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REVIEWER IN BUSINESS LAW CHAPTER 2 NATURE AND EFFECT OF OBLIGATIONS *2 Kinds of Thing 1.

Specific or Determinate particularly designated or physically segregated others of the same class. - it is identified by its individuality - the debtor cannot substitute it with another although the latter is of the same kind and quality without the consent of the creditor. 2. Generic or Indeterminate refers only to a class or genus to which it pertains and cannot be pointed out with particularity . -it is identified only by its specie - the debtor can give anything of the same class as long as it is of the same kind. *Duties of debtor in obligation to give a determinate thing 1. Preserve the thing a. Diligence of a good father of a family with ordinary care or diligence which an average person exercises over his own property b. Another standard of care slight or extraordinary diligence c. Factors to be considered force majeure / fortuitous events d. Reason for debtors obligation 2. Deliver the fruits of the thing 3. Deliver the accessions and accessories 4. Deliver the thing itself 5. nswer for damages in case of non-fulfillment or breach *Duties of debtor in obligation to deliver a generic / indeterminate thing 1. To deliver a thing this is of the quality intended by the parties taking into consideration the purpose of the obligation and other circumstances. 2. To be liable for damages in case of fraud, negligence, or delay, in the performance of his obligation *Kinds of Fruits 1. Natural fruits spontaneous products of the soil, and the young and other products of animals. (e.g. grass, all trees and plants on lands without the intervention of human labor) 2. Industrial fruits produced by lands of any kind through cultivation or labor (e.g. sugar cane, vegetables, rice) 3. Civil fruits those derived by virtue or juridical relation (e.g. rent of buildings, price of leases of lands and other property) *Kinds of Rights 1. Personal right right or power of creditor to demand from debtor, as a definite passive subject, the fulfillment of the latters obligation to give, to do, or not to do. - there is a definite active subject and a definite passive subject 2. Real right right or interest of a person over a specific thing (like ownership, possession, mortgage), without a definite passive subject against whom the right may be personally enforced. - there is only a definite active subject without any definite passive subject *Remedies of creditor in real obligation 1. In a specific real obligation (obligation to deliver a determinate thing) the creditor may exercise the following remedies or rights in case the debtor fails to comply with his obligation: a. Demand specific performance or fulfillment of the obligation with a right to indemnity for damages; or b. Demand rescission or cancellation of the obligation also with a right to recover damages; or c. Demand payment of damages only, where it is the only feasible remedy 2. A generic real obligation (obligation to deliver an indeterminate thing) can be performed by a third person since the object is expressed only according to its family or genus. The creditor has the right to recover damages in case of breach or violation of the obligation. >>An indeterminate/generic thing cannot be the object of destruction by a fortuitous event because genus nunquam perit (genus never perishes) *Accessions and Accessories 1. Accessions fruits of a thing or additions to or improvements upon a thing (the principal) (Examples: House or trees on a land, Rents of a building, Airconditioner in a car)

2. Accessories things joined to or included with the principal thing for the latters embellishment, better use, or completion (Examples: Key of a house, Frame of a picture, Bracelet of a watch, Machinery in a factory) NOTE: Accessions are not necessary to the principal thing. Accessory and the principal thing must go together. Both can exist in relation to the principal. >>All accessions and accessories are considered included in the obligation to deliver a determinate thing although they may not have been mentioned. *Meaning of Delay 1. Ordinary delay is merely the failure to perform an obligation on time. 2. Legal delay (default/mora) is the failure to perform an obligation on time which failure constitutes a breach of the obligation. *Kinds of Delay or Default 1. Mora solvendi the delay on the part of the debtor to fulfill his obligation (to give or to do) 2. Mora accipiendi the delay on the part of the creditor to accept the performance of the obligation 3. Compensatio morae the delay of the obligors in reciprocal obligations - the delay of the obligor cancels the delay of the oblige, and vice versa. The net result is that there is no actionable default on the part of both parties. *When demand is not necessary to put debtor in delay -delay by the debtor begins only from the moment of demand, judicial or extra-judicial, for the fulfillment of the formers obligation is made by the creditor. Without such amount, the effect of default will not rise. Exceptions: 1. When the obligation so provides 2. When the law so provides 3. When time is of the essence 4. When demand would be useless 5. When there is performance by a party in reciprocal obligations *Grounds for liability 1. Fraud (deceit or dolo) 2. Negligence (fault or culpa) 3. Delay (default or mora) 4. Contravention of the terms of the obligation 5. Fortuitous events 6. Force majeure *Fraud (deceit or dolo) it is the deliberate or intentional evasion of the normal fulfillment of an obligation. 1. Incidental fraud (dolo incidente) refers to committed in the performance of an obligation already existing because of contract. 2. Casual fraud (dolo causante) refers to fraud employed in the execution o a contract under Art. 1338, which vitiates consent. *Negligence (fault or culpa) consists in the omission of that diligence which is required by the nature of the obligation and corresponds with the circumstances of the person, of the time and of the place. >>In determining the issue of negligence, the following factors must be considered: 1. Nature of the obligation 2. Circumstances of time 3. Circumstances of the place *Kinds of negligence according to source of obligation 1. Contractual negligence (culpa contractual) negligence in contracts resulting in their breach. 2. Civil negligence (culpa aquiliana) negligence which by itself is the source of an obligation between the parties not so related before by any pre-exisiting contract. - it is also called tort or quasi-delict 3. Criminal negligence (culpa criminal) negligence resulting in the commission of a crime.

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