1995 Sale EXMO 2015 01 06

Loyola University New Orleans, College of Law
Sales and Leases: January 2015 -- Prof. Gruning

Note: For convenience, this document numbers the parts and the sections
within each part. The hyperlinks to cases in Westlaw should be active.
Sale: Expos des Motifs

Table of Contents
Contents
Sale: Expos des Motifs....................................................................................................................................................1
Introduction....................................................................................................................................................................3
I. General Principles.......................................................................................................................................................4
1.1 Definition of Sale.................................................................................................................................................4
1.2 Applicability of Other Titles.................................................................................................................................4
1.3 Purchase of a Thing Already Owned....................................................................................................................5
1.4 Sale of a Future Thing..........................................................................................................................................5
1.5 Sale of a Hope......................................................................................................................................................5
1.6 Price: Essential Elements.....................................................................................................................................6
1.7 No Price Fixed by the Parties...............................................................................................................................7
1.8 Price Left to Determination by Third Person.......................................................................................................7
1.9 Sale of the Thing of Another................................................................................................................................7
1.10 Time of Transfer 0f Ownership..........................................................................................................................8
1.11 Time of Transfer of Risk.....................................................................................................................................8
II. Sales of Movables......................................................................................................................................................9
2.1 Preliminary Remarks............................................................................................................................................9
2.2 Additional Terms in the Acceptance.....................................................................................................................9
2.3 Obligation To Deliver Conforming Things........................................................................................................11
2.4 Buyer's Right of inspection................................................................................................................................12
2.5 Acceptance And Rejection of Nonconforming Things.......................................................................................13
2.6 Partial Acceptance..............................................................................................................................................14
2.7 Merchant Buyer's Duty Upon Rejection............................................................................................................15
2.8 Purchase of Substitute Things By the Buyer......................................................................................................15
2.9 Cure of Nonconformity......................................................................................................................................16
2.10 Ownership of Things in Transit........................................................................................................................17
2.11 Judicial Dissolution..........................................................................................................................................17
2.12 Payment Against Documents............................................................................................................................18
III. Sales of Immovables...............................................................................................................................................19
3.1 Formal Requirements.........................................................................................................................................19
3.2 Manners of Sale..................................................................................................................................................19
IV. Delivery and Eviction.............................................................................................................................................21
4.1 Construction of Ambiguities; Waiver of Warranty.............................................................................................21
4.2 Methods of Making Delivery.............................................................................................................................21
4.3 Retention of Possession By Seller; Presumption of Simulation.........................................................................22
4.4 Incorporeals, Method of Making Delivery.........................................................................................................23
4.5 Delivery Excused Until Payment of the Price....................................................................................................23
4.6 Condition of Thing At Time of Delivery............................................................................................................24
4.7 Eviction: General Principles...............................................................................................................................24
4.8 Modification Or Exclusion of Warranty.............................................................................................................25
4.9 Transferring One's Rights To A Thing (Sale By Quitclaim Deed).....................................................................26
4.10 Rights of the Buyer Against the Seller in Case of Eviction.............................................................................29
4.10 Restitution of Full Price Despite Deterioration................................................................................................30
4.11 Call in Warranty................................................................................................................................................30
V. Redhibition...............................................................................................................................................................31
5.1 General Principles..............................................................................................................................................31
5.2 Apparent Defects................................................................................................................................................32
Sale: Expos des motifs (2012 dwg)
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5.3 Thing Not of the Kind Specified in the Contract................................................................................................32

5.4 Time of Existence of Defect...............................................................................................................................34
5.5 Liability of the Good Faith Seller.......................................................................................................................34
5.6 Notice of the Existence of Defect.......................................................................................................................35
5.7 Prescription.........................................................................................................................................................35
5.8 Multiple Sellers And Multiple Buyers................................................................................................................36
5.9 Redhibition of Matched Things Sold Together..................................................................................................37
5.10 Quanti Minoris..................................................................................................................................................38
5.11 Liability of the Seller in Bad Faith...................................................................................................................38
5.12 Exclusion Or Limitation of Warranty...............................................................................................................39
5.13 The Warranty of Fitness...................................................................................................................................41
5.14 Revised Article 2524........................................................................................................................................44
VI. Obligations of the Buyer........................................................................................................................................44
6.2 Interest................................................................................................................................................................44
6.3 Liability of the Buyer Who Fails To Take Delivery...........................................................................................45
6.4 Dissolution of Sale For Nonpayment of Price....................................................................................................45
VII. Lesion....................................................................................................................................................................47
7.2 Action Against the Vendee Who Has Resold the Immovable............................................................................48
7.3 Peremption of Action For Lesion.......................................................................................................................48
VIII. Sale With Right of Redemption...........................................................................................................................48
8.2 Liability For Deterioration At the Time of Redemption.....................................................................................49
IX. Assignment of Rights.............................................................................................................................................50
9.2 Delivery of Title.................................................................................................................................................50
9.3 Notification of the Debtor in Assignment of Rights...........................................................................................51
9.4 Warranty.............................................................................................................................................................55
X. Giving in Payment...................................................................................................................................................55
10.1 General Principles............................................................................................................................................55
10.2 Giving in Partial Payment................................................................................................................................57
XI. Agreements Preparatory To the Sale......................................................................................................................57
11.1 Introduction......................................................................................................................................................57
11.2 The Option: General Principles........................................................................................................................57
11.3 Time When Option Becomes Effective............................................................................................................58
11.4 Warranty of The Assignor of An Option...........................................................................................................59
11.5 Contract To Sell: General Principles................................................................................................................59
11.6 Deposit And Earnest Money.............................................................................................................................60
11.7 Right of First Refusal: General Principles........................................................................................................61
11.8 Time Limitations For Exercising Options And Rights of First Refusal...........................................................62
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Louisiana Civil Code.
Book III. Of the Different Modes of Acquiring the Ownership of Things:

Title VII. Sale
Note that this document retains hyperlinks to cases on Westlaw.
Introduction
1996 Main Volume
The articles on sales of the Louisiana Civil Code of 1870 followed the basic
scheme of the Code Napoleon from which they were lifted. Designed for an
agrarian society two centuries ago, the title on sales no longer adequately served
the needs of a society that is not centered on landed wealth. Over the years, the
Louisiana Legislature made certain amendments to the original articles in an
attempt to keep the Civil Code structure in tune with the changing times. See,
e.g., Acts 1910, No. 249; Acts 1920, 2nd Ex.Sess., No. 27 (introducing the option
contract); Acts 1974, No. 673 (limiting the liability of the seller in good faith).
Likewise, Louisiana courts made valiant efforts to adapt the old articles to the
requirements of commerce and everyday life in the late twentieth century. See
Benglis Sash & Door Co. v. A.P. Leonards, 387 So.2d 1171 (La.1980); Media
Production Consultants, Inc. vs. Mercedes-Benz of North America, Inc., 262 La.
80, 262 So.2d 377 (1972).
But there is a limit to what mending legislation and judicial interpretative
ingenuity can do with a legislative scheme that no longer adequately serves the
needs of the community. While it was becoming increasingly obvious that the
Louisiana Civil Code articles on sales were insufficient to meet the needs of
Louisiana citizens, legislative innovations in the area of sales, both in the United
States and abroad, made the agedness of the sales articles of the Louisiana Civil
Code and the urgency of their revision glaringly clear. Article 2 of the U.C.C. and
the 1980 Convention on International Sales are recent legislative models
providing realistic approaches to contemporary sales problems that stand in
sharp contrast to the elegant, yet outdated, provisions of the Louisiana Civil
Code. Those two bodies of law, as well as various other contemporary models,
could not be ignored.
In spite of their age, the old articles did not deserve to be totally eliminated.
What was needed was a major overhaul; a structural and functional renovation
that left the foundations intact. Most basic principles of the Louisiana Civil Code
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of 1870 on sales are preserved in this revision, yet no article has been left
untouched. The language of the provisions of the Civil Code of 1870 that were
reproduced has been modernized.
While the revision adopts many provisions from Article 2 of the U.C.C., the basic
civilian character of the sales articles of the Louisiana Civil Code remains intact.
The approach throughout the revision was to adopt whatever provisions were
thought useful, regardless of the source, yet to adapt the language of those
provisions to fit the civilian mould and the plan of the Louisiana Civil Code. The
result is a modern sales scheme that fits well in Louisiana's civil law tradition
while at the same time adequately serving the personal and commercial needs of
Louisiana citizens.
I. General Principles
1.1 Definition of Sale
Revised Article 2439 rephrases the source provision by expressing that, through
a sale, a person transfers ownership of a thing rather than gives a thing. The
true meaning of obligation to give, that is, the transferring of title to a thing, as
opposed to the handing over or delivery of a thing, has never been clearly
understood. See 2 Litvinoff, Obligations 20-38 (1975). For that reason the
revision of obligations, although it preserved giving as one of the possible
objects of a performance in Article 1756, eliminated Articles 1905-1925 of the
Louisiana Civil Code of 1870 that dealt with the obligation of giving. The text of
revised Article 2439 is consistent with that approach.
Though at first blush it might seem that the words transfers ownership in a
thing are confined to corporeal things, that is not so because rights are, by
definition, incorporeal things. See C.C. Art. 461. Thus, the sale of a usufruct still
entails a transfer of ownership of a thing, namely a right, that falls within the
scope of the revised article. See C.C. Art. 544.
The second paragraph of Article 2439, which is so obvious that it might very well
be eliminated, has been preserved because it expresses a rule oftentimes used by
the Louisiana jurisprudence. See Hearty Burger of Harvey, Inc. v. Brown, 407
So.2d 806 (La.App.4th Cir.1981); Vercher v. Toda Enterprises, Inc., 216 So.2d
318 (La.App.3d Cir.1968); Gant v. Palmer et al., 10 So.2d 523 (La.App.1st
Cir.1942); Hearon v. Davis, 8 So.2d 787 (La.App.2d Cir.1942); Collins v.
Louisiana State Lottery Co., 43 La.Ann. 9, 9 So. 27 (1891).
Article 2439 preserves the idea that a price must consist of a sum of money, an
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idea that has been challenged in modern times. See Smith, Exchange Or Sale?,
48 Tul.L.Rev. 1029 (1974). In fact, the Uniform Commercial Code has completely
eliminated the requirement that the price of a sale be stipulated in terms of
money. See U.C.C. 2-304. It is also worth noting that modern civil codes exclude
from the definition of sale the notion that the price must consist of a sum of
money. See Article 1470 of the Italian Civil Code; Article 433 of the German Civil
Code.
1.2 Applicability of Other Titles

Article 2438 of the Louisiana Civil Code of 1870 provided that the title on
Conventional Obligations governed sale transactions in all matters not
especially provided for in the title on sales. In other words, the redactors
intended that the title on conventional obligations should constitute a body of
suppletive law for sale transactions. When Article 2438 was originally enacted
the title of the Louisiana Civil Code devoted to conventional obligations -- Title IV
of Book III -- contained virtually all of the provisions on the subject of obligations
in the Civil Code, while Title III, the other title concerning obligations in the Civil
Code of 1870, contained only five articles (one article defined obligations (1756);
one classified obligations (1757); two dealt with natural obligations (1758-59);
and one classified civil obligations according to their origin (1760)). The 1984
Obligations revision substantially changed that picture by placing all subjects of
a general scope under current Title III, entitled Obligations in General; so the
cross-reference contained in former Article 2438 thereby became misleading.
Under revised Article 2438, it is intended that all provisions of the Louisiana law
of obligations govern sale transactions wherever the title on sales of the
Louisiana Civil Code does not otherwise provide. As the comments indicate, that
does not effect a change in the law.
1.3 Purchase of a Thing Already Owned

Revised Article 2443 reproduces the substance of the source provision in that it
reasserts the impossibility of the purchase of a thing already owned by the
purchaser. The revised article does allow, however, the purchase of rights to the
thing from persons who have, or may have, adverse claims to the thing. A
property owner may wish to purchase the rights of those who own claims that
are adverse to his property rights in order to remove a cloud from his title. That
is consistent with accepted real estate practices. Louisiana courts have never
interpreted Article 2443 as prohibiting a property owner from purchasing claims
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adverse to his ownership rights. See Walker v. Baer, 129 So. 218 (La.App.1st
Cir.1930).
1.4 Sale of a Future Thing

The sale of a future thing presents two problems. First, there is a possibility of
confusion between such a sale and a contract for work by the plot or job. See
C.C. Art. 2756 (1870). Second, there is a need to avoid the danger of
overgeneralizing the implied suspensive condition of the coming into existence of
the thing.
Concerning the first problem, even without attempting a definitive solution at
this time, it is clear that practical experience shows many instances of sales of
things not yet in existence, as is the case of manufacturers who either have run
out of stock or simply produce upon orders. Sales of that kind are readily
distinguishable from building contracts for the lack of specifications furnished
by the buyer.
Concerning the second problem, French writers have shown little concern for the
matter. See 10 Planiol et Ripert, Trait pratique de droit civil franais -- De la
vente et du louage 25-26 (1932); Beudant, Cours de droit civil franais -- La
vente et le louage 56-58 (1908); Pothier, Trait du contrat de vente 3-5 (Bugnet
ed. 1861). No doubt, Article 2450 of the Louisiana Civil Code of 1870, like its
French ancestor, had been drafted for transactions having as object things
produced as the result of natural processes. When that is the case it is
reasonable to imply that the coming into existence of a thing is a suspensive
condition of the sale. It is different, however, with things to be produced by the
labor or industry of the seller, since in such a situation the seller's failure to
make the thing he promised would result in breach rather than in nullity of the
contract. Revised Article 2450 addresses this problem by providing that a party
who, through his fault, prevents the coming into existence of the thing, is liable
in damages.
1.5 Sale of a Hope

Former Article 2451 was one of the staples of the Louisiana Civil Code. Yielding
to the weight of tradition, the language of that article has been preserved in the
revised Article with only slight modifications.
The sale of a hope presents two problems, however. In the first place, a treasure,
rather than the originally hoped-for fish, may be caught in the net. In the
second, a fortuitous event may prevent the casting of the net. The two problems
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revolve around the extension of the risk assumed by the parties.

