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RGO
2nd Year

Obligations with Temporal Conditions

LAW

Definition

The Contract
An agreement of will intended to produce legal effects, which the objective law compels to produce such effects. The legal relationship that the contract creates is both a bond and an asset. As each of the two parties is obliged to the other, each has the power to compel the other to perform their obligations forcefully.

Article 1304 of the Civil Code: "An obligation is conditional when it depends on a future and uncertain event. The condition is suspensive when its fulfillment makes the obligation absolute. It is resolutory when its fulfillment leads to the extinction of the obligation."


Article 1304-1 of the Civil Code: "The condition must be lawful. Otherwise, the obligation is null."


Article 1304-2 of the Civil Code: "An obligation contracted under a condition whose realization depends solely on the will of the debtor is void. This nullity cannot be invoked when the obligation has been executed with full knowledge."


Article 1304-3 of the Civil Code: "The suspensive condition is deemed fulfilled if the party interested has prevented its fulfillment. The resolutory condition is deemed failed if its fulfillment was caused by the party interested."


Article 1304-4 of the Civil Code: "A party is free to waive the condition stipulated in its exclusive interest, as long as it has not been fulfilled or failed."


Article 1304-5 of the Civil Code: "Before the suspensive condition is fulfilled, the debtor must refrain from any act that would prevent the proper execution of the obligation; the creditor may perform any conservatory act and challenge acts of the debtor that have been entered into in fraud of their rights. What has been paid can be reclaimed as long as the suspensive condition has not been fulfilled."


Article 1304-6 of the Civil Code: "The obligation becomes absolute upon the fulfillment of the suspensive condition. However, the parties may provide that the fulfillment of the condition will retroact to the date of the contract. The thing, which is the object of the obligation, remains at the risk of the debtor, who retains its administration and is entitled to its fruits until the condition is fulfilled. In the event of failure of the suspensive condition, the obligation is deemed to have never existed."


Article 1304-7 of the Civil Code: "The fulfillment of the resolutory condition retroactively extinguishes the obligation, without affecting, where appropriate, conservatory and administrative acts. Retroactivity does not occur if that is the agreement of the parties or if the exchanged performances have found their utility as the reciprocal execution of the contract has progressed."


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Article 1305 of the Civil Code: "An obligation is due when its enforceability is deferred until the occurrence of a future and certain event, even though the date may be uncertain."


Article 1305-1 of the Civil Code: "The term may be express or implied. In the absence of an agreement, the judge may set it considering the nature of the obligation and the situation of the parties."


Article 1305-2 of the Civil Code: "What is owed only at term cannot be claimed before the due date; but what was paid in advance cannot be reclaimed."


Article 1305-3 of the Civil Code: "The term benefits the debtor if it does not result from the law, the will of the parties, or circumstances that it was established in favor of the creditor or both parties. The party for whose exclusive benefit the term was fixed can waive it without the consent of the other."


Article 1305-4 of the Civil Code: "The debtor may not claim the benefit of the term if they do not provide the guarantees promised to the creditor or if they diminish those that secure the obligation."


Article 1305-5 of the Civil Code: "The forfeiture of the term incurred by a debtor is not opposable to their co-debtors, even if solidary, and to their sureties."










To remember:

