Obligations in Legal Transactions

Obligations

An obligation is a legal transaction in which parties bind themselves to either act or refrain from acting. It is a legal relationship between two or more persons. An obligation exists when:

1. An obligor (debtor) owes a performance in favor of an obligee (creditor).
2. The performance or duty is legally enforceable.

An obligee is entitled to judicial enforcement of the obligor's duty to perform, and to recover damages if the obligor fails to perform. The obligation is only extinguished for the original obligee, and performance of the obligation by the party in whose favor subrogation occurs causes that party to be substituted as obligee.

Real Rights and Real Obligations

A real right is a right in a thing that's good against the world. A real obligation is an obligation incurred as a result of a real right.

Strictly Personal and Heritable Obligations

An obligation is heritable if it can be enforced by or against the successors of the original obligors and obligees. Thus, heritability concerns only the question of whether a third party can be substituted or added to the obligation. A strictly personal obligation is an obligation that is only enforceable by the original obligee or against the original obligor, and it is not heritable.

Conditional Obligations

Conditional obligation is an obligation whose occurrence depends on an uncertain event. Uncertainty over whether the event will occur is the key ingredient for a conditional obligation. If the event is certain to occur, the condition isn't conditional but rather a condition subject to a term.

Obligations with Several People

Several obligations exist when separate performances are owed. Several obligations are treated as separate obligations, and produce the same legal impact as obligations incurred through different juridical acts. Joint obligations exist for obligors when one performance is owed, and when no joint obligor is bound for the whole and no joint obligee is entitled to receive the whole performance. An obligation is solidary for the obligors when each owes the whole performance, and solidary for the obligees when each is entitled to receive the whole performance.

Novation and Remission of Debt

Novation is the extinguishment of an existing obligation by the substitution of a new obligation. There are objective and subjective novations. Objective novation is the substitution of a new performance or a new cause in place of the original performance or cause, and the obligor remains the same, but a new obligation is substituted for the original obligation. Subjective novation is the substitution of a new obligor for the original obligor.

A remission of debt is the voluntary relinquishment by the obligee of her right to demand performance. A remission of debt extinguishes the obligation and is effective when the obligor receives communication from the obligee.

Natural and Moral Obligations

A natural or moral obligation is an obligation that is not legally enforceable but an obligation that compels the obligor to perform. Natural or Moral obligations produce three outcomes:

1. No Judicial Action for Obligee – A natural obligation isn't enforceable by judicial action. Thus, the obligee can't compel performance and the obligor isn't bound to render a performance.
2. No Reclamation of Freely Rendered Performance – A performance freely rendered in compliance with a natural obligation can't be reclaimed.
3. New Contract May Be Enforceable – A new contract made for the performance of a natural obligation is onerous, not gratuitous. Generally, this means that a new promise to perform made by the obligor of a natural obligation will elevate the debt into a fully binding obligation, but the promise must be express, in language that shows a clear, distinct, and unequivocal recognition and renewal of the debt as a binding obligation.