Concerning the problem that things other than fish are caught in the net,
various solutions are possible. Thus, one may take the approach that he who
bears the risk should also obtain the benefit of an unexpected profit; or,
conversely, one may argue that the buyer is only entitled to what was in
contemplation of the parties at the time of the agreement -- which, in the
example given by the article is fish -- and, possibly, things of a similar type -Ejusdem Generis. If the Ejusdem Generis approach is used, the buyer would
probably be entitled to an octopus or a crab caught in the net, but certainly not
to a treasure.
Where a fortuitous event prevents the casting of the fisherman's net, the answer
to the question about who should bear the loss would seem to depend upon the
particular nature of the hope that was sold. Thus, the hope may be based on a
condition of things expected to exist in the future -- that is, a readily available
net that the fisherman proposes to, and is capable of, casting. Or, the sale may
be of the hope both that the net will be cast and, if so cast, that fish will be
caught therein. In the first factual situation, the seller bears the risk of a
fortuitous event that prevents the casting of the net. In the latter case, the risk of
a fortuitous event preventing the casting of the net is born by the buyer. See
Losecco v. Gregory, 108 La. 648, 32 So. 985, 996 (1901).
Nevertheless, whatever solution may be deemed proper to this latter problem, its
place is not in revised Article 2451, but rather as part of the doctrine of
impossibility of performance.
1.6 Price: Essential Elements

Former Article 2464 was another staple of the Civil Code of 1870. For that
reason the principle it contains, and also part of its language, have been
preserved in revised Article 2464. Indeed, Louisiana courts utilized that article to
expurgate the Louisiana law of the once prevailing common-law doctrine of token
consideration. See Murray v. Barnhart, 117 La. 1023, 42 So. 489 (1906), where
the reasonableness of the price idea that Article 2464 reflects was applied by
analogy to the contract of lease.
The last paragraph of Article 2464 of the Louisiana Civil Code of 1870 is not to
be found in the corresponding article -- Article 1591 -- of the Code Napoleon, nor
in the Projet du gouvernement. It was taken, no doubt, from Pothier. See 3
Oeuvres de Pothier -- Trait du contrat de vente 10-11 (Bugnet ed. 1861). The
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paragraph presents no problem if it is read as a reference to lesion. It is

noteworthy, however, that in the view of some writers the idea which that
paragraph reflects could be used as grounds for actions not only of rescission as
in the case of the sale of an immovable, but also of nullity for vile price, which
could also involve the sale of movables. In such views a vile price is not a
serious price and, therefore, a purported sale at such a price would be null for
the lack of one of the essential elements of the price. See Beudant, Cours de
droit civil franais 101-104 (1908). The revised Article carries forward the idea of
that paragraph.
Thus, under revised Article 2464 the price must be 1) either certain or
determinable, and 2) not totally out of proportion with the value of the thing
sold.
1.7 No Price Fixed by the Parties

Revised Article 2466 carves out an exception to the general rule that the price
must be determined by the parties for sales of movables where the seller 1) is a
merchant, 2) who habitually sells the goods in question. The article is in line
with contemporary business understandings and expectations. Moreover, it
promotes good faith and fair dealing by precluding a party to a sale from
backing away from the contract by urging a technicality, wherever it is
objectively possible to set the price.
Not long ago the Louisiana Supreme Court took a posture on the issue of the
required degree of certainty of the price in a contract of sale that is consistent
with the principle behind this article. In Benglish [sic?] Sash & Door Co. v. A.P.
Leonards, 387 So.2d 1171 (La.1980), the court held that a sale was valid even
though no price had been stipulated. In the course of its opinion the court
stated: It is not essential that the specific sum of the sales price be stated at the
time of contracting .... The parties can consent to buy and to sell a certain thing
for a reasonable price, and when they do, the contract of sale has been perfected
.... Consent of the parties to buy and sell the specific item at a reasonable price
may be implied from the circumstances of the case. Id., at 1172-1173.
1.8 Price Left to Determination by Third Person

In French law, under the traditional approach, a party who has agreed that the
price will be set by arbitrators to be named at a future time by the parties to the
agreement may prevent the perfection of the sale by refusing to name an
arbitrator. 2 Planiol et Ripert, Trait lmentaire de droit civil 784-785 (La.State
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Law Ins.1959). While in such a situation the other party cannot sue for specific
performance, he may have an action for damages sustained as a result of the
breach of the innominate contract entered into by the parties. See Planiol
(supra). The same result obtains under the Louisiana jurisprudence. Thus, in
Louis Werner Sawmill Co. v. O'Shee, 111 La. 817, 35 So. 919 (1904), while
denying specific performance where the estimators appointed by the parties
failed to agree on the price, the court reserved the aggrieved party's right to
pursue an action for damages. Id., at 921. In Andrus v. Eunice Bond Mill, 185
La. 403, 169 So. 449 (1936), the plaintiff's suit for damages was sustained
although the defendant had refused to appoint an estimator as stipulated in the
contract.
As the comments indicate, revised Article 2465 changes the law by providing
that, if the parties fail to name the third person, or if the person named fails to
make an estimation of the price, then the determination of the price may be
made by the court.
1.9 Sale of the Thing of Another

French authorities agree in asserting that Article 1599 of the Code Napoleon,
equivalent to former Civil Code Article 2452 (1870), contains an overstatement.
That overstatement is attributed to the drastic change effected by the Code
Napoleon in matters of sale, consisting in turning a contract that, under Roman
law and the ancien rgime only gave rise to an obligation to effect a transfer, into
a contract that accomplished an immediate transfer. See C.C. Arts. 2439, 2456
(1870). Taking a step further, it is possible to realize that former Civil Code
Article 2452 (1870) stated an incomplete conclusion. In fact, the sale of the thing
of another, rather than being null, may effect a transfer through the application
of the public records doctrine, where immovable property is concerned, and
through the operation of the bona fide purchaser doctrine, where movables are
concerned. A null juridical act would produce no effects at all, while the sale of a
thing belonging to another may give rise to damages, in the first place, and may
create a just title for purposes of the short acquisitive prescription, in the
second. See C.C. Arts. 3473, 3483; Beudant, op. cit. at 71. Both such
consequences are important legal effects that seem to deny the nullity that
former Article 2452 asserted.
Be that as it may, it would be dangerous to tamper with the principle contained
in the source article because it is, no doubt, a salutary one. Accordingly, revised
Article 2452 preserves the substance of the source article by providing that The
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sale of a thing belonging to another is null.

It should be clear that this Article only concerns the seller and buyer. For the
true owner the sale of his property by another is res inter alios acta that cannot
affect him, and he can bring a revendicatory action if out of possession.
1.10 Time of Transfer 0f Ownership

At Roman law, and under ancient French law, ownership was transferred upon
delivery of the thing sold to the buyer. This approach was not followed by the
Code Napoleon. Article 1583 of the French Civil Code, the source provision of
Article 2456 of the Louisiana Civil Code, provides that ownership is transferred
from the seller to the buyer upon consent alone, when there exists an agreement
as to the thing and the price of the sale. See 2 Litvinoff, Obligations, 136 et
seq. (1975). Revised Article 2456 preserves the principle that ownership is
transferred by consent alone.
1.11 Time of Transfer of Risk

The rule that risk follows ownership, even in the absence of delivery of the thing
sold, introduced into modern law by the Code Napoleon, was adopted by the
common law and the Uniform Sales Act. This rule has been criticized on several
counts, both in continental Europe and in the United States. The argument of
the critics is basically two-fold: unfairness in the buyer's bearing the risk of loss
of an object which he cannot control, and unpredictability of the moment when
ownership is transferred in many practical situations. See 3 Mazeud, Leons de
droit civil, Vol. 2, pt. 1 at 173 (1979); White and Summers, Uniform Commercial
Code 175-177 (2d ed. 1980).
The U.C.C. abandoned the approach of res perit domino in favor of an approach
considered to be more in line with commercial expectations. Under the U.C.C.
risk essentially follows possession and control over the thing, regardless of who
is deemed to be the owner at the time of the loss. See U.C.C. 2-509, 510.
Modern civil codes uniformly provide that the risk of loss is transferred to the
buyer at the moment of delivery. See Article 522 of the Greek Civil Code and
Article 2324 of the Civil Code of Ethiopia.
The first paragraph of revised Article 2467 follows the modern approach by
providing that risk of loss of the thing sold is transferred at the moment of
delivery.
The second paragraph of that article also changes the law. It provides that, after
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delivery, risk of loss is transferred to the buyer even if the goods do not conform
to the specifications of the contract, if the buyer does not act in the manner
required to dissolve the contract.
When the buyer receives nonconforming goods, if the nonconformity makes the
goods unsatisfactory to him, he should promptly notify the seller of that fact. It
is reasonable to assume that if the buyer does not seasonably move to either (1)
have the contract rescinded, or (2) have the goods replaced by the seller, the
goods delivered, though nonconforming, are nonetheless satisfactory to him. In
such a situation, basic notions of fairness and good faith would seem to require
that the buyer bear the risk of loss or deterioration of the thing sold caused by a
fortuitous event. See C.C. Arts. 1759, 1983 (rev. 1984).
II. Sales of Movables

2.1 Preliminary Remarks
One of the changes brought about by the industrial revolution was a
transformation of society's conception of wealth. Formerly, wealth had been
primarily associated with the ownership of immovable property. Since the
industrial revolution, new developments in industry and technology have led to a
growing importance of things that are movable in nature. Motor vehicles, heavy
industrial equipment, drilling rigs, and sophisticated machines of every type are
examples of assets having a value that is, in many instances, considerably
greater than that of immovable property. There were few such valuable movables
in this state at the time the Louisiana Civil Code of 1870 was enacted; so it is no
wonder that the Louisiana Civil Code, like the Code Napoleon, contained no
section devoted to the sale of movable property.
The Louisiana State Law Institute, as part of its revision of the law of sales,
considered the possibility of adopting Article 2 of the U.C.C. in globo. After
considerable study and debate, the Council decided that certain provisions of
the U.C.C. did not mesh with fundamental principles of Louisiana civil law. The
Law Institute also concluded that the solutions contained in a number of
sections of the U.C.C. were, as a matter of policy, inappropriate. Accordingly, the
Institute's Council decided that the provisions of the U.C.C. that were worth
adopting should be incorporated into the Louisiana Civil Code, but only after
appropriate changes had been made in the language of those provisions so that
they might conform to civilian terminology. It was also decided that the new
articles governing movables be collected in a separate chapter in the title on
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sales to be exclusively devoted to the sale of movable property. In this revision,

Chapter 9 of the title on sales, comprising Articles 2601 through 2617, is
devoted to sales of movable property.
2.2 Additional Terms in the Acceptance

According to the mirror image rule, which prevailed at common law, for an
acceptance to be conclusive for contract-formation it had to conform to the terms
of the offer in every respect. If it failed to do so, it would be deemed to be a
counteroffer and, regardless of the intent of the parties, would not serve to form
a contract. See 1 Litvinoff, Obligations 337 (1969). The arbitrary nature of that
rule created numerous problems, since it ran counter to the normal practices
and expectations of merchants. It was a trap for the unwary and a haven for the
welsher. See White and Summers, Uniform Commercial Code 22 (1980).
Under the regime of the Louisiana Civil Code of 1870, the same approach
followed at common law prevailed in Louisiana. The acceptance had to in all
respects conform to the terms of the offer, and any conditions, limitations, or
modifications were taken to be counteroffers. See C.C. Arts. 1805, 1806 (1870).
That approach was retained in the 1984 Obligations revision. Thus, revised
Article 1943 provides: An acceptance not in accordance with the terms of the
offer is deemed to be a counteroffer.
To deal with problems created by the mirror image rule the drafters of the
U.C.C. introduced Section 2-207. That section sets forth rules designed to
facilitate the sale in cases where the acceptance does not in every way conform
to the terms of the offer.
Similarly, the 1980 convention on international sales rejects the mirror image
rule concerning the form of acceptance required for contract formation. Thus,
under Section 2 of Article 19 of that convention, additional or different terms
contained in the acceptance which do not materially alter the terms of the offer
do not render the acceptance invalid unless the offeror promptly objects to the
discrepancy. If the offeror does not so object, the additional terms contained in
the acceptance are incorporated into the contract. See Winship, Formation of
International Sales Contracts Under the 1980 Vienna Convention, 17, The
International Lawyer, no. 1, p. 1.
An exchange of forms containing several varying provisions should not prevent
the formation of an agreement when the parties intend to contract. When it is
clear that the parties have agreed to undertake a sale transaction, one of them
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who later wishes to retract upon discovering that he has made a bad bargain, or
is now able to strike a better deal, should not be able to repudiate his obligations
by way of an arbitrary technicality that is unresponsive to the way sales are
made in the business world of today.
While the U.C.C. covers the problem of the battle of the forms in one section -Section 2-207 -- for technical reasons it is preferable to divide the subject into
two separate articles. That is so because when the writings of the parties differ
two different situations may arise: On the one hand, the writings of the parties
may evince an intention to form a contract, and the problem is one of
determining the terms of such a contract. On the other hand, there is the
situation where the writings of the parties have not formed a contract, yet the
parties are, in fact, performing. Thus, in this revision those two situations are
addressed in two separate articles: revised Articles 2601-2602 of the Louisiana
Civil Code.
Article 2601 attempts to eliminate the controversy that has arisen in other states
with respect to what constitutes a material alteration under Section 2-207 of
the U.C.C. Compare Marlene Industries Corp. v. Carnac Textiles, Inc., 45 N.Y.2d
327, 380 N.E.2d 239 (Ct.App., N.Y., 1978) with Dorton v. Collins, 453 F.2d 1161
(U.S. 6th Cir.1972), where two distinguished courts gave different answers to the
question whether an arbitration clause set forth in the acceptance constitutes a
material alteration of the offer. Article 2601 attempts to clarify that problem, first
of all, by defining the term material alteration generally: Thus, additional terms
in the acceptance constitute a material alteration of the offer when it must be
presumed that the offeror would not have contracted on those terms.
Article 2602 covers the situation where, in spite of the fact that the writings of
the parties have not formed a contract, the parties are, in fact, performing. The
Article clearly indicates that, in such a situation, the terms of the contract shall
be those as to which the two writings agree plus any term that may be added by
suppletive law.
That Article also seeks to eliminate an unfair advantage that might be derived by
the party who sends the last communication under current interpretation of
Section 2-207 of the U.C.C. Under what has come to be known as the last shot
doctrine, the party who sends the last communication usually gets his nonconforming terms incorporated into the agreement, unless the other party
promptly signifies his dissent thereto. See Roto-Lith Ltd. v. F.P. Barlett & Co.,
297 F.2d 497 (U.S. 1st Cir.1962). In Roto-Lith, the buyer sent a purchase order
Page 13 of 81
to the seller for a quantity of cellophane adhesive manufactured by the latter.

Subsequently the seller returned an acknowledgment that contained a
disclaimer of all warranties on the product. The buyer was silent as to the
disclaimer. He neither assented nor objected to it. The emulsion was shipped
thereafter and was received and paid for by the buyer. The problem arose when
the emulsion failed to perform its intended function and the buyer instituted an
action for damages. The court held that a responding document which states a
condition materially altering the obligation solely to the advantage of the offeror
was expressly conditional within the meaning of U.C.C. Section 2-207(1). Id. at
499-500. The seller's supposed acceptance was, therefore, a counteroffer which
was accepted when the buyer received and used the goods.
It is quite clear that under the Roto-Lith approach the party who fortuitously
sends the responding, or last, form will get all of his terms incorporated into the
agreement where performance takes place and the other party remains silent.
That approach often gives an unfair and unbargained for advantage to the party
who fires the last shot. Such a solution is contrary to basic principles of
Louisiana obligations law, since it fails to require the consent of the party
receiving the last shot. Under revised Article 2602, the party who sends the last
communication would not derive an unfair advantage therefrom.
2.3 Obligation To Deliver Conforming Things

According to Article 2475 of the Louisiana Civil Code of 1870, the seller had two
principal obligations: delivery and warranty of the things sold. While the Civil
Code of 1870 devoted no less than six articles to regulating the extent and
effects of the obligation of delivery with respect to immovables, it was
conspicuously silent with respect to the obligation of delivery concerning
movables. That silence may have been due to the fact that civil codes were not
conceived as instruments to regulate commercial sales. At the time the Louisiana
Civil Codes of 1825 and 1870 were enacted, most major European countries had
commercial codes regulating, among other things, commercial sales.
Revised Article 2603 provides that the seller must deliver things conforming to
the contract. Clearly, delivery of non-conforming goods would have been a
breach of the obligation of delivery and, consequently, a breach of contract under
the Civil Code of 1870. However, due in part to the fact that the Civil Code did
not regulate at length the seller's obligation of delivery with respect to movables,
Louisiana courts experienced some difficulty in distinguishing between problems
of faulty performance of the obligation of delivery -- i.e., delivery of goods that
Page 14 of 81
did not conform to the specifications of the contract -- and problems of delivery
of defective goods or redhibition. Thus, in Walton v. Katz & Besthoff, Inc., 77
So.2d 563 (La.App.Orl.Cir.1955), the plaintiff had bought from the defendant
paint advertised as mildew resistant, a quality verbally re-asserted by the
defendant's employee. The paint was fine in every respect, except that it did not
resist mildew. The court sustained a plea of prescription over the buyer's
objection that the suit was one for breach of contract, which called for
application of a 10-year prescriptive period, rather than a suit for redhibition.
That same court held, however, in Victory Oil v. Perret, 183 So.2d 360
(La.App.4th Cir.1966), where the plaintiff oil company had contracted to supply
to the defendant for use in the latter's truck diesel fuel suitable for that purpose,
but had delivered, in part, diesel fuel of a type that caused damage to the truck,
that the oil company had failed to fulfill its contractual obligations and that the
rules of redhibition were not applicable, stating that the seller did not deliver
that for which the parties had contracted.
On the other hand, in Reiners v. Stran-Steel, 317 So.2d 657 (La.App.3d
Cir.1975), a case involving the supplying of incorrect rafters for the construction
of a steel building, another appellate court analyzed the problem as one involving
redhibition. The court held, however, that since the defects in the supplying of
the rafters were corrected prior to the plaintiffs bringing suit, such defects could
not properly be grounds for redhibition, but gave rise only to reduction of the
price or quanti minoris. Id., at 660.
Revised Article 2603 attempts to solve that conflict in the jurisprudence by
stating, categorically, that the seller of movables must deliver things conforming
to the contract. Under this article it becomes clear that where the seller delivers
goods that do not conform to the specifications of the contract, he has breached
the contract of sale regardless of whether the goods actually delivered are
defective or not.
2.4 Buyer's Right of inspection

