Obligations: Payment, Breach, and Liability
Payment and Compliance
Under Article 1156 of the Civil Code: “The obligations are extinguished by:
- Payment or performance.
- Loss of the thing properly.
- Debt forgiveness.
- Confusion of rights of creditor or debtor.
- Compensation.
- Novation.
- Appropriation, prescription and compliance with the condition and time solving.
Payment is the legal act that is or is fully executed the benefit payable under a mandatory relationship. It is the primary means of settlement.
Payment can take several forms: It may involve giving money, the delivery of a specific item, or conducting a service. Solvens is the person making the payment, and accipiens is the person who receives it.
People Who Make the Payment:
- Payment made by the debtor: Most often, the payment is made by the debtor personally. The debtor must be able to pay.
- Payment made by the representative of the debtor: Valid if they have enough power to dispose of the thing delivered.
- Payment by a third party: “Any person can pay, whether or not they have an interest in the performance of the obligation, whether the debtor knows and approves, or ignores it. But this payment does not discharge the debtor, and that ‘who pays on behalf of another may claim from the debtor what they would have paid, not to have done against their express wish’ (Action for refund or leveling).”
Person to Pay:
- Payment made to the creditor: “The payment made to a person incapable of managing their property shall be valid as it has become its usefulness.”
- Payment to the creditor’s representative: It is valid since Article 1162 of the Civil Code allows payment made to a person authorized to receive it on behalf of the creditor.
- Payment to a third party: It is inefficient and does not release the debtor, to be paid to the creditor and directed against the recipient, in action for reimbursement. There are some exceptions, and payment to a third party applies when:
- The payment becomes useful to the creditor.
- Paid in good faith to an apparent creditor.
- Payment is made by payment into a bank account.
Objective Conditions of Payment:
- Identity: Exists when the debtor surrenders the thing intended to constitute an obligation.
- Integrity: When all benefits are provided.
Liability for Breach
Any obligation arises and persists while a person suffers a great loss (constitutive damage) allowed by law to reinstate or compensate. If the debtor defaults on their obligation to compensate, then the harm caused to the creditor may cause a second type of injury (default injury).
Failure can take many forms. We can talk about:
- Total failure or no benefit: The debtor has not performed any act aimed at implementing the promised benefit payable or has tried unsuccessfully to deliver a thing or provide a service different from those agreed.
- Partial Failure: The debtor has not made full payment but has spent part of the provision, leaving another part to be discharged.
- Defective Failure: The debtor has carried out some acts designed to accomplish, but this provision does not coincide entirely with the program or project delivery. The provision held is not identical to the projected face of defective performance; the creditor has a duty to act diligently.
Fault in the Contract
Civil Code Article 1101: “Those who in fulfilling their obligations incur fraud, negligence, or default, and those who in any way contravene the tenor of those obligations, are subject to compensation for damages.”
Article 1110 Civil Code: “The capital receipt by the creditor without reservation with respect to interest extinguishes the debtor’s obligation concerning them.”
The receipt of the last installment of a debit, if the creditor does not make reservations, extinguishes the obligation in respect of the previous installments.
Acts of God and Force Majeure
Both fortuitous events and force majeure are unforeseeable or unavoidable events (events which could not be foreseen or that, if expected, were inevitable), producing damage, including loss of the thing, but exonerating the debtor provided that they are not in arrears.
Along with the exemption of the debtor that was not past due by accident and force majeure, there is a third case of exemption if the creditor and debtor have agreed to a waiver of liability clause, which is valid, except for the event to attend in fraud, because “the renunciation of action to enforce the liability for fraud is void.”
Debtor and Creditor Default
It’s more than a simple delay; it aggravates the responsibility of the defaulting debtor. Article 1108 of the Civil Code: “If the obligation consists in the payment of a sum of money, and the debtor delays, compensation for damages, not having been agreed, will consist of the agreed interest payment, and in the absence of agreement, on the legal interest.”
Arrears are incurred in the obligation to give or do anything since the lender requires them to court or out of compliance with its obligation.
Incidental Failure
Article 1182 Civil Code: “The obligation to deliver a certain thing shall be terminated when it is lost or destroyed without fault of the debtor and before the latter has become delinquent.”
Article 1183 of the Civil Code: “Whenever something was lost in the possession of the debtor, it is presumed that the loss occurred because of them and not by accident, unless proven otherwise, and subject to the provisions of Article 1096.”
Resolution of Synallagmatic Obligations
Civil Code Article 1247: “In onerous contracts, it is understood that, for each contracting party, the delivery or promise of a thing or service by the other party is in remuneration, service, or benefit to be paid, and in pure beneficence, the mere liberality of the benefactor.”
Recovery of Damages
Material damage is the patrimonial loss suffered by the victim and includes both the cash payment (damages) and loss of earnings or what has failed to be gained (profit).
LACRUZ points out that it would be unfair to deny any appreciation of profits or take a restrictive admission, reducing it to virtually secure gains, as our Supreme Court does. Profits should be understood by anyone who is reasonably likely, which deems it appropriate, and within the meaning of Section 1106 of the Civil Code, allow reasonable profits for breach.
Moral damage includes physical pain and worry caused.
The penal code provides that compensation shall include material and moral damages.
The law provides that compensation will be extended to moral damages in cases of violations of honor, image, and privacy.