- The Casual Condition: A valid condition because the expected event is uncertain and does not depend on the will of the parties (former Article 1169 of the Civil Code) - The Potestative Condition: If it depends on the will of the creditor: valid condition / If it depends on the will of the debtor: invalid condition --> Simply potestative: It depends on the will of one party and a circumstance that it does not control (valid) --> Purely potestative: It depends exclusively on the will of one of the parties (only if creditor) - The Mixed Condition: It depends both on the will of one contracting party and on the will of a third party (former Article 1171 of the Civil Code) --> The condition is mixed when the party in whose interest the condition has been stipulated has the obligation to solicit the loan - Suspensive: when its realization gives rise to the obligation - Resolutory: when its realization extinguishes the obligation - Nullity of Conditions --> Purely potestative condition on the part of the debtor (relative nullity of the contract because the obligation of one party is the counterpart of that of the other, but the nullity cannot be invoked when the obligation has been executed knowingly) --> Impossible conditions (The new Article 1304-1 no longer refers to impossible conditions, but it can be considered that contracts concluded after October 1, 2016, will still be null or for certain authors, void if they are affected by such a modality) --> Illegal or immoral conditions (resolutory condition, it can be valid / a suspensive condition that would tend to favor the accomplishment of an illegal or immoral act would be null / they must be temporary and justified by a serious and legitimate interest) ==> Article 1304-1 of the Civil Code pertains to onerous contracts: in the absence of legality of the condition, the contract is null ==> Article 900 of the Civil Code concerns gratuitous acts: only the condition is annulled ==> In practice, courts often limit themselves to annulling only the contested clause
The effect of suspensive conditions (birth of the obligation) --> If the debtor prevents the realization of a suspensive condition, then it is considered fulfilled (Art. 1304-3 al. 1 of the Civil Code) (When the condition is simply potestative, the creditor has the choice of the sanction: either the maintenance of the contract under the operation of Article 1304-2 of the Civil Code or the disappearance of the contract by having the nonfulfillment of the condition noted) - When the suspensive condition is pending --> For the creditor (holder of a potential, imperfect right): As the obligation does not yet exist, the creditor cannot demand its execution or act for resolution due to non-execution. They may, however, perform any conservatory act (an act aimed at preventing the loss of the right) and exercise the Paulian action (to declare an act of impoverishment committed by the debtor in fraud of their rights to be unenforceable) (Art. 1304-5 al. 1 of the Civil Code). --> For the debtor: They can exercise an action for the reimbursement of the undue; if they have paid the debt by mistake, they can claim its restitution (Art. 1304-5 al. 2 of the Civil Code). ==> The contract is valid and enforceable as such against third parties. - When the suspensive condition has failed: It is considered that the obligation has never existed (caducity: the contract is retroactively erased, sureties are released, real guarantees disappear) (Art. 1304-6 al. 3 of the Civil Code) --> The deadline has expired --> It is certain that the event will not occur ==> The party who had an interest in the condition may waive it after the failure if they obtain the agreement of their co-contractor (Article 1304-4 of the Civil Code: case law will have to rule on whether the agreement of the parties will resurrect the contract that was supposed to be void or whether the agreement will lead to the formation of a new contract). - When the suspensive condition is fulfilled: --> Principle: The fulfillment of the suspensive condition gives rise to the obligation which becomes absolute (Art. 1304-6 al. 1 of the Civil Code) and thus, in principle, has no retroactive effect. --> Limit: The parties may provide that the fulfillment of the condition retroacts to the date of the contract (Art. 1304-6 al. 2 of the Civil Code). It will then be considered that the obligation existed from the conclusion of the contract. The effect of resolutory conditions (extinguishment of the obligation) --> Resolution operates as of right. - If the debtor causes the occurrence of a resolutory condition, then it is deemed failed = not realized (Art. 1304-3 al. 2 of the Civil Code). - When the resolutory condition is pending: The obligation produces its effects as if it were absolute, the obligation is directly exigible (Article 1304-7 of the Civil Code) - When the resolutory condition fails: The obligation becomes absolute: the failure of the resolutory condition has the effect of definitively solidifying the right that was associated with it, the act is retroactively consolidated. - When the resolutory condition is fulfilled: --> Principle: The obligation is retroactively extinguished (Art. 1304-7 al. 1 of the Civil Code). --> Limits: Conservatory and administrative acts concluded before the fulfillment of the condition are not affected by this retroactivity and thus remain valid (Art. 1304-7 al. 1 of the Civil Code). The parties may exclude the retroactivity attached to the fulfillment of the resolutory condition (Art. 1304-7 al. 2 of the Civil Code). Retroactivity does not occur for successive performance contracts (Art. 1304-7 al. 2 of the Civil Code). The risks of loss of the thing remain with the acquirer under a resolutory condition, despite the principle of retroactivity.
The Term: - The term affects only the enforceability of the obligation, not its existence. - A term can only be a certain event, while a condition is an uncertain event.* - The term has no retroactive effect. - The judicial term: grace period: granting a debtor a deferral or stagger of the payment of amounts due. - The legal term: the law permits the exercise of a right upon the expiration of a period or conversely provides that the right will be extinguished upon the expiration of a certain period. --> Prescription, legal moratorium (exceptional nature of the circumstances that make the execution of obligations at the scheduled deadlines difficult or even impossible). - The conventional term: explicit or tacit, the Court of Cassation retains an objective conception of the event. - The person for whose benefit the term is stipulated can waive it without the consent of the other; the term was stipulated in the common interest of both parties, renunciation may be subject to penalties. - The execution of the obligation cannot be demanded by the creditor before the term has expired. --> This only holds if the term is stipulated in the exclusive interest of the debtor: only the debtor can waive the term. --> Conversely, if the term is stipulated in the exclusive interest of the creditor, the latter may waive it and demand that the debtor performs their obligation. - The creditor can demand the execution of the obligation in case of forfeiture of the term, that is, in the event that the benefit of the term is lost before expiration. --> In this regard, if the debtor does not provide the guarantees promised to the creditor or diminishes those that secure the obligation, they cannot claim the benefit of the term (Art. 1305-4 of the Civil Code). --> The forfeiture of the term incurred by a debtor is, however, not opposable to their co-debtors, even if solidary, and to their sureties (Art. 1305-5 of the Civil Code). - The execution of the obligation before the term has expired is valid; the debtor cannot request its restitution, and the creditor cannot demand its repayment (Art. 1305-2 of the Civil Code). - When the term has expired, the obligation becomes pure and simple and therefore exigible, it can produce its effects.
RGO
2nd Year