Revised Article 2604 provides that a buyer has a right to inspect things delivered
pursuant to a contract of sale.
The buyer's right of inspection is accessory to his right to receive goods that
conform to the specifications of the contract. See revised Article 2603. Unless the
parties stipulate otherwise the buyer has a right to inspect the goods before
making payment.
Page 15 of 81
The right of inspection before making payment does not exist, however, in
documentary sales -- as, for instance, in a C.I.F. contract -- since in such
agreements the buyer must make payment upon the seller's tender of the
required documents, regardless of whether the goods arrived at the point of
destination. Nevertheless, even in the case of documentary sales, the buyer has
a right to inspect the goods in order to ascertain whether they are in conformity
with the agreement, and may reject them if they do not so conform.
2.5 Acceptance And Rejection of Nonconforming Things

According to revised Article 2605, a buyer may reject nonconforming things
within a reasonable time. To make effective a rejection of such things the buyer
must give reasonable notice to the seller. A buyer's failure to make an effective
rejection shall be regarded as an acceptance of the things.
After the buyer has had sufficient time to inspect the goods delivered, it is
reasonable to require that he either seasonably notify the seller of any
nonconformity of the goods to the specifications of the contract or be deemed to
have accepted the goods. There are several policy reasons militating in favor of
this requirement. First of all, the seller may be able to cure the defect in delivery,
and, if he is capable of doing so seasonably, he should be allowed to do so.
Second, if promptly notified of the rejection, the seller may be in a better position
to sell the goods to another buyer. Third, in many cases the buyer's neglect to
inform the seller promptly that the goods are nonconforming amounts to a
violation of the overriding duty of good faith. See C.C. Arts. 1759, 1983 (rev.
1984); 2 Litvinoff, Obligations 5-9 (1975). Moreover, the buyer should not be
allowed to sit on the goods and speculate on the market's fluctuations at the
seller's peril and risk.
Thus, it appears quite reasonable for the law to provide that when the buyer
does not seasonably notify the seller that the goods are rejected due to their
nonconformity, the buyer who has had a reasonable opportunity to inspect the
goods is deemed to have accepted them.
As the comments to revised Article 2605 indicate, that rule should not be
applied to a purchaser of consumer goods. The buyer of consumer goods cannot
be held to the same standards of commercial reasonableness as the merchant
buyer. That is so because the consumer lacks the resources and know how
that a merchant buyer is presumed to have. Even the consumer, however, must
act reasonably and in good faith. See C.C. Arts. 1759, 1983 (rev. 1984).
Page 16 of 81
Where the buyer accepts the delivered goods with knowledge that they do not
conform to the specifications, it is fair to preclude him from rejecting the goods
thereafter on grounds of nonconformity. In such an instance the buyer, having
willingly accepted a variance in the object of the contract, should not be allowed
to repudiate his acceptance and reject the goods. Aside from the provisions of
this Article, it would seem that, in such a situation, the buyer would be
precluded from rejecting the goods on grounds of nonconformity by the
overriding principle of good faith and the doctrine of contra factum proprium.
See C.C. Arts. 1759, 1983 (rev. 1984). Hebert v. McGuire, 447 So.2d 64 (La.App.
4th Cir.1984). Thus, according to revised Civil Code Article 2606, a buyer who,
with knowledge, accepts nonconforming things may no longer reject those things
on grounds of that nonconformity, unless the acceptance was made on the
reasonable belief that the nonconformity would be cured.
As the comments indicate, the provisions of Article 2606 are consistent with the
principle of contractual freedom. Where the buyer accepts the delivered goods
with knowledge that they do not conform to the specifications, the buyer may be
presumed to consent to an alteration in the object of the sale. It follows that he
has agreed to enter into a sale whose object is the thing that was actually
delivered. Concerning that -- new -- sale there are no grounds to rescind for
nonconformity, because, by virtue of the acceptance, the thing delivered now
conforms to the specifications of the sale. See C.C. Art. 1983 (rev. 1984).
Nevertheless, when the buyer reasonably believes that the nonconformity will be
cured by the seller, the buyer may subsequently reject the goods on grounds of
nonconformity if the nonconformity is not cured. That is so because, in such a
situation, the buyer has only conditionally accepted nonconforming goods. The
seller's failure to correct the nonconformity constitutes a resolutory condition.
See C.C. Arts. 1767, 1773, 1775 (rev. 1984).
2.6 Partial Acceptance

It is not unusual for the object of a contract of sale to consist of more than one
commercial unit. When a shipment of goods contains several commercial units of
a certain thing, one or more of such units may not conform to the specifications
of the contract. In such a situation the buyer finds himself with goods that are
useful for the intended purpose -- the contractually conforming units -- and
goods that are not -- the contractually nonconforming units. In such an instance
it seems inequitable, as well as economically inefficient, to make the buyer either
accept or reject the entire shipment. Revised Article 2607 allows the buyer to
Page 17 of 81
accept those commercial units of the shipment that conform to the specifications
of the sale and reject those that do not.
Louisiana courts have on several occasions been confronted with the problem of
determining the buyer's right to accept part of the things delivered where a
shipment of goods contained both conforming and nonconforming goods. The
matter has arisen primarily in redhibition cases. In Bates v. Lilly Brokerage Co.,
159 So. 457 (La.App.2d Cir.1935), the plaintiff bought 200 second-hand barrels
to be used for vinegar. Upon inspection, he discovered that 150 barrels had
contained an acid that made them unfit for that use. The court held that the
buyer was entitled to keep the contractually conforming units and return the
remainder against t
he defendant's contention that the plaintiff had to return all or none. The court
formulated the rule thusly: If several things sold together are independent of
each other and do not form a whole, and if the value of each thing is not
increased by its union with the rest, a redhibitory action can be maintained only
for those things that are found to be defective, and the contract must stand and
be carried into effect in relation to the others. Id. at 459.
In Huntington v. Lowe, 3 La.Ann. 377 (1848), the purchaser of pork by hogheads
discovered that several hogheads were unsound. The Louisiana Supreme Court
held that in such a situation the buyer was entitled to retain the sound
hogheads and return the unsound ones. Id. at 379. It is noteworthy that in
Huntington, just as in Bates, supra, the vendor claimed that the buyer had
either to keep or to return the entire shipment. The court in Huntington
countered the seller's argument thusly: The rule that the redhibitory vice of one
of several things sold together gives rise to the redhibition of all, applies to a
limited class of cases; those where one of the things would not have been bought
without the other. The illustrations given in the code are a pair of matched
horses or a yoke of oxen. The rule is a reasonable one, and we have narrowed it
from the Roman law. Quumautem jumenta paria veneunt, edicto expressum est
ut, cum alterum in ea causa sit ut redhiberi debeat, utrumque redhibeatur; in
qua re tam emptori quam venditori consulitur, dum jumenta non separantur.
But when the things are independent of each other, the redhibitory action lies for
that which is affected by the redhibitory vice. The example given by the civilians
is a lot of unmatched horses or a flock of sheep. If one proves to be unsound, the
partial dissolution of the sale is permitted. Id. at 379. Under revised Article
2607, as under these prior decisions, the buyer may accept conforming
Page 18 of 81
commercial units and reject nonconforming ones. In case of partial acceptance

the buyer must pay at the contract rate for any things that are accepted.
2.7 Merchant Buyer's Duty Upon Rejection

When the buyer rejects goods that have been delivered to him by the seller,
revised Article 2608 requires that he take certain measures to preserve the
integrity of the goods delivered. It should be noted, however, that in such
instances the buyer, even though following the seller's instructions in accordance
with the provisions of this Article, is not a mandatary of the seller. In other
words, the fact that the buyer has exercised the right of rejection does not
transform the contract of sale into one of agency. Rather, the buyer at that point
becomes a kind of negotiorum gestor. See C.C. Arts. 2295-2300 (1870). Thus,
the rejecting buyer is held to the standard of a prudent administrator in the care
and handling of the goods for the seller's account. See C.C. Art. 2298 (1870). As
in the case of a gestor, the buyer who undertakes to handle and care for rejected
goods pursuant to Article 2608 should be entitled to reimbursement for his
expenses. See C.C. Art. 2299 (1870).
In H.T. Cottam & Co. v. Moises, 149 La. 305, 88 So. 916 (1921), the buyer
breached a contract of sale of goods by refusing to accept delivery. The seller
then proceeded to resell the goods on his own account, and sued the buyer for
the difference between the contract price and the price obtained for the goods.
The defendant argued that the plaintiff was not entitled to judgment, among
other reasons, because the goods had been sold on the plaintiff's rather than on
the defendant's, account. The Louisiana Supreme Court rejected that argument.
According to the Court: It is immaterial that the plaintiffs ordered the goods
sold for their account instead of for the account of the defendant.... As the sale of
goods is only a method of determining the amount of damages, it is immaterial
for whose account the sale is made. But it is more rational that it be made for
account of the vendor, as he remains the owner of the goods and the price is to
be paid to him. It would be a contradiction to say that the goods are sold for
account of the purchaser, who has not paid the price, and who, therefore, was
not the owner of the goods, and who was not to get the proceeds of the sale. Id.
at 917.
Although, in the Cottam case the buyer was the breaching party, and it was the
seller who was forced to resell the merchandise, it would seem that its rationale
should be applicable to instances where a buyer is faced with the need to
dispose of unwanted goods. Under revised Article 2608, as in Cottam, the goods
Page 19 of 81
are sold for the account of the owner of the goods rejected: the seller. It should
be noted, however, that this Article applies only to a situation where the seller
delivers nonconforming goods and the buyer rejects them.
2.8 Purchase of Substitute Things By the Buyer

At common law, and under the U.C.C., the buyer's right to obtain substitute or
replacement goods in the market upon the seller's breach is known as cover. In
exercising the remedy of cover the buyer must, as in other cases, act in good
faith. Thus, for example, the buyer cannot ordinarily cover with goods of a higher
quality, even if they are commercial substitutes of the contract goods.
Under the traditional approach previously followed by the Louisiana
jurisprudence, where the seller repudiates the agreement or fails to deliver
conforming goods, the buyer's damages were measured by the difference between
the contract price and the market price at the moment of the breach. See Hafner
Mfg. Co. v. Lieher Lumber & Shingle Co., 127 La. 348, 53 So. 646 (1910); Palmer
v. Smith Co., 165 La. 788, 116 So. 186 (1928); Lexington Candy Co. v. Prejean,
168 La. 1078, 123 So. 719 (1929); Burglass v. J.C. Healy, Co., 159 La. 393, 105
So. 384 (1925).
Where that formula is used in assessing the buyer's damages, it places the buyer
in a better or worse economic position, depending on how promptly the buyer
acts and what price fluctuations take place in the market. Moreover, under that
approach the actual cost of the replacement or substitute goods that the buyer
purchases, and the market price of those goods at the time and place of their
acquisition, are irrelevant to the buyer's damage suit. Thus, if the seller
repudiated a $50,000 contract for belts, and the buyer promptly obtained
substitute belts for $60,000, if the market price at the time of the breach was
$55,000, the buyer could recover only $5,000, and not the full $10,000 above
the original contract price that it cost him to cover. That result seems
impractical, since it discourages mitigation of damages by the buyer, as he
seemingly proceeds at his own peril and risk when he goes to market to
purchase substitute goods.
Revised Article 2609 rejects the traditional approach utilized by Louisiana courts
in the past in favor of one more in line with the loss actually sustained by the
buyer. Under Article 2609 the buyer may recover the difference between the
contract price and the price of the substitute things. Thus, under revised Article
2609, the buyer may obtain substitute goods in the market without assuming
Page 20 of 81
the risk of price fluctuations. Also under that article, the buyer is precluded
from speculating on price fluctuations at the seller's expense.
2.9 Cure of Nonconformity

Revised Article 2610 allows the seller an opportunity to cure a nonconforming
performance of the contract of sale in instances where the time for performance
has not yet expired or when the seller had a reasonable belief that the
nonconforming things would be acceptable to the buyer. Revised Article 2610 is
premised on the principle that, whenever possible, the parties' bargain should be
preserved. When the time for performance has not expired, the buyer has lost
nothing if the seller is allowed to correct an improper performance within the
time limitations set forth in the agreement. Also, where because of a prior course
of dealing between the parties or other circumstances, it is reasonable for the
seller to have assumed that the buyer would accept the goods delivered, even
though they did not conform to the specifications of the contract, it is reasonable
to allow the seller to cure the nonconformity.
It is clear, however, that in either case of improper performance the seller must
have acted in good faith. Thus, if the seller intentionally ships goods of an
inferior quality ahead of time, in the hope that the buyer will accept them, the
seller will be liable to the buyer for breach of contract and will not, ordinarily,
have a right to cure under Article 2610. See C.C. Arts. 1759, 1983 (rev. 1984).
As noted in the comments to revised Article 2610, the seller's right of cure does
not arise unless the buyer rejects the goods delivered. That is so because, when
the buyer accepts nonconforming goods, theoretically at least, there is nothing to
cure.
There may be instances, of course, where a nonconforming delivery is very much
to the buyer's advantage and the seller, consequently, would be interested in
rectifying the delivery. Thus, for instance, instead of delivering 500 assemblymade polyester suits, the seller might mistakenly ship 500 hand-made suits of
the finest silk. In such a situation the seller would normally be entitled to
reclaim his merchandise and to ship the contracted-for suits. But that would not
be a matter of cure. That is a problem to be resolved under general principles
of the law of obligations, such as the doctrine of error. See C.C. Arts. 1948-52;
1759, 1983 (rev. 1984).
2.10 Ownership of Things in Transit

The provisions once contained in R.S. 45:901-955, which reproduced the
Page 21 of 81
Uniform Bills of Lading Act, have been repealed and replaced by Chapter 7 of
R.S. 10, which contains provisions on documents of title. As a result, there is no
clear provision in present Louisiana law governing the effects of the form of the
bill of lading in relation to ownership of the things that are shipped under such
bills, a matter formerly governed by R.S. 45:940. The repealed provisions were
intended, no doubt, also to govern transfer of risk under the traditional principle
res perit domino -- risk follows ownership.
Revised Article 2613 is designed to fill this gap in Louisiana law. It is not a
verbatim reproduction of R.S. 45:940, as the second sentence of the second
section -- which practically rendered ineffectual the form of the bill of lading -has been eliminated. Under the new Article it is the form of the bill of lading that
clearly establishes ownership of the things, in a manner consistent with the
intendment of the Louisiana jurisprudence. See California Fruit Exchange vs.
John Meyer, Inc., 166 La. 9, 116 So. 575 (1928).
2.11 Judicial Dissolution

Article 2564 of the Louisiana Civil Code of 1870 had a peculiar history. Its
French equivalent, Article 1657 of the Code Napoleon, reads: In the sale of
movable things dissolution takes place of right for the benefit of the seller after
expiration of the time agreed for the payment. Article 89, at page 362, of the
Louisiana Digest of 1808 reproduced the text of the French article, but the
revision of 1825 adopted the present text. See 3 Louisiana Legal Archives, Part II
at 1408 (1942). The main difference between the texts of 1808 and 1825 is that
the former allows dissolution of the sale of movables only for failure to pay the
price and in favor of the seller, while the latter seems to allow dissolution for any
kind of failure to perform and in favor of both parties. Those two approaches
appear combined in Article 1517 of the Italian Civil Code.
Pothier is silent on this matter. Troplong treats it extensively and traces the
origin of the French article to ancient French coutumes. See Troplong, Le droit
civil expliqu--De la vente 346-350 (1836). In the ancien droit dissolution of a
sale of movables could be sought only for the buyer's failure to pay the price and,
moreover, could not be invoked by the buyer. See Troplong at 335.
The source of the text of Civil Code Article 2564 as it appeared in the Civil Code
of 1870 cannot be readily ascertained. Be that as it may, that text seems to be
more consistent with modern law, as confirmed by the Italian example.
Louisiana jurisprudence, moreover, found the Article useful. See Madere v. Cole,
Page 22 of 81
424 So.2d 1125 (La.App. 1st Cir.1982). For that reason its substance has been
retained in revised Article 2615.
Revised Article 2615 eliminates the expression of right -- intended as a literal
translation of de plein droit -- because it is equivocal and lends itself to be
interpreted as meaning that certain effects take place automatically, which is not
so. See 2 Litvinoff, Obligations 531 (1975). See also Atkins v. Garrett, 252 F. 280
(D.C.1917).
Revised Article 2615 only contemplates judicial dissolution. That must be
stressed because the new Louisiana law of obligations, besides judicial
dissolution, also contemplates nonjudicial dissolution by a party's initiative. See
C.C. Arts. 2013-2016 (rev. 1984). In the case of nonjudicial dissolution there is
no occasion for a court to grant an additional time to perform.
2.12 Payment Against Documents

