tract$ e"tered
i"t! *- t#e de*t!r de$i+"ed t! de%raud t#e
%!r&er,
11$3. Subjct to t2 la*s# all rig2ts
ac.uird in "irtu o% an obligation ar
trans&issibl# i% t2r 2as bn no
sti1ulation to t2 contrar!.
ECCE;TI3NS>
6, T#!$e "!t tra"$&i$$i*le *- t#eir "ature
li7e 'urel- 'er$!"al ri+#t$
2, T#!$e "!t tra"$&i$$i*le *- 'r!1i$i!" !%
la)
<, T#!$e "!t tra"$&i$$i*le *- $ti'ulati!" !%
'artie$,
11$5. <"r! obligation *2os 1r%or&anc
dos not d1nd u1on a %utur or uncrtain
"nt# or u1on a 1ast "nt un9no*n to t2
1artis# is d&andabl at onc.
<"r! obligation *2ic2 contains a rsolutor!
condition s2all also b d&andabl# *it2out
1rjudic to t2 %%cts o% t2 2a11ning o%
t2 "nt.
C3NDITI3N a" e1e"t )#ic# i$ *!t# %uture a"d
u"certai" u'!" )#ic# t#e eAi$te"ce !r
eAti"+ui$#&e"t !% a" !*li+ati!" i$ &ade t!
de'e"d,
;URE 35LI0ATI3N a" !*li+ati!" )#ic# d!e$ "!t
c!"tai" a"- c!"diti!" !r ter& u'!" )#ic# t#e
%ul%ill&e"t i$ &ade t! de'e"d i&&ediatel-
de&a"da*le *- t#e credit!r$ a"d t#e de*t!r
ca""!t *e eAcu$ed %r!& "!t c!&'l-i"+ )it# #i$
're$tati!",
C3NDITI3NAL 35LI0ATI3N a" !*li+ati!" $u*ject
t! a c!"diti!",
1. Su$'e"$i1e 3*li+ati!" it$ %ul%ill&e"t
+i1e$ ri$e t! a" !*li+ati!" t#e
de&a"da*ilit- !% t#e !*li+ati!" !r t#e
e%%ecti1it- !% t#e c!"tract ca" ta7e 'lace
!"l- a%ter t#e c!"diti!" #a$ *ee" %ul%illed,
2. Re$!lut!r- 3*li+ati!" it$ #a''e"i"+
eAti"+ui$#e$ t#e !*li+ati!" )#ic# i$
alread- eAi$ti"+
113;. ?2n t2 dbtor binds 2i&sl% to 1a!
*2n 2is &ans 1r&it 2i& to do so# t2
obligation s2all b d&d to b on *it2 a
1riod# subjct to t2 1ro"isions o% Articl
115$.
S'ea7$ !% a 'eri!d de'e"di"+ !" t#e )ill
!% t#e DE5T3R, I% it$ 'ur'!$e i$ t! dela-(
i&&ediate acti!" i$ all!)ed, T#e c!urt
%iAe$ t#e ter&$,
;ERI3D a %uture a"d certai" e1e"t u'!" t#e
arri1al !% )#ic#( t#e !*li+ati!" $u*ject t! it eit#er
ari$e$ !r i$ eAti"+ui$#ed,
INDICATI3NS 34 A TERM 3R ;ERI3D>
W#e" t#e de*t!r *i"d$ #i&$el% t! 'a-
6, )#e" #i$ &ea"$ 'er&it #i& t! d! $!
2, little *- little
3. a$ $!!" a$ '!$$i*le
=, %r!& ti&e t! ti&e
F, a$ $!!" a$ I #a1e t#e &!"e-
H, i" 'artial 'a-&e"t
7, )#e" i" t#e '!$iti!" t! 'a-
1131. In conditional obligations# t2
ac.uisition o% rig2ts# as *ll as t2
4tinguis2&nt or loss o% t2os alrad!
ac.uird# s2all d1nd u1on t2 2a11ning
o% t2 "nt *2ic2 constituts t2
condition.
Su$'e"$i1e C!"diti!" t#e ac9ui$iti!" !% ri+#t$
*- t#e credit!r de'e"d$ u'!" t#e #a''e"i"+ !%
t#e e1e"t )#ic# c!"$titute$ t#e c!"diti!" i% $uc#
c!"diti!" d!e$ "!t ta7e 'lace( it )!uld *e a$ !%
t#e c!"diti!"al !*li+ati!" #ad "e1er eAi$ted,
.i,e, 'r!&i$e t! +i1e a car a%ter +raduati"+ %r!&
la) $c#!!l a$ cu& laude/
Re$!lut!r- C!"diti!" t#e ri+#t$ a"d !*li+ati!"$
alread- eAi$ti"+ are u"der t#reat !% eAti"cti!"
u'!" t#e #a''e"i"+ !r %ul%ill&e"t !% $uc#
c!"diti!",
.i,e, d!"ati!" *- rea$!" !% &arria+e t#e
cele*rati!" !% &arria+e i$ a re$!lut!r- c!"diti!"
i% t#e &arria+e did "!t 'u$# t#r!u+#( t#e
d!"ati!" &a- *e re1!7ed/
6 7anna 8ag9asi :ag
6
OBLIGATIONS AND CONTRACTS
JANUARY 2007
MIDTERM REVIEWER
113,. ?2n t2 %ul%ill&nt o% t2 condition
d1nds u1on t2 sol *ill o% t2 dbtor#
t2 conditional obligation s2all b "oid. I% it
d1nds u1on c2anc or u1on t2 *ill o% a
t2ird 1rson# t2 obligation s2all ta9 %%ct
in con%or&it! *it2 t2 1ro"isions o% t2is
Cod.
A''lie$ !"l- t! $u$'e"$i1e c!"diti!"$,
< 2INDS 34 C3NDITI3NS UNDER TEIS ARTICLE>
1. ;3TESTATIVE a $u$'e"$i1e c!"diti!" )#ic#
de'e"d$ u'!" t#e )ill !% !"e !% t#e
c!"tracti"+ 'artie$ i% at t#e $!le )ill !% t#e
de*t!r( it i$ 1!id i% at t#e credit!rD$( $till 1alid,
t#i$ i$ t! 're1Ue"t t#e e$ta*li$#&e"t !%
illu$!r- !*li+ati!"$,
2. CASUAL t#e c!"diti!" de'e"d$ u'!" c#a"ce
!r t#e )ill !% a t#ird 'er$!".i,e, cell'#!"e
)arra"t-/
<, MICED t#e c!"diti!" de'e"d$ 'artl- u'!"
t#e )ill !% t#e 'artie$ a"d 'artl- u'!" c#a"ce
!r t#e )ill !% a t#ird 'er$!"
113-. I&1ossibl conditions# t2os contrar!
to good custo&s or 1ublic 1olic! and t2os
1ro2ibitd b! la* s2all annul t2 obligation
*2ic2 d1nds u1on t2&. I% t2 obligation
is di"isibl# t2at 1art t2ro% *2ic2 is not
a%%ctd b! t2 i&1ossibl or unla*%ul
condition s2all b "alid.
T2 condition not to do an i&1ossibl t2ing
s2all b considrd as not 2a"ing bn
agrd u1on.
;3SSI5LE C3NDITI3N i% it i$ ca'a*le !%
reali8ati!" !r actuali8ati!" acc!rdi"+ t! "ature(
la)( 'u*lic '!lic- !r +!!d cu$t!&$,

2 2INDS 34 IM;3SSI5LE C3NDITI3NS>
6, ;#-$icall- I&'!$$i*le ca""!t eAi$t !r ca""!t
*e d!"e i" it$ "ature
2, Le+all- I&'!$$i*le c!"trar- t! la)( +!!d
cu$t!&$( !r 'u*lic '!lic-,
W#e" a c!"diti!"al !*li+ati!" i$ V3ID
i&'!$$i*le c!"diti!"$ a""ul t#e !*li+ati!" )#ic#
de'e"d$ u'!" t#e& t#e !*li+!r 7"!)$ #i$
!*li+ati!" ca""!t *e %ul%illed( #e #a$ "! i"te"ti!"
t! c!&'l- )it# #i$ !*li+ati!",
W#e" a c!"diti!"al !*li+ati!" i$ VALID i% t#e
c!"diti!" i$ "e+ati1e ."!t t! d! a" i&'!$$i*le
t#i"+/( it i$ di$re+arded a"d t#e !*li+ati!" i$
re"dered 'ure a"d 1alid,
3"l- t#e a%%ected !*li+ati!" i$ 1!id( i% t#e
!*li+ati!" i$ di1i$i*le( a"d t#e 'art t#ere!% "!t
a%%ected *- t#e i&'!$$i*le c!"diti!" i$ 1alid,
3"l- t#e c!"diti!" i$ 1!id i% t#ere i$ alread- a 're@
eAi$ti"+ !*li+ati!" a"d it d!e$ "!t de'e"d u'!"
t#e %ul%ill&e"t !% t#e c!"diti!" )#ic# i$
i&'!$$i*le,
1130. T2 condition t2at so& "nt
2a11n at a dtr&inat ti& s2all
4tinguis2 t2 obligation as soon as t2
ti& 41irs or i% it 2as bco& indubitabl
t2at t2 "nt *ill not ta9 1lac.
;!$iti1e c!"diti!" re%er$ t! t#e %ul%ill&e"t !% a"
e1e"t !r 'er%!r&a"ce !% a" act
Ne+ati1e c!"diti!" re%er$ t! t#e "!"@%ul%ill&e"t
!r "!"@'er%!r&a"ce !% a" act,
;3SITIVE SUS;ENSIVE C3NDITI3N
T#e !*li+ati!" i$ eAti"+ui$#ed>
6, A$ $!!" a$ t#e TIME EC;IRES )it#!ut t#e
e1e"t ta7i"+ 'lace
2, A$ $!!" a$ it #a$ *ec!&e certai" t#at t#e
EVENT WILL N3T TA2E ;LACE alt#!u+# t#e
ti&e $'eci%ied #a$ "!t -et eA'ired,
BB TIME i$ t#e c!"diti!" $#!uld #a''e" %!r t#e
!*li+ati!" t! eAti"+ui$#,
1135. T2 condition t2at so& "nt *ill
not 2a11n at a dtr&inat ti& s2all
rndr t2 obligation %%cti" %ro& t2
&o&nt t2 ti& indicatd 2as la1sd# or
i% it 2as bco& "idnt t2at t2 "nt
cannot occur.
I% no ti& 2as bn %i4d# t2 condition
s2all b d&d %ul%illd at suc2 ti& as
&a! 2a" 1robabl! bn cont&1latd#
baring in &ind t2 natur o% t2
obligation.