Obligations with Temporal Conditions

LAW

Definition

The Contract
An agreement of will intended to produce legal effects, which the objective law compels to produce such effects. The legal relationship that the contract creates is both a bond and an asset. As each of the two parties is obliged to the other, each has the power to compel the other to perform their obligations forcefully.

Article 1304 of the Civil Code: "An obligation is conditional when it depends on a future and uncertain event. The condition is suspensive when its fulfillment makes the obligation absolute. It is resolutory when its fulfillment leads to the extinction of the obligation."


Article 1304-1 of the Civil Code: "The condition must be lawful. Otherwise, the obligation is null."


Article 1304-2 of the Civil Code: "An obligation contracted under a condition whose realization depends solely on the will of the debtor is void. This nullity cannot be invoked when the obligation has been executed with full knowledge."


Article 1304-3 of the Civil Code: "The suspensive condition is deemed fulfilled if the party interested has prevented its fulfillment. The resolutory condition is deemed failed if its fulfillment was caused by the party interested."


Article 1304-4 of the Civil Code: "A party is free to waive the condition stipulated in its exclusive interest, as long as it has not been fulfilled or failed."


Article 1304-5 of the Civil Code: "Before the suspensive condition is fulfilled, the debtor must refrain from any act that would prevent the proper execution of the obligation; the creditor may perform any conservatory act and challenge acts of the debtor that have been entered into in fraud of their rights. What has been paid can be reclaimed as long as the suspensive condition has not been fulfilled."


Article 1304-6 of the Civil Code: "The obligation becomes absolute upon the fulfillment of the suspensive condition. However, the parties may provide that the fulfillment of the condition will retroact to the date of the contract. The thing, which is the object of the obligation, remains at the risk of the debtor, who retains its administration and is entitled to its fruits until the condition is fulfilled. In the event of failure of the suspensive condition, the obligation is deemed to have never existed."


Article 1304-7 of the Civil Code: "The fulfillment of the resolutory condition retroactively extinguishes the obligation, without affecting, where appropriate, conservatory and administrative acts. Retroactivity does not occur if that is the agreement of the parties or if the exchanged performances have found their utility as the reciprocal execution of the contract has progressed."


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Article 1305 of the Civil Code: "An obligation is due when its enforceability is deferred until the occurrence of a future and certain event, even though the date may be uncertain."


Article 1305-1 of the Civil Code: "The term may be express or implied. In the absence of an agreement, the judge may set it considering the nature of the obligation and the situation of the parties."


Article 1305-2 of the Civil Code: "What is owed only at term cannot be claimed before the due date; but what was paid in advance cannot be reclaimed."


Article 1305-3 of the Civil Code: "The term benefits the debtor if it does not result from the law, the will of the parties, or circumstances that it was established in favor of the creditor or both parties. The party for whose exclusive benefit the term was fixed can waive it without the consent of the other."


Article 1305-4 of the Civil Code: "The debtor may not claim the benefit of the term if they do not provide the guarantees promised to the creditor or if they diminish those that secure the obligation."


Article 1305-5 of the Civil Code: "The forfeiture of the term incurred by a debtor is not opposable to their co-debtors, even if solidary, and to their sureties."










To remember:

- The Casual Condition: A valid condition because the expected event is uncertain and does not depend on the will of the parties (former Article 1169 of the Civil Code) - The Potestative Condition: If it depends on the will of the creditor: valid condition / If it depends on the will of the debtor: invalid condition --> Simply potestative: It depends on the will of one party and a circumstance that it does not control (valid) --> Purely potestative: It depends exclusively on the will of one of the parties (only if creditor) - The Mixed Condition: It depends both on the will of one contracting party and on the will of a third party (former Article 1171 of the Civil Code) --> The condition is mixed when the party in whose interest the condition has been stipulated has the obligation to solicit the loan - Suspensive: when its realization gives rise to the obligation - Resolutory: when its realization extinguishes the obligation - Nullity of Conditions --> Purely potestative condition on the part of the debtor (relative nullity of the contract because the obligation of one party is the counterpart of that of the other, but the nullity cannot be invoked when the obligation has been executed knowingly) --> Impossible conditions (The new Article 1304-1 no longer refers to impossible conditions, but it can be considered that contracts concluded after October 1, 2016, will still be null or for certain authors, void if they are affected by such a modality) --> Illegal or immoral conditions (resolutory condition, it can be valid / a suspensive condition that would tend to favor the accomplishment of an illegal or immoral act would be null / they must be temporary and justified by a serious and legitimate interest) ==> Article 1304-1 of the Civil Code pertains to onerous contracts: in the absence of legality of the condition, the contract is null ==> Article 900 of the Civil Code concerns gratuitous acts: only the condition is annulled ==> In practice, courts often limit themselves to annulling only the contested clause
The effect of suspensive conditions (birth of the obligation) --> If the debtor prevents the realization of a suspensive condition, then it is considered fulfilled (Art. 1304-3 al. 1 of the Civil Code) (When the condition is simply potestative, the creditor has the choice of the sanction: either the maintenance of the contract under the operation of Article 1304-2 of the Civil Code or the disappearance of the contract by having the nonfulfillment of the condition noted) - When the suspensive condition is pending --> For the creditor (holder of a potential, imperfect right): As the obligation does not yet exist, the creditor cannot demand its execution or act for resolution due to non-execution. They may, however, perform any conservatory act (an act aimed at preventing the loss of the right) and exercise the Paulian action (to declare an act of impoverishment committed by the debtor in fraud of their rights to be unenforceable) (Art. 1304-5 al. 1 of the Civil Code). --> For the debtor: They can exercise an action for the reimbursement of the undue; if they have paid the debt by mistake, they can claim its restitution (Art. 1304-5 al. 2 of the Civil Code). ==> The contract is valid and enforceable as such against third parties. - When the suspensive condition has failed: It is considered that the obligation has never existed (caducity: the contract is retroactively erased, sureties are released, real guarantees disappear) (Art. 1304-6 al. 3 of the Civil Code) --> The deadline has expired --> It is certain that the event will not occur ==> The party who had an interest in the condition may waive it after the failure if they obtain the agreement of their co-contractor (Article 1304-4 of the Civil Code: case law will have to rule on whether the agreement of the parties will resurrect the contract that was supposed to be void or whether the agreement will lead to the formation of a new contract). - When the suspensive condition is fulfilled: --> Principle: The fulfillment of the suspensive condition gives rise to the obligation which becomes absolute (Art. 1304-6 al. 1 of the Civil Code) and thus, in principle, has no retroactive effect. --> Limit: The parties may provide that the fulfillment of the condition retroacts to the date of the contract (Art. 1304-6 al. 2 of the Civil Code). It will then be considered that the obligation existed from the conclusion of the contract. The effect of resolutory conditions (extinguishment of the obligation) --> Resolution operates as of right. - If the debtor causes the occurrence of a resolutory condition, then it is deemed failed = not realized (Art. 1304-3 al. 2 of the Civil Code). - When the resolutory condition is pending: The obligation produces its effects as if it were absolute, the obligation is directly exigible (Article 1304-7 of the Civil Code) - When the resolutory condition fails: The obligation becomes absolute: the failure of the resolutory condition has the effect of definitively solidifying the right that was associated with it, the act is retroactively consolidated. - When the resolutory condition is fulfilled: --> Principle: The obligation is retroactively extinguished (Art. 1304-7 al. 1 of the Civil Code). --> Limits: Conservatory and administrative acts concluded before the fulfillment of the condition are not affected by this retroactivity and thus remain valid (Art. 1304-7 al. 1 of the Civil Code). The parties may exclude the retroactivity attached to the fulfillment of the resolutory condition (Art. 1304-7 al. 2 of the Civil Code). Retroactivity does not occur for successive performance contracts (Art. 1304-7 al. 2 of the Civil Code). The risks of loss of the thing remain with the acquirer under a resolutory condition, despite the principle of retroactivity.
The Term: - The term affects only the enforceability of the obligation, not its existence. - A term can only be a certain event, while a condition is an uncertain event.* - The term has no retroactive effect. - The judicial term: grace period: granting a debtor a deferral or stagger of the payment of amounts due. - The legal term: the law permits the exercise of a right upon the expiration of a period or conversely provides that the right will be extinguished upon the expiration of a certain period. --> Prescription, legal moratorium (exceptional nature of the circumstances that make the execution of obligations at the scheduled deadlines difficult or even impossible). - The conventional term: explicit or tacit, the Court of Cassation retains an objective conception of the event. - The person for whose benefit the term is stipulated can waive it without the consent of the other; the term was stipulated in the common interest of both parties, renunciation may be subject to penalties. - The execution of the obligation cannot be demanded by the creditor before the term has expired. --> This only holds if the term is stipulated in the exclusive interest of the debtor: only the debtor can waive the term. --> Conversely, if the term is stipulated in the exclusive interest of the creditor, the latter may waive it and demand that the debtor performs their obligation. - The creditor can demand the execution of the obligation in case of forfeiture of the term, that is, in the event that the benefit of the term is lost before expiration. --> In this regard, if the debtor does not provide the guarantees promised to the creditor or diminishes those that secure the obligation, they cannot claim the benefit of the term (Art. 1305-4 of the Civil Code). --> The forfeiture of the term incurred by a debtor is, however, not opposable to their co-debtors, even if solidary, and to their sureties (Art. 1305-5 of the Civil Code). - The execution of the obligation before the term has expired is valid; the debtor cannot request its restitution, and the creditor cannot demand its repayment (Art. 1305-2 of the Civil Code). - When the term has expired, the obligation becomes pure and simple and therefore exigible, it can produce its effects.
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