Under revised Article 2617, when the contract of sale calls for payment against
documents, the seller must promptly tender the required documents to the
buyer, and the buyer must make payment upon the seller's tender of the
required documents, even if the goods have not yet arrived. Examples of sales
requiring the buyer to make payment against documents are the following
types of commercial sales: F.O.B. vessel, F.A.S., C.I.F., and C. & F. Where
the agreement requires the buyer to make payment for the goods upon the
seller's tender of the required documents, the transaction is known as a
documentary sale. See 3 Anderson, Uniform Commercial Code Series 481
(1981); Henson, The Law of Sales 67-68 (1985).
A documentary sale normally envisions a resale of the goods by the buyer. Thus,
it is extremely important, where a documentary sale is involved, that the seller
procure a bill of lading covering the goods in the quantity called for by the
contract, since the resale by the buyer is normally made by negotiating the bill of
lading. The contemplation of resale by assignment of the documents also
accounts for the rule that in a documentary sale the seller may not deliver, nor
the buyer demand, the goods as a substitute for the documents. See, for
example, U.C.C. 2-320(4), which, with respect to C.I.F. and C. & F. contracts
-- both of which are documentary sales -- provides: Under the term C.I.F. or C.
& F. unless otherwise agreed the buyer must make payment against tender of
the required documents and the seller may not tender nor the buyer demand
delivery of the goods in substitution for the documents.
Page 23 of 81
It is important to note, however, that even though in a documentary sale the

buyer must pay for the goods upon delivery of the documents -- which, in most
cases, arrive before the goods are delivered -- payment by the buyer does not
constitute acceptance of the goods. Thus, by making payment the buyer does not
waive or forfeit any remedies that he may otherwise have, or even impair his
right to inspect the goods after they are delivered. See 3 Anderson, Uniform
Commercial Code Series 488 (1981). That point is made perfectly clear by the
redactors of the U.C.C. in comment 12 to Section 2-320, where it is said: Under
a C.I.F. contract the buyer, as under the common law, must pay the price upon
tender of the required documents without first inspecting the goods, but his
payment in these circumstances does not constitute an acceptance of the goods
nor does it impair his right of subsequent inspection or his options and remedies
in the case of improper delivery. All remedies and rights for the seller's breach
are reserved to him. The buyer must pay before inspection and assert his remedy
against the seller afterward unless the nonconformity of the goods amounts to a
real failure of consideration, since the purpose of choosing this form of contract
is to give the seller protection against the buyer's unjustifiable rejection of the
goods at a distant port of destination which would necessitate taking possession
of the goods and suing the buyer there.
III. Sales of Immovables

3.1 Formal Requirements
As under the source provision of the same number, revised Article 2440 requires
that sales of immovables be made either by authentic act or under private
signature. The Article allows testimonial proof of an oral sale pursuant to the
provisions of Article 1839 of the Louisiana Civil Code.
Revised Article 2440 adds nothing of substance to the provisions of Civil Code
Article 1839, which deals with all transactions affecting immovables. Thus, it
might fairly be asked whether an article reproducing the substance of Article
2440 is necessary. Technically speaking, the answer is no. However, in order to
avoid all speculation concerning whether the failure to include the provisions of
that Article signifies an intent to change the law concerning sales of immovables,
the revised Article particularizes for the law of sales the principle set forth in
Article 1839.
3.2 Manners of Sale

Under the scheme of the Louisiana Civil Code of 1870 three different manners or
Page 24 of 81
methods of selling immovable property were recognized:

1) sales at a price per measure;
2) sales of a certain and limited body; and
3) sales per aversionem.
When immovables are sold on the basis of a price per measure, the seller must
give -- and the buyer is, consequently, entitled to receive -- the exact quantity
stipulated in the act of sale. C.C. Art. 2492 (1870); C.C. Art. 2492 (rev. 1992). If
the real measure of the immovable is less than what was stipulated in the act of
sale, the buyer is entitled to a diminution of the price; and in instances where
the immovable conveyed is larger in measurement than what is provided in the
act of sale, the seller is entitled to a proportionate increase in the price. C.C. Art.
2493 (1870).
Louisiana courts have held that the question whether a particular sale is one by
measure or of a different type must be answered from the recitals in the act of
sale. See Campbell v. Cook, 51 La. 269, 91 So. 731 (1922). In Phelps v. Wilson,
16 La. 185 (1840), the immovable conveyed was described in the act of sale as
follows: A parcel of land situated, lying and being in the parish of Rapides, on
the south side of Red River, being section number 26, township 3 north, range 1
east, containing eighty-nine 50-100 acres, agreeably to the register's certificate,
number 2036, together with all the improvements and appurtenances thereto
belonging. Id. at 186. A post-sale survey revealed that there was a deficiency
greater than one-twentieth of the acreage conveyed. The court held that the sale
was of a certain and limited body. Since the discrepancy exceeded onetwentieth of the land conveyed, the court held that the vendee was entitled to a
reduction of the price under Article 2494 of the Civil Code of 1870.
The text of Article 2492 of the Louisiana Civil Code (1870), dealing with sales of
immovables at a price per measure, contained several ambiguities. First of all,
the meaning of the phrase can not conveniently do it, with respect to the
seller's obligation to deliver the full, specified extent of the premises, was
unclear. The word convenience is inexact and subject to several different
interpretations. It would seem that only the seller's inability-in-fact to convey the
contractually stipulated extent of the premises should exonerate him from
specific performance.
Secondly, Article 2492 did not clearly state the nature of the buyer's right in case
of partial nonperformance by the seller of his obligation of delivery. Lastly, Article
2492 failed to provide with clarity the seller's obligation, and the buyer's
Page 25 of 81
correlative right, in cases where the seller is unable to deliver the full extent of
the premises.
Revised Article 2492 combines the substance of Articles 2492 and 2493 of the
Louisiana Civil Code of 1870. It allows the buyer to recede from the sale when
the actual extent of the immovable sold exceeds by more than one twentieth the
extent specified in the contract.
Article 2494 of the Louisiana Civil Code of 1870 dealt with sales of certain and
limited bodies or of distinct and separate objects. Those are sales where the
property is sold with an indication of quantity, but for a lump sum, rather than a
price per measure. For such instances, Article 2494 provided that, should there
be a discrepancy between the measurements as designated in the act of sale and
the real measurements of the immovable, the seller was not entitled to a price
increase in the case of an overplus, and the buyer was not entitled to a price
reduction in case of a deficiency, unless the real measure comes short of that
expressed in the contract, by one twentieth part, regard being had to the totality
of the object sold.... C.C. Art. 2494 (1870).
Thus, it would seem that, concerning the right to compensation for discrepancy
in measurement, the only difference between sales by measure and sales of
certain and limited bodies was that in the latter type of sale there was no room
for price adjustment unless the discrepancy consisted of the real measurement's
falling short of the stipulated measurement by at least five percent.
Under revised Article 2494, when the sale is made with indication of the extent
of the premises but for a lump price, there is no right to an increase or reduction
in the price for a discrepancy in the measurement of the premises, unless the
surplus or shortage exceeds by more than five percent the extent specified in the
act of sale.
Under the provisions of Article 2495 of the Louisiana Civil Code of 1870, when
the immovable sold was designated by the adjoining tenements and sold from
boundary to boundary, the law did not allow an increase or diminution of the
purchase price on account of a discrepancy. C.C. Art. 2495 (1870). That was the
so-called sale per aversionem.
Revised Article 2495 effects a merger of Articles 2494 and 2495 of the Louisiana
Civil Code of 1870. As the comments indicate, this Article changes the law in
part in that it makes every sale of immovable property described as constituting
a certain and limited body a sale per aversionem. This combination of the
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substance of Articles 2494 and 2495 should serve to eliminate much of the
confusion generated by the obscure text of Articles 2494 and 2495 of the
Louisiana Civil Code of 1870.
IV. Delivery and Eviction

4.1 Construction of Ambiguities; Waiver of Warranty
While the warranties that protect the buyer against eviction from, and
redhibitory vices in, the thing sold are subject to waiver, it is well established
that three elements must exist before a waiver is held to be effective:
(1) The waiver must be written in clear and unambiguous terms;
(2) The waiver must be contained in the sale and -- where there is one -- the
chattel mortgage document; and
(3) The waiver must either be brought to the attention of the buyer or explained
to him.
See: Hob's Refrigeration v. Poche, 304 So.2d 326 (La.1974); Roy v. Cuccia, 298
So.2d 840 (La.1974); Prince v. Paretti Pontiac, 281 So.2d 112 (La.1973); Media
Prod. v. Mercedes-Benz of North Amer., 262 La. 80, 262 So.2d 377 (La.1972).
Terms such as no warranties of any kind or character and sold as is have
been repeatedly held not to have satisfied the requirement that the terms of the
waiver shall be clear and unambiguous with respect to the warranty of fitness.
See Dunlap v. Chrysler Motors, 299 So.2d 495 (La.App. 4th Cir.1974); Lee v.
Blanchard, 264 So.2d 364 (La.App. 1st Cir.1972); McLain v. Cuccia, 259 So.2d
337 (La.App. 4th Cir.1972); Juneau v. Bob McKinnon Chevrolet, 260 So.2d 919
(La.App. 4th Cir.1972); and Stumpf v. Metairie Motor Sales, 212 So.2d 705
(La.App. 4th Cir.1968).
Revised Articles 2474 and 2475 reproduce the substance of the source
provisions on which the above cited cases are based. Accordingly, the same
results reached in those decisions should obtain under this revision.
4.2 Methods of Making Delivery

Revised Article 2477, involving the methods of making delivery in sales of both
movable and immovable property, effects a merger of Articles 2477-2479 of the
Louisiana Civil Code of 1870. As the comments indicate, the revised article
changes the law insofar as it extends to acts under private signature the
presumption that former Civil Code Article 2479 created for authentic acts. As
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explained below, that change is consistent with the legislative history of Article
2479 (1870).
Article 2479 of the Louisiana Civil Code of 1870 provided that delivery of
immovables accompanied the public act which transfers the property. Although
it could have been argued that public act, as used in the article, is synonymous
with authentic act, Louisiana courts indicated that this was not so. In the case
of Potts v. Reynolds, 131 La. 421, 59 So. 837 (La.1912), the supreme court
stated that an act of sale of land under private signature, duly recorded, should
be interpreted to be in accordance with the provisions of Article 2479 of the
Louisiana Civil Code.
Moreover, the origin and history of Article 2479 indicate clearly that the term
public act therein was not meant to be synonymous with the term authentic
act. Article 2479 provided as follows:
The law considers the tradition or delivery of immovables, as always accompanying the
public act, which transfers the property....
In the Projet du Gouvernement (1800), Book III, Title XI, Article 25, it was stated:
The tradition of immovables is accomplished by the act alone which transfers the ownership.
Article 1605 of the Code Napoleon provides as follows:
The obligation to deliver immovables is fulfilled by the seller when he has delivered the keys,
if it is a building, or when he has delivered the titles of ownership.
Article 29 of the Louisiana Digest of 1808 provided as follows:
Tradition or delivery of immovables is made by the .... delivery of the titles.
The pertinent language of Article 2479 of the 1870 Code was first incorporated
into Louisiana law as Article 2455 of the Civil Code of 1825. The redactors of the
Code of 1825 introduced the present language without comment. Since the
redactors consistently made comments concerning changes in the law when
changes were intended, it is fair to conclude that they did not wish to effect a
change in the law by the change in language in that instance.
Furthermore, the fact must be considered that Article 2479 was the only article
in the Civil Code of 1870 addressing delivery in sales of immovables. Since the
Louisiana Civil Code of 1870 admitted the validity of sales under private
signature, it is fair to assume that the redactors would have written a special
provision to govern delivery in this type of sale had they intended for delivery
thereunder to be effected in a manner different from that provided in Article
2479. Since there is no such special provision, one must conclude that the
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redactors intended for Article 2479 to govern both sales by authentic act and
those under private signature.
4.3 Retention of Possession By Seller; Presumption of Simulation

Revised Article 2480 reproduces the substance of the source provision to the
effect that when the seller remains in possession of the thing sold a presumption
of simulation arises.
A simulated sale is a feigned or pretended sale clothed with the formalities of a
valid sale. In such a transaction the parties intend for the property to remain in
the vendor's patrimony and for no price to be paid. It is a sham and as a result,
an absolute nullity. See Succession of Terral, 312 So.2d 296 (La.1975);
Succession of Webre, 247 La. 461, 172 So.2d 285 (La.1965); Spiers v. Davidson,
233 La. 239, 96 So.2d 502 (La.1957). When the thing sold remains in the
corporeal possession of the seller, who acts as owner, to the injury of a third
person, the rule that the delivery of immovables accompanies their transfer
ceases, and the sale is presumed to be simulated. See Russell v. Culpepper, 344
So.2d 1372 (La.1977); Succession of Terral, supra; Succession of Webre, supra.
To rebut this presumption the vendee must prove a good faith transaction
resulting in a true alienation of ownership for a price. Succession of Terral,
supra; Dietz v. Dietz, 227 La. 801, 80 So.2d 414 (La.1955); Succession of
Combre, 217 La. 955, 47 So.2d 734 (La.1950); Holohan v. Guirovidr, 220 So.2d
527 (La.App. 4th Cir.1969); Litvinoff, The Action In Declaration of Simulation In
Louisiana Law, in Essays on The Civil Law of Obligations 139 (Dainow, ed.
1969). In sum, the vendee must establish the parties' good faith intention to
transfer ownership, the delivery of the property, and the existence of a price.
4.4 Incorporeals, Method of Making Delivery

There were two articles in the Louisiana Civil Code of 1870 that addressed the
requirements for a valid transfer of incorporeal rights: Articles 2481 and 2642.
While Article 2481 provided two different ways in which incorporeals could be
assigned -- that is, by the giving of the title or by the use made by the buyer of
the title with the seller's consent -- Article 2642 only allowed a delivery to take
place by the giving of the title. Thus, at first blush there would seem to be an
inconsistency between the two articles.
That discrepancy between the texts of Articles 2481 and 2642 of the Louisiana
Civil Code of 1870 -- paralleled by that existing between Articles 1607 and 1689
of the Code Napoleon -- may only be an apparent contradiction, however. That
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appears to be so because where the seller allows the buyer to make use of the
title he is, in effect, allowing the buyer to avail himself of the title in order to
enforce the claim, which amounts to a transfer of possession -- or to a giving -of the title evidencing the claim.
Besides the apparent contradiction between Articles 2481 and 2642 of the
Louisiana Civil Code of 1870, there were several theoretical problems with the
language of Article 2481 of the Civil Code of 1870. First of all, many incorporeals
are simply not transferred by the handing over of the titles or by the use thereof
made by the buyer with the seller's consent. Secondly, it is hard to imagine how
the provisions of Article 2481 could have any practical bearing on the delivery of
incorporeal immovables. Pursuant to those concerns, revised Article 2481 has
amended the substance of Article 2481 by: 1) limiting the applicability of the
article to transactions involving movables; and 2) eliminating the obscurities
involved in the language of the source article.
It should be noted that the difficulties discussed above are not addressed by the
French authorities. Baudry-Lacantinerie in his treatise on the civil law discusses
the problems involved in the delivery of incorporeals under Article 1607 of the
Code Napoleon -- the equivalent of Article 2481 of the Louisiana Civil Code -- but
what he says therein is not useful for Louisiana. See 19 Baudry-Lacantinerie et
Saignat, Trait thorique et pratique de droit civil, 300-302 (1908).
4.5 Delivery Excused Until Payment of the Price