BB T#i$ i$ a c!"diti!" !% "!"@#a''e"i"+ !% a %uture
e1e"t,
T#e !*li+ati!" $#all *ec!&e e%%ecti1e a"d
*i"di"+>
6, 4r!& t#e &!&e"t t#e ti&e i"dicated #a$
ela'$ed )it#!ut t#e e1e"t ta7i"+ 'lace
2, 4r!& t#e &!&e"t it #a$ *ec!&e e1ide"t
t#at t#e e1e"t ca""!t !ccur( alt#!u+# t#e
ti&e i"dicated #a$ "!t -et ela'$ed,
66M= @1$@ 66MF
1130
(:OSITIB<
S>S:<NSIB<)
1135
(N<GATIB<
S>S:<NSIB<)
Jon Davis obliges
himself to give the
pregnant woman Amy
Lee $5000 if she would
give birth on or before
December 30.
Jon Davis obliges
himself to give the
pregnant woman Amy
Lee $5000 if she would
!" give birth on
December 30.
a, J!" Da1i$ i$ LIA5LE i%
A&- Lee +i1e$ *irt# !"
!r *e%!re Dece&*er <0,
a, J!" Da1i$ i$ N3T
LIA5LE i% A&- Lee +i1e$
*irt# !" Dece&*er <0,
*, J!" Da1i$ i$ N3T
LIA5LE i% A&- Lee +i1e$
*irt# a%ter Dece&*er
*, J!" Da1i$ i$ LIA5LE i%
A&- Lee DID N3T +i1e
*irt# !" Dece&*er <0
6 7anna 8ag9asi :ag
$
OBLIGATIONS AND CONTRACTS
JANUARY 2007
MIDTERM REVIEWER
<0, i% A&- Lee +i1e$ *irt#
5E43RE !r A4TER
Dece&*er <0,
c, I% A&- Lee )!uld
#a1e a &i$carria+e
*e%!re Dece&*er <0(
t#e !*li+ati!" i$
ECTIN0UISEED,
c, I% A&- Lee )!uld
#a1e a &i$carria+e
*e%!re Dece&*er <0(
t#e !*li+ati!" i$
dee&ed 4UL4ILLED,
1136. T2 condition s2all b d&d
%ul%illd *2n t2 obligor "oluntaril!
1r"nts its %ul%ill&nt.
RE?UISITES>
6, T#e c!"diti!" i$ SUS;ENSIVE
2, T#e !*li+!r ACTUALLY ;REVENTS t#e
%ul%ill&e"t !% t#e c!"diti!"
<, Ee act$ V3LUNTARILY,
Malice !r %raud i$ "!t re9uired( a$ l!"+ a$
#i$ 'ur'!$e i$ t! 're1e"t t#e %ul%ill&e"t !%
t#e c!"diti!",
N! 'er$!" $#all 'r!%it *- #i$ !)" )r!"+,
113$. T2 %%cts o% a conditional obligation
to gi"# onc t2 condition 2as bn
%ul%illd# s2all rtroact to t2 da! o% t2
constitution o% t2 obligation. N"rt2lss#
*2n t2 obligation i&1oss rci1rocal
1rstations u1on t2 1artis# t2 %ruits and
intrsts during t2 1ndnc! o% t2
condition s2all b d&d to 2a" bn
&utuall! co&1nsatd. I% t2 obligation is
unilatral# t2 dbtor s2all a11ro1riat t2
%ruits and intrsts rci"d# unlss %ro&
t2 natur and circu&stancs o% t2
obligation it s2ould b in%rrd t2at t2
intntion o% t2 1rson constituting t2
sa& *as di%%rnt.
In obligations to do and not to do# t2
courts s2all dtr&in# in ac2 cas# t2
rtroacti" %%ct o% t2 condition t2at 2as
bn co&1lid *it2.
A''lie$ !"l- t! %ul%illed $u$'e"$i1e
c!"diti!"$,
Retr!acti1e $tatute
T#e e%%ect$ !% t#e !*li+ati!" i$ dee&ed t!
c!&&e"ce "!t %r!& t#e %ul%ill&e"t !% t#e
!*li+ati!" *ut %r!& t#e da- !% it$
c!"$tituti!" .$i&ilar t! t#e le+iti&ati!" !%
a "atural c#ild/
T#e article d!e$ "!t re9uire t#e deli1er- !%
%ruit$ !r 'a-&e"t !% i"tere$t$ accrui"+
.accu&ulati"+/ *e%!re t#e %ul%ill&e"t !%
t#e $u$'e"$i1e c!"diti!",
3*li+ati!"$ t! d! !r "!t t! d! t#e
retr!acti1e e%%ect $#all *e deter&i"ed *-
t#e c!urt u$i"+ it$ $!u"d di$creti!"
)it#!ut di$re+ardi"+ t#e i"te"ti!"$ !% t#e
'artie$,
1133. T2 crditor &a!# b%or t2
%ul%ill&nt o% t2 condition# bring t2
a11ro1riat actions %or t2 1rsr"ation o%
2is rig2t.
T2 dbtor &a! rco"r *2at during t2
sa& ti& 2 2as 1aid b! &ista9 in cas o%
a sus1nsi" condition.
;re$er1ati!" !% t#e ri+#t$ !% CREDIT3R t#e
de*t!r &a- re"der "u+at!r- ."!t $eri!u$( i+"!re/
t#e !*li+ati!" u'!" t#e #a''e"i"+ !% t#e
!*li+ati!",
6, Acti!" %!r 'r!#i*iti!" re$trai"i"+ t#e
alie"ati!" !% t#e t#i"+ 'e"di"+ t#e
#a''e"i"+ !% t#e $u$'e"$i1e c!"diti!"
2, Acti!" t! de&a"d $ecurit- i% t#e de*t!r
#a$ *ec!&e i"$!l1e"t
<, Acti!" t! $et a$ide alie"ati!"$ &ade *-
t#e de*t!r i" %raud !% credit!r$
=, Acti!"$ a+ai"$t ad1er$e '!$$e$$!r$ t!
i"terru't t#e ru""i"+ 're$cri'ti1e 'eri!d,
Ri+#t$ !% t#e DE5T3R e"titled t! rec!1er )#at
#a$ *ee" 'aid *- &i$ta7e 'ri!r t! t#e #a''e"i"+
!% t#e $u$'e"$i1e c!"diti!",
1135. ?2n t2 conditions 2a" bn
i&1osd *it2 t2 intntion o% sus1nding
t2 %%icac! o% an obligation to gi"# t2
%ollo*ing ruls s2all b obsr"d in cas o%
t2 i&1ro"&nt# loss or dtrioration o%
t2 t2ing during t2 1ndnc! o% t2
conditionA

L3SS
6, de*t!r )it#!ut %ault !*li+ati!" i$
eAti"+ui$#ed
2, de*t!r )it# %ault !*li+ati!" t! 'a-
da&a+e$
DETERI3RATI3N
6, de*t!r )it#!ut %ault i&'air&e"t i$ t! *e
*!r"e *- t#e credit!r
2, de*t!r )it# %ault credit!r c#!!$e$>
re$ci$$i!" !% !*li+ati!"( %ul%ill&e"t(
i"de&"it-
IM;R3VEMENT
6, *- "ature !r ti&e i&'r!1e&e"t> i"ure t!
t#e *e"e%it !% t#e credit!r
2, at t#e eA'e"$e !% t#e de*t!r +ra"ted t!
t#e u$u%ructuar-
115;. ?2n t2 conditions 2a" %or t2ir
1ur1os t2 4tinguis2&nt o% an
obligation to gi"# t2 1artis# u1on t2
%ul%ill&nt o% said conditions# s2all rturn to
ac2 ot2r *2at t2! 2a" rci"d.
In cas o% t2 loss# dtrioration or
i&1ro"&nt o% t2 t2ing# t2 1ro"isions
*2ic2# *it2 rs1ct to t2 dbtor# ar laid
do*n in t2 1rcding articl s2all b
a11lid to t2 1art! *2o is bound to rturn.
As %or t2 obligations to do and not to do#
t2 1ro"isions o% t2 scond 1aragra12 o%
Articl 113$ s2all b obsr"d as rgards
t2 %%ct o% t2 4tinguis2&nt o% t2
obligation.
Re%er$ t! t#e %ul%ill&e"t !% a re$!lut!r-
c!"diti!",
W#e" t#e re$!lut!r- c!"diti!" #a''e"ed(
t#e !*li+ati!" i$ c!"$idered a$ i% it did "!t
eAi$t,
6 7anna 8ag9asi :ag
3
OBLIGATIONS AND CONTRACTS
JANUARY 2007
MIDTERM REVIEWER
T#e 'artie$ are *!u"d t! retur" !r re$t!re
)#ate1er t#e- #a1e recei1ed %r!& eac#
!t#er Jreci'r!cal re$tituti!"K
D!"ati!" *- rea$!" !% &arria+e i% t#e
&arria+e d!e$ "!t #a''e"( $uc# d!"ati!"
$#!uld *e retur"ed t! t#e d!"!r,
L!$$( deteri!rati!" a"d i&'r!1e&e"t
+!1er"ed *- 66ML,
I" !*li+ati!"$ t! d! a"d "!t t! d!( t#e
c!urt$ $#all deter&i"e( i" eac# ca$e( t#e
retr!acti1e e%%ect !% t#e c!"diti!" t#at #a$
*ee" c!&'lied )it#,
1151. T2 1o*r to rscind obligations is
i&1lid in rci1rocal ons# in cas on o%
t2 obligors s2ould not co&1l! *it2 *2at is
incu&bnt u1on 2i&.
T2 injurd 1art! &a! c2oos bt*n t2
%ul%ill&nt and t2 rscission o% t2
obligation# *it2 t2 1a!&nt o% da&ags in
it2r cas. 7 &a! also s9 rscission#
"n a%tr 2 2as c2osn %ul%ill&nt# i% t2
lattr s2ould bco& i&1ossibl.
T2 court s2all dcr t2 rscission
clai&d# unlss t2r b just caus
aut2oriCing t2 %i4ing o% a 1riod.
T2is is undrstood to b *it2out 1rjudic
to t2 rig2ts o% t2ird 1rsons *2o 2a"
ac.uird t2 t2ing# in accordanc *it2
Articls 1-35 and 1-33 and t2 8ortgag
La*.
RESCISSI3N re$!luti!" !r ca"cellati!" !% t#e
c!"tract
A''lie$ !"l- t! reci'r!cal !*li+ati!"$
)#ere t)! 'artie$ are &utuall- de*t!r a"d
credit!r !% eac# !t#er i" t#e $a&e
tra"$acti!", T#e cau$e &u$t *e ide"tical
ad t#e !*li+ati!"$ &u$t ari$e
$i&ulta"e!u$l-,
T#e 'art- )#! ca" de&a"d re$ci$$i!"
