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Novation which consists in substituting a new debtor in the place of the original one, may be made even without the knowledge or against the will of the latter, but not without the consent of the creditor. If the substitution is without the knowledge or against the will of the debtor, the new debtor's insolvency or non-fulfillment of the obligations shall not give rise to any liability on the part of the original debtor. The insolvency of the new debtor, who has been proposed by the original debtor and accepted by the creditor, shall not revive the action of the latter against the original obligor, except when said insolvency was already existing and of public knowledge, or known to the debtor, when the delegated his debt. The creditor has a right to the fruits of the thing from the time the obligation to deliver it arises. When what is to be delivered is a determinate thing, the creditor, in addition to the right granted him by Article 1170, may compel the debtor to make the delivery. If a person obliged to do something fails to do it, the same shall be executed at his cost. Those obliged to deliver or to do something incur in delay from the time the obligee judicially or extrajudicially demands from them the fulfillment of their obligation. If the law or contract does not state the diligence which is to be observed in the performance, that which is expected of a good father of a family shall be required. (n) Obligations with a resolutory period take effect at once, but terminate upon arrival of the day certain. Anything paid or delivered before the arrival of the period, the obligor being unaware of the period or believing that the obligation has become due and demandable, may be recovered, with the fruits and interests. In every case, the courts shall determine such period as may under the circumstances have been probably contemplated by the parties. The debtor shall lose every right to make use of the period:(1) When after the obligation has been contracted, he becomes insolvent, unless he gives a guaranty or security for the debt;(2) When he does not furnish to the creditor the guaranties or securities which he has promised;(3) When by his own acts he has impaired said guaranties or securities after their establishment, and when through a fortuitous event they disappear, unless he immediately gives new ones equally satisfactory;(4) When the debtor violates any undertaking, in consideration of which the creditor agreed to the period;(5) When the debtor attempts to abscond. The right of choice belongs to the debtor, unless it has been expressly granted to the creditor. The choice shall produce no effect except from the time it has been communicated. But once the substitution has been made, the obligor is liable for the loss of the substitute on account of his delay, negligence or fraud. There is a solidary liability only when the obligation expressly so states, or when the law or the nature of the obligation requires solidarity. Responsibility arising from negligence in the performance of every kind of obligation is also demandable, but such liability may be regulated by the courts, according to the circumstances. When negligence shows bad faith, the provisions of Articles 11, paragraph 2, shall apply. Except in cases expressly specified by the law, or when it is otherwise declared by stipulation, or when the nature of the obligation requires the assumption of risk, no person shall be responsible for those events which could not be foreseen, or which, though foreseen, were inevitable. This is understood to be without prejudice to the rights of third persons who have acquired the thing, in accordance with Articles 13 and the Mortgage Law. If it cannot be determined which of the parties first violated the contract, the same shall be deemed extinguished, and each shall bear his own damages. Whenever in an obligation a period is designated, it is presumed to have been established for the benefit of both the creditor and the debtor, unless from the tenor of the same or other circumstances it should appear that the period has been established in favor of one or of the other. The courts shall also fix the duration of the period when it depends upon the will of the debtor. The debtor shall lose the right of choice when among the prestations whereby he is alternatively bound, only one is practicable. Damages other than the value of the last thing or service may also be awarded. Until then the responsibility of the debtor shall be governed by the following rules:(1) If one of the things is lost through a fortuitous event, he shall perform the obligation by delivering that which the creditor should choose from among the remainder, or that which remains if only one subsists;(2) If the loss of one of the things occurs through the fault of the debtor, the creditor may claim any of those subsisting, or the price of that which, through the fault of the former, has disappeared, with a right to damages;(3) If all the things are lost through the fault of the debtor, the choice by the creditor shall fall upon the price of any one of them, also with indemnity for damages. The loss or deterioration of the thing intended as a substitute, through the negligence of the obligor, does not render him liable. The concurrence of two or more creditors or of two or more debtors in one and the same obligation does not imply that each one of the former has a right to demand, or that each one of the latter is bound to render, entire compliance with the prestation. If from the law, or the