book_3_1_2 – Louisiana Civil Code

Civil Code

Book III. Of the Different Modes of Acquiring the Ownership of Things

Title IV. Conventional Obligations or Contracts

Chapter 1. General Principles

Art. 1906. Definition of contract

A contract is an agreement by two or more parties whereby obligations are created, modified, or extinguished.

Acts 1984, No. 331, §1, eff. Jan. 1, 1985.

Art. 1907. Unilateral contracts

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

Acts 1984, No. 331, §1, eff. Jan. 1, 1985.

Art. 1908. Bilateral or synallagmatic contracts

Art. 1908.  Bilateral or synallagmatic contracts

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

Acts 1984, No. 331, §1, eff. Jan. 1, 1985.

Art. 1909. Onerous contracts

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

Acts 1984, No. 331, §1, eff. Jan. 1, 1985.

Art. 1910. Gratuitous contracts

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

Acts 1984, No. 331, §1, eff. Jan. 1, 1985.

Art. 1911. Commutative contracts

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

Acts 1984, No. 331, §1, eff. Jan. 1, 1985.

Art. 1912. Aleatory contracts

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

Acts 1984, No. 331, §1, eff. Jan. 1, 1985.

Art. 1913. Principal and accessory contracts

A contract is accessory when it is made to provide security for the performance of an obligation.  Suretyship, mortgage, pledge, and other types of security agreements are examples of such a contract.

When the secured obligation arises from a contract, either between the same or other parties, that contract is the principal contract.

Acts 1984, No. 331, §1, eff. Jan. 1, 1985; Acts 1989, No. 137, §16, eff. Sept.  1, 1989.

Art. 1914. Nominate and innominate contracts

Nominate contracts are those given a special designation such as sale, lease, loan, or insurance.

Innominate contracts are those with no special designation.

Acts 1984, No. 331, §1, eff. Jan. 1, 1985.

Art. 1915. Rules applicable to all contracts

All contracts, nominate and innominate, are subject to the rules of this title.

Acts 1984, No. 331, §1, eff. Jan. 1, 1985.

Art. 1916. Rules applicable to nominate contracts

Nominate contracts are subject to the special rules of the respective titles when those rules modify, complement, or depart from the rules of this title.

Acts 1984, No. 331, §1, eff. Jan. 1, 1985.

Art. 1917. Rules applicable to all kinds of obligations

The rules of this title are applicable also to obligations that arise from sources other than contract to the extent that those rules are compatible with the nature of those obligations.

Acts 1984, No. 331, §1, eff. Jan. 1, 1985.

Chapter 2. Contractual Capacity and Exceptions

Art. 1918. General statement of capacity

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

Acts 1984, No. 331, §1, eff. Jan. 1, 1985.

Art. 1919. Right to plead rescission

A contract made by a person without legal capacity is relatively null and may be rescinded only at the request of that person or his legal representative.

Acts 1984, No. 331, §1, eff. Jan. 1, 1985.

Art. 1920. Right to require confirmation or rescission of the contract

Immediately after discovering the incapacity, a party, who at the time of contracting was ignorant of the incapacity of the other party, may require from that party, if the incapacity has ceased, or from the legal representative if it has not, that the contract be confirmed or rescinded.

Acts 1984, No. 331, §1, eff. Jan. 1, 1985.

Art. 1921. Rescission of contract for incapacity

Upon rescission of a contract on the ground of incapacity, each party or his legal representative shall restore to the other what he has received thereunder.  When restoration is impossible or impracticable, the court may award compensation to the party to whom restoration cannot be made.

Acts 1984, No. 331, §1, eff. Jan. 1, 1985.

Art. 1922. Fully emancipated minor

A fully emancipated minor has full contractual capacity.

Acts 1984, No. 331, §1, eff. Jan. 1, 1985.

Art. 1923. Incapacity of unemancipated minor;  exceptions

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

Acts 1984, No. 331, §1, eff. Jan. 1, 1985.

Art. 1924. Mere representation of majority;  reliance

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

Acts 1984, No. 331, §1, eff. Jan. 1, 1985.

Art. 1925. Noninterdicted person deprived of reason;  protection of innocent contracting party by onerous title

A noninterdicted person, who was deprived of reason at the time of contracting, may obtain rescission of an onerous contract upon the ground of incapacity only upon showing that the other party knew or should have known that person's incapacity.

Acts 1984, No. 331, §1, eff. Jan. 1, 1985.

Art. 1926. Attack on noninterdicted decedent's contracts

A contract made by a noninterdicted person deprived of reason at the time of contracting may be attacked after his death, on the ground of incapacity, only when the contract is gratuitous, or it evidences lack of understanding, or was made within thirty days of his death, or when application for interdiction was filed before his death.

Acts 1984, No. 331, §1, eff. Jan. 1, 1985.

Chapter 3. Consent

Art. 1927. Consent

A contract is formed by the consent of the parties established through offer and acceptance.

Unless the law prescribes a certain formality for the intended contract, offer and acceptance may be made orally, in writing, or by action or inaction that under the circumstances is clearly indicative of consent.

Unless otherwise specified in the offer, there need not be conformity between the manner in which the offer is made and the manner in which the acceptance is made.