Where the seller has not granted the buyer a term for the payment of the price,
the seller need not deliver the thing sold until the price is paid. See C.C. Art.
2487 (1870). The seller's right to withhold delivery until payment is made is
known in continental doctrine as a droit de retention (right of retention). The
basis of that right is the presumed will of the parties: In a bilateral contract
neither party is presumed to bind himself except on condition that the other
party perform his obligation. See 2 Planiol et Ripert, Trait lmentaire de droit
civil, (Part 1) 856 (La.St.L.Ins. transl. 1959). Moreover, it should be noted that
the doctrine of cause makes the obligations arising out of a bilateral contract
correlative. In such a contract, the obligation of each party is the other's cause.
See 1 Litvinoff, Obligations, 396-400 (1969); see also C.C. Art. 1908 (rev. 1984).
Along that line of thought, Louisiana courts have uniformly held that a buyer
who is in default by failing to pay promptly cannot maintain an action for
damages for the seller's failure to deliver. See Smith v. Anders, 148 La. 474, 87
Page 30 of 81
So. 241 (La.1921); Bunge Corporation v. McGuffie, 317 So.2d 227 (La.App. 3d
Cir.1975); Louisiana Farm Bureau Rice, Inc. v. Miller, 389 So.2d 840 (La.App. 3d
Cir.1980).
Revised Article 2487 reproduces the substance of the source provision and
declares that the seller may refuse to deliver the thing sold until the buyer
tenders payment of the price, unless the seller has granted the buyer a term for
such payment.
4.6 Condition of Thing At Time of Delivery

The seller's obligation to deliver the thing sold implies that of conserving it and
keeping it safe until the moment of delivery. See 2 Planiol et Ripert, Trait
lmentaire de droit civil, (Part 1) 816 (La.St.L.Ins. transl. 1959). Before the 1984
Obligations revision, Article 1908 of the Louisiana Civil Code of 1870 provided
that a person -- such as the seller before delivery -- who has a thing in his
keeping must take all the care of it that could be expected from a prudent
administrator. Since that obligation is merely incidental to the overriding duty of
good faith -- see C.C. Arts. 1759, 1983 (rev. 1984) -- the seller's obligation to care
for the thing as a prudent administrator has not been altered in any way by the
repeal of former Article 1908.
French doctrine is to the effect that the seller's obligation of preserving the thing
does not mean solely that the seller should exercise due diligence to protect the
thing against all risk of loss or theft; it also means that the seller must abstain
from making alterations in the thing between the time of the sale and that of
delivery, Planiol, supra, at 816.
Revised Article 2489 preserves the substance of the source provision. It states
that the seller must deliver the thing in the condition that the parties expected,
or should have expected, the thing to be at the time of delivery, according to its
nature.
4.7 Eviction: General Principles

Revised Article 2500 reproduces the substance of Articles 2500-2502 of the
Louisiana Civil Code of 1870. It changes the law only insofar as it gives
legislative recognition to the danger of loss as a circumstance which is as
operative as an actual loss. See Bonvillian v. Bodenheimer, 117 La. 793, 42 So.
273 (1906); McDonold & Coon v. Vaughan, 14 La.Ann. 716 (1859); Landry v.
Gamet, 1 Rob. 362 (1842).
Page 31 of 81
The seller is not responsible for the acts of persons not asserting any rights to
the thing sold; thus, the dispossession of the buyer from the thing sold by a
trespasser or other wrongdoer does not constitute eviction. It is only when the
third party asserts a lawful claim to the thing sold, under color of title or
otherwise, that the seller's obligation to warrant the buyer against eviction
comes into play.
French doctrine and jurisprudence are to the effect that the fact that the buyer
knows of a right in a third person that may be the basis for a disturbance does
not give him a right to call his vendor in warranty; an actual disturbance in his
peaceful possession of the property is required. See 2 Planiol et Ripert, Trait
lmentaire de droit civil (Part 1) 827 (La.St.L.Ins. transl. 1959). Thus, where the
buyer discovers a mortgage inscription in the public records on the immovable
purchased, it has been held that he should wait until he is disturbed by the
mortgage creditor. See Doriai, May 8, 1891, D. 92.2.541.
Louisiana courts have held that where a perfect title exists in a third person,
whereby it is rendered certain that the vendor has no title, there is such an
eviction as will authorize a call in warranty. Robbins v. Martin, 43 La.Ann. 488,
9 So. 108 (1891); Bickham v. Kelly, 162 La. 421, 110 So. 637 (1929). See also
Kling v. McLin, 394 So.2d 1289 (La.App. 4th Cir.1981), where the court held that
the buyer of an automobile is evicted where the vehicle sold is encumbered by a
chattel mortgage at the time of the sale.
Thus, it is a well-established proposition that under Article 2500 of the Civil
Code of 1870 the buyer did not have to be actually dispossessed of the thing in
order to be entitled to call his vendor in warranty. In the leading case of
McDonold & Coon v. Vaughan, 14 La.Ann. 716, 718 (1859), it was said: It is
true, it is not necessary that a party should be actually dispossessed to
constitute an eviction. It may take place while he continues to hold the property,
if under a different title from that transferred to him by his vendor, as when he
inherits it, or acquires it by purchase from the true owner. Landry v. Gamet, 1 R.
362; Thomas v. Clement, 11 R. 397. Or, if a perfect title exists in a third person,
whereby it is rendered legally certain that his vendor had no title.
The last sentence of Paragraph one of revised Article 2500, like its source -Article 2501 of the Louisiana Civil Code of 1870 -- , makes it quite clear that the
seller has a duty to warrant the buyer against undeclared encumbrances
burdening the thing sold. In fact, it has been held that under that article the
seller will be liable to the buyer for undeclared encumbrances even if the
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encumbrances affecting the property were of record. See Young v. Sartor, 152 La.
1064, 95 So. 223 (1923). In Richmond v. Zapata Development Corp., 350 So.2d
875, 878 (La.1977), the Supreme Court stated: Because the registry laws are
intended only as notice to third parties and have no application whatever
between parties to a contract, a vendee is under no obligation to search the
record in order to ascertain what his vendor has sold and what it has not, and
the vendee is entitled, as between himself and his vendor, to rely upon his deed
as written.
4.8 Modification Or Exclusion of Warranty

Since a stipulation of non-warranty, unaccompanied by knowledge on the part of
the buyer of the danger of eviction, will not prevent the buyer from recovering the
purchase price in the event of eviction, the purchaser under such a deed who
has not paid the price may suspend the payment if he is disquieted or has just
reason to fear that he will be, until he is restored to quiet possession or the seller
gives security. See Article 2557 of the Louisiana Civil Code of 1870; Gautreaux v.
Boote, 10 La.Ann. 137 (1855). In Gautreaux the court stated: But admitting it to
be a correct construction of the act of sale that the vendors were to be subject to
no warranty as to the validity of their title ... the only exception stated in Article
2557 to the rule there laid down, that the buyer may require security to be given
to him when he has just cause to apprehend being disquieted by adverse claims,
is the case where the buyer has been informed before the sale of the danger of
eviction. The seller is bound to restore the price in case of eviction, even where it
has stipulated that there should be no warranty, unless the buyer was aware at
the time of the sale of the danger and purchased at his peril. Article 2557. Id. at
139. See also Litvinoff, Sale and Lease in the Louisiana Jurisprudence, 346-47
(2d ed., 1986).
Articles 2504 and 2505 of the Louisiana Civil Code of 1870 were ambiguous with
respect to the situation where the buyer, under a sale with no warranty, 1) was
aware of the danger of eviction, and 2) purchased at his peril and risk, and 3)
was thereafter evicted by a personal act of the seller. The ambiguity arises from
the fact that it wasn't entirely clear whether the seller's accountability for his
personal acts, as specially set forth in former Article 2504, applied not only to
sales where the warranty was excluded, but also to those where, in addition to
the exclusion of warranty, the buyer 1) was aware of the danger of eviction, and
2) purchased at his peril and risk.
It would seem that the seller's accountability for his own acts should obtain in
Page 33 of 81
both types of situation. By combining the provisions of former Articles 2504 and
2505, revised Article 2503 makes that quite clear.
4.9 Transferring One's Rights To A Thing (Sale By Quitclaim Deed)

At common law, the distinguishing feature of a quitclaim deed is that it is an
instrument that purports to convey nothing more than the interest or estate of
the grantor, if any he has, at the time of the conveyance, rather than the
property itself. See 3 A.L.R. 945 (1919); 26 C.J.S., Verbo Deeds, Section 8, at
181; Moelle v. Sherwood, 148 U.S. 21, 13 Sup.Ct. 426, 37 L.Ed. 351 (1893); Van
Rensselaer v. Kerney, 11 How. 297, 13 L.Ed. 703 (1850). Conveyance by
quitclaim deed does not include any implication that the vendor has good title to
the property, or even that he has any title at all. Thus, the purchaser by
quitclaim deed is put on immediate notice that he is not acquiring land but
merely the interest of his vendor in the land. See Waterman et al. v. Tidewater
Associated Oil Co. et al., 213 La. 588, 35 So.2d 225 (La.1947).
The idea of a quitclaim as transferring whatever right, title, or interest the
grantor has seems to be an outgrowth of the common-law doctrine of estates.
The term quitclaim does not appear in the Louisiana Civil Code, but a
quitclaim deed may be properly characterized as a type of transfer by sale, since
by using this device the transferor purports to alienate permanently to the
transferee whatever interest -- including ownership -- the transferor possesses in
the thing.
With respect to warranty, the Louisiana Civil Code of 1870 contemplated three
types of sales: sales with warranty (former Civil Code Article 2501); sales limiting
or excluding warranty (former Civil Code Article 2503); and sales at the buyer's
peril and risk (former Civil Code Article 2505). Sale by quitclaim would be a
fourth type under the scheme of that article.
There are many instances where it cannot be accurately ascertained whether a
person owns an interest in a piece of immovable property. This is not an
uncommon phenomenon in the area of successions, for example, particularly
concerning the rights of illegitimates. In such instances a person may be asked
to release any contingent interest that he might own in an immovable for a
nominal or relatively low price. Clearly, in such a case, it could hardly be
expected that the transferor should give the transferee any warranty with respect
to the right -- or thing -- conveyed. See, generally, comment, The Legal Effect of
Quitclaim Deeds in Louisiana Law, 23 Tul.L.R. 534 (1949); Rubin, The Work of
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the Louisiana Supreme Court for the 1947-48 Term, 9 La.L.Rev. 215, 220-21
(1949).
Louisiana courts have generally held that a sale by quitclaim deed is without
warranty, and in Sabourin v. Jilek, 128 So.2d 698, 701 (La.App. 4th Cir.1961),
the court even went so far as to state that adding without warranty to this
deed of quitclaim changes nothing and is merely a redundancy, since under our
law a quitclaim is a transfer of the vendor's interest without warranty.
However, there have been hints in the jurisprudence suggesting that quitclaim
and non-warranty may not always be synonymous in Louisiana. In Read v.
Hewitt, 120 La. 288, 45 So. 143, 144 (La.1907), the court stated: ... the
objection that the deed is without warranty has no force, for warranty is implied
if not expressly excluded. Moreover, in Waterman v. Tidewater, supra, Justice
McCaleb saw a subtle distinction between sale without warranty and quitclaim.
Waterman, 35 So.2d at 230-31.
It seems clear that the quitclaim deed is a useful form of conveyance. Sale by
quitclaim deed is a sui generis type of sale that deserves legislative attention.
Revised Article 2502 gives legislative formulation to the traditional
understandings of the effects of a sale by quitclaim deed. The word quitclaim is
not, however, utilized in the text of the article.
Since the decision of Read v. Hewitt, 120 La. 288, 45 So. 143 (La.1907), it has
been consistently held that a quitclaim deed can be a basis for 10 year
acquisitive prescription, because the mere use of such a deed is by itself
insufficient to place the purchaser on notice concerning the possible invalidity of
the vendor's title to the property. Land Development Co. v. Shultz, 169 La. 1, 124
So. 125 (La.1929); Perkins v. Wisner, 171 La. 898, 132 So. 493 (La.1929);
Cherami v. Cantrelle, 174 La. 995, 142 So. 150 (La.1932); Smith v. Southern
Kraft Corporation, 202 La. 1019, 13 So.2d 335 (La.1943); Bel v. Manuel, 234 La.
135, 99 So.2d 58 (La.1958); Board of Commissioners v. S.D. Hunter Foundation,
354 So.2d 156 (La.1977). Moreover, it has been held that the fact that a deed
excludes all warranty of title or is a quitclaim deed may be regarded as an
indication that the seller lacked faith in his title, but it does not necessarily
indicate that the purchaser lacked faith in the seller's title to the property. See
Land Development Co. v. Shultz and Cherami v. Cantrelle, supra.
On at least two occasions, however, Louisiana courts suggested that the
rationale espoused by the jurisprudence following Read v. Hewitt, supra, is an
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unsatisfactory approach to the question of good faith. In Board of

Commissioners, Lafourche Basin Levee District v. Elmer, 268 So.2d 274 (La.App.
4th Cir.1972), the court suggested that in each instance the buyer must
legitimately believe that the seller had a good and valid title in order to be in
good faith; any doubt as to the validity of the title expressed by the seller in the
deed can reasonably raise a doubt in the mind of the buyer. In Board of
Commissioners v. S.D. Hunter Foundation, 354 So.2d 156 (La.1977), the
Louisiana Supreme Court qualified the rule of Read v. Hewitt by holding that
where a deed discloses a basis for doubting the vendor's ownership of the
property conveyed, then the vendor is not in good faith.
Revised Article 2502 codifies the rule of Read v. Hewitt, supra. This article makes
it clear that: 1) a sale by quitclaim is a just title that will support acquisitive
prescription of 10 years; and 2) the fact that the sale is by quitclaim does not
raise a presumption of bad faith on the part of the purchaser.
Louisiana courts have long refused to apply the doctrine of after-acquired title to
quitclaim deeds. See Avery v. Allain, 11 Rob. 436 (1845); Waterman v. Tidewater
Associated Oil Co., 213 La. 588, 35 So.2d 225 (La.1947). However, it has been
held that a quitclaim deed that obligates the vendor to perfect the title will
support an after-acquired title despite the technical labeling of these
transactions as quitclaim or non-warranty deeds. See Rycade Oil Corp. v. Board
of Commissioners, 129 So.2d 302 (La.App. 3d Cir.1961).
Revised Article 2502 preserves the rule established by the jurisprudence to the
effect that the doctrine of after-acquired title does not apply to sales by quitclaim
deed. The parties may provide in their agreement, however, that the vendor is
obligated to perfect the title delivered at the act of sale. In such a situation, the
vendor who subsequently gets good title to the property is merely fulfilling an
obligation of the agreement on behalf of his vendee, and the newly-acquired title
should inure to the latter's benefit. See C.C. Arts. 1759, 1983 (rev. 1984), and
2474 (1870).
As regards quitclaim deeds and lesion, it is well to recall that the action for
lesion is premised on the presumption that the seller would not knowingly sell
an immovable for less than half of its value. Before its repeal in 1984, Article
1860 of the Louisiana Civil Code of 1870 provided: Lesion is the injury suffered
by one who does not receive a full equivalent for what he gives in a commutative
contract. The remedy given for this injury, is founded on its being the effect of
implied error or imposition; for, in every commutative contract, equivalents are
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supposed to be given and received. Where the price obtained for the immovable
is less than half of its value, the seller is conclusively presumed to have acted in
error. See C.C. Art. 2589 (rev. 1992), C.C. Art. 2589 (1870). The presumption is
juris et de jure.
However, a sale by quitclaim deed is an aleatory sale. It is akin to the sale of
hope. It is a transaction where the seller necessarily gives no warranty.
Therefore, no error can be implied, much less conclusively presumed, where the
seller makes the buyer take the immovable sold at his peril and risk by means of
a quitclaim deed. Like the purchaser of a lottery ticket, the buyer who acquires
an immovable by quitclaim deed pays the price therefor knowing that there is no
warranty that he will get title to anything of value in exchange for the price he
gives. In such a case there is no policy reason militating in favor of protecting the
vendee, in the event that he gets nothing of value in return for the price paid,
just as there is also no policy reason suggesting that the interests of the other
party to the aleatory transaction, the seller, ought to be protected where the
vendee actually does get something of value. Revised Article 2502 provides that a
sale by quitclaim deed cannot be rescinded for lesion.
4.10 Rights of the Buyer Against the Seller in Case of Eviction