nature or the wording of the obligations to which the preceding article refers the contrary does not appear, the credit or debt shall be presumed to be divided into as many shares as there are creditors or debtors, the credits or debts being considered distinct from one another, subject to the Rules of Court governing the multiplicity of suits. If one of the latter should be insolvent, the others shall not be liable for his share. Nor does solidarity of itself imply indivisibility. However, if after the creditor has decided to require the fulfillment of the obligation, the performance thereof should become impossible without his fault, the penalty may be enforced. (1155) (1) By payment or performance:(2) By the loss of the thing due:(3) By the condonation or remission of the debt;(4) By the confusion or merger of the rights of creditor and debtor;(5) By compensation;(6) By novation. If the debtor accepts from the creditor a receipt in which an application of the payment is made, the former cannot complain of the same, unless there is a cause for invalidating the contract. The agreements which, on the effect of the cession, are made between the debtor and his creditors shall be governed by special laws. (1176a)The consignation shall be ineffectual if it is not made strictly in consonance with the provisions which regulate payment. The consignation having been made, the interested parties shall also be notified thereof. The same rule applies when the nature of the obligation requires the assumption of risk. The determination shall not be obligatory if it is evidently inequitable. Contracts take effect only between the parties, their assigns and heirs, except in case where the rights and obligations arising from the contract are not transmissible by their nature, or by stipulation or by provision of law. Contracts are perfected by mere consent, and from that moment the parties are bound not only to the fulfillment of what has been expressly stipulated but also to all the consequences which, according to their nature, may be in keeping with good faith, usage and law. A qualified acceptance constitutes a counter-offer. Acceptance made by letter or telegram does not bind the offerer except from the time it came to his knowledge. Real contracts, such as deposit, pledge and Commodatum, are not perfected until the delivery of the object of the obligation. A contract entered into in the name of another by one who has no authority or legal representation, or who has acted beyond his powers, shall be unenforceable, unless it is ratified, expressly or impliedly, by the person on whose behalf it has been executed, before it is revoked by the other contracting party. The offer must be certain and the acceptance absolute.
In conditional obligations, the acquisition of rights, as well as the extinguishment or loss of those already acquired, shall depend upon the happening of the event which constitutes the condition. If it depends upon chance or upon the will of a third person, the obligation shall take effect in conformity with the provisions of this Code. If the obligation is divisible, that part thereof which is not affected by the impossible or unlawful condition shall be valid. The condition that some event happen at a determinate time shall extinguish the obligation as soon as the time expires or if it has become indubitable that the event will not take place. If no time has been fixed, the condition shall be deemed fulfilled at such time as may have probably been contemplated, bearing in mind the nature of the obligation. If the obligation is unilateral, the debtor shall appropriate the fruits and interests received, unless from the nature and circumstances of the obligation it should be inferred that the intention of the person constituting the same was different. The creditor may, before the fulfillment of the condition, bring the appropriate actions for the preservation of his right. When the conditions have been imposed with the intention of suspending the efficacy of an obligation to give, the following rules shall be observed in case of the improvement, loss or deterioration of the thing during the pendency of the condition:(1) If the thing is lost without the fault of the debtor, the obligation shall be extinguished;(2) If the thing is lost through the fault of the debtor, he shall be obliged to pay damages; it is understood that the thing is lost when it perishes, or goes out of commerce, or disappears in such a way that its existence is unknown or it cannot be recovered;(3) When the thing deteriorates without the fault of the debtor, the impairment is to be borne by the creditor;(4) If it deteriorates through the fault of the debtor, the creditor may choose between the rescission of the obligation and its fulfillment, with indemnity for damages in either case;(5) If the thing is improved by its nature, or by time, the improvement shall inure to the benefit of the creditor;(6) If it is improved at the expense of the debtor, he shall have no other right than that granted to the usufructuary. In case of the loss, deterioration or improvement of the thing, the provisions which, with respect to the debtor, are laid down in the preceding article shall be applied to the party who is bound to return. The power to rescind obligations is implied in reciprocal ones, in case one of the obligors should not comply with what is incumbent upon him. The debtor may pay any one of the solidary creditors; but if any demand, judicial or extrajudicial, has been made by one of them, payment should be made to him. The creditor who