Acts 1984, No. 331, §1, eff. Jan. 1, 1985.

Art. 1928. Irrevocable offer

An offer that specifies a period of time for acceptance is irrevocable during that time.

When the offeror manifests an intent to give the offeree a delay within which to accept, without specifying a time, the offer is irrevocable for a reasonable time.

Acts 1984, No. 331, §1, eff. Jan. 1, 1985.

Art. 1929. Expiration of irrevocable offer for lack of acceptance

An irrevocable offer expires if not accepted within the time prescribed in the preceding Article.

Acts 1984, No. 331, §1, eff. Jan. 1, 1985.

Art. 1930. Revocable offer

An offer not irrevocable under Civil Code Article 1928 may be revoked before it is accepted.

Acts 1984, No. 331, §1, eff. Jan. 1, 1985.

Art. 1931. Expiration of revocable offer

A revocable offer expires if not accepted within a reasonable time.

Acts 1984, No. 331, §1, eff. Jan. 1, 1985.

Art. 1932. Expiration of offer by death or incapacity of either party

An offer expires by the death or incapacity of the offeror or the offeree before it has been accepted.

Acts 1984, No. 331, §1, eff. Jan. 1, 1985.

Art. 1933. Option contracts

An option is a contract whereby the parties agree that the offeror is bound by his offer for a specified period of time and that the offeree may accept within that time.

Acts 1984, No. 331, §1, eff. Jan. 1, 1985.

Art. 1934. Time when acceptance of an irrevocable offer is effective

An acceptance of an irrevocable offer is effective when received by the offeror.

Acts 1984, No. 331, §1, eff. Jan. 1, 1985.

Art. 1935. Time when acceptance of a revocable offer is effective

Unless otherwise specified by the offer or the law, an acceptance of a revocable offer, made in a manner and by a medium suggested by the offer or in a reasonable manner and by a reasonable medium, is effective when transmitted by the offeree.

Acts 1984, No. 331, §1, eff. Jan. 1, 1985.

Art. 1936. Reasonableness of manner and medium of acceptance

A medium or a manner of acceptance is reasonable if it is the one used in making the offer or one customary in similar transactions at the time and place the offer is received, unless circumstances known to the offeree indicate otherwise.

Acts 1984, No. 331, §1, eff. Jan. 1, 1985.

Art. 1937. Time when revocation is effective

A revocation of a revocable offer is effective when received by the offeree prior to acceptance.

Acts 1984, No. 331, §1, eff. Jan. 1, 1985.

Art. 1938. Reception of revocation, rejection, or acceptance

A written revocation, rejection, or acceptance is received when it comes into the possession of the addressee or of a person authorized by him to receive it, or when it is deposited in a place the addressee has indicated as the place for this or similar communications to be deposited for him.

Acts 1984, No. 331, §1, eff. Jan. 1, 1985.

Art. 1939. Acceptance by performance

When an offeror invites an offeree to accept by performance and, according to usage or the nature or the terms of the contract, it is contemplated that the performance will be completed if commenced, a contract is formed when the offeree begins the requested performance.

Acts 1984, No. 331, §1, eff. Jan. 1, 1985.

Art. 1940. Acceptance only by completed performance

When, according to usage or the nature of the contract, or its own terms, an offer made to a particular offeree can be accepted only by rendering a completed performance, the offeror cannot revoke the offer, once the offeree has begun to perform, for the reasonable time necessary to complete the performance.  The offeree, however, is not bound to complete the performance he has begun.

The offeror's duty of performance is conditional on completion or tender of the requested performance.

Acts 1984, No. 331, §1, eff. Jan. 1, 1985.

Art. 1941. Notice of commencement of performance

When commencement of the performance either constitutes acceptance or makes the offer irrevocable, the offeree must give prompt notice of that commencement unless the offeror knows or should know that the offeree has begun to perform.  An offeree who fails to give the notice is liable for damages.

Acts 1984, No. 331, §1, eff. Jan. 1, 1985.

Art. 1942. Acceptance by silence

When, because of special circumstances, the offeree's silence leads the offeror reasonably to believe that a contract has been formed, the offer is deemed accepted.

Acts 1984, No. 331, §1, eff. Jan. 1, 1985.

Art. 1943. Acceptance not in accordance with offer

An acceptance not in accordance with the terms of the offer is deemed to be a counteroffer.

Acts 1984, No. 331, §1, eff. Jan. 1, 1985.

Art. 1944. Offer of reward made to the public

An offer of a reward made to the public is binding upon the offeror even if the one who performs the requested act does not know of the offer.

Acts 1984, No. 331, §1, eff. Jan. 1, 1985.

Art. 1945. Revocation of an offer of reward made to the public

An offer of reward made to the public may be revoked before completion of the requested act, provided the revocation is made by the same or an equally effective means as the offer.

Acts 1984, No. 331, §1, eff. Jan. 1, 1985.

Art. 1946. Performance by several persons

Unless otherwise stipulated in the offer made to the public, or otherwise implied from the nature of the act, when several persons have performed the requested act, the reward belongs to the first one giving notice of his completion of performance to the offeror.

Acts 1984, No. 331, §1, eff. Jan. 1, 1985.