From a very early date, Louisiana courts have refused to consider appreciation or
depreciation in value of the thing sold in assessing the damages to which an
evicted vendee is entitled. In Boyer v. Amet, 41 La.Ann. 721, 6 So. 734 (1889),
the court stated that part of the reason for refusing to consider appreciation in
value of the thing sold in assessing the damages suffered by the evicted vendee
lies in the fact that, although the Digest of 1808 contained a provision
specifically allowing appreciation damages, the Civil Code of 1825 eliminated
that provision, thus giving rise to the implication that the redactors of the Civil
Code of 1825 purposely wished to disallow any recovery for appreciation.
In Derouen v. Lebleu, 18 So.2d 207 (La.App. 1st Cir.1944), plaintiff Derouen filed
suit alleging ownership of a certain cow and its calf. Defendant Lebleu had sold
the cow, clearly pregnant at the time of the sale, to defendant Cormier. Cormier,
in turn, prayed for judgment against Lebleu for the value of calf and cow. The
court noted the unavailability to an evicted purchaser of damages that represent
the increase in value of the object of the sale over the value it had at the time the
transaction was entered into. It then held: The measure of recovery on the part
of Cormier as an evicted vendee against his vendor Lebleu is the price paid for
the cow in her condition when the sale was made, and the subsequent birth and
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growth of the calf cannot be taken into consideration. 18 So.2d at 210. The
court was of the opinion that the restoration of the price placed the vendee in
the same position as he was before the sale insofar as the price is concerned. Id.
In Jackson Title Corporation v. Swayne, 411 So.2d 690 (La.App. 4th Cir.1982), a
notary public had failed to obtain tax certificates before passing an act of sale.
The property was subsequently sold for unpaid taxes. Thereafter, the tax sale
purchaser filed suit against the original vendee to quiet his tax title. Swayne, the
original vendee, third-partied the notary. The court analogized the situation to
that of an action for damages by the evicted vendee under Article 2506 of the
Louisiana Civil Code. It held that the vendee was entitled to the value of the
property at the time of the sale, and not to the value of the property at the
moment of eviction. The court explained its decision to limit the vendee's
recovery to the value of the property at the time of the sale thusly: We are not
constrained to give appellant the benefit of inflationary economic cycles, just as
we would not be constrained to penalize him for deflationary cycles should the
Code have provided a remedy different than the return of the purchase price. In
this regard, it is noteworthy to point out that the redactors of our Civil Code
failed to include Article 1633 of the French Code, which provides: If the thing
sold has increased in price at the time of eviction, even independently of any act
of the acquirer, the vendor is bound to pay him what it is worth above the price
of the sale. 411 So.2d at 693.
Revised Article 2506 specifically provides that the buyer is not entitled to recover
as damages against his vendor an increase in value of the thing lost.
4.10 Restitution of Full Price Despite Deterioration

Under the rule of Article 2507 of the Louisiana Civil Code of 1870, the vendor
had to make restitution of the purchase price of the property, in full, to the
evicted vendee, regardless of the condition of the property at the time of eviction,
even if it was dilapidated at that time due to the buyer's neglect. Civil Code
Article 2508 provided an exception to that seemingly harsh rule for cases where
the buyer had derived some benefit from the impairment that he had caused to
the thing; for example, where he had sold the materials of a dilapidated building.
See 2 Planiol et Ripert, Trait lmentaire de droit civil, pt. 1, 839 (La.St.L.Ins.
transl. 1959). Revised Article 2507 reproduces the substance of the former
Articles 2507 and 2508 without effecting a change in the law.
While at first blush the rule thus reproduced might seem wanting in rationality,
Page 38 of 81
since if the property has decreased in value the buyer appears to get a windfall
from the eviction, that is not the case. A buyer is entitled to do with his property
as he pleases, within the limits established by law. See C.C. Arts. 477, 667. As a
property owner, the buyer does not have the obligation of caring for the thing
purchased. qui rem alienam quasi suam neglexit nullius querelae subjectus est.
The evicted buyer has lost a valuable right by the seller's breach of warranty; it
seems fair that the performance he gave in exchange for the seller's defective
performance -- the price -- be returned to him. Planiol, supra, at 838.
4.11 Call in Warranty

The question of when a buyer must give notice to his vendor in case of eviction in
order to protect his right to warranty is not free from difficulty. Article 2517 of
the Louisiana Civil Code of 1870 stated that a buyer threatened with eviction
had to timely notify his vendor of the interference in order to preserve his right
of warranty. Article 2517 had no equivalent in the Code Napoleon. It was
introduced into Louisiana law for the first time in the Civil Code of 1825 as
Article 2493 of that Code. While the article seems to have obliged the vendee to
notify his vendor whenever his peaceful possession of the thing sold was
threatened by the rights of a third party, that interpretation of the article would
have meant that the redactors intended a change in the civil law of eviction.
Under French law, both before and after the Code Napoleon, the call in
warranty could only take place after litigation had been initiated concerning the
buyer's right to possess the property sold, either 1) by a third party whose
intention was to dispossess the buyer, or 2) by the buyer against a third party
who had disturbed the buyer's possession under color of title. See Pothier, Trait
du contrat de vente, at 49 et seq. (1806); 19 Baudry-Lacantinerie et Saignat,
Trait thorique et pratique de droit civil, at 345 et seq. (1908). That traditional
practice of limiting the mandatory notification of eviction to cases where
litigation was involved derived from the very definition of eviction at Roman law:
Evincere est aliquid vincendo auferre (Eviction is the dispossessing of someone
from something by virtue of a judgment). Pothier, supra, at 48.
Louisiana courts have held that under Article 2517 of the Louisiana Civil Code of
1870 a vendee is obliged to notify the vendor of a threatened eviction after he
learns of this fact, regardless of whether suit has been filed to evict the vendee
by way of a possessory or petitory action or otherwise. See Herring v. Price, 4
So.2d 17 (La.App. 2d Cir.1941); Halley v. Sellers, 347 So.2d 77 (La.App. 2d
Cir.1977).
Page 39 of 81
That is certainly the better view, since in many instances eviction occurs without
the institution of a lawsuit against the vendee. Thus, in Halley v. Sellers, 347
So.2d 77 (La.App. 2d Cir.1977), the buyer of a timber estate was evicted when
the owner of the land refused to allow him to cut the timber. In that case, the
court held that the vendee's notification of that fact to his vendor put the latter
on notice that his title was in question and complied with the requirements of
Article 2517 of the Louisiana Civil Code of 1870. In Herring v. Price, 4 So.2d 17
(La.App. 2d Cir.1941) the property had been sold to a third party at a tax sale for
the vendor's unpaid taxes. It was held that the vendee was obliged under Article
2517 of the Louisiana Civil Code to notify his vendor of that fact.
Revised Article 2517 does not change the above law regarding the requirement of
notice of eviction.
V. Redhibition
5.1 General Principles
The Louisiana Civil Code of 1870, following the Code Napoleon, dealt with the
problem of unsatisfactory goods under the rubric of redhibition, which it
defined as the avoidance of a sale on account of some vice or defect in the thing
sold which renders it either absolutely useless or its use so inconvenient and
imperfect that it must be supposed that the buyer would not have purchased it
had he known of the vice. C.C.Art. 2520 (1870).
The modern redhibitory action derives from the Roman actio redhibitoria and
the actio aestimatoria sive quanti minoris. The actio redhibitoria was the action
given by the edict of the Aedile to cancel a sale as a consequence of defects in the
thing sold. See Hunter, A Systematic and Historical Exposition of Roman Law
505 (1897). The object was twofold:
1) complete restitution to the seller of the thing sold, with all its products and accessories, and
2) to give the buyer back the price, with interest, as an equivalent for the restitution of the thing
and its products.
The seller was required to restore the price before the buyer delivered the thing
sold. The actio aestimatoria sive quanti minoris was brought to reduce the price,
not to dissolve the sale. When that action was used, it was in the power of the
iudex to dissolve the sale. Id.
Under Louisiana law, by the warranty of redhibition the seller warrants that the
thing sold is free of hidden defects. A buyer of a thing with such a defect is
entitled to have the sale dissolved when he is able to prove that he would not
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have bought the thing had he known of the defect. According to revised Article
2520 of the Louisiana Civil Code, such a defect must be such as to render the
thing sold useless, or its use so inconvenient that it must be presumed that a
buyer would not have bought the thing, had he known of the defect.
Louisiana courts have on many occasions held that the warranty against hidden
defects includes the warranty of fitness. As stated by the Supreme Court in Rey
v. Cuccia, 298 So.2d 840, 842 (La.1974): In Louisiana sales, the seller is bound
by an implied warranty that the thing sold is ... reasonably fit for the product's
intended use. To the same effect, see Smith v. Max Thieme Chevrolet, Inc., 315
So.2d 82 (La.App. 2d Cir.1975); Wolf v. Flanagan, 333 So.2d 663 (La.App. 4th
Cir.1976); Hob's Refrigeration & Air Conditioning v. Poche, 304 So.2d 326
(La.1974).
Revised Article 2520 places its focus on the warranty in order to parallel the
pertinent article on eviction -- revised Article 2501 of the Louisiana Civil Code.
[???] Revised Article 2520 takes a more functional approach than the source, as
it sets forth the content of the warranty in a direct fashion. However, most of the
language in the source provision, Article 2520 of the Civil Code of 1870, is
preserved because Louisiana courts are very used to quoting that Article. See,
for example, Ingram v. Freeman, 503 So.2d 640 (La.App. 4th Cir.1987); Napoli v.
Gully, 509 So.2d 798 (La.App. 1st Cir.1987); A & B Restaurant Equipment, Inc.
v. Homeseekers Savings And Loan, 506 So.2d 137 (La.App. 4th Cir.1987).
5.2 Apparent Defects

In a way, it may be said that paragraph one of revised Article 2521 states the
obvious: Since redhibition is, by definition, an action to rescind a sale for hidden
defects in the thing sold, it could hardly be alleged that defects are redhibitory
when the buyer knew of their existence or when he was informed of their
existence by the seller. Nevertheless, since eliminating the article might create
the impression that a change in the law was intended, revised Article 2521
retains the substance of Articles 2521-2522 of the Louisiana Civil Code of 1870.
Since the purpose of the redhibitory action is to make the seller responsible for
hidden defects, it follows that the seller should not be responsible for those
defects in the thing sold that were apparent upon inspection. Determination of
what is an apparent defect is not always, however, a simple task. Article 2521
of the Louisiana Civil Code of 1870 defined apparent defects as such as the
buyer might have discovered by simple inspection. However, that approach only
Page 41 of 81
begged the question, since the term simple inspection is not technically
precise. In Barker v. Tangi Exterminating Co., 448 So.2d 690, 692 (La.App. 1st
Cir.1984), the court offered the following definition of simple inspection for the
purposes of the seller's warranty against hidden defects: a simple inspection is
one made by a reasonably prudent buyer, with no special knowledge, and under
no obligation to deface the thing before inspecting it. That reasonably prudent
approach to simple inspection was also followed in Buck v. Adams, 446 So.2d
895 (La.App. 1st Cir.1984), and Dansky v. Thompson, 415 So.2d 396 (La.App.
1st Cir.1982). See also Fraser v. Ameling, 277 So.2d 633 (La.1973), where the
Louisiana Supreme Court stated that there is no obligation on the part of the
buyer to inspect with expertise or to deface the thing purchased while inspecting
it.
Revised Article 2521 codifies the jurisprudence in that area and provides a more
functional approach by describing the type of defect for which no warranty is
owed. According to this Article: The seller owes no warranty for defects in the
thing that were known to the buyer at the time of the sale, or for defects that
should have been discovered by a reasonably prudent buyer of such things.
5.3 Thing Not of the Kind Specified in the Contract

Louisiana courts have experienced difficulty in distinguishing redhibition
problems from problems concerning nonperformance, or faulty performance, of
the seller's obligation of delivery. Thus, in Walton v. Katz & Besthoff, Inc., 77
So.2d 563 (La.App.Orl., 1955), the plaintiff had bought from the defendant paint
advertised as mildew resisting, and which defendant's employee orally asserted
to have that particular quality. The paint was fine in every respect, except that it
did not resist mildew. The court sustained a plea of prescription over the buyer's
objection that the suit was one for breach of contract (which would have
rendered applicable the ten year prescriptive period applicable to such an
action).
However, that same court in Victory Oil v. Perrett, 183 So.2d 360 (La.App. 4th
Cir.1966), where the plaintiff oil company had contracted to supply to the
defendant for use in the latter's truck diesel fuel suitable for that purpose, but
had delivered, in part, diesel fuel of a different type which caused damage to the
trucks, held that the oil company had failed to fulfill its contractual obligations
and that the rules of redhibition were not applicable, stating that the seller did
not deliver that for which the parties contracted.
Page 42 of 81
In Runers v. Stran-Steel, 317 So.2d 657 (La.App. 3d Cir.1975), a case involving

the supplying of incorrect rafters for the construction of steel buildings, the
court analyzed the problem as one involving redhibition. It held, however, that
since the defects in supply of the rafters were corrected prior to bringing suit,
such defects could not properly be grounds for redhibition, the appropriate relief
being a reduction of the price, or quanti minoris Id. at 660.
The problem of categorizing the issue as either one concerning redhibition or one
dealing with breach of the obligation of delivery assumes capital importance
because of the different prescriptive periods involved. Louisiana courts have
hitherto indicated that three prescriptive periods could be applicable in
redhibitory actions: one year from the sale if the vendor did not know of the
defect in the thing (former C.C. Art 2534) (now four years; see revised Art. 2534);
one year from the discovery of the defect where a vendor knew -- or was
presumed to have known -- of the defect (former C.C.Art. 2546; rev. C.C.Art.
2534); or five years from the discovery of the fraud if the vendor had committed
fraud (former C.C.Art. 2547). See Russell v. Lake Sherwood Acres, Inc., 388
So.2d 822 (La.App. 1st Cir.1980). However, where the vendor had undertaken an
obligation incidental to the sale with respect to the thing sold and had failed to
perform that obligation, the 10 year period for nonperformance of obligations
might be applicable. Fuselier v. Ardoin, 266 So.2d 531 (La.App. 3d Cir.1972);
Primeaux v. Bennet Homes, Inc., 339 So.2d 1251 (La.App. 1st Cir.1976). Thus,
there was a strong incentive for plaintiffs who had, for whatever reason, been
slow to sue to argue that a delivery of defective goods constituted a full breach of
contract, rather than merely a violation of the seller's warranty against
redhibitory defects. Conversely, sellers would argue that redhibition should apply
in some cases clearly involving breach of contract.
Problems concerning improper performance of the obligation to deliver goods
conforming to the contract should not be confused with problems of defect. The
redhibitory action was never intended to encompass every dispute involving the
breach of the contract of sale. Revised Article 2529 clarifies the law by providing
that where the thing delivered is different from that called for in the contract, the
issue must be resolved in accordance with the articles governing effects of
conventional obligations -- i.e., breach of contract.
5.4 Time of Existence of Defect

Under Article 2530 of the Louisiana Civil Code of 1870, in order to institute the
redhibitory action the buyer had to prove that the particular defect on which the
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action is based had existed before the sale. The reason for this requirement is
based on the fact that under the scheme of the Louisiana Civil Code of 1870 risk
of loss of the thing sold was transferred from the seller to the buyer at the
moment of the sale. See former C.C.Art. 2467. Thus, unless the defect existed
before the sale, the seller did not have to answer therefor. See 2 Planiol et Ripert,
Trait lmentaire de droit civil, Part I at 820 (La.St.L.Ins. transl. 1959).
In the case of Rey v. Cuccia, 298 So.2d 840 (La.1974), the Louisiana Supreme
Court established the rule that where a thing becomes unfit for its intended
purpose during normal use, then it shall be presumed to be, and to have been
defective, regardless of whether the actual cause of the unfitness or defect is
proven or not. According to the court: However, even where the defect appears
more than three days after the sale ... if it appears soon after the thing is put
into use, a reasonable inference may arise, in the absence of other explanation
or intervening cause shown, that the defect existed at the time of the sale. Id. at
843.
The language of revised Article 2530 is consistent with the approach taken by
the Supreme Court in Rey. It is also consistent with the new rules concerning
transfer of risk. See revised Article 2467.
5.5 Liability of the Good Faith Seller

