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42 Cards in this Set
- Front
- Back
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When there is no agreement on term, what is the length of the lease?
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Indefinite until a party properly terminates by notice. For agricultural it continues on an annual basis, for residential immovable month to month, and for non-residential movable, day to day.
tacit reconduction DOES NOT apply - only applies to leases with a fixed term |
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Where there is a failure of a lessor or lesee to make repairs, pursuant to an agreement to do so, is there a breach?
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Yes but whether it may be dissolved is within the court's discretion
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Explain differences between PMSI in movables and vendor's privilege in movables
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The purpose of both a vendor’s privilege in movable property and a purchase-money security interest (PMSI) is
that, if the debtor-buyer defaults on the promise to pay for a credit purchase, the creditor can have the purchased property (the collateral) seized and sold and apply the proceeds to the unpaid obligation. A vendor’s privilege on movables is created automatically as a matter of law whenever a vendor sells movable property on credit to a buyer. A purchase-money security interest (PMSI), in contrast, can be created in favor of either a credit seller or a lender making a loan actually used to buy the collateral, and it must be specifically created by authenticated agreement (generally, an agreement signed by the buyer-debtor granting a security interest in the movable property to the credit seller or lender). In order to be effective against third parties, a PMSI must be “perfected,” generally by filing a financing statement in any parish clerk of court’s office, while a vendor’s privilege requires no separate “perfection” step to be effective against third parties. A vendor’s privilege, however, benefits only the credit seller, and only while the immediate buyer has possession of the property. A perfected PMSI generally remains effective and enforceable against the collateral (and its proceeds) even if the Page 2 of 7 original debtor-buyer sells or otherwise disposes of the collateral to a third party. While a PMSI can be enforced against the property immediately upon the debtor’s default (perhaps even by quick and efficient executory process), a vendor’s privilege can be enforced only after the vendor obtains a judgment on the unpaid obligation against the debtor and seeks to enforce that judgment against the property subject to the privilege (through ordinary process). As against third persons with competing interests in the collateral, a PMSI perfected within 20 days of delivery of the [non-inventory] collateral to the debtor takes priority over virtually any other interest, whereas a vendor’s privilege provides priority over other judgment creditors, but it is subordinate to any Chapter 9 security interest (including PMSIs, perfected or not) as well as to lessor’s and artisan’s/repairperson’s privileges |
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explain attachment
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“Attachment” is the process by which a security interest is created; that is, made enforceable against the debtor,
by “attaching” to specific property, called the “collateral.” The prerequisites for attachment are that (1) value has been given, (2) the debtor has rights in the collateral, and (3) the debtor has authenticated a security agreement adequately describing the collateral. “Authenticated” generally simply means “signed,” usually on a written agreement, and an adequate description of the collateral includes descriptions by category for most collateral. |
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explain perfection
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“Perfection” is the process of making an attached security interest enforceable against third parties. The most
common method of perfection is filing a UCC-1 financing statement in the UCC records of the jurisdiction where the debtor is. Because Abe is a corporation, it is a “registered organization,” so it is located in its state of registry, Louisiana, and a filing in the UCC records in Louisiana can be made in any parish clerk of court’s office. The financing statement must simply identify the debtor and secured creditor and describe the collateral, generally by category/type. A UCC-1 is effective for five years, then it lapses unless a continuation statement is filed in the 6-month window preceding its lapse date, which then continues the UCC-1’s effectiveness for five more years after the original lapse date. |
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how to perfect collateral with certificate of title?
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The only way to perfect an
interest in collateral covered by a certificate of title is to file a UCC-1 in the Department of Public Safety and Corrections, Office of Motor Vehicles, describing the truck with greater specificity (e.g., ID number, make, model). |
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Why can't you have a security interest in rent owed?
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A security agreement and financing statement are
effective to grant and perfect rights in movable property only; they do not affect rights in or associated with immovable property, such as rent. |
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perfection of a promissory note
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, perfection in an instrument can also
be accomplished by possession of the instrument by the creditor |
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perfection of a deposit acct
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the only way to perfect an original security interest in a deposit account is by establishing
“control” over the account. Because FNB is not the bank that maintains the account, and it has no agreement with Jefferson Parish Bank for “control” of that account, FNB’s interest based directly on the security agreement is not perfected. Alternatively, if FNB could prove that some or all of the funds in that account are proceeds of its other collateral, AND if it can prove that its interest in that other collateral was perfected when the collateral produced proceeds (despite the retroactively lapsed 2001 UCC-1, discussed above), then FNB’s interest in the proceeds deposited into the deposit account might be perfected automatically and continuously (identifiable cash proceeds) as a matter of law |
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category of tax refund for SI purposes
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The tax refund likely represents a “payment intangible,” a
subcategory of “general intangibles” in which the obligor’s primary obligation is for payment of an amount of money. |
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can an issuing corporation grant a security interest in its issued stock certificates?