Art. 1947. Form contemplated by parties

When, in the absence of a legal requirement, the parties have contemplated a certain form, it is presumed that they do not intend to be bound until the contract is executed in that form.

Acts 1984, No. 331, §1, eff. Jan. 1, 1985.

Chapter 4. Vices of Consent

Section 1. Error

Art. 1948. Vitiated consent

Consent may be vitiated by error, fraud, or duress.

Acts 1984, No. 331, §1, eff. Jan. 1, 1985.

Art. 1949. Error vitiates consent

Art. 1949.  Error vitiates consent

Error vitiates consent only when it concerns a cause without which the obligation would not have been incurred and that cause was known or should have been known to the other party.

Acts 1984, No. 331, §1, eff. Jan. 1, 1985.

Art. 1950. Error that concerns cause

Error vitiates consent only when it concerns a cause without which the obligation would not have been incurred and that cause was known or should have been known to the other party.

Acts 1984, No. 331, §1, eff. Jan. 1, 1985.

Art. 1951. Other party willing to perform

A party may not avail himself of his error if the other party is willing to perform the contract as intended by the party in error.

Acts 1984, No. 331, §1, eff. Jan. 1, 1985.

Art. 1952. Rescission;  liability for damages

A party who obtains rescission on grounds of his own error is liable for the loss thereby sustained by the other party unless the latter knew or should have known of the error.

The court may refuse rescission when the effective protection of the other party's interest requires that the contract be upheld.  In that case, a reasonable compensation for the loss he has sustained may be granted to the party to whom rescission is refused.

Acts 1984, No. 331, §1, eff. Jan. 1, 1985.

Section 2. Fraud

Art. 1953. Fraud may result from misrepresentation or from silence

Fraud is a misrepresentation or a suppression of the truth made with the intention either to obtain an unjust advantage for one party or to cause a loss or inconvenience to the other.  Fraud may also result from silence or inaction.

Acts 1984, No. 331, §1, eff. Jan. 1, 1985.

Art. 1954. Confidence between the parties

Fraud does not vitiate consent when the party against whom the fraud was directed could have ascertained the truth without difficulty, inconvenience, or special skill.

This exception does not apply when a relation of confidence has reasonably induced a party to rely on the other's assertions or representations.

Acts 1984, No. 331, §1, eff. Jan. 1, 1985.

Art. 1955. Error induced by fraud

Error induced by fraud need not concern the cause of the obligation to vitiate consent, but it must concern a circumstance that has substantially influenced that consent.

Acts 1984, No. 331, §1, eff. Jan. 1, 1985.

Art. 1956. Fraud committed by a third person

Fraud committed by a third person vitiates the consent of a contracting party if the other party knew or should have known of the fraud.

Acts 1984, No. 331, §1, eff. Jan. 1, 1985.

Art. 1957. Proof

Fraud need only be proved by a preponderance of the evidence and may be established by circumstantial evidence.

Acts 1984, No. 331, §1, eff. Jan. 1, 1985.

Art. 1958. Damages

The party against whom rescission is granted because of fraud is liable for damages and attorney fees.

Acts 1984, No. 331, §1, eff. Jan. 1, 1985.

Section 3. Duress

Art. 1959. Nature

Consent is vitiated when it has been obtained by duress of such a nature as to cause a reasonable fear of unjust and considerable injury to a party's person, property, or reputation.

Age, health, disposition, and other personal circumstances of a party must be taken into account in determining reasonableness of the fear.

Acts 1984, No. 331, §1, eff. Jan. 1, 1985.

Art. 1960. Duress directed against third persons

Duress vitiates consent also when the threatened injury is directed against the spouse, an ascendant, or descendant of the contracting party.

If the threatened injury is directed against other persons, the granting of relief is left to the discretion of the court.

Acts 1984, No. 331, §1, eff. Jan. 1, 1985.

Art. 1961. Duress by third person

Consent is vitiated even when duress has been exerted by a third person.

Acts 1984, No. 331, §1, eff. Jan. 1, 1985.

Art. 1962. Threat of exercising a right

A threat of doing a lawful act or a threat of exercising a right does not constitute duress.

A threat of doing an act that is lawful in appearance only may constitute duress.

Acts 1984, No. 331, §1, eff. Jan. 1, 1985.

Art. 1963. Contract with party in good faith

A contract made with a third person to secure the means of preventing threatened injury may not be rescinded for duress if that person is in good faith and not in collusion with the party exerting duress.

Acts 1984, No. 331, §1, eff. Jan. 1, 1985.

Art. 1964. Damages

When rescission is granted because of duress exerted or known by a party to the contract, the other party may recover damages and attorney fees.

When rescission is granted because of duress exerted by a third person, the parties to the contract who are innocent of the duress may recover damages and attorney fees from the third person.

Acts 1984, No. 331, §1, eff. Jan. 1, 1985.

Section 4. Lesion

Art. 1965. Lesion

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

Acts 1984, No. 331, §1, eff. Jan. 1, 1985.

Chapter 5. Cause

Art. 1966. No obligation without cause

An obligation cannot exist without a lawful cause.

Acts 1984, No. 331, §1, eff. Jan. 1, 1985.

Art. 1967. Cause defined;  detrimental reliance

Cause is the reason why a party obligates himself.

