LA Bar Contracts and Sales 3 — Questions and Answers
Question 1: When a Louisiana obligor fails to perform, the creditor may seek which of the following remedies?
- Only monetary damages for the loss suffered
- Specific performance, damages, or dissolution of the contract (Correct answer)
- Automatic voidance of the contract without court action
- Dissolution only if expressly provided in the contract
Correct answer: Specific performance, damages, or dissolution of the contract
La. CC Art. 1986 and 2013 together authorize the creditor to demand specific performance, dissolution, or damages at their election.
Question 2: Under Louisiana Civil Code Article 1989, 'putting in default' (mise en demeure) is generally required before the creditor may:
- File a lawsuit in any contractual dispute
- Claim damages for delay in the obligor's performance (Correct answer)
- Rescind an offer already communicated
- Seek specific performance for non-monetary obligations
Correct answer: Claim damages for delay in the obligor's performance
The obligor is liable for delay damages only after being put in default, which puts the obligor on notice that timely performance is demanded.
Question 3: Under La. CC Art. 2013, a party may dissolve a contract without judicial action when:
- The breach is only minor or technical in nature
- The contract expressly provides for dissolution upon a specified breach (Correct answer)
- Both parties orally agree at the time of the breach
- The breaching party fails to respond to a demand letter within 10 days
Correct answer: The contract expressly provides for dissolution upon a specified breach
A dissolution clause (pact commissoire) permits extrajudicial dissolution when the contract expressly grants that right for a particular breach.
Question 4: Under the fortuitous event (force majeure) doctrine in Louisiana, performance is excused only when:
- Performance becomes more costly than originally anticipated
- An unforeseeable, irresistible event makes performance impossible (Correct answer)
- The non-performing party gives the other party timely notice
- The contract is silent on the allocation of risk
Correct answer: An unforeseeable, irresistible event makes performance impossible
La. CC Art. 1873 requires that the event be unforeseeable and irresistible; increased cost or difficulty alone does not excuse performance.
Question 5: A Louisiana court may reduce a stipulated damages (penalty) clause when it finds the agreed penalty is:
- Greater than 10% of the contract price
- Manifestly excessive in relation to the actual harm (Correct answer)
- Written rather than negotiated orally
- Intended to punish rather than to pre-estimate damages
Correct answer: Manifestly excessive in relation to the actual harm
La. CC Art. 2012 permits judicial reduction of a penalty clause that is manifestly unreasonable, though the clause is otherwise valid and binding.
Question 6: Under Louisiana law, damages for breach of contract are limited to losses that are:
- Always equal to the full contract price
- A foreseeable consequence of the breach at the time of contracting (Correct answer)
- Only out-of-pocket expenses and lost deposits
- Punitive in nature to deter future breaches
Correct answer: A foreseeable consequence of the breach at the time of contracting
La. CC Art. 1996 restricts damages for breach to losses that were foreseeable when the contract was made, absent bad faith by the obligor.
Question 7: Under Louisiana law, a party claiming impossibility of performance due to a fortuitous event must prove the event was:
- Unforeseeable at the time of contracting and irresistible at the time of performance (Correct answer)
- Merely difficult or burdensome to overcome
- Anticipated but not allocated in the contract
- Caused solely by the other party's conduct
Correct answer: Unforeseeable at the time of contracting and irresistible at the time of performance
La. CC Art. 1873 requires both unforeseeability at contracting and irresistibility at performance to discharge the obligor.
LA Bar Contracts and Sales 3
When a Louisiana obligor fails to perform, the creditor may seek which of the following remedies?