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Here, Abe is the issuing corporation, not the owner
of the stock certificate. Abe cannot grant a security interest in property in which it has no rights; only the sole shareholder could grant such an interest, since the shareholder owns the shares, not Abe. If the sole shareholder were the debtor granting an interest in the stock certificate, the 2008 UCC-1 would be sufficient to perfect the interest. Although control is a superior method of perfection of interests in investment property, filing is an effective method. |
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explain the warranty against redhibitory defects and whether this can be waived
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The most obvious remedy Bob will claim against Sam is that Sam has breached the warranty against
redhibition. This warranty is one of the three warranties implied in every Louisiana sale. Unless successfully waived, the warranty protects the buyer from hidden defects in the thing at the time of delivery that qualify as redhibitory. Such defects are of two types. The first type of redhibitory defect is the defect that renders the thing either absolutely useless or so inconvenient to use that tit must be supposed that the buyer would not have bought the thing had he known of the defect. The remedy for this type of defect is rescission of the sale. The second type of redhibitory defect is the defect that diminishes the usefulness or value of the thing such that it must be supposed that the buyer would have paid a lesser price. The remedy for this type of defect is quanti minoris — a reduction of the price. The problems Bob has experienced seem to qualify as redhibitory defects. The structural defects, which will cost more then $50,000 to correct, likely make the home so inconvenient to use that Bob would not have purchased it had he known of the structural defects. Because the home was purchased for a price of $285,000, however, it may be that Bob meets only the standard for quanti minoris rather than rescission. Further, the defect was hidden, meaning that it likely would not have been discovered on reasonably prudent inspection. The residential inspection company missed the problem here, but Bob cannot be expected to do more than hire such a company as part of “reasonable prudence.” Sam never revealed the defect to Bob. To the contrary, Sam told Bob specifically that he had “no problems” with the house. With regard to whether the foundational defect was in existence at the time of delivery, the buyer has the burden of proving this. Under these facts, the cracks |
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explain warranty of fitness
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he may seek a remedy for breach of the
warranty of fitness, under which the seller warrants that the thing sold is reasonably fit for its intended use. The warranty of fitness is governed by general contract rules. Bob could argue that persistent door sticking, cracks all over the house, and structural instability render the house unfit for its ordinary use as a residence. This warranty, however, was waived by Bob when he waived the warranty against redhibition. If the waiver is effective, Bob could not assert breach of the warranty of fitness. There is also an issue here of whether the waiver is invalid because it was not brought to the buyer’s attention. (In contrast to the law on waiver of redhibitory defects, the law on waiver of breach of the warranty against fitness is unclear as to whether the waiver must be brought to the buyer’s attention to be effective.) |
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elements of fraud
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The elements of fraud
that must be proven to rescind a contract are three: first, that the other party misrepresented to suppressed the truth; second, that the party’s intent in doing so was to obtain and unjust advantage or cause inconvenience to the injured party; and third, that the injured party’s error related to a circumstance that substantially influenced hi consent to the contract |
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requirements of error
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requires merely that he err on a cause without which he would not
have entered into the obligation and that the other party knew of his cause |
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PP for vices of consent? (fraud, error, duress)
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5 years
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What does the lessor's privilege allow?
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Gives privilege in movables on the leased premises to secure payment of rent. Merely gives right to collect his debt in preference and priority to other creditors but doesn't allow him to exercise "self-help" to hold the goods covered by the privilege. (ex. padlocking the door)
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Discuss the warranty against eviction
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Even a sale without a warranty allows the buyer who is evicted to claim restitution of the purchase price as long as the buyer was unaware of the danger of eviction.
That warranty covers physical eviction and also the existence of non-apparent, undeclared servitudes. |
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What is a quitclaim deed?
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The transferor conveys to the transferee whatever interest (if any) the transferor may have in the property without warranting the existence of such rights. If the transferee is evicted, the transferor owes nothing.
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Sale by Aversionem
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described as a certain and limited body or a distinct object and is an immovable sold for a lump price
NO increase or decrease in price if quantity differs |
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Sale by Measure
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price is fixed rate of so much per measure
1. if less than promised delivered, price reduced accordingly (no right to recede unless vice of consent) 2. more amount than promsied, but diff is 5% (1/20) or LESS, price is increased accordingly 3. more than 5% delivered, buyer can pay increase or recede |
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Sale of immovable for lump price
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less delivered, diff is 5% or less = no effect, no right to recede
less delivered, diff is 5% or more = price reduced, no right to recede more delivered, diff is 5% or less = no effect, no recede more delivered, more than 5% = right to recede or pay increase |
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List 4 matters that remain effective as to third parties even though not evidenced of record
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1. capacity or authority
2. occurrence of a condition 3. exercise of option or right of first refusal 4. termination of rights that depends on occurrence of condition |
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list for types of perfection and examples of collateral for each
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1. filing; inventory, equipment, etc.
