question

A contract to sell

answer

Bilateral promise of sale, purchase agreement) is an agreement about a sale that will happen at a future date

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Is it necessary to have a term set for a Contract to sell?

answer

No term is necessary for a contract TO sell.

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A Sale

answer

A contract that transfers ownership of a thing from seller to buyer for a price in money

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**Each party in a contract to sell may demand specific performance and a court shall enforce it. *Parties may contract around specific performance with earnest money*

answer

**Each party in a contract to sell may demand specific performance and a court shall enforce it. *Parties may contract around specific performance with earnest money*

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Deposit

answer

preliminary money given in which specific performance may be granted

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Earnest money

answer

preliminary money given in which specific performance may NOT be granted

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An option contract

answer

a contract by which one party agrees to be bound by his offer for a period of time and the offeree may accept within that period of time - option contracts are assignable

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(Option Contracts-asignee) If the assignee exercises the option and the seller fails to sale...

answer

The assignee may sue the assignor only for the price paid the assignor; the assignee cannot recover damages from the assignor...

question

All contracts of SALE require...

answer

price, consent, and a thing

question

Option term for an Immovable

answer

... option may not exceed 10 years. If more than 10 years is set for an option, the time period shall be reduced to 10 years. CC art. 2628

question

Which type of option term is absolutely null?

answer

Perpetual option - comment c of art. 2620

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What is absolute nullity?

answer

As if it ( the contract, argeement, etc.) never occurred

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Effect of an option contract

answer

Upon receipt of the grantee's decision to accept the option, the option is effective.

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Three-step contractual process that occurs with option contracts...

answer

(1)option contract, (2) contract TO sell, (3) contract OF sale

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Does Earnest money apply to option contracts?

answer

Earnest money does not apply to option contracts

question

Can Lesion be used as a means of annulling an option contract?

answer

No. Lesion is not a means of annulling an option.

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What is Lesion?

answer

Injury suffered as a loss from failure to receive a threshold amount or value. (when the price is less than one half of the fair market value of the immovable)

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Who can bring a claim of Lesion for rescission?

answer

Lesion can be claimed only by the SELLER and only in sales of corporeal immovables. Art. 2589

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**The seller may invoke lesion even if he has renounced the right to claim it.

answer

**The seller may invoke lesion even if he has renounced the right to claim it.

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**Option contracts are indivisible

answer

**Option contracts are indivisible

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A Right of first refusal (pacte de preference)

answer

a promise that an owner will not sell a certain thing without first offering it to a certain person (art. 2625)

question

Is right of first refusal... ...bilateral or unilateral? And who is bound?

answer

It is a unilateral contract by which only the grantor is bound

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Can the grantor be forced to sell in a right of first refusal?

answer

The grantor cannot be forced to ever sell... If the grantor opts to sell, then specific performance can be used to enforce the right of first refusal (art. 2625)

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**Right of first refusal terms - The grantor must offer the thing to the grantee on the same terms the grantor would sell the thing to a third party

answer

**Right of first refusal terms - The grantor must offer the thing to the grantee on the same terms the grantor would sell the thing to a third party

question

**A right of first refusal generally has no term limit, but if the object of the sale is immovable property, the term must be no longer than 10 years - *However, the term may be longer than 10 years if the contract gives rise to a continuous or periodic performance of an obligation

answer

**A right of first refusal generally has no term limit, but if the object of the sale is immovable property, the term must be no longer than 10 years - *However, the term may be longer than 10 years if the contract gives rise to a continuous or periodic performance of an obligation

question

**Though the right of first refusal must be granted to a certain person, the right is not strictly personal—it is assignable and heritable

answer

**Though the right of first refusal must be granted to a certain person, the right is not strictly personal—it is assignable and heritable

question

The default time periods for accepting a right of first refusal... movables and immovables

answer

The default time periods for accepting a right of first refusal are 10 days for movables and 30 days for immovables (art. 2627), but parties may contract for a different period

question

If the grantee does not accept the thing offered under a right of first refusal during the default time period

answer

the default rule says the grantor has 6 months to sell the thing to a third party (art. 2627). After 6 months, the right of first refusal subsists in the grantee again. Parties may contract around this rule

question

Contracts of sale (and contracts of lease) are subject to the general requirements of a contract...

answer

capacity, consent, object, and cause

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Who does not have the capacity to contract?

answer

Minors, interdicts, and persons deprived of reason (art. 1918)

question

Effects of contracting with someone who lacks capacity...

answer

Lack of capacity for contracting creates a relative nullity

question

Who can claim a relative nullity?

answer

A relative nullity may be claimed only by the person in whose interest the nullity was created

question

What is the prescription period for claiming relative nullity for lack of capacity.

answer

There is a 5-year prescription period for claiming it (art. 2032)

question

**A party who unknowingly contracts with someone who is incapacitated may demand the contract be confirmed or rescinded immediately upon learning of the incapacity (art. 1920)

answer

**A party who unknowingly contracts with someone who is incapacitated may demand the contract be confirmed or rescinded immediately upon learning of the incapacity (art. 1920)

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**A sales contract is governed by the laws of obligations. ( Art. 2438.)

answer

**A sales contract is governed by the laws of obligations. ( Art. 2438.)

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A sale of a "future thing"

answer

The coming into existence of the thing is a condition that suspends the effects of the sale. Buyer need not pay if thing does not come into existence

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A sale of a "hope"

answer

Even if nothing is produced, the sale is still valid. Buyer must pay even if thing does not come into existence. Sale of hope is an aleatory contract, i.e., a "gamble" (risk).

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** Language: describing the object as something other than the existent thing, e.g., the "right to" the thing, is indicative of a sale of a hope.

answer

** Language: describing the object as something other than the existent thing, e.g., the "right to" the thing, is indicative of a sale of a hope.

question

Price v. Fair Market Value

answer

If price is close to FMV of existent thing, then poss. sale of future thing. If price is well below FMV of existent thing, then poss. sale of a hope ... * Discount shows parties factored risk of nonproduction into price

question

Is it a contract of sale or contract to build

answer

A contract to build is not a contract to give a thing for a price, thus it is not a sale. Sales are governed by the Civil Code articles concerning obligations to give, whereas building contracts are governed by the articles concerning obligations to do. [Giving and doing, may be K to Build]

question

Art. 2439. Definition of a Sale

answer

Sale is a contract whereby a person transfers ownership of a thing to another for a price in money. The thing, the price, and the consent of the parties are requirements for the perfection of a sale.

question

Fundamental obligations - value test (Contract to Sale or to Build)

answer

Step 1: which is the more FO: to do (build) or to give (sell)? Step 2: value of the labor input v. value of materiel input? ex: If labor value is "trifling", then it is a sale

question

To Sale or Build Balancing test

answer

1. How much control does buyer have over specs? 2. Any Prior negotiations? 3. Is there a Reliance on skill ; labor? **Buyer control, prior negotiations and reliance on skill and labor imply a Contract to build.

question

Art. 2601. (Para 1) Additional terms in acceptance of offer to sell a movable.

answer

An expression of acceptance of an offer to sell a movable thing suffices to form a contract of sale if there is agreement on the thing and the price, even though the acceptance contains terms additional to, or different from, the terms of the offer, unless acceptance is made conditional on the offeror's acceptance of the additional or different terms. Where the acceptance is not so conditioned, the additional or different terms are regarded as proposals for modification and must be accepted by the offeror in order to become a part of the contract.

question

**Default contract formation rule is the mirror image rule, but LA makes an exception for movables.

answer

If the acceptance contains additional/different terms & acceptance is made conditional on offeror's acceptance of these terms, then there is no contract unless the offeror accepts the terms. This acceptance is a counteroffer. (movables)

question

The "extra" terms are proposals ; fall out if not accepted. (movables)

answer

If acceptance contains additional or different terms ; acceptance is NOT made conditional on the offeror's acceptance, then the contract is formed based on the terms of the offer w/o the added terms.

question

** Where both parties are merchants & the acceptance contains additional terms then a contract is formed.

answer

** Where both parties are merchants & the acceptance contains additional terms then a contract is formed.

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Difference between additional and different terms

answer

Additional terms are terms not addressed in the offer, whereas a different term varies a term in the offer.