Before being amended in 1974, Article 2531 of the Louisiana Civil Code of 1870
provided as follows: The seller who knew not of the vices of the thing, is only
bound to restore the price, and to reimburse the expenses occasioned by the
sale, as well as those incurred for the preservation of the thing, unless the fruits,
which the purchaser has drawn from it, are sufficient to satisfy those expenses.
The 1974 amendment effected two significant changes: 1) It transformed the
obligation of the good faith seller to the buyer concerning redhibitory defects in
the thing sold into one of repairing or correcting defects that are remediable; 2)
In those cases in which the good faith seller was liable to the buyer under the
articles on redhibition, it gave the seller an action against the manufacturer
which could not be waived by contract.
Revised Article 2531 retains the changes effected by the 1974 amendment of
former Article 2531. It is fair to allow the good faith seller to correct remediable
defects in the thing sold. To provide otherwise would, in most cases, merely favor
the welsher and promote litigation. As the comments indicate, tender of the thing
to the seller for repair of defects is only required when the remedy sought is
Page 44 of 81
redhibition; [SIC? 'rescission' is the correct word] tender is not required to

maintain an action in quanti minoris. Broussard v. Breaux, 412 So.2d 176
(La.App. 3d Cir.1982).
The 1974 bill amending Article 2531 of the Louisiana Civil Code had a
companion bill amending Article 2521, which purported to explain the nature of
the seller's opportunity to repair. The legislature failed to pass the companion
bill, but the reference to Article 2521 was left in the bill that amended Article
2531. Accordingly, Article 2531, as it stood before this revision, contained a
meaningless reference to Article 2521. In Jordan v. Leblanc and Broussard Ford,
Inc., 332 So.2d 534 (La.App. 3d Cir.1976), the third circuit court of appeal
decided to treat the reference to Article 2521 as surplusage. Concerning the
right to repair the court stated: Until the legislature provides specific rules
concerning the terms and conditions of the right to repair, there is no alternative
in the judiciary but to decide each case on its peculiar circumstances with due
regard being given to the competing interests of the consuming public and the
retailers and manufacturers. Id at 538. See also Litvinoff, Sale and Lease In the
Louisiana Jurisprudence (2d ed. 1986).
In view of the fact that the reference to Article 2521 set forth in Article 2531 was
meaningless, it has been eliminated from the revised Article.
5.6 Notice of the Existence of Defect

A defect is, in a broad sense, a nonconformity in the thing sold. Since the good
faith seller has a right to correct remediable defects in the thing sold, it is
appropriate for the law to provide what amounts to a correlative duty in the
buyer to give the seller seasonable notice of the defects in the thing sold. That
requirement should not be unduly burdensome to the buyer, since, after all, it is
presumably in his best interest to have the defect repaired as soon as
practicable.
Where the buyer gives no notice, the seller's opportunity to correct remediable
defects may be lost, and this can be particularly undesirable in instances of
mechanical problems that are aggravated for lack of prompt remedial action. By
the time the buyer files a lawsuit, not infrequently the day before the applicable
prescriptive period expires, the opportunity to remedy the defect may, for all
practical purposes, be permanently lost to the seller. If the seller is to have the
right of repairing correctable defects, then it seems that the buyer ought to notify
him promptly, and not by the mere service of a lawsuit filed shortly before
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prescription runs.
The buyer's failure to give the seller notice as required by revised Article 2522
should preclude him from obtaining rescission in cases where the seller proves
that he has been damaged by the lack of seasonable notification.
5.7 Prescription
As the comments indicate, revised Article 2534 combines the substance of
Articles 2534 and 2546 of the Louisiana Civil Code of 1870. It changes the law in
part by eliminating the suspension of prescription provided by the source article
for certain cases where the seller is a nondomiciliary.
The starting point for the commencement of the prescriptive period for the
redhibitory action provided in revised Article 2534 parallels the policy decision
made by the Louisiana State Law Institute whereby delivery was made the
critical point for transfer of risk of loss from the seller to the buyer. That appears
also to be a more appropriate point from which to measure a limitation period,
since before delivery the buyer is generally unaware of defects in the thing sold,
and would, therefore, have no reason motivating him to exercise the redhibitory
action.
The third paragraph of the source provision, whereby prescription against a
nondomiciliary seller is suspended when the latter has absented himself before
the expiration of the year following the sale, has been eliminated. That
provision, somewhat discriminatory against the non-domiciliary seller, makes
little sense in the contemporary business world, where the interstate transaction
is an everyday occurrence. At any rate, the buyer cannot be seriously prejudiced
by the seller's absence, since under Article 3462 of the Louisiana Civil Code
liberative prescription is interrupted by the filing of a lawsuit against the obligor.
5.8 Multiple Sellers And Multiple Buyers
I. THE LOUISIANA CIVIL CODE OF 1870

The Louisiana Civil Code of 1870 contained two articles arguably dealing with
the divisibility of the redhibitory action: Articles 2538 and 2539. Strictly
speaking, they did not address the issue of the divisibility vel non of the action in
redhibition. While Article 2538 proclaimed that the action in redhibition is not
divisible among the heirs of the purchaser, that statement seems to have been
more of a doctrinal statement than a rule of law. The actual rule provided by
Article 2538 was that all heirs of the purchaser must concur in the redhibitory
action, and no one of them can bring it for his part only. While that mandatory
Page 46 of 81
concurrence on the part of the creditors characterizes indivisible actions -- see

C.C. Article 1819 (1984) -- it is not a trait exclusive to actions where the object is
indivisible. Thus, for instance, in the area of redemption, and again in that of
lesion, while the seller's right may involve the return of a divisible thing -- say
100 bushels of corn -- or the payment of a supplement to the purchase price -which would of course be divisible--, the buyer, in each instance, has a right to
compel the concurrence of all coheirs of the seller. See C.C.Arts. 2582, 2600
(1870).
The second of the articles of the Civil Code of 1870 that arguably dealt with
divisibility of the redhibitory action -- Article 2539 -- provided: The redhibitory
action may be brought against the heirs of the vendor collectively, or against one
of them, at the choice of the purchaser. Article 2539 was ambiguous in that it
failed to provide whether one of several heirs of the seller could be sued for the
whole in redhibition, or for his pro-rata share or part only. However, in
accordance with general principles, and bearing in mind the fact that the object
of the redhibitory action is a divisible thing -- i.e., the return of the price -- it
would seem that the heir should only be liable for his part. See C.C. Arts. 1796,
1815, 1817 (rev. 1984).
II. LOUISIANA JURISPRUDENCE

Louisiana courts did not have an opportunity to rule on the divisibility of the
redhibitory action. Articles 2538 and 2539 of the Louisiana Civil Code of 1870
were never judicially interpreted. In view of the lack of jurisprudence on
divisibility in the area of redhibition, it is in order to examine the case law
concerning divisibility of its twin warranty action: eviction.
In the area of eviction, Louisiana courts have in a number of instances ruled on
the issue of the divisibility of the warranty action. The early case of Schultz v.
Ryan, 131 La. 78, 59 So. 21 (1912), involved the question whether one of several
co-sellers could be held as warrantor of the entire title. The court held that,
while each co-seller warranted the entire title, the obligation of returning the
price was divisible. According to the court: The deed of Stephens is the joint
deed of Jones, Lamar, and Robertson (the co-seller), with full warranty of title.
Such being the case, Jones was the warrantor of the entire title ... It might be
well to add that the reason why the obligation of a joint vendor is held to extend
to the entire title is that this obligation is from its very nature indivisible; but
that this reason no longer applies when it comes to reimbursing the price, for
then the obligation, being a mere money obligation is necessarily divisible. Id. at
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22.
Soule v. West, 185 La. 655, 170 So. 26 (1936), involved a petitory action by the
heirs of the vendors of an immovable seeking to be recognized as the owners of
certain property. The court held that they were bound by the act of their
ancestor and held for the defendant. In the course of its opinion the court stated:
The obligation of joint vendors to maintain the vendee in peaceable possession
is an indivisible one, though their obligation to respond in money for the
purchase price is divisible. Id. at 30.
Collins v. Slocum, 317 So.2d 672 (La.App. 3d Cir.1975) involved an action by a
buyer against co-sellers seeking rescission of the sale of a lot and damages for
the cost of building a home on the lot. Citing Schultz v. Ryan, supra, and Soule
v. West, supra, as authority, the court held that the co-sellers were not solidarily
liable for the return of the purchase price. According to the court: Joint owners
of immovable property are not subject to solidary judgment for recovery of the
purchase price. A joint sale of land gives rise to only joint obligations of
warranty. Collins v. Slocum, supra, at 682. With respect to the damage award,
on the other hand, the court held all co-sellers liable in solido to the buyer. Id.
Thus, Louisiana courts appear to have reached a result strikingly similar to that
of French jurisprudence and doctrine: Warranty qua warranty is an indivisible
obligation. Thus, all co-sellers owe this warranty in toto and it is insusceptible of
division among them. Concerning the obligation of returning the purchase price
a different rule obtains, in view of the different nature of the obligation. Since
the obligation of returning the price is a monetary obligation, and monetary
obligations are necessarily divisible, the obligation of returning the price is
divisible. Thus, co-sellers are not solidarily liable for the return of the purchase
price upon eviction of the buyer by someone with a superior title.
III. THE REVISION

As the comments indicate, revised Article 2538 changes the law in part by
providing that the warranty obligation of co-sellers in redhibition is divisible.
According to paragraph one of revised Article 2538: The warranty against
redhibitory vices is owed by each of multiple sellers in proportion to his interest.
Under Article 2538, all co-purchasers must concur in an action to rescind the
sale on account of a redhibitory vice. Any one of multiple co-purchasers may,
however, bring an action for reduction of the price in proportion to his interest.
Page 48 of 81
5.9 Redhibition of Matched Things Sold Together

While the source provision of revised Article 2540 was conceived with the
realities of early nineteenth century husbandry in mind, the principle contained
therein is still quite useful. Thus, while there may not be very many purchases of
a team of oxen or mules in contemporary society, innumerable sales are made
every day involving separate things sold as a unit, as, for instance, the sale of
the various component parts of a personal computer -- disc drive, printer, etc. -sold as a package. Thus, the utility of the principle contained in the revised
Article cannot be doubted.
It is important, however, to distinguish between things sold jointly -- as a group
or package -- and things sold in bulk but independent of each other -- as, for
instance, ten thousand bars of soap. Revised Article 2540 does not apply to the
latter type of sale. That point was made clear by the Louisiana supreme court in
the case of Huntington v. Lowe, 3 La.Ann. 377 (La.1848), where the court stated:
The rule that the redhibitory vice of one of several things sold together gives rise to the
redhibition of all, applies to a limited class of cases; those where one of the things would not
have been bought without the other. The illustrations given in the Code are a pair of matched
horses or a yoke of oxen. The rule is obviously a reasonable one, and we have borrowed it from
the Roman law. Quum autem jumenta paria veneunt, edicto expressum est ut, cum alterum in
ea causa sit ut redhibere debeat, utrumque redhibeatur; in qua re tam emptori quam venditori
consulitur, dum jumenta non separantur. But when things are independent of each other, the
redhibitory action lies for that which is affected by the redhibitory vice. The example given by
the civilians is a lot of unmatched horses or a flock of sheep.
Id. at 379-380.
5.10 Quanti Minoris

The buyer's action for a reduction of the purchase price, or quanti minoris, is
derived from the Roman actio aestimatoria sive quanti minoris. At Roman law,
the actio aestimatoria sive quanti minoris was brought in instances where the
buyer, instead of suing for a rescission of the sale, chose to demand a reduction
in the purchase price. When that action was brought, it was in the power of the
iudex to rescind the sale. See Hunter, A Systematic and Historical Exposition of
Roman Law 505 (1897).
As the comments indicate, in an action for quanti minoris, as a general rule, the
measure of damages is the difference between the sale price and the price a
reasonable buyer would have paid for the thing had he known of the defects. See
Capitol City Leasing Corp. v. Hill, 404 So.2d 935 (La.1981). While that rule
works fairly well in sales of movables, it is difficult to apply in sales of immovable
property. In view of that difficulty, Louisiana courts have held that, where a
Page 49 of 81
reduction in price of an immovable is warranted, the measure of damages is the

amount necessary to convert an unsound structure into a sound one. Lemonier
v. Coco, 237 La. 760, 112 So.2d 436 (La.1959); Lemoine v. Hebert, 395 So.2d
353 (La.App. 1st Cir.1980); Cook v. Highland Park Const. Co., 168 So.2d 825
(La.App. 2d Cir., 1964); Pursell v. Kelly, 139 So.2d 12 (La.App. 4th Cir.1962).
Under revised Article 2541, as under the source provision, a buyer may seek a
reduction of the price even when the redhibitory defect is such as to give him
the right to obtain rescission of the sale. Article 2541 also preserves the rule
that in an action for redhibition the court may limit the buyer's remedy to a
reduction of the price.
5.11 Liability of the Seller in Bad Faith

The distinction made in the area of redhibition between good and bad faith
sellers -- insofar as liability, burden of proof, and remedies are concerned -- is
consistent with the overall policy of the Louisiana law of obligations of treating
the breach of the obligor in good faith in a different manner from that of the
obligor in bad faith. Thus, while the obligor in good faith who has failed to
perform his contractual obligations is liable only for those damages that were
foreseeable at the time of the agreement, the obligor in bad faith is liable for all
damages sustained by the obligee that flowed directly from the obligor's
nonperformance, regardless of whether those damages were foreseeable. See C.C.
Arts. 1996, 1997 (rev. 1984). See also C.C. Arts. 1759, 1983 (rev. 1984).
The Louisiana Civil Code of 1870 devoted four articles to the problem of the
liability of the bad faith seller, Civil Code Articles 2545-2548 (1870). Articles
2545 and 2547 attempted to make a distinction between the seller who knew of
the defect and withheld that information from the buyer, and the seller who
intentionally misled the buyer by making a false statement concerning a quality
of the thing that he knew it did not possess. In the case where the seller knew
and did not reveal, Article 2545 provided that the seller had to reimburse the
price and expenses, plus damages and attorney's fees. On the other hand, for
the case of the seller who intentionally misrepresented, Article 2547 referred the
situation to the law of fraud, adding that, depending on the circumstances, the
seller might be liable to the buyer in redhibition or for a reduction of the price,
and for damages, including reasonable attorneys fees. Revised Article 2545
provides that both these kinds of bad faith sellers are liable for return of the
price plus interest thereon and reimbursement of expenses, plus damages and
attorney fees. DOESN'T SAY THAT RHN APPLIES!
Page 50 of 81
PRESUMPTION OF KNOWLEDGE; PROFESSIONAL SELLERS AND

NATIONAL DISTRIBUTORS
Pothier's dictum spondet peritiam artis -- that is, that by exercising his trade a
manufacturer represents that he has the skill of one learned in his art and is for
that reason presumed to know of the defects in the things he sells -- , since first
expounded by a Louisiana court in Doyle v. Fuerst and Kramer, 129 La. 838, 56
So. 906 (1911), has become a veritable rule of Louisiana law. It would be
superfluous to indulge in citations on this point, as the decisions based on the
presumption of knowledge that burdens the makers of things are myriad. That
being the case, the famous presumption should be given legislative recognition.
That is precisely what revised Article 2545 does in its second paragraph.
Pothier cast the same presumption upon professional sellers and modern French
jurisprudence goes along with that extended scope. Louisiana courts have not
yet reached that point, however. See Redhibition: An Argument for the Adoption
of a Professional Seller Standard for Automobile Dealers, 43 La.L.R. 1101
(1983). Neither does this revision.
5.12 Exclusion Or Limitation of Warranty