A party may be obligated by a promise when he knew or should have known that the promise would induce the other party to rely on it to his detriment and the other party was reasonable in so relying.  Recovery may be limited to the expenses incurred or the damages suffered as a result of the promisee's reliance on the promise.  Reliance on a gratuitous promise made without required formalities is not reasonable.

Acts 1984, No. 331, §1, eff. Jan. 1, 1985.

Art. 1968. Unlawful cause

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

Examples of obligations with unlawful causes include those that arise from gaming, gambling, and wagering not authorized by law.

Acts 1984, No. 331, §1, eff. Jan. 1, 1985; Acts 2019, No. 106, §1.

Art. 1969. Cause not expressed

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

Acts 1984, No. 331, §1, eff. Jan. 1, 1985.

Art. 1970. Untrue expression of cause

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

Acts 1984, No. 331, §1, eff. Jan. 1, 1985.

Chapter 6. Object and Matter of Contracts

Art. 1971. Freedom of parties

Parties are free to contract for any object that is lawful, possible, and determined or determinable.

Acts 1984, No. 331, §1, eff. Jan. 1, 1985.

Art. 1972. Possible or impossible object

A contractual object is possible or impossible according to its own nature and not according to the parties' ability to perform.

Acts 1984, No. 331, §1, eff. Jan. 1, 1985.

Art. 1973. Object determined as to kind

The object of a contract must be determined at least as to its kind.

The quantity of a contractual object may be undetermined, provided it is determinable.

Acts 1984, No. 331, §1, eff. Jan. 1, 1985.

Art. 1974. Determination by third person

If the determination of the quantity of the object has been left to the discretion of a third person, the quantity of an object is determinable.

If the parties fail to name a person, or if the person named is unable or unwilling to make the determination, the quantity may be determined by the court.

Acts 1984, No. 331, §1, eff. Jan. 1, 1985.

Art. 1975. Output or requirements

The quantity of a contractual object may be determined by the output of one party or the requirements of the other.

In such a case, output or requirements must be measured in good faith.

Acts 1984, No. 331, §1, eff. Jan. 1, 1985.

Art. 1976. Future things

Future things may be the object of a contract.

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

Acts 1984, No. 331, §1, eff. Jan. 1, 1985.

Art. 1977. Obligation or performance by a third person

The object of a contract may be that a third person will incur an obligation or render a performance.

The party who promised that obligation or performance is liable for damages if the third person does not bind himself or does not perform.

Acts 1984, No. 331, §1, eff. Jan. 1, 1985.

Chapter 7. Third Party Beneficiary

Art. 1978. Stipulation for a third party

A contracting party may stipulate a benefit for a third person called a third party beneficiary.

Once the third party has manifested his intention to avail himself of the benefit, the parties may not dissolve the contract by mutual consent without the beneficiary's agreement.

Acts 1984, No. 331, §1, eff. Jan. 1, 1985.

Art. 1979. Revocation

The stipulation may be revoked only by the stipulator and only before the third party has manifested his intention of availing himself of the benefit.

If the promisor has an interest in performing, however, the stipulation may not be revoked without his consent.

Acts 1984, No. 331, §1, eff. Jan. 1, 1985.

Art. 1980. Revocation or refusal

In case of revocation or refusal of the stipulation, the promisor shall render performance to the stipulator.

Acts 1984, No. 331, §1, eff. Jan. 1, 1985.

Art. 1981. Rights of beneficiary and stipulator

The stipulation gives the third party beneficiary the right to demand performance from the promisor.

Also the stipulator, for the benefit of the third party, may demand performance from the promisor.

Acts 1984, No. 331, §1, eff. Jan. 1, 1985.

Art. 1982. Defenses of the promisor

The promisor may raise against the beneficiary such defenses based on the contract as he may have raised against the stipulator.

Acts 1984, No. 331, §1, eff. Jan. 1, 1985.

Chapter 8. Effects of Conventional Obligations

Section 1. General Effects of Contracts

Art. 1983. Law for the parties;  performance in good faith

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

Acts 1984, No. 331, §1, eff. Jan. 1, 1985.

Art. 1984. Rights and obligations will pass to successors

Rights and obligations arising from a contract are heritable and assignable unless the law, the terms of the contract or its nature preclude such effects.

Acts 1984, No. 331, §1, eff. Jan. 1, 1985.

Art. 1985. Effects for third parties

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

Acts 1984, No. 331, §1, eff. Jan. 1, 1985.

Section 2. Specific Performance

Art. 1986. Right of the obligee

Upon an obligor's failure to perform an obligation to deliver a thing, or not to do an act, or to execute an instrument, the court shall grant specific performance plus damages for delay if the obligee so demands.  If specific performance is impracticable, the court may allow damages to the obligee.

Upon a failure to perform an obligation that has another object, such as an obligation to do, the granting of specific performance is at the discretion of the court.

Acts 1984, No. 331, §1, eff. Jan. 1, 1985.

Art. 1987. Right to restrain obligor

The obligor may be restrained from doing anything in violation of an obligation not to do.

Acts 1984, No. 331, §1, eff. Jan. 1, 1985.

Art. 1988. Judgment may stand for act

A failure to perform an obligation to execute an instrument gives the obligee the right to a judgment that shall stand for the act.

Acts 1984, No. 331, §1, eff. Jan. 1, 1985.

Section 3. Putting in Default

Art. 1989. Damages for delay

Damages for delay in the performance of an obligation are owed from the time the obligor is put in default.

Other damages are owed from the time the obligor has failed to perform.

Acts 1984, No. 331, §1, eff. Jan. 1, 1985.

Art. 1990. Obligor put in default by arrival of term

When a term for the performance of an obligation is either fixed, or is clearly determinable by the circumstances, the obligor is put in default by the mere arrival of that term.  In other cases, the obligor must be put in default by the obligee, but not before performance is due.

Acts 1984, No. 331, §1, eff. Jan. 1, 1985.

Art. 1991. Manners of putting in default

An obligee may put the obligor in default by a written request of performance, or by an oral request of performance made before two witnesses, or by filing suit for performance, or by a specific provision of the contract.

Acts 1984, No. 331, §1, eff. Jan. 1, 1985.

Art. 1992. Risk devolves upon the obligor

If an obligee bears the risk of the thing that is the object of the performance, the risk devolves upon the obligor who has been put in default for failure to deliver that thing.

Acts 1984, No. 331, §1, eff. Jan. 1, 1985.

Art. 1993. Reciprocal obligations

In case of reciprocal obligations, the obligor of one may not be put in default unless the obligor of the other has performed or is ready to perform his own obligation.

Acts 1984, No. 331, §1, eff. Jan. 1, 1985.

Section 4. Damages

Art. 1994. Obligor liable for failure to perform

An obligor is liable for the damages caused by his failure to perform a conventional obligation.

A failure to perform results from nonperformance, defective performance, or delay in performance.

Acts 1984, No. 331, §1, eff. Jan. 1, 1985.

Art. 1995. Measure of damages

Damages are measured by the loss sustained by the obligee and the profit of which he has been deprived.

Acts 1984, No. 331, §1, eff. Jan. 1, 1985.

Art. 1996. Obligor in good faith

An obligor in good faith is liable only for the damages that were foreseeable at the time the contract was made.

Acts 1984, No. 331, §1, eff. Jan. 1, 1985.

Art. 1997. Obligor in bad faith

An obligor in bad faith is liable for all the damages, foreseeable or not, that are a direct consequence of his failure to perform.

Acts 1984, No. 331, §1, eff. Jan. 1, 1985.

Art. 1998. Damages for nonpecuniary loss

Damages for nonpecuniary loss may be recovered when the contract, because of its nature, is intended to gratify a nonpecuniary interest and, because of the circumstances surrounding the formation or the nonperformance of the contract, the obligor knew, or should have known, that his failure to perform would cause that kind of loss.

Regardless of the nature of the contract, these damages may be recovered also when the obligor intended, through his failure, to aggrieve the feelings of the obligee.

Acts 1984, No. 331, §1, eff. Jan. 1, 1985.

Art. 1999. Assessment of damages left to the court

When damages are insusceptible of precise measurement, much discretion shall be left to the court for the reasonable assessment of these damages.

Acts 1984, No. 331, §1, eff. Jan. 1, 1985.  

Art. 2000. Damages for delay measured by interest;  no need of proof;  attorney fees

When the object of the performance is a sum of money, damages for delay in performance are measured by the interest on that sum from the time it is due, at the rate agreed by the parties or, in the absence of agreement, at the rate of legal interest as fixed by R.S. 9:3500.  The obligee may recover these damages without having to prove any loss, and whatever loss he may have suffered he can recover no more.  If the parties, by written contract, have expressly agreed that the obligor shall also be liable for the obligee's attorney fees in a fixed or determinable amount, the obligee is entitled to that amount as well.

Acts 1984, No. 331, §1, eff. Jan. 1, 1985; Acts 1985, No. 137, §1, eff. July 3, 1985; Acts 1987, No. 883, §1; Acts 2004, No. 743, §3, eff. Jan. 1, 2005.

NOTE:  SEE ACTS 1985, NO. 137, §2.

Art. 2001. Interest on interest

Interest on accrued interest may be recovered as damages only when it is added to the principal by a new agreement of the parties made after the interest has accrued.

Acts 1984, No. 331, §1, eff. Jan. 1, 1985.

Art. 2002. Reasonable efforts to mitigate damages

An obligee must make reasonable efforts to mitigate the damage caused by the obligor's failure to perform.  When an obligee fails to make these efforts, the obligor may demand that the damages be accordingly reduced.

Acts 1984, No. 331, §1, eff. Jan. 1, 1985.

Art. 2003. Obligee in bad faith

An obligee may not recover damages when his own bad faith has caused the obligor's failure to perform or when, at the time of the contract, he has concealed from the obligor facts that he knew or should have known would cause a failure.

If the obligee's negligence contributes to the obligor's failure to perform, the damages are reduced in proportion to that negligence.

Acts 1984, No. 331, §1, eff. Jan. 1, 1985.

Art. 2004. Clause that excludes or limits liability

Any clause is null that, in advance, excludes or limits the liability of one party for intentional or gross fault that causes damage to the other party.

Any clause is null that, in advance, excludes or limits the liability of one party for causing physical injury to the other party.

Acts 1984, No. 331, §1, eff. Jan. 1, 1985.

Section 5. Stipulated Damages

Art. 2005. Secondary obligation

Parties may stipulate the damages to be recovered in case of nonperformance, defective performance, or delay in performance of an obligation.

That stipulation gives rise to a secondary obligation for the purpose of enforcing the principal one.

Acts 1984, No. 331, §1, eff. Jan. 1, 1985.

Art. 2006. Nullity of the principal obligation

Nullity of the principal obligation renders the stipulated damages clause null.

Nullity of the stipulated damages clause does not render the principal obligation null.

Acts 1984, No. 331, §1, eff. Jan. 1, 1985.

Art. 2007. Stipulated damages or performance

An obligee may demand either the stipulated damages or performance of the principal obligation, but he may not demand both unless the damages have been stipulated for mere delay.

Acts 1984, No. 331, §1, eff. Jan. 1, 1985.

Art. 2008. Failure to perform justified

An obligor whose failure to perform the principal obligation is justified by a valid excuse is also relieved of liability for stipulated damages.

Acts 1984, No. 331, §1, eff. Jan. 1, 1985.

Art. 2009. Obligee not bound to prove damage

An obligee who avails himself of a stipulated damages clause need not prove the actual damage caused by the obligor's nonperformance, defective performance, or delay in performance.

Acts 1984, No. 331, §1, eff. Jan. 1, 1985.

Art. 2010. Obligor put in default

An obligee may not avail himself of a clause stipulating damages for delay unless the obligor has been put in default.

Acts 1984, No. 331, §1, eff. Jan. 1, 1985.

Art. 2011. Benefit from partial performance

Stipulated damages for nonperformance may be reduced in proportion to the benefit derived by the obligee from any partial performance rendered by the obligor.

Acts 1984, No. 331, §1, eff. Jan. 1, 1985.

Art. 2012. Stipulated damages may not be modified

Stipulated damages may not be modified by the court unless they are so manifestly unreasonable as to be contrary to public policy.

Acts 1984, No. 331, §1, eff. Jan. 1, 1985.

Chapter 9. Dissolution

Art. 2013. Obligee's right to dissolution

When the obligor fails to perform, the obligee has a right to the judicial dissolution of the contract or, according to the circumstances, to regard the contract as dissolved.  In either case, the obligee may recover damages.

In an action involving judicial dissolution, the obligor who failed to perform may be granted, according to the circumstances, an additional time to perform.

Acts 1984, No. 331, §1, eff. Jan. 1, 1985.

Art. 2014. Importance of failure to perform

A contract may not be dissolved when the obligor has rendered a substantial part of the performance and the part not rendered does not substantially impair the interest of the obligee.

Acts 1984, No. 331, §1, eff. Jan. 1, 1985.

Art. 2015. Dissolution after notice to perform

Upon a party's failure to perform, the other may serve him a notice to perform within a certain time, with a warning that, unless performance is rendered within that time, the contract shall be deemed dissolved.  The time allowed for that purpose must be reasonable according to the circumstances.

The notice to perform is subject to the requirements governing a putting of the obligor in default and, for the recovery of damages for delay, shall have the same effect as a putting of the obligor in default.

Acts 1984, No. 331, §1, eff. Jan. 1, 1985.

Art. 2016. Dissolution without notice to perform

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

Acts 1984, No. 331, §1, eff. Jan. 1, 1985.

Art. 2017. Express dissolution clause

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

Acts 1984, No. 331, §1, eff. Jan. 1, 1985.

Art. 2018. Effects of dissolution

Upon dissolution of a contract, the parties shall be restored to the situation that existed before the contract was made.  If restoration in kind is impossible or impracticable, the court may award damages.

If partial performance has been rendered and that performance is of value to the party seeking to dissolve the contract, the dissolution does not preclude recovery for that performance, whether in contract or quasi-contract.

Acts 1984, No. 331, §1, eff. Jan. 1, 1985.

Art. 2019. Contracts for continuous or periodic performance

In contracts providing for continuous or periodic performance, the effect of the dissolution shall not be extended to any performance already rendered.

Acts 1984, No. 331, §1, eff. Jan. 1, 1985.

Art. 2020. Contracts made by more than two parties

When a contract has been made by more than two parties, one party's failure to perform may not cause dissolution of the contract for the other parties, unless the performance that failed was essential to the contract.

Acts 1984, No. 331, §1, eff. Jan. 1, 1985.

Art. 2021. Rights of third party in good faith

Dissolution of a contract does not impair the rights acquired through an onerous contract by a third party in good faith.

If the contract involves immovable property, the principles of recordation apply to a third person acquiring an interest in the property whether by onerous or gratuitous title.

Acts 1984, No. 331, §1, eff. July 1, 1985; Acts 2005, No. 169, §2, eff. Jan. 1, 2006; Acts 2005, 1st Ex. Sess., No. 13, §1, eff. Nov. 29, 2005.

Art. 2022. Refusal to perform

Either party to a commutative contract may refuse to perform his obligation if the other has failed to perform or does not offer to perform his own at the same time, if the performances are due simultaneously.

Acts 1984, No. 331, §1, eff. Jan. 1, 1985.