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Additional Term:

answer

Terms that are not addressed in the offer.

question

Different Term:

answer

Term that varies a term in the offer.

question

Merchant

answer

One who habitually sells similar things

question

When do additional terms NOT become a part of the contract BETWEEN MERCHANTS. Article 2601.

answer

When: 1. The terms materially alter the offer. 2. The offer expressly limits acceptance to the terms of the offer. 3. Offeree gets notice of the offeror's objection in a reasonable time.

question

What happens if additional terms cannot become part of the contract?

answer

The additional terms fall out ; the terms of the offer control. (Knock out rule)

question

If Both parties are merchants and acceptance contain additional terms...

answer

Where both parties are merchants ; the acceptance contains additional terms then a contract is formed.

question

Three possible analytical methods as BETWEEN MERCHANTS if the terms are different

answer

1. If acceptance make conditional the terms of the counteroffer control. If acceptance not made conditional, the counteroffer terms must be accepted. (2601) 2. This a material alteration, so the counteroffer terms fall out ; terms of the original offer stand.(2601 P2 ) 3. Knocks out both and applies default rules. (2602)

question

C.C. Article 2601. (Para 2) Additional terms between Merchants

answer

Between merchants, however, additional terms become part of the contract unless they alter the offer materially, or the offer expressly limits the acceptance to the terms of the offer, or the offeree is notified of the offeror's objection to the additional terms within a reasonable time, in all of which cases the additional terms do not become a part of the contract. Additional terms alter the offer materially when their nature is such that it must be presumed that the offeror would not have contracted on those terms.

question

Art. 2550. Time and place of payment of price

answer

Payment of the price is due at the time and place stipulated in the contract, or at the time and place of delivery if the contract contains no such stipulation.

question

Transfer of Ownership

answer

Ordinarily, Ownership passes from Seller to Buyer as soon as agreement on thing & price. But where things is sold by weight, tale, or measure, Ownership doesn't pass until weighing, counting or measuring. (Necessary but no a sufficient condition) Further, where the thing must be individualized from a mass of like things, Ownership does not pass until the thing is individualized according to the intention of the parties.

question

Possibilities for Time of Transfer of Ownership

answer

a) 1st possibility: not until goods have been delivered to the public carrier at the place from which they are to be shipped to the buyer * The "shoe" case (Witt) b) 2nd possibility: an "irrevocable" assignment of the goods to the buyer * The "lottery ticket" case (Collins) c) 3rd possibility: any act indicating a definite intention to appropriate the goods to the contract is sufficient, such as setting apart and marking the goods for the buyer * The "whiskey barrel" case (Edgewood)

question

Art. 2613. Things in transit, ownership (Para 1) Bill of Lading

answer

When, according to the terms of the contract, the seller sends the things to the buyer through a common carrier, the form of the bill of lading determines ownership of the things while in transit.

question

Art. 2613. Things in transit, ownership (Para 2 ; 3) Bill of Lading specs

answer

When the bill of lading makes the things *deliverable to the buyer*, or to his order, ownership of the things is thereby transferred to the buyer. When the bill of lading makes the things *deliverable to the seller*, or to his agent, ownership of the things thereby remains with the seller.

question

Art. 2613. Things in transit, ownership (Para 4)

answer

When the seller or his agent remains in possession of a bill of lading that makes the things deliverable to the buyer, or to the buyer's order, the seller thereby reserves the right to retain the things against a claim of the buyer who has not performed his obligations.

question

Bill of Lading

answer

a document issued by a carrier which details a shipment of merchandise and gives title of that shipment to a specified party.

question

Price Not Set (an element to form a contract of a sale)

answer

Generally f there is no price, there is no contract. But where there's a market for the thing that's habitually sold, then quotes/price lists from that market may be used to compute the price, thus creating the "price" element. *Unless parties stipulate that there's no contract unless price is agreed upon.* Therefore, parties can tacitly agree on a "reasonable" price a) Could be based on prices for regularly sold b) Or past dealings between the parties

question

Redhibition:

answer

- a civil action available under Louisiana law against the seller and/or manufacturer of a defective product, similar to the lemon laws more familiar to common law jurisdictions in other U.S. states.

question

Redhibitory Defect...

answer

a defect that renders a thing useless or so diminishes its usefulness or value that it must be presumed that the buyer would not have bought it or would have paid a lesser price if aware of the defect [a seller is deemed to know that the thing he sells has a redhibitory defect when he is a manufacturer of that thing.

question

Art. 2532. Return of the thing; destruction of the thing (Redhibitory Defect)

answer

A buyer who obtains rescission because of a redhibitory defect is bound to return the thing to the seller, for which purpose he must take care of the thing as a prudent administrator, but is not bound to deliver it back until all his claims, or judgments, arising from the defect are satisfied. If the redhibitory defect has caused the destruction of the thing the loss is borne by the seller, and the buyer may bring his action even after the destruction has occurred. If the thing is destroyed by a fortuitous event before the buyer gives the seller notice of the existence of a redhibitory defect that would have given rise to a rescission of the sale, the loss is borne by the buyer. After such notice is given, the loss is borne by the seller, except to the extent the buyer has insured that loss. A seller who returns the price, or a part thereof, is subrogated to the buyer's right against third persons who may be liable for the destruction of the thing.

question

FORTUITOUS EVENT

answer

Having either positive or negative consequences, it is an unforeseen occurrence. An affected person has no control over it, be it a force natural or man-made, as it occurs by chance or accident.

question

Rescission

answer

The abrogation of a contract, effective from its inception, thereby restoring the parties to the positions they would have occupied if no contract had ever been formed.

question

Risk of Loss

answer

If the defect causes the thing's destruction, the seller eats the loss ; buyer may still seek rescission. 2532 Where the thing is destroyed due to a fortuitous event ; it has a defect that would grant the buyer rescission, the buyer eats the loss unless he has given notice of the defect to the seller. If notice was given, the seller eats the loss, except to the extent that buyer has insured against that loss. 2532. If the seller eats the loss, he is subrogated to the rights of the buyer against a 3rd party.

question

Transfer of Risk of Loss

answer

As a general rule, the risk of loss in the sale of a movable does not pass from Seller to Buyer until "delivery". There are exceptions for certain "things in transit". Analyze when loss occurred.

question

Sale of a Future thing

answer

A future thing may be sold. Its existence is a suspensive condition. 2450.

question

Art. 2450. Sale of future things

answer

A future thing may be the object of a contract of sale. In such a case the coming into existence of the thing is a condition that suspends the effects of the sale. A party who, through his fault, prevents the coming into existence of the thing is liable for damages.

question

Selling a hope

answer

A hope may be sold. 2451

question

Art. 2451. Sale of a hope

answer

A hope may be the object of a contract of sale. Thus, a fisherman may sell a haul of his net before he throws it. In that case the buyer is entitled to whatever is caught in the net, according to the parties' expectations, and even if nothing is caught the sale is valid.

question

Suspensive Condition

answer

A condition depending upon an uncertain event which must be fulfilled before an obligation arise

question

Case: Spring Thunder v. Odom

answer

Sale of insurance renewals is a sale of a hope, not a future thing. The object is the right to renewals, not the renewals & the failure of any accounts to renew has no effect on the contract validity.

question

Art. 2452. Sale of the thing of another

answer

The sale of a thing belonging to another does not convey ownership.

question

Risk of Loss... Situation: Contract requires delivery via carrier, but *not* at a particular destination (Shipment contract)

answer

Effect: Risk of loss passes to Buyer upon delivery to *carrier*. "F.O.B. seller's place of business"

question

Risk of Loss... Situation: Contract requires delivery via carrier, but *at* a particular destination (Destination contract)

answer

Effect: risk of loss passes to Buyer upon tender *by* carrier to buyer. "F.O.B. buyer's place of business"

question

Sale of a Thing of Another (Precarious Possessor)

answer

When seller giver someone the thing to transfer to buyer... And the transferer diverts the thing and sells it to someone else. Transferer is technically not a thief, but a precarious possessor.

question

Sale of a thing by a precarious possessor

answer

Transfer of a movable is effective as to 3P when possession is transferred to buyer. 2nd buyer wins if he is in Good Faith @ time of purchase if 1st buyer never took possession. 518. Buyer is in GF unless he Knew Or Had Reason To Know his seller was not the thing's owner.

question

Sale of a lost or stolen thing

answer

Possessor of a lost/stolen thing may not transfer its ownership. 521 True owner may get it back from a Good Faith buyer who got it from either *a public auction* or *a merchant*, but *must reimburse the purchase price*. 524. Owner may not get it back if thing was sold by authority of law.

question

Lost or Stolen Things

answer

Thing is stolen where one takes possession w/o permission of its owner ; *not where the owner gives it to another due to fraud*.

question

Merchant

answer

One who customarily sell similar things.

question

Good Faith Buyer

answer

A Buyer's Good Faith is presumed. True owner has BOP to show buyer KOHRTK thing was stolen before buyer bought it. Case: Brown & Root v. SE Equip.

question

Weight, tale, or measure

answer

When the thing is sold by weight, tale, or measure ownership is transferred between the parties when the seller, w/ the buyer's consent, weighs, counts or measures the thing. 2458

question

Lump Sum

answer

If sold in a lump, ownership is transferred between the parties by their consent, even though the things are not yet weighed, counted, or measured. 2458 *For there to be a lump sale there must be a lump price*.

question

Individualization

answer

When the sold thing must be individualized from a mass of similar things, ownership is transferred when the thing is individualized according to the parties' intent. 2457

question

Collins v. Louisiana Lottery

answer

The things are not yet individualized where the sale is revocable, or *if seller could have sold it to another* "Not marked and set aside"

question

Obligations of the seller

answer

1. Delivery of the thing 2. Warranty against Eviction 3. Warranty against Redhibitory Defects

question

Art. 2500. Eviction, definition, scope of warranty

answer

The seller warrants the buyer against eviction...The warranty also covers encumbrances on the thing that were *not declared* at the time of the sale, *(with the exception of apparent servitudes and natural and legal non apparent servitudes, which need not be declared)*. If the right of the third person is perfected only after the sale through the negligence of the buyer, though it arises from facts that took place before, the buyer has no claim in warranty.

question

Eviction

answer

The buyer's loss of, or danger of losing, the whole or part of the thing sold because of a third person's right that existed at the time of the sale. It must be a loss caused by a 3r Party right that existed *at the time of the sale*.

question

Art. 2460. Sale on view or trial

answer

When the buyer has reserved the view or trial of the thing, ownership is not transferred from the seller to the buyer until the latter gives his approval of the thing.

question

Sale of View or Trial

answer

View or trial is a sale where the transfer of ownership depends on buyer approval. When the buyer requires (expresses) view or trial of the thing, ownership is xferred when the buyer gives his approval. 2460

question

Right of Redemption

answer

The right to take the thing back

question

Art. 2567. Right of redemption, definition

answer

The parties to a contract of sale may agree that the seller shall have the right of redemption, which is *the right to take back the thing from the buyer*.

question

Art. 2568. Limitation on duration

answer

The right of redemption may not be reserved for more than *10 years* when the thing sold is immovable*, or more than *5 years when the thing sold is movable*. If a longer time for redemption has been stipulated in the contract that time must be reduced to either ten or five years, depending on the nature of the thing sold.