$#!uld *e t#e 'art- )#! i$ read-( )illi"+(
a"d a*le t! c!&'l- )it# #i$ !)"
!*li+ati!"$ )#ile t#e !t#er i$ "!t ca'a*le
t! 'er%!r& #i$ !)",
REMEDIES>
6, S'eci%ic 'er%!r&a"ce !r %ul%ill&e"t
!% !*li+ati!" )it# da&a+e$
2, Re$ci$$i!" !% c!"tract )it#
da&a+e$,
E%%ect !% re$ci$$i!"> t#e 'artie$ &u$t $urre"der
)#ate1er t#e- #a1e recei1ed %r!& t#e !t#er( a"d
t#e !*li+ati!" t! 'a- i$ eAti"+ui$#ed,
I% t#ere i$ a" eA're$$ $ti'ulati!" !% aut!&atic
re$ci$$i!" *et)ee" 'artie$ $uc# re$!luti!" $#all
ta7e 'lace !"l- a%ter t#e credit!r #a$ "!ti%ied t#e
de*t!r !% #i$ c#!ice !% re$ci$$i!" $u*ject t!
judicial $cruti"-,
115,. In cas bot2 1artis 2a" co&&ittd
a brac2 o% t2 obligation# t2 liabilit! o%
t2 %irst in%ractor s2all b .uitabl!
t&1rd b! t2 courts. I% it cannot b
dtr&ind *2ic2 o% t2 1artis %irst
"iolatd t2 contract# t2 sa& s2all b
d&d 4tinguis2d# and ac2 s2all bar
2is o*n da&ags.
4IRST IN4RACT3R 2N3WN
T#e lia*ilit- !% t#e %ir$t i"%ract!r $#!uld *e
e9uita*l- reduced, e9uita*l- !%%$et eac# !t#erD$
da&a+e$,
4IRST IN4RACT3R CANN3T 5E DETERMINED
T#e c!urt $#all declare t#e eAti"+ui$#&e"t !% t#e
!*li+ati!" a"d eac# $#all *ear #i$ !)" da&a+e$,
115-. Obligations %or *2os %ul%ill&nt a
da! crtain 2as bn %i4d# s2all b
d&andabl onl! *2n t2at da! co&s.
Obligations *it2 a rsolutor! 1riod ta9
%%ct at onc# but tr&inat u1on arri"al o%
t2 da! crtain.
A da! crtain is undrstood to b t2at *2ic2
&ust ncssaril! co&# alt2oug2 it &a! not
b 9no*n *2n.
I% t2 uncrtaint! consists in *2t2r t2
da! *ill co& or not# t2 obligation is
conditional# and it s2all b rgulatd b! t2
ruls o% t2 1rcding Sction.
;ERI3D : TERM c!"$i$t$ i" a $'ace !r le"+t# !%
ti&e u'!" t#e arri1al !% )#ic#( t#e de&a"da*ilit-
!r t#e eAti"+ui$#&e"t !% a" !*li+ati!" i$
deter&i"ed it &a- *e de%i"ite .eAact date !r
ti&e i$ 7"!)"/ !r i"de%i"ite .arri1al !% date i$
u"7"!)" *ut $ure t! c!&e/,
0ENERAL CLASSI4ICATI3NS>
6, EC DIE %r!& a da- certai" +i1e ri$e t! t#e
!*li+ati!" $u$'e"$i1e e%%ect,
2, IN DIEM arri1al !% a ter& certai"
ter&i"ated t#e !*li+ati!" re$!lut!r-
e%%ect,
Ter& le"+t# !% ti&e $ure t! c!&e
C!"diti!" %act !r e1e"t u"certai" t! c!&e
Basis :riodDTr& Condition
6, TIME Al)a-$ re%er$
t! 4UTURE
Ca" re%er t!
'a$t e1e"t$
u"7"!)" t!
t#e 'artie$
2,
4UL4ILLMENT
Sure t! #a''e"
at a" eAact
date !r
i"de%i"ite ti&e
*ut $ure t!
c!&e,
Ma- !r &a-
"!t #a''e",
<, IN4LUENCE Merel- %iAe$
t#e ti&e %!r
t#e
de&a"da*ilit-
!r
'er%!r&a"ce
!% !*li+ati!",
Ma- cau$e t#e
ari$i"+ !r
ce$$ati!" !%
t#e !*li+ati!",
RE?UISITES>
6, 4uture
2, Certai"( $ure t! c!&e
<, ;#-$icall- !r le+all- '!$$i*le
6 7anna 8ag9asi :ag
5
OBLIGATIONS AND CONTRACTS
JANUARY 2007
MIDTERM REVIEWER
1150. In cas o% loss# dtrioration or
i&1ro"&nt o% t2 t2ing b%or t2 arri"al
o% t2 da! crtain# t2 ruls in Articl 1135
s2all b obsr"d.
1155. An!t2ing 1aid or dli"rd b%or t2
arri"al o% t2 1riod# t2 obligor bing
una*ar o% t2 1riod or bli"ing t2at t2
obligation 2as bco& du and
d&andabl# &a! b rco"rd# *it2 t2
%ruits and intrsts.
T#e 'a-&e"t !r deli1er- i$ d!"e *e%!re
t#e arri1al !% t#e 'eri!d,
C3NSE?UENCES>
6, I% #e )a$ "!t a)are !% t#e 'eri!d !r #e
*elie1e$ t#at t#e !*li+ati!" #a$ *ec!&e
due a"d de&a"da*le #e ca" rec!1er
)#at #e 'aid !r deli1ered i"cludi"+ %ruit$
a"d i"tere$t$
2, I% #e )a$ a)are a"d #e 'aid 1!lu"taril-
#e ca""!t rec!1er t#e deli1er- &ade it i$
dee&ed a )ai1er !% t#e *e"e%it !% t#e
ter& a"d t#e !*li+ati!" i$ c!"$idered
alread- &atured,
T#e 're$u&'ti!" i$ t#at t#e de*t!r 7"e)
t#at t#e de*t )a$ "!t -et due, Ee #a$ t#e
*urde" !% 'r!1i"+ t#at #e )a$ u"a)are !%
t#e 'eri!d,
1156. ?2n"r in an obligation a 1riod is
dsignatd# it is 1rsu&d to 2a" bn
stablis2d %or t2 bn%it o% bot2 t2
crditor and t2 dbtor# unlss %ro& t2
tnor o% t2 sa& or ot2r circu&stancs it
s2ould a11ar t2at t2 1riod 2as bn
stablis2d in %a"or o% on or o% t2 ot2r.
Ca""!t a''l- )#e" t#e c!urt )a$
aut#!ri8ed *- t#e 'artie$ t! %iA a
rea$!"a*le ter&,
T#e *e"e%it !% t#e ter& &a- *e t#e $u*ject
!% $ti'ulati!" !% t#e 'artie$,
1. Ter& i$ %!r t#e *e"e%it !% t#e de*t!r
al!"e #e ca""!t *e c!&'elled t!
'a- 're&aturel-( *ut #e ca" i% #e
de$ire$ t! d! $!,
2. Ter& i$ %!r t#e *e"e%it !% t#e
credit!r Ee &a- de&a"d
%ul%ill&e"t e1e" *e%!re t#e arri1al
!% t#e ter& *ut t#e de*t!r ca""!t
re9uire #i& t! acce't 'a-&e"t
*e%!re t#e eA'irati!" !% t#e
$ti'ulated 'eri!d,
T#e credit!r &a- #a1e rea$!"$ !t#er t#a"
t#e &aturit- !% i"tere$t( t#atD$ )#-( u"le$$
t#e credit!r c!"$e"t$( t#e de*t!r #a$ "!
ri+#t t! accelerate t#e ti&e !% 'a-&e"t
e1e" i% t#e 're&ature te"der i"clude a"
!%%er t! 'a- t#e 'ri"ci'al a"d i"tere$t i"
%ull,
115$. I% t2 obligation dos not %i4 a 1riod#
but %ro& its natur and t2 circu&stancs it
can b in%rrd t2at a 1riod *as intndd#
t2 courts &a! %i4 t2 duration t2ro%.
T2 courts s2all also %i4 t2 duration o% t2
1riod *2n it d1nds u1on t2 *ill o% t2
dbtor.
In "r! cas# t2 courts s2all dtr&in
suc2 1riod as &a! undr t2
circu&stancs 2a" bn 1robabl!
cont&1latd b! t2 1artis. Onc %i4d b!
t2 courts# t2 1riod cannot b c2angd b!
t2&.
JUDICIAL ;ERI3D 'eri!d de$i+"ated *- t#e
c!urt,
C3NTRACTUAL ;ERI3D 'eri!d %iAed *- t#e
'artie$ i" t#eir c!"tract,
C!urt )ill %iA a 'eri!d>
6, W#e" "! 'eri!d i$ &e"ti!"ed( *ut it i$
i"%era*le %r!& t#e "ature a"d
circu&$ta"ce$ !% t#e !*li+ati!" t#at a
'eri!d )a$ i"te"ded *- t#e 'artie$,
2, W#e" t#e 'eri!d i$ de'e"de"t u'!" t#e
)ill !% t#e de*t!r,
I% t#e !*li+ati!" d!e$ "!t $tate a"d i"te"d
a 'eri!d( t#e c!urt i$ "!t aut#!ri8ed t! %iA
a 'eri!d,
T#e c!urt &u$t %iA t#e durati!" !% t#e
'eri!d t! 're1e"t t#e '!$$i*ilit- t#at t#e
!*li+ati!" &a- "e1er *e %ul%illed !r t! cure
a de%ect i" a c!"tract )#ere*- it i$ &ade
t! de'e"d $!lel- u'!" t#e )ill !% !"e !%
t#e 'artie$,
C!urt ca""!t %iA t#e 'eri!d>
6, I% t#ere i$ a 'eri!d a+reed u'!" *- t#e
'artie$ a"d it #a$ alread- la'$ed !r
eA'ired,
2, 4r!& t#e 1er- &!&e"t t#e 'artie$ +i1e
t#eir acce'ta"ce a"d c!"$e"t t! t#e
'eri!d %iAed *- t#e c!urt( it *ec!&e$ a la)
+!1er"i"+ t#eir c!"tract,
1153. T2 dbtor s2all los "r! rig2t to
&a9 us o% t2 1riodA
(1) ?2n a%tr t2 obligation 2as bn
contractd# 2 bco&s insol"nt# unlss
2 gi"s a guarant! or scurit! %or t2 dbt+
(,) ?2n 2 dos not %urnis2 to t2 crditor
t2 guarantis or scuritis *2ic2 2 2as
1ro&isd+
(-) ?2n b! 2is o*n acts 2 2as i&1aird
said guarantis or scuritis a%tr t2ir
stablis2&nt# and *2n t2roug2 a
%ortuitous "nt t2! disa11ar# unlss 2
i&&diatl! gi"s n* ons .uall!
satis%actor!+
(0) ?2n t2 dbtor "iolats an!
undrta9ing# in considration o% *2ic2 t2
crditor agrd to t2 1riod+
(5) ?2n t2 dbtor att&1ts to abscond.
e$ca'e
T#e 'eri!d i$ di$re+arded a"d t#e !*li+ati!"