Art. 2023. Security for performance

If the situation of a party, financial or otherwise, has become such as to clearly endanger his ability to perform an obligation, the other party may demand in writing that adequate security be given and, upon failure to give that security, that party may withhold or discontinue his own performance.

Acts 1984, No. 331, §1, eff. Jan. 1, 1985.

Art. 2024. Contract terminated by a party's initiative

A contract of unspecified duration may be terminated at the will of either party by giving notice, reasonable in time and form, to the other party.

Acts 1984, No. 331, §1, eff. Jan. 1, 1985.

Chapter 10. Simulation

Art. 2025. Definition;  simulation and counterletter

A contract is a simulation when, by mutual agreement, it does not express the true intent of the parties.

If the true intent of the parties is expressed in a separate writing, that writing is a counterletter.

Acts 1984, No. 331, §1, eff. Jan. 1, 1985.

Art. 2026. Absolute simulation

A simulation is absolute when the parties intend that their contract shall produce no effects between them.  That simulation, therefore, can have no effects between the parties.

Acts 1984, No. 331, §1, eff. Jan. 1, 1985.

Art. 2027. Relative simulation

A simulation is relative when the parties intend that their contract shall produce effects between them though different from those recited in their contract.  A relative simulation produces between the parties the effects they intended if all requirements for those effects have been met.

Acts 1984, No. 331, §1, eff. Jan. 1, 1985.

Art. 2028. Effects as to third persons

Any simulation, either absolute or relative, may have effects as to third persons.

Counterletters can have no effects against third persons in good faith. Nevertheless, if the counterletter involves immovable property, the principles of recordation apply with respect to third persons.

Acts 1984, No. 331, §1, eff. Jan. 1, 1985; Acts 2012, No. 277, §1.

Chapter 11. Nullity

Art. 2029. Nullity of contracts

A contract is null when the requirements for its formation have not been met.

Acts 1984, No. 331, §1, eff. Jan. 1, 1985.

Art. 2030. Absolute nullity of contracts

A contract is absolutely null when it violates a rule of public order, as when the object of a contract is illicit or immoral.  A contract that is absolutely null may not be confirmed.

Absolute nullity may be invoked by any person or may be declared by the court on its own initiative.

Acts 1984, No. 331, §1, eff. Jan. 1, 1985.

Art. 2031. Relative nullity of contracts

A contract is relatively null when it violates a rule intended for the protection of private parties, as when a party lacked capacity or did not give free consent at the time the contract was made.  A contract that is only relatively null may be confirmed.

Relative nullity may be invoked only by those persons for whose interest the ground for nullity was established, and may not be declared by the court on its own initiative.

Acts 1984, No. 331, §1, eff. Jan. 1, 1985.

Art. 2032. Prescription of action

Action for annulment of an absolutely null contract does not prescribe.

Action of annulment of a relatively null contract must be brought within five years from the time the ground for nullity either ceased, as in the case of incapacity or duress, or was discovered, as in the case of error or fraud.

Nullity may be raised at any time as a defense against an action on the contract, even after the action for annulment has prescribed.

Acts 1984, No. 331, §1, eff. Jan. 1, 1985.

Art. 2033. Effects

An absolutely null contract, or a relatively null contract that has been declared null by the court, is deemed never to have existed.  The parties must be restored to the situation that existed before the contract was made.  If it is impossible or impracticable to make restoration in kind, it may be made through an award of damages.

Nevertheless, a performance rendered under a contract that is absolutely null because its object or its cause is illicit or immoral may not be recovered by a party who knew or should have known of the defect that makes the contract null.  The performance may be recovered, however, when that party invokes the nullity to withdraw from the contract before its purpose is achieved and also in exceptional situations when, in the discretion of the court, that recovery would further the interest of justice.

Absolute nullity may be raised as a defense even by a party who, at the time the contract was made, knew or should have known of the defect that makes the contract null.

Acts 1984, No. 331, §1, eff. Jan. 1, 1985.

Art. 2034. Nullity of a provision

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

Acts 1984, No. 331, §1, eff. Jan. 1, 1985.

Art. 2035. Rights of third party in good faith

Nullity of a contract does not impair the rights acquired through an onerous contract by a third party in good faith.

If the contract involves immovable property, the principles of recordation apply to a third person acquiring an interest in the property whether by onerous or gratuitous title.

Acts 1984, No. 331, §1, eff. Jan. 1, 1985; Acts 2005, No. 169, §2, eff. July 1, 2006; Acts 2005, 1st Ex. Sess., No. 13, §1, eff. Nov. 29, 2005.

Chapter 12. Revocatory Action and Oblique Action

Section 1. Revocatory Action

Art. 2036. Act of the obligor that causes or increases his insolvency

An obligee has a right to annul an act of the obligor, or the result of a failure to act of the obligor, made or effected after the right of the obligee arose, that causes or increases the obligor's insolvency.

Acts 1984, No. 331, §1, eff. Jan. 1, 1985; Acts 2003, No. 552, §1; Acts 2004, No. 447, §1.

Art. 2037. Insolvency

An obligor is insolvent when the total of his liabilities exceeds the total of his fairly appraised assets.

Acts 1984, No. 331, §1, eff. Jan. 1, 1985; Acts 2003, No. 552, §1; Acts 2004, No. 447, §1.