2. control; deposit account 3. possession; money and collateral mortgage note 4. automatic perfection; PMSI in consumer goods |
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When does promissory note payable with interest in monthly installments become unenforceable?
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5 years from when payment is exigible. thus, first month's payment is unenforceable 5 years from date first payment is due
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What should the notice of reinscription contain?
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identify the mortgagor
the file number or other info describing the original inscription declaring the mortgage reinscribed |
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When does a mortgage lapse?
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generally, 10 years after the date of Act of Mortgage but if any secured obligation is described in the mortgage as having a maturity date beyond 9 years, then the effect of inscription lapses 6 years after said maturity date
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What happens when a person sells land that they don't currently own but later inherits it as an heir?
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Even if there was no express warranty, the seller gave a warranty against eviction. This requires the seller to pay the buyer damages for the buyer's loss or danger of losing a thing to some third party with title.
The after-acquired titled doctrine vests owership of the land in the buyer automatically and cures the breach of warranty. The fact that the seller wants to now keep the property is irrelevant. The doctrine operates automatically and against the seller's will. |
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When can you obtain an action for lesion?
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allows the seller of an immovable to promptly rescind the sale if he received less than one half of the fair market value of the thing.
subject to a one year PEREMPTIVE period from date of sale |
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What happens when earnest money is involved in a sale and one wants to breach?
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Buyer loses earnest money and seller must return it and pay that amount as well. No damages or specific performance available
must expressly agree that the deposit is earnest money |
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when looking at a potential claim for lesion in a contract to sell, when do you look at the fair market value?
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at the time of the contract. not at the time of the sale.
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Describe the requirements and limitations of an option contract coupled with a lease
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Option contract requires the thing and the price and meet the formal requirements of the sale that it contemplates. It is okay to leave the price up to an appraiser. Where no specified term, it will be the term of the lease. While options are usually not enforceable for more than 10 years, it is okay when that option is a part of a contract involving continuous and periodic performance such as a lease.
Third parties are bound by option contracts only if those are recorded. |
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When a party enters into a contract and then realizes he will not profit off of it, what argument can he make besides vices of consent?
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Impossibility - requires occurrence of a fortuitous event not forseen by the parties. This will not succeed where the risks of the contract are known to those involved in the industry.
LA DOES NOT recognize the common law doctrine of impracticability which would allow a party to avoid a contract when performance would become substantially more burdensome than originally anticipated. |
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To what extent are parties free to select the law that governs their contract?
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free except to the extent that their chosen law violates a strong public policy of the law that would have governed had they made no selection
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Suppose you have a mortgage on your property and you find someone to purchase the property and assume the mortgage. Suppose everything is in writing and the bank gives consent.
Are you still liable on the mortgage? |
Yes. You could argue that there was a subjective novation - meaning there was a substitute of obligors which extinquishes the obligation for the first obligor. However, novation is NEVER presumed and an obligee's intent to novate must be clear and unequivocal. If the bank gave no indication that the first obligor would be discharged, then both became liable as solidary obligors and are both liable for the whole performance.
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Does a vendor's privilege on immovable property have priority over a judicial mortgage?
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Yes, if the act of sale was recorded in the mortgage records in the parish where the property is located before the money judgment is filed in that parish.
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Explain the parole evidence rule
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although oral testimony is not allowed to negate or vary a written contract... it is permissible to prove a subsequent agreement to modify the contract
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what is the PP for redhibitory defects?
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1 year, or 4 years when brought to the attention of a good faith seller
seller is good faith if didn't know of defect. buyer must give seller opportunity to correct the defect before he can seek rescission of the sale. |
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requirements for perfection of a sale
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The thing, the price, and the consent of the parties are requirements for the perfection of a sale.
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difference between sale of a future thing and sale of a hope
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Sale of a Future Thing: requirement to pay only occurs on the condition that the thing comes into existence.
Sale of a Hope: There is always a requirement to pay the purchase price; the buyer purchases the hope to obtain something. |
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Rights and obligations established or created by the following written instruments are without effect as to third persons unless the instrument is registered by recording it in the appropriate mortgage or conveyance records pursuant to the provisions of this title:
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1. Instrument that transfers an immovable or establishes a real right in or over an immovable
2. Lease of an immovable 3. Option or right of first refusal, or a contract to buy, sell, or lease an immovable or to establish a real right in or over an immovable 4. An instrument that modifies, terminates, or transfers the rights created or evidenced by the instruments described in 1-3 of this article. |
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What is the purpose of opening a succession judicially?
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The judgment of possession rendered in a succession proceeding shall be prima facie evidence of the relationship to the deceased of the parties recognized therein, as heir, legatee, surviving spouse in community, or usufructuary, as the case may be, and of their right to the possession of the estate of the deceased.
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