*ec!&e$ 'ure a"d i&&ediatel- de&a"da*le>
1. W#e" de*t!r *ec!&e$ i"$!l1e"t
T#e i"$!l1e"c- "eed "!t *e
judiciall- declared, It i$ $u%%icie"t
6 7anna 8ag9asi :ag
1;
OBLIGATIONS AND CONTRACTS
JANUARY 2007
MIDTERM REVIEWER
t#at de*t!r c!uld "!t 'a- #i$ de*t$
due t! lac7 !% &!"e- !r %u"d$,
2. W#e" t#e de*t!r d!e$ "!t %ur"i$#
+uara"tie$ !r $ecuritie$
3. W#e" +uara"tie$ !r $ecuritie$ +i1e" #a1e
*ee" i&'aired !r #a1e di$a''eared
I% $ecurit- )a$ l!$t t#r!u+#
de*t!rD$ %ault @ i&'air&e"t
I% $ecurit- )a$ l!$t t#r!u+#
%!rtuit!u$ e1e"t @ di$a''eara"ce
4. W#e" de*t!r 1i!late$ a" u"derta7i"+
I% $uc# u"derta7i"+ i$ t#e rea$!"
%!r t#e credit!r t! a+ree )it# $uc#
'eri!d,
5. W#e" de*t!r atte&'t$ t! a*$c!"d
.e$ca'e/,
Mere atte&'t t! a*$c!"d i$
$u%%icie"t, It i$ a" i"dicati!" !% *ad
%ait#,
1155. A 1rson altrnati"l! bound b!
di%%rnt 1rstations s2all co&1ltl!
1r%or& on o% t2&.
T2 crditor cannot b co&1lld to rci"
1art o% on and 1art o% t2 ot2r
undrta9ing.
35LI0ATI3NS WITE ;LURAL ;RESTATI3NS>
6, C3NJUNCTIVE:C3M;3UND 35LI0ATI3N @
a" !*li+ati!" )#ere t#e de*t!r #a$ t!
'er%!r& ALL t#e $e1eral 're$tati!"$ i" t#e
c!"tract t! eAti"+ui$# t#e !*li+ati!",
2. ALTERNATIVE 35LI0ATI3N a" !*li+ati!"
)#ere t#e de*t!r i$ re9uired t! %ul%ill 3NLY
3NE !% t#e $e1eral 're$tati!"$ t!
eAti"+ui$# t#e !*li+ati!",
3. 4ACULTATIVE 35LI0ATI3N a" !*li+ati!"
)#ere t#e de*t!r i$ *!u"d t! 'er%!r&
3NLY 3NE 're$tati!"( )it# a re$er1ed ri+#t
t! c#!!$e a"!t#er 're$tati!" a$
SU5STITUTE %!r t#e 'ri"ci'al,
1,;;. T2 rig2t o% c2oic blongs to t2
dbtor# unlss it 2as bn 41rssl! grantd
to t2 crditor.
T2 dbtor s2all 2a" no rig2t to c2oos
t2os 1rstations *2ic2 ar i&1ossibl#
unla*%ul or *2ic2 could not 2a" bn t2
objct o% t2 obligation.
I&'lied +ra"t t! t#e credit!r i$ "!t
all!)ed, I% it d!e$ "!t a''ear !" t#e
a+ree&e"t a$ t! )#!& a&!"+ t#e& #a$
t#e ri+#t t! c#!!$e( it i$ t#e de*t!r )#!
ca" c#!!$e,
1,;1. T2 c2oic s2all 1roduc no %%ct
4c1t %ro& t2 ti& it 2as bn
co&&unicatd.
T#e c#!ice $#all "!t 'r!duce a"- le+al
e%%ect u"til it #a$ *ee" dul- c!&&u"icated
t! t#e !t#er 'art-,
It ca" *e d!"e i" )riti"+( 1er*all-(
i&'liedl-( !r a"- u"e9ui1!cal &ea"$,
3"ce t#e c#!ice #a$ *ee" c!&&u"icated
t! t#e !t#er 'art->
6, T#e !*li+ati!" i$ "!) LIMITED !"l- t!
t#e ;RESTATI3N CE3SEN( )it# all t#e
"atural c!"$e9ue"ce$ %l!)i"+
t#ere%r!&
2, T#e c#!ice i$ IRREV3CA5LE,
T#e 'er%!r&a"ce !% 're$tati!" )it#!ut
a""!u"ci"+ t#e c#!ice t! t#e credit!r i$
N3T 5INDIN0,
T#e c!"$e"t !% t#e !t#er 'art- i$ N3T
RE?UIRED i" &a7i"+ t#e c#!ice t#at )ill
i" e%%ect %ru$trate t#e clear i"te"ti!" !% t#e
la) a"d t#e "ature !% t#e alter"ati1e
!*li+ati!",
I% t#ere i$ dela- i" t#e &a7i"+ !% c#!ice
'u"i$# t#e !"e )#! i$ $u''!$ed t! eAerci$e
t#e ri+#t !% c#!ice %!r t#e dela- #e cau$ed
c!urt &a- !rder t#e de*t!r t! &a7e a
c#!ice( !r credit!r t! &a7e t#e c#!ice
)it#i" certai" 'eri!d( !r c!urt &a7e$ t#e
c#!ice,
1,;,. T2 dbtor s2all los t2 rig2t o%
c2oic *2n a&ong t2 1rstations
*2rb! 2 is altrnati"l! bound# onl! on
is 1racticabl.
T#ere *ei"+ *ut !"e 're$tati!" a1aila*le(
t#i$ 're$tati!" *ec!&e$ a $i&'le
!*li+ati!",
1,;-. I% t2roug2 t2 crditorEs acts t2
dbtor cannot &a9 a c2oic according to
t2 tr&s o% t2 obligation# t2 lattr &a!
rscind t2 contract *it2 da&ags.
1. I% t#e de*t!r c!uld "!t &a7e a c#!ice due
t! t#e credit!rD$ act !% &a7i"+ t#e
're$tati!"$ i&'!$$i*le( de*t!r &a-
RESCIND t#e c!"tract )it# da&a+e$,@
re$ci$$i!" ta7e$ 'lace at t#e i"itiati1e !%
t#e de*t!r,
2, I% t#e de*t!r i$ *ei"+ 're1e"ted t! c#!!$e
!"l- a 'articular 're$tati!"( a"d t#ere are
!t#er$ a1aila*le( #e i$ %ree t! c#!!$e %r!&
t#e&( a%ter "!ti%-i"+ t#e credit!r !% #i$
deci$i!",
1,;0. T2 crditor s2all 2a" a rig2t to
ind&nit! %or da&ags *2n# t2roug2 t2
%ault o% t2 dbtor# all t2 t2ings *2ic2 ar
altrnati"l! t2 objct o% t2 obligation
2a" bn lost# or t2 co&1lianc o% t2
obligation 2as bco& i&1ossibl.
T2 ind&nit! s2all b %i4d ta9ing as a
basis t2 "alu o% t2 last t2ing *2ic2
disa11ard# or t2at o% t2 sr"ic *2ic2
last bca& i&1ossibl.
Da&ags ot2r t2an t2 "alu o% t2 last
t2ing or sr"ic &a! also b a*ardd.
I% t#e i&'!$$i*ilit- !% all t#e !*ject$ !% t#e
alter"ati1e !*li+ati!" i$ cau$ed *- t#e
de*t!r( t#e credit!r i$ e"titled t! da&a+e$,
I% $uc# i&'!$$i*ilit- i$ cau$ed *- a
%!rtuit!u$ e1e"t( t#e !*li+ati!" i$
eAti"+ui$#ed a"d t#e de*t!r i$ relea$ed
6 7anna 8ag9asi :ag
11
OBLIGATIONS AND CONTRACTS
JANUARY 2007
MIDTERM REVIEWER
%r!& re$'!"$i*ilit-( u"le$$ t#e c!"trar- i$
$ti'ulated *- t#e 'artie$,
T#e credit!r ca""!t clai& %!r da&a+e$ i%
t#e de*t!r ca" $till 'er%!r& t#e re&ai"i"+
're$tati!"$,
T#e da&a+e$ t#at &a- *e rec!1ered i$
*a$ed !" t#e la$t t#i"+ )#ic# di$a''eared
!r t#e $er1ice )#ic# *eca&e i&'!$$i*le,
T#i$ la$t !"e i$ c!"1erted i"t! a $i&'le
!*li+ati!",
1,;5. ?2n t2 c2oic 2as bn 41rssl!
gi"n to t2 crditor# t2 obligation s2all
cas to b altrnati" %ro& t2 da! *2n
t2 slction 2as bn co&&unicatd to t2
dbtor.
>ntil t2n t2 rs1onsibilit! o% t2 dbtor
s2all b go"rnd b! t2 %ollo*ing rulsA
A. !"l- !"e t#i"+ l!$t %!rtuit!u$ e1e"t
credit!r c#!!$e$ %r!& t#e re&ai"der
de*t!r deli1er$ t#e c#!ice t! credit!r
5, !"l- !"e re&ai"$ de*t!r deli1er$ t#e
$a&e t! t#e credit!r
C. !"l- !"e t#i"+ l!$t %ault !% t#e de*t!r
6, credit!r &a- c#!!$e a"- !"e !% t#e
re&ai"der$
2, credit!r &a- c#!!$e t#e 'rice !r
1alue !% t#e !"e )#ic# )a$ l!$t
<, &a- c#!!$e 6 !r 2 'lu$ da&a+e$
D, all t#i"+$ l!$t %ault !% t#e de*t!r
credit!r &a- c#!!$e t#e 'rice !% ANY3NE
!% t#e t#i"+$( )it# da&a+e$ i% )arra"ted,
T2 sa& ruls s2all b a11lid to
obligations to do or not to do in cas on#
so& or all o% t2 1rstations s2ould
bco& i&1ossibl.
T#i$ article a''lie$ !"l- )#e" t#e ri+#t !%
c#!ice #a$ *ee" eA're$$l- +ra"ted t! t#e
credit!r,
1,;6. ?2n onl! on 1rstation 2as bn
agrd u1on# but t2 obligor &a! rndr
anot2r in substitution# t2 obligation is
calld %acultati".