Art. 2038. Onerous contract made by the obligor

An obligee may annul an onerous contract made by the obligor with a person who knew or should have known that the contract would cause or increase the obligor's insolvency.  In that case, the person is entitled to recover what he gave in return only to the extent that it has inured to the benefit of the obligor's creditors.

An obligee may annul an onerous contract made by the obligor with a person who did not know that the contract would cause or increase the obligor's insolvency, but in that case that person is entitled to recover as much as he gave to the obligor.  That lack of knowledge is presumed when that person has given at least four-fifths of the value of the thing obtained in return from the obligor.

Acts 1984, No. 331, §1, eff. Jan. 1, 1985.

Art. 2039. Gratuitous contract made by the obligor

An obligee may attack a gratuitous contract made by the obligor whether or not the other party knew that the contract would cause or increase the obligor's insolvency.

Acts 1984, No. 331, §1, eff. Jan. 1, 1985.

Art. 2040. Contract made in course of business

An obligee may not annul a contract made by the obligor in the regular course of his business.

Acts 1984, No. 331, §1, eff. Jan. 1, 1985.

Art. 2041. Action must be brought within one year

The action of the obligee must be brought within one year from the time he learned or should have learned of the act, or the result of the failure to act, of the obligor that the obligee seeks to annul, but never after three years from the date of that act or result.

The three year period provided in this Article shall not apply in cases of fraud.

Acts 1984, No. 331, §1, eff. Jan. 1, 1985; Acts 2013, No. 88, §1.

Art. 2042. Obligee must join obligor and third persons

In an action to annul either his obligor's act, or the result of his obligor's failure to act, the obligee must join the obligor and the third persons involved in that act or failure to act.

A third person joined in the action may plead discussion of the obligor's assets.

Acts 1984, No. 331, §1, eff. Jan. 1, 1985.

Art. 2043. Assets transferred must be returned

If an obligee establishes his right to annul his obligor's act, or the result of his obligor's failure to act, that act or result shall be annulled only to the extent that it affects the obligee's right.

Acts 1984, No. 331, §1, eff. Jan. 1, 1985.

Section 2. Oblique Action

Art. 2044. Insolvency by failure to exercise right

If an obligor causes or increases his insolvency by failing to exercise a right, the obligee may exercise it himself, unless the right is strictly personal to the obligor.

For that purpose, the obligee must join in the suit his obligor and the third person against whom that right is asserted.

Acts 1984, No. 331, §1, eff. Jan. 1, 1985.

Chapter 13. Interpretation of Contracts

Art. 2045. Determination of the intent of the parties

Interpretation of a contract is the determination of the common intent of the parties.

Acts 1984, No. 331, §1, eff. Jan. 1, 1985.

Art. 2046. No further interpretation when intent is clear

When the words of a contract are clear and explicit and lead to no absurd consequences, no further interpretation may be made in search of the parties' intent.

Acts 1984, No. 331, §1, eff. Jan. 1, 1985.

Art. 2047. Meaning of words

The words of a contract must be given their generally prevailing meaning.

Words of art and technical terms must be given their technical meaning when the contract involves a technical matter.

Acts 1984, No. 331, §1, eff. Jan. 1, 1985.

Art. 2048. Words susceptible of different meanings

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

Acts 1984, No. 331, §1, eff. Jan. 1, 1985.

Art. 2049. Provision susceptible of different meanings

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

Acts 1984, No. 331, §1, eff. Jan. 1, 1985.

Art. 2050. Provisions interpreted in light of each other

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

Acts 1984, No. 331, §1, eff. Jan. 1, 1985.

Art. 2051. Contract worded in general terms

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

Acts 1984, No. 331, §1, eff. Jan. 1, 1985.

Art. 2052. Situation to which the contract applies

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

Acts 1984, No. 331, §1, eff. Jan. 1, 1985.

Art. 2053. Nature of contract, equity, usages, conduct of the parties, and other contracts between same parties

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

Acts 1984, No. 331, §1, eff. Jan. 1, 1985.

Art. 2054. No provision of the parties for a particular situation

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

Acts 1984, No. 331, §1, eff. Jan. 1, 1985.

Art. 2055. Equity and usage

Equity, as intended in the preceding articles, is based on the principles that no one is allowed to take unfair advantage of another and that no one is allowed to enrich himself unjustly at the expense of another.

Usage, as intended in the preceding articles, is a practice regularly observed in affairs of a nature identical or similar to the object of a contract subject to interpretation.

Acts 1984, No. 331, §1, eff. Jan. 1, 1985.

Art. 2056. Standard-form contracts

In case of doubt that cannot be otherwise resolved, a provision in a contract must be interpreted against the party who furnished its text.

A contract executed in a standard form of one party must be interpreted, in case of doubt, in favor of the other party.

Acts 1984, No. 331, §1, eff. Jan. 1, 1985.

Art. 2057. Contract interpreted in favor of obligor

In case of doubt that cannot be otherwise resolved, a contract must be interpreted against the obligee and in favor of the obligor of a particular obligation.

Yet, if the doubt arises from lack of a necessary explanation that one party should have given, or from negligence or fault of one party, the contract must be interpreted in a manner favorable to the other party whether obligee or obligor.

Acts 1984, No. 331, §1, eff. Jan. 1, 1985.