may have executed any of these acts, as well as he who collects the debt, shall be liable to the others for the share in the obligation corresponding to them. The demand made against one of them shall not be an obstacle to those which may subsequently be directed against the others, so long as the debt has not been fully collected. If two or more solidary debtors offer to pay, the creditor may choose which offer to accept. The remission of the whole obligation, obtained by one of the solidary debtors, does not entitle him to reimbursement from his co-debtors. If there was fault on the part of any one of them, all shall be responsible to the creditor, for the price and the payment of damages and interest, without prejudice to their action against the guilty or negligent debtor. A solidary debtor may, in actions filed by the creditor, avail himself of all defenses which are derived from the nature of the obligation and of those which are personal to him, or pertain to his own share. The divisibility or indivisibility of the things that are the object of obligations in which there is only one debtor and only one creditor does not alter or modify the provisions of Chapter 2 of this Title. The debtors who may have been ready to fulfill their promises shall not contribute to the indemnity beyond the corresponding portion of the price of the thing or of the value of the service in which the obligation consists. When the obligation has for its object the execution of a certain number of days of work, the accomplishment of work by metrical units, or analogous things which by their nature are susceptible of partial performance, it shall be divisible. The creditor is not bound to accept payment or performance by a third person who has no interest in the fulfillment of the obligation, unless there is a stipulation to the contrary. Whoever pays on behalf of the debtor without the knowledge or against the will of the latter, cannot compel the creditor to subrogate him in his rights, such as those arising from a mortgage, guaranty, or penalty. But the payment is in any case valid as to the creditor who has accepted it. Such benefit to the creditor need not be proved in the following cases:(1) If after the payment, the third person acquires the creditor's rights;(2) If the creditor ratifies the payment to the third person;(3) If by the creditor's conduct, the debtor has been led to believe that the third person had authority to receive the payment. However, when the debt is in part liquidated and in part unliquidated, the creditor may demand and the debtor may effect the payment of the former without waiting for the liquidation of the latter. The delivery of promissory notes payable to order, or bills of exchange or other mercantile documents shall produce the effect of payment only when they have been cashed, or when through the fault of the creditor they have been impaired. In case an extraordinary inflation or deflation of the currency stipulated should supervene, the value of the currency at the time of the establishment of the obligation shall be the basis of payment, unless there is an agreement to the contrary. There being no express stipulation and if the undertaking is to deliver a determinate thing, the payment shall be made wherever the thing might be at the moment the obligation was constituted. When the service has become so difficult as to be manifestly beyond the contemplation of the parties, the obligor may also be released therefrom, in whole or in part. Express condonation shall, furthermore, comply with the forms of donation. If in order to nullify this waiver it should be claimed to be inofficious, the debtor and his heirs may uphold it by proving that the delivery of the document was made in virtue of payment of the debt. Subrogation of a third person in the rights of the creditor is either legal or conventional. Conventional subrogation of a third person requires the consent of the original parties and of the third person. It is presumed that there is legal subrogation:(1) When a creditor pays another creditor who is preferred, even without the debtor's knowledge;(2) When a third person, not interested in the obligation, pays with the express or tacit approval of the debtor;(3) When, even without the knowledge of the debtor, a person interested in the fulfillment of the obligation pays, without prejudice to the effects of confusion as to the latter's share. The contract must bind both contracting parties; its validity or compliance cannot be left to the will of one of them. If a contract should contain some stipulation in favor of a third person, he may demand its fulfillment provided he communicated his acceptance to the obligor before its revocation. Creditors are protected in cases of contracts intended to defraud them.
The determination of the performance may be left to a third person, whose decision shall not be binding until it has been made known to both contracting parties. In such case, the courts shall decide what is equitable under the circumstances. The heir is not liable beyond the value of the property he received from the decedent. Any third person who induces another to violate his contract shall be liable for damages to the other contracting party. The contract, in such a case, is presumed to have been entered into in the place where the offer was made.
When all the requisites mentioned in Article 1279 are present, compensation takes effect by operation of law, and extinguishes both debts to the concurrent amount, even though the creditors and debtors are not aware of the compensation.