T2 loss or dtrioration o% t2 t2ing
intndd as a substitut# t2roug2 t2
nglignc o% t2 obligor# dos not rndr
2i& liabl. But onc t2 substitution 2as
bn &ad# t2 obligor is liabl %or t2 loss
o% t2 substitut on account o% 2is dla!#
nglignc or %raud.
I% l!$$ !r deteri!rati!" #a''e"ed *e%!re
$u*$tituti!" i$ &ade( !*li+!r i$ "!t lia*le
a%ter $u*$tituti!" i$ c!&&u"icated( #e i$
lia*le %!r l!$$ .t#r!u+# dela-( "e+li+e"ce !r
%raud/
1,;$. T2 concurrnc o% t*o or &or
crditors or o% t*o or &or dbtors in on
and t2 sa& obligation dos not i&1l! t2at
ac2 on o% t2 %or&r 2as a rig2t to
d&and# or t2at ac2 on o% t2 lattr is
bound to rndr# ntir co&1lianc *it2 t2
1rstation. T2r is a solidar! liabilit! onl!
*2n t2 obligation 41rssl! so stats# or
*2n t2 la* or t2 natur o% t2 obligation
r.uirs solidarit!.
INDIVIDUAL 35LI0ATI3N !"e de*t!r a"d !"e
credit!r
C3LLECTIVE 35LI0ATI3N t)! !r &!re de*t!r$
a"d t)! !r &!re credit!r$
6, J3INT e"tire !*li+ati!" i$ t! *e 'aid !r
'er%!r&ed 'r!'!rti!"atel- *- t#e de*t!r$
2, S3LIDARY eac# !"e !% t#e de*t!r$ are
!*li+ed t! 'a- t#e e"tire !*li+ati!"( eac#
!"e !% t#e credit!r$ #a$ t#e ri+#t t!
de&a"d %r!& a"- !% t#e de*t!r$( t#e
%ul%ill&e"t !% t#e e"tire !*li+ati!"
A, ;a$$i1e S!lidarit- $!lidarit- !"
t#e 'art !% t#e DE5T3RS
5, Acti1e S!lidarit- $!lidarit- !" t#e
'art !% t#e CREDIT3RS,
S3LIDARITY SE3ULD 5E EC;RESSED la)(
$ti'ulati!"( "ature !% !*li+ati!",
W#e" t#e !*li+ati!" i$ a&*i+u!u$( it &u$t
*e c!"$idered a$ j!i"t !*li+ati!",
C3NSE?UENCES 34 S3LIDARITY>
1. ;a$$i1e S!lidarit- %ull 'a-&e"t &ade *-
a"-!"e !% t#e $!lidar- de*t!r$
eAti"+ui$#e$ t#e !*li+ati!", T#e !"e )#!
'aid ca" clai& rei&*ur$e&e"t %r!& #i$ c!@
de*t!r$ a$ re+ard$ t#eir c!rre$'!"di"+
$#are$ i" t#e !*li+ati!",
2are"( 2i&( N 2e" are $!lidar- de*t!r$ !%
2at#ri"a i" t#e $u& !% OL00,
2at#ri"a ca" de&a"d 'a-&e"t !% t#e
e"tire !*li+ati!" )#e" it *ec!&e$ due(
%r!& a"- !"e !% t#e de*t!r$ !r %r!& all
!% t#e& at t#e $a&e ti&e,
I% 2e""et# 'aid t#e )#!le OL00 t!
2at#ri"a( #e &a- clai& rei&*ur$e&e"t
%r!& 2are" a"d 2i&,
2. Acti1e S!lidarit- %ull 'a-&e"t t! a"- !%
t#e credit!r$ eAti"+ui$#e$ t#e !*li+ati!",
T#e credit!r )#! recei1ed t#e e"tire
a&!u"t )ill *e lia*le t! 'a- t#e
c!rre$'!"di"+ $#are$ !% #i$ c!@credit!r$ i"
acc!rda"ce )it# t#eir i"ter"al a+ree&e"t,
Lil- !)e$ t#e $u& !% ;=0(000 t! Ali"+
C#!le"+( 5!- Ta+a$( Mae Ta*a( a"d
D!de"+ Adi7( )#! are $!lidar- credit!r$,
I% Lil- ca" 'a- a"-!"e !% t#e&, I% Ali"+
C#!le"+ recei1ed t#e ;=0(000( $#e i$
lia*le t! 'a- t#e c!rre$'!"di"+ $#are$ !%
#er c!@credit!r$,
MICED S3LIDARITY
A, S!lidar- De*t!r$( J!i"t Credit!r$
O L(000,00 t!tal de*t
Dbtors (Solidar!) Crditors (Foint)
6 7anna 8ag9asi :ag
1,
OBLIGATIONS AND CONTRACTS
JANUARY 2007
MIDTERM REVIEWER
Aida 'a-$ O
=(F00,00
J!#" P O
=(F00,00
L!r"a 'a-$ O
=(F00,00
Mar$#a P O
=(F00,00
4e
5, J!i"t De*t!r$( S!lidar- Credit!r$
O L(000,00 t!tal de*t
Dbtors (Foint) Crditors (Solidar!)
Aida .O <(000,00/ J!#" .ca" clai& %r!&
de*t!r$/
L!r"a .O <(000,00/ Mar$#a .@$a&e@/
4e .O <(000,00/
1,;3. I% %ro& t2 la*# or t2 natur or t2
*ording o% t2 obligations to *2ic2 t2
1rcding articl r%rs t2 contrar! dos
not a11ar# t2 crdit or dbt s2all b
1rsu&d to b di"idd into as &an! s2ars
as t2r ar crditors or dbtors# t2
crdits or dbts bing considrd distinct
%ro& on anot2r# subjct to t2 Ruls o%
Court go"rning t2 &ulti1licit! o% suits.
W#e" t#ere i$ a c!"curre"ce !% $e1eral
credit!r$ !r !% $e1eral de*t!r$ i" !"e a"d i"
t#e $a&e !*li+ati!"( t#ere i$ a 're$u&'ti!"
t#at t#e !*li+ati!" i$ j!i"t,
Eac# !% t#e credit!r$ $#all *e e"titled t!
de&a"d !"l- t#e 'a-&e"t !% #i$
'r!'!rti!"ate $#are !% t#e credit,
Eac# !% t#e de*t!r$ ca" *e c!&'elled t!
'a- !"l- #i$ 'r!'!rti!"ate $#are !% t#e
de*t,
T#e credit$ !r de*t$ $#all *e c!"$idered
di$ti"ct %r!& !"e a"!t#er,
C3NSE?UENCES 34 J3INT 35LI0ATI3N>
6, Eac# de*t!r lia*le %!r a 'r!'!rti!"ate
'art !% t#e e"tire de*t
A"++e( 5a*e$( C#e"+( N Da"+ !)e
;600 t! Eddie
P = de*t$ a"d 6
credit
Eac# !% t#e& !)e Eddie ;2F
Eddie ca""!t c!llect t#e e"tire ;600
%r!& a"- !"e !% t#e&,
2. Eac# credit!r e"titled t! a 'r!'!rti!"ate
'art !% t#e credit
C#a&&- !)e$ O600 t! Wa%%le a"d
Al&!"d
P 6 de*t a"d 2 credit$
Wa%%le ca" !"l- c!llect OF0 %r!&
C#a&&-(
Sa&e )it# Al&!"d
3. De&a"d &ade *- !"e credit!r u'!" !"e
de*t!r 'r!duce$ t#e e%%ect$ !% de%ault !"l-
a$ *et)ee" t#e&( *ut "!t )it# re$'ect t!
t#e !t#er$
Eddie de&a"ded 'a-&e"t %r!& A"++e
A"++e )a$ i" de%ault, T#i$ d!e$ "!t
&ea" t#at t#e !t#er$ are i" de%ault t!!
*ecau$e Eddie did "!t de&a"d %r!&
t#e&,
=, T#e i"terru'ti!" !% 're$cri'ti!" cau$ed *-
t#e de&a"d &ade *- !"e credit!r u'!"
!"e de*t!r )ill "!t *e"e%it t#e c!@
credit!r$
Wa%%le eAte"ded t#e 'eri!d i" )#ic#
C#a&&- $#!uld #a1e 'aid #er de*t t!
#er, T#i$ d!e$ "!t &ea" t#at t#e $a&e
eAte"$i!" a''lie$ t! C#a&&-D$ de*t t!
Al&!"d,
F, T#e i"$!l1e"c- !% !"e de*t!r )ill "!t
i"crea$e t#e lia*ilit- !% #i$ c!@de*t!r$( "!r
)ill it all!) a credit!r t! de&a"d a"-t#i"+
%r!& t#e c!@credit!r$,
I% J!el a"d Te$$ are de*t!r$ !% Re"e %!r
;6(000(000,00 a"d J!el *ec!&e$
i"$!l1e"t( t#e lia*ilit- !% Te$$ )ill !"l- *e
;F00(000,00 re're$e"ti"+ #er
'r!'!rti!"al $#are !% Q i" t#e )#!le
!*li+ati!",
1,;5. I% t2 di"ision is i&1ossibl# t2 rig2t
o% t2 crditors &a! b 1rjudicd onl! b!
t2ir collcti" acts# and t2 dbt can b
n%orcd onl! b! 1rocding against all t2
dbtors. I% on o% t2 lattr s2ould b
insol"nt# t2 ot2rs s2all not b liabl %or
2is s2ar.
J3INT INDIVISI5LE 35LI0ATI3N a" !*li+ati!"
)#ere $!lidarit- i$ "!t 'r!1ided a"d t#e
're$tati!" !r !*ject i$ "!t $u$ce'ti*le !% di1i$i!"
it$ %ul%ill&e"t re9uire$ t#e c!"curre"ce !% all
de*t!r$( )#ile d!i"+ eac# !"eD$ 'art$,

5a*-ca7e$ a"d 5a*-a"+el j!i"tl- !*li+ed
t#e&$el1e$ t! deli1er a *ra"d "e) T!-!ta
4!rtu"er )!rt# ; 6(F00(000,00 t! Su'er&a",
T#e !*ject( a 1e#icle( i$ i"di1i$i*le, T#e- &u$t
deli1er t#e t#i"+ j!i"tl-, I" ca$e !% *reac#( t#e
!*li+ati!" i$ c!"1erted i"t! &!"etar- !*li+ati!"
%!r i"de&"it- %!r da&a+e$, 5a*-ca7e$ a"d
5a*-a"+el )ill *e lia*le !"l- %!r ; 7F0(000,00
eac#,
1,1;. T2 indi"isibilit! o% an obligation dos
not ncssaril! gi" ris to solidarit!. Nor
dos solidarit! o% itsl% i&1l! indi"isibilit!.
