LA Notary Obligations and Contracts 2 — Questions and Answers
Question 1: Under Louisiana Civil Code Art. 1967, 'cause' in a contract is best described as:
- The consideration exchanged between the parties
- The reason why a party obligates himself (Correct answer)
- The motive that induced a party to enter the contract
- The legal basis established by statute for enforcing the agreement
Correct answer: The reason why a party obligates himself
Louisiana Civil Code Art. 1967 defines cause as 'the reason why a party obligates himself,' which differs from common-law consideration and from a party's personal motive.
Question 2: Under Louisiana Civil Code, which type of error can vitiate consent and allow rescission of a contract?
- Any error of law or fact, regardless of its importance
- Error that concerns a cause of the obligation and is excusable (Correct answer)
- Error of motive only when the motive was expressed in the contract
- Error only when the other party induced the error by fraud
Correct answer: Error that concerns a cause of the obligation and is excusable
Louisiana Civil Code Art. 1949 provides that error vitiates consent only when it concerns a cause of the obligation and is excusable — trivial or inexcusable errors do not invalidate a contract.
Question 3: Under Louisiana Civil Code Arts. 2025–2026 (simulation), what is the general effect of a simulated contract between the parties?
- Both the simulated contract and the true agreement are absolutely null
- Between the parties, the true agreement prevails; third parties in good faith may rely on the simulated contract (Correct answer)
- The simulated contract is enforceable and the hidden agreement is void
- Only the notarized version of the agreement is enforceable
Correct answer: Between the parties, the true agreement prevails; third parties in good faith may rely on the simulated contract
Louisiana Civil Code Art. 2025 provides that a simulated contract has no effect between the parties, and Art. 2026 protects third parties acting in good faith by allowing them to rely on the simulated contract.
Question 4: What is the general prescriptive period for personal actions (including most contract claims) under Louisiana Civil Code Art. 3499?
- One year
- Three years
- Five years
- Ten years (Correct answer)
Correct answer: Ten years
Louisiana Civil Code Art. 3499 establishes a ten-year prescriptive period for personal actions where no other period is provided by law.
Question 5: 'Legal subrogation' under Louisiana Civil Code Art. 1829 occurs when:
- The creditor expressly assigns his right to a third party who pays the debt
- Subrogation takes place by operation of law without the creditor's agreement (Correct answer)
- The debtor and creditor agree in writing to substitute a new creditor
- A court orders the transfer of the creditor's rights to satisfy a judgment
Correct answer: Subrogation takes place by operation of law without the creditor's agreement
Louisiana Civil Code Art. 1829 enumerates specific situations where subrogation occurs by operation of law (legal subrogation), as distinguished from conventional subrogation that requires an express agreement.
Question 6: A 'resolutory condition' under Louisiana Civil Code Art. 1767 is one that:
- Suspends the creation of the obligation until the uncertain event occurs
- Terminates an already existing obligation upon fulfillment of the condition (Correct answer)
- Allows the obligor to resolve disputes through arbitration
- Creates a new obligation when the prior obligation is extinguished
Correct answer: Terminates an already existing obligation upon fulfillment of the condition
Louisiana Civil Code Art. 1767 distinguishes a resolutory condition, which upon fulfillment terminates an obligation that already exists, from a suspensive condition, which creates the obligation upon fulfillment.
Question 7: Under Louisiana Civil Code, what is required for a contract's 'object' to be valid?
- The object must be a corporeal movable or immovable thing
- The object must be possible, determinable, and lawful (Correct answer)
- The object must exist at the time the contract is formed
- The object must be of ascertainable monetary value
Correct answer: The object must be possible, determinable, and lawful
Louisiana Civil Code Art. 1971 requires that the object of a contract be possible, determinable, and lawful — future things may be the object of a contract as long as these requirements are met.
LA Notary Obligations and Contracts 2
Under Louisiana Civil Code Art. 1967, 'cause' in a contract is best described as: