5.4 Obligations and Contracts

What Makes a Contract Valid

In Louisiana, an obligation is a legal relationship compelling one person to give, do, or not do something for another. A contract is an agreement creating obligations. Four requirements must be satisfied:

Note that Louisiana speaks of cause, not common law "consideration." Cause is the why of the obligation (e.g., the price the buyer wants the thing); it need not be a bargained-for exchange.

Consent and the Vices of Consent

Valid consent requires offer, acceptance, and a true meeting of the minds. Consent can be defeated by a vice of consent, which makes the contract relatively null (voidable by the injured party):

Undue advantage taken of a person's weakness can also support relief, but error, fraud, and duress are the named vices to memorize.

Capacity

The general rule: all persons have capacity to contract except those the law disqualifies.

An emancipated minor (by marriage or court order) may contract for matters within the scope of the emancipation. A notary should never proceed when a party appears not to understand the act.

Lesion Beyond Moiety (CC art. 2589) — Louisiana-Specific

This remedy almost always appears on the exam. The sale of a corporeal immovable may be rescinded for lesion when the price is less than one-half (the moiety) of the fair market value of the immovable at the time of sale.

Note the one-year peremptive period — older study material that says "four years" is outdated. By statute, lesion is also unavailable for certain mineral transactions (La. R.S. 31:17).

Worked Example

An immovable worth $200,000 is sold for $90,000. Because $90,000 is less than half of $200,000 ($100,000), the seller may sue for lesion within one year of the sale. The buyer can defeat rescission by paying the supplement to bring the price up to the just amount.

Form Requirements for Specific Contracts

The Notary's Lane

Common Traps

• Confusing cause with common law consideration.
• Citing a stale four-year lesion period — it is one year, peremptive.
• Thinking the buyer can claim lesion — only the seller can.
• Forgetting that a donation of an immovable demands an authentic act, not merely a signed writing.

Nullity: Absolute vs. Relative

The exam distinguishes two kinds of invalid contracts, and the difference controls who can complain and whether the defect can be cured:

A contract to do something illegal is absolutely null and binds no one. A contract signed under fraud or by a minor is relatively null — only the defrauded party or the minor may attack it, and they may instead choose to confirm (ratify) it once free of the vice.

Object and Cause in More Detail

The object is the thing or performance owed; it must be lawful, possible, and determined (or determinable). A sale of a specific tract has a determined object; a promise to sell "some land someday" may fail for lack of a certain object. The cause is the reason the party obligates himself; if the stated cause is false or unlawful, the obligation has no effect. A donation's cause, for example, is the donor's intent to give (liberality), while a sale's cause for the buyer is acquiring the thing.

How Lesion Differs From a Vice of Consent

Students confuse lesion with fraud or error. They are distinct:

Lesion does not require any wrongdoing — a perfectly honest bargain at a grossly low price still qualifies. That is why it is uniquely Louisianan and frequently tested.

On the Exam

• Four requirements: capacity, consent, object, cause.
• Vices of consent: error, fraud, duress (all yield relative nullity).
• Absolute nullity (unlawful object/cause) cannot be confirmed; relative nullity can.
• Lesion beyond moiety: seller, corporeal immovable, price under half value, one-year peremptive period, no wrongdoing required.