S!lidarit- i$ eA're$$ed i" t#e $ti'ulati!"$ !%
t#e 'art-( la) +!1er"i"+ t#e !*li+ati!"( !r
t#e "ature !% t#e !*li+ati!",
INDIVISI5LE 35LI0ATI3N a" !*li+ati!" )#ere
t#e 're$tati!" !r !*ject t! *e deli1ered ca""!t *e
'er%!r&ed *- 'art$ )it#!ut alteri"+ it$ e$$e"ce !r
$u*$ta"ce,
5a$i$ I"di1i$i*ilit- S!lidarit-
6, Nature Re%er$ t! t#e
're$tati!" !%
t#e c!"tract
Re%er$ t! t#e
tie eAi$ti"+
*et)ee"
'artie$ !% t#e
6 7anna 8ag9asi :ag
1-
OBLIGATIONS AND CONTRACTS
JANUARY 2007
MIDTERM REVIEWER
!*li+ati!"
.)#! i$ lia*le/
2, Nu&*er !%
$u*ject$ :
'artie$
D!e$ "!t
re9uire
'luralit- !%
'artie$
Re9uire$
'luralit- !%
'artie$
<, E%%ect !%
*reac# !%
!*li+ati!"
3*li+ati!" i$
c!"1erted i"t!
&!"etar-
!*li+ati!" %!r
i"de&"it- %!r
da&a+e$
eac# de*t!r i$
lia*le !"l- %!r
#i$ 'art i" t#e
i"de&"it-,
T#e lia*ilit-(
e1e" i%
c!"1erted i"t!
i"de&"it- %!r
da&a+e$(
re&ai"$
$!lidar-,
1,11. Solidarit! &a! 4ist alt2oug2 t2
crditors and t2 dbtors &a! not b bound
in t2 sa& &annr and b! t2 sa&
1riods and conditions.
T#e $!lidarit- !% t#e de*t!r$ i$ "!t a%%ected
e1e" i% di%%ere"t ter&$ a"d c!"diti!"$ are
&ade a''lica*le t! t#e&,
E"%!rce&e"t !% t#e ter&$ a"d c!"diti!"$
&a- *e &ade at di%%ere"t ti&e$, T#e
!*li+ati!"$ )#ic# #a1e &atured ca" *e
e"%!rced )#ile t#!$e $till u"due )ill #a1e
t! *e a)aited, E"%!rce&e"t ca" *e &ade
a+ai"$t a"- !"e !% t#e $!lidar- de*t!r$
alt#!u+# it ca" #a''e" t#at a 'articular
!*li+ati!" c#ar+ea*le t! a 'articular de*t!r
i$ "!t -et due, Ee )ill *e a"$)era*le %!r all
t#e 're$tati!"$ )#ic# %all due alt#!u+#
c#ar+ea*le t! t#e !t#er c!@de*t!r$,
5!""ier( 0le""( a"d Ar"el +!t a l!a" !% O6F0
%r!& Je%%, T#e- $i+"ed a 'r!&i$$!r- "!te
$!lidaril- *i"di"+ t#e&$el1e$ t! 'a- Je%% u"der
t#e %!ll!)i"+ ter&$>
5!""ier )ill 'a- OF0 )it# <R !"
Dece&*er <0( 200H
0le"" )ill 'a- OF0 )it# =R !" Dece&*er
<0( 2007
Ar"el )ill 'a- OF0 )it# FR !" Dece&*er
<0( 200M
3" Dece&*er <6( 200H( Je%% ca" c!llect #i$ OF0
)it# <R %r!& a"- !"e !% t#e de*t!r$( *ut "!t
t#e )#!le O6F0 *ecau$e it i$ "!t -et e"tirel-
due, T#e &aturit- !% t#e !t#er a&!u"t$ $#!uld
$till *e a)aited, I% &aturit- c!&e$( Je%% ca"
c!llect %r!& a"- !% t#e de*t!r$( *ecau$e t#e-
are eA're$$l- $!lidar- i" lia*ilitie$( a"d "!t
a%%ected *- t#e $ec!"dar- $ti'ulati!"$,
1,1,. <ac2 on o% t2 solidar! crditors
&a! do *2at"r &a! b us%ul to t2
ot2rs# but not an!t2ing *2ic2 &a! b
1rjudicial to t2 lattr.
E1er- $!lidar- credit!r i$ *e"e%ited *- t#e
u$e%ul act$ !% a"- !"e !% t#e&,
I% a $!lidar- credit!r 'er%!r&$ a" act )#ic#
i$ "!t %air t! #i$ c!@credit!r$( t#e act &a-
#a1e 1alid le+al e%%ect$ !r t#e !*li+ati!" !%
t#e de*t!r due t! t#e& &a- *e
eAti"+ui$#ed( *ut t#e 'er%!r&i"+ credit!r
$#all *e lia*le t! #i$ c!@credit!r$,
1,1-. A solidar! crditor cannot assign 2is
rig2ts *it2out t2 consnt o% t2 ot2rs.
A$$i+" tra"$%er !% ri+#t
T#e a$$i+"ee d!e$ "!t *ec!&e a $!lidar-
credit!r( a"d a"- 'a-&e"t &ade u'!" #i&
*- t#e de*t!r d!e$ "!t eAti"+ui$# t#e
!*li+ati!", Ee i$ c!"$idered a STRAN0ER(
a"d #i$ act$ are "!t *i"di"+ t! t#e
$!lidarit-,
1,10. T2 dbtor &a! 1a! an! on o% t2
solidar! crditors+ but i% an! d&and#
judicial or 4trajudicial# 2as bn &ad b!
on o% t2&# 1a!&nt s2ould b &ad to
2i&.
T#e de*t!r ca" 'a- a"- !"e !% t#e $!lidar-
credit!r$, Suc# 'a-&e"t )#e" acce'ted *-
a"- !% t#e $!lidar- credit!r$ )ill eAti"+ui$#
t#e !*li+ati!",
T! a1!id c!"%u$i!" !" t#e 'a-&e"t !% t#e
!*li+ati!"( t#e de*t!r i$ re9uired t! a- !"l-
t! t#e de&a"di"+ credit!r a"d t#at
'a-&e"t i$ $u%%icie"t t! e%%ect t#e
eAti"+ui$#&e"t !% t#e !*li+ati!",
I" ca$e t)! !r &!re de&a"d$ &ade *- t#e
!t#er credit!r$( t#e %ir$t de&a"d &u$t *e
+i1e" 'ri!rit-,
1,15. No"ation# co&1nsation# con%usion or
r&ission o% t2 dbt# &ad b! an! o% t2
solidar! crditors or *it2 an! o% t2 solidar!
dbtors# s2all 4tinguis2 t2 obligation#
*it2out 1rjudic to t2 1ro"isions o%
Articl 1,15.
T2 crditor *2o &a! 2a" 4cutd an! o%
t2s acts# as *ll as 2 *2o collcts t2
dbt# s2all b liabl to t2 ot2rs %or t2
s2ar in t2 obligation corrs1onding to
t2&.
N3VATI3N !*li+ati!"$ are &!di%ied *->
6, C#a"+i"+ t#eir !*ject !r 'ri"ci'al
c!"diti!"$
2, Su*$tituti"+ t#e 'er$!" !% t#e de*t!r a"d
<, Su*r!+ati"+ .'laci"+/ a t#ird 'er$!" i" t#e
ri+#t$ !% t#e credit!r,
C3M;ENSATI3N ta7e$ 'lace )#e" t)! 'er$!"$(
i" t#eir !)" ri+#t( *ec!&e credit!r$ a"d de*t!r$
!% eac# !t#er
I"+rid *!rr!)ed ;600 %r!& Claudette,
Claudette *!rr!)ed ;7F %r!& I"+rid,
I"+ridD$ !*li+ati!" t! Claudette i$ "!) ;2F !"l-(
*ecau$e t#e !ri+i"al !*li+ati!" )a$ !%%$et *-
ClaudetteD$ $u''!$ed@t!@*e !*li+ati!" t! I"+rid,
C3N4USI3N ta7e$ 'lace )#e" t#e c#aracter$ !%
credit!r a"d de*t!r are &er+ed i" t#e $a&e
'er$!",
6 7anna 8ag9asi :ag
10
OBLIGATIONS AND CONTRACTS
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MIDTERM REVIEWER
Ia" 'a-$ #i$ de*t t! J!#" )it# a c#ec7 'a-a*le
t! Jca$#K,
J!#" 'aid #i$ de*t t! Jere&ia# )it# t#e $a&e
c#ec7,
Jere&ia# 'aid #i$ de*t t! Ia"( )it# t#e $a&e
c#ec7 Ia" i$$ued t! J!#",
Ia" *ec!&e$ 'aid *- #i$ !)" c#ec7, Ee
*ec!&e$ t#e de*t!r a"d t#e credit!r !% #i&$el%
at t#e $a&e ti&e,
REMISSI3N t#e +ratuit!u$ a*a"d!"&e"t *- t#e
credit!r !% #i$ ri+#t acce'ta"ce !% t#e !*li+!r i$
"ece$$ar-,
T#e$e = &!de$ !% eAti"+ui$#i"+ !*li+ati!"$
are act$ 'rejudicial t! t#e !t#er $!lidar- c!@
credit!r$ *ecau$e t#e$e #a1e t#e e%%ect !%
eAti"+ui$#i"+ t#e de*t !r !*li+ati!" )#ic#
i$ due t! all !% t#e&,
T#e !"l- rec!ur$e !% t#e c!@credit!r$ i$ t!
let t#e !"e )#! eAecuted a"- !% t#!$e act$
*e lia*le %!r t#e $#are$ c!rre$'!"di"+ t! all
#i$ c!@credit!r$ .i" t#eir i"ter"al
a+ree&e"t/,
1,16. T2 crditor &a! 1rocd against an!
on o% t2 solidar! dbtors or so& or all o%
t2& si&ultanousl!. T2 d&and &ad
against on o% t2& s2all not b an obstacl
to t2os *2ic2 &a! subs.untl! b
dirctd against t2 ot2rs# so long as t2
dbt 2as not bn %ull! collctd.
W#e" t#ere i$ 'a$$i1e $!lidarit-( t#e
credit!r ca" 'r!ceed a+ai"$t>
6, A"- !% t#e $!lidar- de*t!r$
2, S!&e !% t#e $!lidar- de*t!r$
<, All !% t#e $!lidar- de*t!r$(
$i&ulta"e!u$l-,
EAtrajudicial de&a"d$ @ %ir$t de&a"d $#all "!t
're1e"t $u*$e9ue"t de&a"d$ !" t#e !t#er c!@
de*t!r$( i% c!@de*t!r %ir$t t! #a1e *ee" re9uired
t! %ul%ill !*li+ati!" did "!t act !" it,
1,1$. :a!&nt &ad b! on o% t2 solidar!
dbtors 4tinguis2s t2 obligation. I% t*o
or &or solidar! dbtors o%%r to 1a!# t2
crditor &a! c2oos *2ic2 o%%r to acc1t.
7 *2o &ad t2 1a!&nt &a! clai& %ro&
2is co/dbtors onl! t2 s2ar *2ic2
corrs1onds to ac2# *it2 t2 intrst %or
t2 1a!&nt alrad! &ad. I% t2 1a!&nt
is &ad b%or t2 dbt is du# no intrst
%or t2 intr"ning 1riod &a! b
d&andd.
?2n on o% t2 solidar! dbtors cannot#
bcaus o% 2is insol"nc!# ri&burs 2is
s2ar to t2 dbtor 1a!ing t2 obligation#
suc2 s2ar s2all b born b! all 2is co/
dbtors# in 1ro1ortion to t2 dbt o% ac2.
;a-&e"t c!"$i$t$ i" t#e deli1er- !% t#e t#i"+ !r
t#e re"diti!" .re"deri"+/ !% t#e $er1ice )#i$# i$
t#e !*ject !% t#e !*li+ati!",
I"tere$t c!&'e"$ati!" %!r t#e u$e !% *!rr!)ed
&!"e-
;artial 'a-&e"t t#e $!lidar- de*t!r )#! &ade
t#e 'artial 'a-&e"t i$ e"title$ t! *e rei&*ur$ed
!"l- %!r $uc# a&!u"t !% &!"e- )#ic# #e #ad 'aid
a"d )#ic# eAceed$ #i$ !)" $#are i" t#e
!*li+ati!",
I% !"e !% t#e de*t!r$ i$ i"$!l1e"t a"d c!uld "!t
'a- #i$ $#are i" t#e !*li+ati!"( all $!lidar-
de*t!r$ i"cludi"+ t#e 'a-i"+ de*t!r $#all $#are
'r!'!rti!"atel- i" t#e $ettle&e"t !% t#e
c!rre$'!"di"+ $#are !% t#e i"$!l1e"t de*t!r, SI"
$#!rt( #i$ c!@de*t!r$ )ill $a1e #i$ a$$,T
1,13. :a!&nt b! a solidar! dbtor s2all
not ntitl 2i& to ri&burs&nt %ro& 2is
co/dbtors i% suc2 1a!&nt is &ad a%tr
t2 obligation 2as 1rscribd or bco&
illgal.
N! rei&*ur$e&e"t i%>
6, 3*li+ati!" ;RESCRI5ES
T#e credit!r did "!t &a7e a"- de&a"d %!r
&!re t#a" 60 -ear$,
2, 3*li+ati!" *ec!&e$ ILLE0AL
La) #a$ *ee" 'a$$ed( &a7i"+ $uc#
're$tati!" ille+al,
1,15. T2 r&ission &ad b! t2 crditor o%
t2 s2ar *2ic2 a%%cts on o% t2 solidar!
dbtors dos not rlas t2 lattr %ro& 2is
rs1onsibilit! to*ards t2 co/dbtors# in
cas t2 dbt 2ad bn totall! 1aid b!
an!on o% t2& b%or t2 r&ission *as
%%ctd.
A"- *elated .dela-ed/ re&i$$i!" *- t#e
credit!r !% t#e $#are !% a"- !% t#e de*t!r
#a$ "! e%%ect !" t#e i"ter"al relati!"$#i' !%
t#e c!@de*t!r$,
Aar!"( Carl!( a"d A+$ $!lidaril- !)e Neil
;6(F00,00, Carl! 'aid t#e e"tire !*li+ati!", A%ter
)#ic#( Neil re&itted t#e $#are !% A+$, Carl! ca"
c!llect ;F00,00 eac# %r!& Aar!" a"d A+$ e1e"
i% t#e $#are !% A+$ i" t#e !*li+ati!" #ad *ee"
re&itted,
A%ter t#e 'ri!r 'a-&e"t !% t#e e"tire
!*li+ati!"( t#ere i$ "!t#i"+ t! re&it
*ecau$e t#e !*li+ati!" #ad *ee"
eAti"+ui$#ed,
1,,;. T2 r&ission o% t2 *2ol
obligation# obtaind b! on o% t2 solidar!
dbtors# dos not ntitl 2i& to
ri&burs&nt %ro& 2is co/dbtors.
T#ere i$ "!t#i"+ t! *e rei&*ur$ed *ecau$e
#e did "!t $'e"d a"- &!"e-( t#e re&i$$i!"
*ei"+ a +ratuit!u$ act,
6 7anna 8ag9asi :ag
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OBLIGATIONS AND CONTRACTS
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MIDTERM REVIEWER
1,,1. I% t2 t2ing 2as bn lost or i% t2
1rstation 2as bco& i&1ossibl *it2out
t2 %ault o% t2 solidar! dbtors# t2
obligation s2all b 4tinguis2d.
I% t2r *as %ault on t2 1art o% an! on o%
t2&# all s2all b rs1onsibl to t2
crditor# %or t2 1ric and t2 1a!&nt o%
da&ags and intrst# *it2out 1rjudic to
t2ir action against t2 guilt! or nglignt
dbtor.
I% t2roug2 a %ortuitous "nt# t2 t2ing is
lost or t2 1r%or&anc 2as bco&
i&1ossibl a%tr on o% t2 solidar! dbtors
2as incurrd in dla! t2roug2 t2 judicial or
4trajudicial d&and u1on 2i& b! t2
crditor# t2 1ro"isions o% t2 1rcding
1aragra12 s2all a11l!.
L!$$ !% t#e t#i"+ !r i&'!$$i*ilit- !% 're$tati!"
6, N3 4AULT $!lidar- de*t!r$ !*li+ati!" i$
eAti"+ui$#ed
2, 4AULT a"- !"e !% t#e& all are lia*le
*ecau$e !% t#eir &utual a+e"c-
<, 43RTUIT3US EVENT dela- !" t#e 'art !%
t#e de*t!r$ all )ill *e lia*le
I% t#e t#i"+ due )a$ "!t l!$t( *ut t#ere i$
&erel- a dela-( %raud !r "e+li+e"ce !" t#e
'art !% !"e !% t#e $!lidar- de*t!r$( all
.i"cludi"+ t#e i""!ce"t/ de*t!r$ )ill $#are
i" t#e 'a-&e"t !% t#e ;RINCI;AL
're$tati!", T#e da&a+e$ a"d i"tere$t
i&'!$ed )ill *e *!r"e *- t#e +uilt- de*t!r,
3*li+ati!" t! deli1er i$ c!"1erted i"t! a"
!*li+ati!" t! 'a- i"de&"it- )#e" t#ere u$
l!$$ !r i&'!$$i*ilit- !% 'er%!r&a"ce,
1,,,. A solidar! dbtor &a!# in actions %ild
b! t2 crditor# a"ail 2i&sl% o% all d%nss
*2ic2 ar dri"d %ro& t2 natur o% t2
obligation and o% t2os *2ic2 ar 1rsonal
to 2i&# or 1rtain to 2is o*n s2ar. ?it2
rs1ct to t2os *2ic2 1rsonall! blong to
t2 ot2rs# 2 &a! a"ail 2i&sl% t2ro%
onl! as rgards t2at 1art o% t2 dbt %or
*2ic2 t2 lattr ar rs1onsibl.
DE4ENSES 34 A S3LIDARY DE5T3R>
6, De%e"$e ari$i"+ %r!& t#e "ature !% t#e
!*li+ati!" $uc# a$ 'a-&e"t( 're$cri'ti!"(
re&i$$i!"( $tatute !% %raud$( 're$e"ce !%
1ice$ !% c!"$e"t( etc,
2. De%e"$e$ )#ic# are 'er$!"al t! #i& !r
)#ic# 'ertai"$ t! #i$ !)" $#are al!"e
$uc# a$ &i"!rit-( i"$a"it- a"d !t#er$
'urel- 'er$!"al t! #i&,
<, De%e"$e$ 'er$!"al t! t#e !t#er $!lidar-
credit!r$ *ut !"l- a$ re+ard$ t#at 'art !%
t#e de*t %!r )#ic# t#e !t#er credit!r$ are
lia*le,
1,,-. T2 di"isibilit! or indi"isibilit! o% t2
t2ings t2at ar t2 objct o% obligations in
*2ic2 t2r is onl! on dbtor and onl! on
crditor dos not altr or &odi%! t2
1ro"isions o% C2a1tr , o% t2is Titl.
DIVISI5ILITY re%er$ t! t#e $u$ce'ti*ilit- !% a"
!*li+ati!" t! *e 'er%!r&ed 'artiall-,
3*li+ati!" t! deli1er 600 $ac7$ !% rice !r a
'articular t-'e
INDIVISI5ILITY re%er$ t! t#e "!"@$u$ce'ti*ilit- !%
a" !*li+ati!" t! 'artial 'er%!r&a"ce,
3*li+ati!" t! deli1er a 'articular c!&'uter
$et
I% a t#i"+ c!uld *e di1ided i"t! 'art$ a"d a$
di1ided( it$ 1alue i$ i&'aired di$'r!'!rti!"atel-(
t#at t#i"+ i$ INDIVISI5LE,
1,,0. A joint indi"isibl obligation gi"s ris
to ind&nit! %or da&ags %ro& t2 ti&
an!on o% t2 dbtors dos not co&1l! *it2
2is undrta9ing. T2 dbtors *2o &a! 2a"
bn rad! to %ul%ill t2ir 1ro&iss s2all not
contribut to t2 ind&nit! b!ond t2
corrs1onding 1ortion o% t2 1ric o% t2
t2ing or o% t2 "alu o% t2 sr"ic in *2ic2
t2 obligation consists.
J3INT INDIVISI5LE 35LI0ATI3N t#e !*ject i$
i"di1i$i*le *ut t#e lia*ilit- !% t#e 'artie$ i$ j!i"t,
T#e u"%ul%illed u"derta7i"+ .dut-/ i$
c!"1erted i"t! a &!"etar- !*li+ati!" )#ic#
i$ "! di1i$i*le,
T#e +uilt- de*t!r i$ lia*le %!r da&a+e$,
1,,5. Gor t2 1ur1oss o% t2 1rcding
articls# obligations to gi" d%init t2ings
and t2os *2ic2 ar not susc1tibl o%
1artial 1r%or&anc s2all b d&d to b
indi"isibl.
?2n t2 obligation 2as %or its objct t2
4cution o% a crtain nu&br o% da!s o%
*or9# t2 acco&1lis2&nt o% *or9 b!
&trical units# or analogous t2ings *2ic2 b!
t2ir natur ar susc1tibl o% 1artial
1r%or&anc# it s2all b di"isibl.