question

Art. 2572. Redemption against second purchaser

answer

When the thing is immovable, the right of redemption is effective against third persons only from the time the instrument that contains it is *filed for registry in the parish* where the immovable is located. When the thing is movable, the right of redemption is effective against third persons who, at the time of purchase, had actual knowledge of the existence of that right.

question

Fruits & products of redeemed thing

answer

Upon redemption, fruits & products belong to the buyer, but if unharvested, the seller owes the buyer the enhanced value of the thing, due to the fruits. 2575 & 2577

question

About redhibitiory defects:

answer

A defect is redhibitory when it renders the thing useless or so inconvenient that it must be presumed the buyer would not have bought the thing had he known of the defect. 1. Buyer may obtain rescission for this type of defect. 2. Even if he could rescind, buyer may seek a price reduction. 2541 3. Only have to show that the thing is defective. DO not have to prove the exact cause. 4. Even if he could rescind, court may limit remedy to a price reduction. 2541 5. The defect must be a *physical defect* in the thing. Zoning issue is not a redhibitory defect

question

Breach of contract

answer

It is not a redhibitory defect when the thing is 1. nonconforming, 2. not fit for its ordinary use *or* 3. even for the particular use of the buyer. The buyer's remedies are for breach of contract. 2524 ; 2529

question

Art. 2524. Thing fit for ordinary use

answer

The thing sold must be reasonably fit for its ordinary use. When the seller has reason to know the particular use the buyer intends for the thing, or the buyer's particular purpose for buying the thing, and that the buyer is relying on the seller's skill or judgment in selecting it, the thing sold must be fit for the buyer's intended use or for his particular purpose. If the thing is not so fit, the buyer's rights are governed by the general rules of conventional obligations.

question

Art. 1965. Lesion

answer

A contract may be annulled on grounds of lesion only in those cases provided by law.

question

Lesion

answer

A sale may be annulled for lesion, when the price is less than one half of the fair market value. 2589 1. Only the seller of corporeal IP may claim it. 2. N/A in a court ordered sale. 3. Cannot be waived by contract. 4. No lesion for the sale of a mineral right

question

Lesion Beyond Moiety

answer

Lesion beyond moiety is the remedy granted to a vendor of immovables who has received less than one-half the value of the thing sold.

question

Perfected

answer

...having completed all necessary legal steps to achieve a result, such as perfected title to property.

question

Recession equals FULL REFUND. You take your stuff, and give me back my money like this never happened.

answer

Recession equals FULL REFUND. You take your stuff, and give me back my money like this never happened.

question

Art. 2534. Redhibition Action Prescription

answer

A.(1) The action for redhibition against a seller who did not know of the existence of a defect in the thing sold prescribes in 4 years from the day delivery of such thing was made to the buyer or *1 year from the day the defect was discovered by the buyer*, whichever occurs first. (2) However, when the defect is of residential or commercial *immovable property*, an action for redhibition against a seller who did not know of the existence of the defect prescribes in *1 year from the day delivery of the property was made to the buyer*. B. The action for redhibition against a seller who knew, or is presumed to have known, of the existence of a defect in the thing sold prescribes in 1 year from the day the defect was discovered by the buyer. C. In any case *prescription is interrupted when the seller accepts the thing for repairs and commences anew from the day he tenders it back to the buyer or notifies the buyer of his refusal or inability to make the required repairs*.

question

Art. 2545. Liability of seller who knows of the defect; presumption of knowledge

answer

A seller who knows that the thing he sells has a defect but omits to declare it, or a seller who declares that the thing has a quality that he knows it does not have, is liable to the buyer for the return of the price with interest from the time it was paid, for the reimbursement of the reasonable expenses occasioned by the sale and those incurred for the preservation of the thing, and also for damages and reasonable attorney fees. If the use made of the thing, or the fruits it might have yielded, were of some value to the buyer, such a seller may be allowed credit for such use or fruits. A seller is deemed to know that the thing he sells has a redhibitory defect when he is a manufacturer of that thing.

question

Parties may exclude or limit the warranty. 2548

answer

The exclusion or limitation must be clear ; unambiguous ; brought to the attention of the buyer.

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