7o*"r# "n t2oug2 t2 objct or sr"ic
&a! b 12!sicall! di"isibl# an obligation is
indi"isibl i% so 1ro"idd b! la* or intndd
b! t2 1artis.
In obligations not to do# di"isibilit! or
indi"isibilit! s2all b dtr&ind b! t2
c2aractr o% t2 1rstation in ac2
1articular cas.
T#e %!ll!)i"+ are c!"$idered INDIVISI5LE
!*li+ati!"$>
6, 3*li+ati!" t! +i1e de%i"ite t#i"+$
2, 3*li+ati!"$ )#ic# are "!t $u$ce'ti*le !%
'artial 'er%!r&a"ce
<, E1e" t#!u+# t#e !*ject !r $er1ice &a- *e
'#-$icall- di1i$i*le( it i$ i"di1i$i*le i%>
a, t#e la) $! 'r!1ide$
*, )#e" t#e 'artie$ i"te"ded it t! *e
i"di1i$i*le
T#e %!ll!)i"+ !*li+ati!"$ are dee&ed DIVISI5LE>
6, W#e" t#e !*ject !% t#e !*li+ati!" i$ t#e
eAecuti!" !% a certai" "u&*er !% da-$ !%
)!r7
2, W#e" t#e !*ject !% t#e !*li+ati!" i$ t#e
acc!&'li$#&e"t !% )!r7 &ea$ured i" u"it$
6 7anna 8ag9asi :ag
16
OBLIGATIONS AND CONTRACTS
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MIDTERM REVIEWER
<, W#e" t#e !*ject !% t#e !*li+ati!" i$
$u$ce'ti*le !% 'artial c!&'lia"ce
=, W#e" t#e !*ject !% t#e !*li+ati!" i$ $uc#
t#at t#e de*t!r i$ re9uired t! 'a- i"
i"$tall&e"t$
I% t#e c!"tract i$ di1i$i*le( a"d a 'art !% it i$
ille+al( t#e ille+al 'art i$ 1!id( a"d t#e re$t
$#all *e 1alid a"d e"%!rcea*le,
I% t#e c!"tract i$ i"di1i$i*le( a"d a 'art !% it
i$ ille+al( t#e e"tire c!"tract i$ 1!id,
;artial 'er%!r&a"ce !% a" i"di1i$i*le
!*li+ati!" i$ ta"ta&!u"t t! "!"@
'er%!r&a"ce,
1,,6. In obligations *it2 a 1nal claus# t2
1nalt! s2all substitut t2 ind&nit! %or
da&ags and t2 1a!&nt o% intrsts in
cas o% nonco&1lianc# i% t2r is no
sti1ulation to t2 contrar!. N"rt2lss#
da&ags s2all b 1aid i% t2 obligor r%uss
to 1a! t2 1nalt! or is guilt! o% %raud in
t2 %ul%ill&nt o% t2 obligation.
T2 1nalt! &a! b n%orcd onl! *2n it is
d&andabl in accordanc *it2 t2
1ro"isions o% t2is Cod.
;ENALTY CLAUSE
T#i$ i$ a" acce$$!r- !*li+ati!" attac#ed t!
t#e 'ri"ci'al !*li+ati!"( )#ic# i&'!$e$ a"
additi!"al lia*ilit- i" ca$e !% *reac# !% t#e
'ri"ci'al !*li+ati!",
It 'u$#e$ t#e de*t!r t! 'er%!r& #i$
!*li+ati!" %ait#%ull- a"d )it#!ut dela-
)it#i" t#e 'eri!d a+reed u'!"( !r el$e( #e
$u%%er$ a %iAed ci1il 'e"alt- )it#!ut "eed !%
'r!1i"+ t#e da&a+e$ !% t#e !t#er 'art-,
T#e 'e"alt- i&'!$a*le i$ a $u*$titute %!r t#e
i"de&"it- %!r>
a, da&a+e$
*, 'a-&e"t !% i"tere$t i" ca$e !% *reac# !%
!*li+ati!"
@ u"le$$ t#e c!"trar- i$ $ti'ulatedU
ECCE;TI3NS additi!"al da&a+e$ &a- *e
rec!1ered %r!& t#e %!ll!)i"+ act$>
6, I% t#e de*t!r re%u$e$ t! 'a- t#e
'e"alt-
2, I% t#e de*t!r i$ +uilt- !% %raud i" t#e
%ul%ill&e"t !% t#e !*li+ati!"
<, I% t#ere i$ eA're$$ $ti'ulati!" t#at
t#e !t#er da&a+e$ !r i"tere$t$ are
de&a"da*le t! t#e 'e"alt- i" t#e
'e"al clau$e
Mel1i" !*li+ed #i&$el% t! 'r!ct!r t#e eAa& i"
C!"$tituti!"al La) t! 6LL5( a"d i" ca$e #e %ail$(
#e )ill 'a- ;60(000, Mel1i" #a$ "! c#!ice *ut t!
'a- ;60(000 i% #e %ail$ t! $u'er1i$e $aid eAa&
re$ult$,
1,,$. T2 dbtor cannot 4&1t 2i&sl%
%ro& t2 1r%or&anc o% t2 obligation b!
1a!ing t2 1nalt!# sa" in t2 cas *2r
t2is rig2t 2as bn 41rssl! rsr"d %or
2i&. Nit2r can t2 crditor d&and t2
%ul%ill&nt o% t2 obligation and t2
satis%action o% t2 1nalt! at t2 sa&
ti&# unlss t2is rig2t 2as bn clarl!
grantd 2i&. 7o*"r# i% a%tr t2 crditor
2as dcidd to r.uir t2 %ul%ill&nt o% t2
obligation# t2 1r%or&anc t2ro% s2ould
bco& i&1ossibl *it2out 2is %ault# t2
1nalt! &a! b n%orcd.
A de*t!r ca""!t e1ade %r!& 'a-&e"t !% #i$
'ri"ci'al !*li+ati!" *- c#!!$i"+ t! 'a- t#e
'e"alt- $ti'ulated( eAce't )#e" t#e de*t!r
i$ EC;RESSLY +ra"ted )it# t#e ri+#t t!
$u*$titute t#e 'e"alt- %!r t#e 'ri"ci'al
!*li+ati!", a" !*li+ati!" )it# 'e"alt-
clau$e ca""!t *e tur"ed t! %acultati1e
!*li+ati!" u"le$$ eA're$$l- $ti'ulated i"
t#e c!"tract,
T#e credit!r ca""!t de&a"d t#e $ti'ulated
%ul%ill&e"t !% t#e 'ri"ci'al !*li+ati!" a"d
t#e 'e"alt- at t#e $a&e ti&e( eAce't
6, )#e" t#e credit!r )a$ clearl- +i1e"
t#e ri+#t t! e"%!rce *!t# t#e 'ri"ci'al
!*li+ati!" a"d 'e"alt-
2, )#e" t#e credit!r #a$ de&a"ded
%ul%ill&e"t !% t#e !*li+ati!" *ut ca""!t
*e %ul%illed due t! t#e
a, de*t!rD$ %ault credit!r &a-
de&a"d %!r 'e"alt-
*, credit!rD$ %ault #e ca""!t
clai& t#e 'e"alt-
c, %!rtuit!u$ e1e"t 'ri"ci'al
!*li+ati!" a"d 'e"alt- are
eAti"+ui$#ed
1,,3. :roo% o% actual da&ags su%%rd b!
t2 crditor is not ncssar! in ordr t2at
t2 1nalt! &a! b d&andd.
A$ l!"+ a$ t#e a+ree&e"t !r c!"tract i$
*reac#ed,
T#e &ere "!"@%ul%ill&e"t !% t#e 'ri"ci'al
!*li+ati!" e"title$ t#e credit!r t! t#e
'e"alt- $ti'ulated,
T#e 'ur'!$e !% t#e 'e"alt- clau$e i$
'reci$el- t! a1!id 'r!1i"+ da&a+e$,
1,,5. T2 judg s2all .uitabl! rduc t2
1nalt! *2n t2 1rinci1al obligation 2as
bn 1artl! or irrgularl! co&1lid *it2 b!
t2 dbtor. <"n i% t2r 2as bn no
1r%or&anc# t2 1nalt! &a! also b
rducd b! t2 courts i% it is ini.uitous or
unconscionabl.
JUDICIAL REDUCTI3N 34 ;ENALTY
6, ;ri"ci'al !*li+ati!" 'artl- c!&'lied )it#
*- t#e de*t!r .*ut "!t i" i"di1i$i*le
!*li+ati!"( *ecau$e it i$ ta"ta&!u"t t!
"!"@c!&'lia"ce/
2, ;ri"ci'al !*li+ati!" c!&'lied "!t i"
acc!rda"ce )it# t#e te"!r !% t#e
a+ree&e"t
<, ;e"alt- i"i9uit!u$ !r u"c!"$ci!"a*le
Jud+eD$ '!)er t! reduce 'e"altie$ are
li&ited t! 'ri1ate c!"tract$,
INI?UIT3US 3R UNC3NSCI3NA5LE )#e" it i$
re1!lti"+ t! t#e c!"$cie"ce !r c!&&!" $e"$e
+r!$$l- di$'r!'!rti!"ate t! t#e da&a+e$ $u%%ered,
6 7anna 8ag9asi :ag
1$
OBLIGATIONS AND CONTRACTS
JANUARY 2007
MIDTERM REVIEWER
;ENALTY N3T EN43RCEA5LE>
6, I&'!$$i*le 'er%!r&a"ce !% 'ri"ci'al
!*li+ati!" due t! %!rtuit!u$ e1e"t$
2, Credit!r 're1e"ted t#e de*t!r %r!&
%ul%illi"+ t#e !*li+ati!"
<, ;e"alt- i$ c!"trar- t! +!!d &!ral$
!r +!!d cu$t!&$
=, 5!t# 'artie$ are +uilt- !% *reac# !%
c!"tract
F, 5reac# !% c!"tract *- t#e credit!r
H, N!"e !% t#e 'artie$ c!&&itted a"-
)ill%ul !r cul'a*le 1i!lati!" !% t#e
a+ree&e"t
1,-;. T2 nullit! o% t2 1nal claus dos
not carr! *it2 it t2at o% t2 1rinci1al
obligation.
T2 nullit! o% t2 1rinci1al obligation
carris *it2 it t2at o% t2 1nal claus.
5ecau$e t#e 'e"al clau$e i$ !"l- a"
acce$$!r- t! t#e 'ri"ci'al !*li+ati!"( it
ca""!t eAi$t al!"e,
I% t#e 'e"al clau$e i$ 1!id( t#e 'ri"ci'al
!*li+ati!" re&ai"$ e"%!rcea*le,
6 7anna 8ag9asi :ag
13

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