While the warranty that protects the buyer against redhibitory vices in the thing
sold is subject to waiver, it is well established that three elements must exist
before a waiver is held to be effective:
1) the waiver must be clear and unambiguous;
2) the waiver must be contained in the sale and -- where there is one -- the chattel mortgage
document; and
3) the waiver must either be brought to the buyer's attention or explained to him.
See Hob's Refrigeration v. Poche, 304 So.2d 326 (La.1974); Roy v. Cuccia, 298
So.2d 840 (La.1974); Prince v. Paretti Pontiac, 281 So.2d 112 (La.1973); Media
Prod. v. Mercedes-Benz of North America, 262 La. 80, 262 So.2d 377 (La.1972).
Contractual provisions such as no warranties of any kind or character and
sold as is have repeatedly been held not to have satisfied the requirement that
the terms of the waiver shall be clear and unambiguous with respect to the
warranty of fitness. See Dunlap v. Chrysler Motors, 299 So.2d 495 (La.App. 4th
Cir.1974); Lee v. Blanchard, 264 So.2d 364 (La.App. 1st Cir.1972); McLain v.
Cuccia, 259 So.2d 337 (La.App. 4th Cir., 1972); Juneau v. Bob McKinnon
Chevrolet, 260 So.2d 919 (La.App. 4th Cir.1972); Stumpf v. Metairie Motors
Sales, 212 So.2d 705 (La.App. 4th Cir.1968).
Page 51 of 81
As the comments indicate, revised Article 2548 incorporates the rule of that
jurisprudence into the text of the Civil Code in order to make it clear that a
waiver of warranty may be invalidated without proving fraud on the part of the
seller where the Article's guidelines for waiver of warranty are not met.
It is worth noting that in Andrus v. Cajun Insulation Co., Inc., 524 So.2d 1239
(La.App. 3d Cir.1988), a case involving breach of the warranty of fitness in a
lease of movable property (mobile telephone equipment), the court refused to
enforce a waiver of warranty clause, stating: It seems clear to us that the
validity of the waiver of the expressed and implied warranties of the Civil Code
articles governing sales and leases need not be reached where the thing sold or
leased is totally and admittedly unfit for the purpose intended. In our view, to
allow a lessor in such a case to take advantage of a general disclaimer of
warranty while, at the same time, requiring the lessee to perform his duty of
paying the lease rentals for the entire duration of the lease, is simply against
public policy. It seems to us that in such circumstances an error of law must be
presumed, such as to invalidate the contract. Id. at 1244-1245.
As the Andrus Court candidly admitted, the Andrus decision was contrary to the
holding of the Louisiana Supreme Court in Louisiana National Leasing Corp. v.
A.D.F. Service, Inc., 377 So.2d 92 (La.1979). It seems, however, that where the
thing is utterly useless for its intended purpose one is confronted with a clear
situation of failure of cause, for in such an instance the reason for the lessee's
(or buyer's) consent to enter the agreement disappears. See La.C.C. Arts. 19661967 (rev. 1984); 1 Litvinoff, Obligations 499 (1969).
Thus, the Andrus decision is perfectly compatible with general principles
governing contractual relations under Louisiana law.
The right of subrogation to his vendor's rights in warranty that the buyer has
under revised Article 2548 parallels the right given to the evicted vendee under
Article 2503 of the Louisiana Civil Code of 1870 and of this revision. In a
concurring opinion to the Louisiana Supreme Court's decision in Media
Production Consultants, Inc. v. Mercedes-Benz of North America, 262 La. 80,
262 So.2d 377 (La.1972), Justice Dixon argued that the subrogation rights of the
evicted vendee under Article 2503 should be available to the vendee of a thing
that has a redhibitory vice. According to that opinion: Under C.C. 2503, the
buyer is subrogated to the seller's rights and actions in warranty. If C.C. 2503 is
applicable, plaintiff Media is subrogated to Cookie's rights against MBNA. C.C.
2503 should be applicable, even though found in the section of the code dealing
Page 52 of 81
with warranty against eviction. This court recognized its applicability in dicta in
McEachern v. Plauche Lumber & Construction Co., Inc., 220 La. 696, 57 So.2d
405, 408 (1952). See also 14 Tul.L.Rev. 470; 23 Tul.L.Rev. 119, 140. This
principle, long recognized as applicable to the warranty of quality, should be
available to the plaintiff. 262 So.2d at 382.
5.13 The Warranty of Fitness

Since 1900, Louisiana courts have held that a warranty of fitness is implied in
every sale. The first decision so holding appears to have been Fee v. Sentell, 52
La.Ann.1957, 28 So. 279, 282 (1900), in which the Louisiana Supreme Court
stated: We are only announcing a principle which no one denies when we state
that the vendor, unless warranty is waived, warrants the thing sold as fit for the
particular purpose for which it was bought. For almost seventy-five years
thereafter, Louisiana courts alluded to the existence of a warranty of fitness in
Louisiana, without, however, attempting to distinguish that warranty from the
Civil Code warranty against redhibitory defects. See, e.g., Crawford v. Abott
Automobile Co., L.T.D., 101 So. 871 (1924); Jackson v. Breard Motor Co., Inc.,
167 La. 857, 120 So. 478 (1929); Falk v. Luke Motor Company, Inc., 237 La. 982,
112 So.2d 683 (La.1959); Bartolotta v. Gambino, 78 So.2d 208
(La.App.Orl.Cir.1955); Cosey v. Cambre, 204 So.2d 97 (La.App. 1st Cir.1967);
Craig v. Burch, 228 So.2d 723 (La.App. 1st Cir.1969); Radalec Inc. v. Automatic
Firing Corporation, 228 La. 116, 81 So.2d 830 (La.1955); Media Production
Consultants, Inc. v. Mercedes-Benz of North America, Inc. et al., 262 La. 80, 262
So.2d 377 (La.1972).
While only a handful of the above-cited cases alludes to any legislative authority
for the warranty of fitness, it seems quite clear that in the mind of the judges the
Civil Code Articles on redhibition created a warranty of fitness, seemingly
indistinguishable from the warranty against latent defects. See, for example,
Media Production Consultants, Inc. v. Mercedes-Benz of North America, Inc. et
al., 262 La. 80, 262 So.2d 377 (La.1972), where the court talked about the
existence of a statutory warranty of fitness which could be no other than the
warranty against latent defects (redhibition). According to the court: The
jurisprudence is well settled that warranty limitation provisions in automobile
manuals and similar documents delivered with the vehicle have no effect upon
the statutory warranty of fitness ... Louisiana has aligned itself with the
consumer protection rule, by allowing a consumer without privity to recover,
whether the suit be strictly in tort or upon implied warranty ... We see no reason
Page 53 of 81
why the rule should not apply to the pecuniary loss resulting from the purchase
of a new automobile that proves unfit for use because of latent defects. Id. at
380-381.
In two cases, both decided in 1974, the Louisiana Supreme Court identified a
warranty of fitness as -- seemingly -- separate, though not unrelated to, the Civil
Code warranty against redhibitory defects. Rey v. Cuccia, 298 So.2d 840
(La.1974); Hob's Refrigeration and Air Conditioning, Inc. v. Poche, 304 So.2d 326
(La.1974).
Rey involved the sale of a camper-trailer that had come apart shortly after the
buyer put it to use. While the supreme court categorically declared that under
Louisiana law the seller is bound by an implied warranty that the thing sold is
free of hidden defects and is reasonably fit for the product's intended use, (Rey
at 842) the court failed to clearly delineate the parameters of the warranty of
fitness. Under Rey there is a certain symbiotic relationship between the warranty
of fitness and redhibition. According to the court: The buyer must prove that
the defect existed before the sale was made to him. Article 2530. However, if he
proves that the product purchased is not reasonably fit for its intended use, it is
sufficient that he prove that the object is thus defective, without his being
required to prove the exact or underlying cause for its malfunction. Rey at 843.
Similarly, in Hob's Refrigeration and Air Conditioning, Inc., v. Poche, 304 So.2d
326, 327 (La.1974), the supreme court stated: In Louisiana sales, the seller is
bound by an implied warranty that the thing sold is free of hidden defects and is
reasonably fit for its intended use. ... a waiver by the purchaser of the lawcreated implied warranty of fitness in his favor cannot be regarded as waived in
the absence of clear and express agreement on his part.
Following the Louisiana Supreme Court's decisions in Rey and Hob's, the
Louisiana appellate courts treated the warranty of fitness as if it were part and
parcel of the warranty against redhibitory vices. Typical of this approach was the
decision in Acadiana Health Club v. Hebert, 469 So.2d 1186 (La.App. 3d
Cir.1985). Acadiana involved a sale and installation of carpet. The court held
that the fact that the plaintiff had used the carpet in its health club for over five
years and was still using it at the time of the trial showed that it was not
altogether unsuitable to its purpose. According to the Court: In the present
case, the defects in the manufacture of the carpet were not such as to render it
useless or its use inconvenient to the degree that it was altogether unsuitable to
its purpose ... Under the circumstances, the most which plaintiff was entitled to
Page 54 of 81
was a reduction in price. Id. at 1191.
THE WARRANTY OF FITNESS AT COMMON LAW: FROM CAVEAT

EMPTOR TO THE ENACTMENT OF THE U.C.C.
Prior to 1815 there was no implied warranty of fitness at common law; in fact,
there was no implied warranty of any sort, so it behooved the buyer to heed the
traditional warning of the law: Caveat Emptor. 1 Harris & Squillante, Warranty
Law In Tort and Contract Actions, 288 (1989). At the outset, the action in
warranty was conceived of as an action in tort. 1 Williston, The Law Governing
Sales of Goods at Common Law and Under the Uniform Sales Act. 506 (1948).
Even today some courts continue to hold that an action in warranty is actually
in tort. See Standard v. Meadors, 347 F.Supp. 908 (N.D.Ga.1972); Public Service
Co. v. Black & Veatch Consulting Engineers, 333 F.Supp. 538 (N.D.Okla.1972).
Occasionally one hears the compromise statement that an action in warranty
invokes a hybrid liability under tort and contract. See McDaniel v. Baptist
Memorial Hospital, 352 F.Supp. 690 (W.D.Tenn.1971); Maynard v. General
Electric Co., 350 F.Supp. 949 (S.D.W.Va., 1972).
A significant inroad on the rule of caveat emptor was made in 1815 in the
English decision of Gardiner v. Gray, 4 Camp. 144, 171 Eng.Rep. 46 (K.B.1815).
In that case, Gardiner had bought silk of waste grade from Gray. However, silk
of an even lower grade than waste was delivered. The plaintiff argued that he
was entitled to goods that could at least be sold under the contract description.
The court held that caveat emptor did not apply to a buyer who had not had an
opportunity to inspect the goods. According to Lord Ellenborough's opinion, a
purchaser cannot be supposed to buy goods to lay them on the dung heap. 4
Comp. at 145.
Writing in the latter years of the nineteenth century, the eminent Louisiana
jurist, Judah Benjamin, summarized the state of the law thusly: So far as an
ascertained specific chattel, already existing, and which the buyer has inspected,
is concerned, the rule of caveat emptor admits of no exception by implied
warranty of quality. But where a chattel is to be made or supplied to the order of
the purchaser, there is an implied warranty that it is reasonably fit for the
purpose for which it is ordinarily used, or that it is fit for the special purpose
intended by the buyer, if that purpose be communicated to the vendor when the
order is given.... Benjamin, A Treatise On the Law of Sales of Personal Property
738 (4th American ed. 1884).
The U.C.C. provides two different warranties concerning fitness: One is the
Page 55 of 81
fitness for ordinary purposes (which is included in the merchantability warranty)

and the other is fitness for a particular purpose known to the seller. U.C.C. 2314 provides in part:
(1) Unless excluded or modified (Section 2-316), a warranty that the goods shall be
merchantable is implied in a contract for their sale if the seller is a merchant with respect to
goods of the kind ...
(2) Goods to be merchantable must be at least such as ...
(3) Are fit for the ordinary purposes for which such goods are used ...
Section 2-315 adds:
Where the seller at the time of contracting has reason to know any particular purpose for
which the goods are required and that the buyer is relying on the seller's skill or judgment to
selector furnish suitable goods, there is unless excluded or modified under the next section an
implied warranty that the goods shall be fit for such purpose.
It is apparent that a tort-law approach prevails in the judicial interpretation of
the warranty of fitness under the U.C.C. Thus, for example, in innumerable
cases the unreasonably dangerous in normal use language of the Restatement
of Torts filters into the case law. See, e.g., Trabaudo v. Kenton Puritan Club, Inc.,
3 U.C.C.Rep.Serv.2d 89, 517 A.2d 706 (Del.1986); First Nat. Bank of Dwight v.
Regent Sports Corp., 42 U.C.C.Rep.Serv. 419, 619 F.Supp. 820 (N.D.Ill.1985). In
the same vein, clearly influenced by the language of the Restatement of Torts,
many decisions equate breach of the warranty of fitness with the existence of a
defect in the thing. See Union Supply Co. v. Pust, 25 U.C.C.Rep.Serv. 134, 583
P.2d 276 (1978); Dienno v. Libbey Glass Division, Owens Illinois, Inc., 4
U.C.C.Rep.Serv.2d 706, 668 F.Supp. 373 (D.Del.1987); Pennington Grain &
Seed, Inc. v. Tuten, 36 U.C.C.Rep.Serv. 458, 422 So.2d 948 (Fla. 1982); Rhodes
v. R.G. Industries, Inc., 40 U.C.C.Rep.Serv. 1668, 173 Ga.App. 51, 325 S.E.2d
465 (1984). It is also not infrequent to see courts undertaking a proximate cause
analysis in determining liability for breach of the U.C.C. warranty of fitness. See,
e.g., Mattos, Inc., v. Hash, 21 U.C.C.Rep.Serv. 473, 368 A.2d 993 (Md.1977).
When is a product unfit for its intended use under the U.C.C.? Perhaps the
best way of approaching that problem is to give examples of particular
applications of the warranty of fitness under the jurisprudence.
In Askew v. Howard-Cooper Corp., 263 Or. 184, 502 P.2d 210 (1972), it was held
that the servicing of heavy equipment by inserting oil at various points is part of
the intended use of the equipment. The Delaware Supreme Court in the case of
Rudolph v. Huckman, 267 A.2d 896 (Del.1970), held that a boat is not of
merchantable quality when because of numerous defects it cannot be used.
Page 56 of 81
Bindel v. Iowa Mfg. Co., 197 N.W.2d 552 (Iowa, 1972), holds that there is a
breach of the implied warranty of fitness where a rock-crushing machine is not
fit for use because it is dangerous in that a rotating axle protruding nine inches
is unguarded.
5.14 Revised Article 2524

Under revised Article 2524, The thing sold must be reasonably fit for its
ordinary use. As the comments indicate, under revised Article 2524 when the
thing sold is not fit for its ordinary use the buyer may seek dissolution or
damages even though the thing is free from any redhibitory defect. The buyer's
action in such a case is one for breach of contract under the general rules of
conventional obligations.
VI. Obligations of the Buyer

As provided in revised Article 2549, the buyer is bound to two principal
obligations: 1) payment of the price, and 2) taking delivery.
The seller has a right to be discharged from the burden of guarding the thing.
The buyer, thus, besides paying the price, must also promptly take possession of
the thing he has purchased. See 2 Planiol et Ripert, Trait lmentaire de droit
civil francais, Part I, at 849 (La.St.L.Ins. transl. 1959).
6.2 Interest
Revised Article 2553 provides: The buyer owes interest on the price from the
time it is due. Since in a contract of sale the object of the buyer's performance is
a sum of money, it would seem that, even in the absence of a particular provision
in the law of sales, interest on the price would be payable from the time the price
is due. Thus, Article 2000 of the Louisiana Civil Code, in pertinent part,
provides: When the object of the performance is a sum of money, damages for
delay in performance are measured by the interest on that sum from the time it
is due....
The principle of Civil Code Article 2000 found a particular application in Article
2553(3) of the Civil Code of 1870, which provided that the buyer owed interest on
the price from the date of the sale when the price is then due. Section 2 of
former Article 2553 provided for the payment of interest If the thing sold
produces fruits, or any other income. However, the Article did not say whether
in such instances interest runs from the date of the sale or from the time the
Page 57 of 81
price was due.

It is preferable to establish as a general rule that interest will be owed on the
price from the time it is due. That provides for certainty and uniformity, and is
also consistent with the general rule of Article 2000. If the parties wish to
stipulate that interest will run from some other time, or that it won't run at all,
they are, of course, at liberty to do so.
The reference to the Louisiana Consumer Credit Law, as it appeared in Article
2554 of the Civil Code of 1870, has been removed. It seems clear that the Civil
Code, as general law, is not intended to affect special laws when they provide
rules that are in conflict with the provisions of the code. Nevertheless, out of an
abundance of caution, comment (b) to revised Article 2553 makes it perfectly
clear that the draft article is not intended to affect dispositions on interest found
in special laws, including the Louisiana Consumer Credit Law.
6.3 Liability of the Buyer Who Fails To Take Delivery

When the buyer neglects to take delivery of the thing, the seller may sustain
special damages directly flowing from that breach, including a number of
expenses that may be incurred in connection with the preservation of the thing.
Thus, for instance, the seller may incur 1) transportation expenses, 2) storage
fees, 3) inventory taxes, and 4) miscellaneous overhead expenses. Since it is
perfectly predictable that the seller will sustain losses of the kind described
above as a result of the buyer's breach, it is reasonable to make the buyer
answerable for such losses. Thus, revised Article 2555 makes the buyer who fails
to take delivery liable for expenses incurred by the seller in preservation of the
thing and for other damages sustained by the seller.
While revised Article 2555 does not address the issue of mitigation, it is quite
clear that the seller -- like all obligees under Louisiana law -- has an affirmative
duty to mitigate the damages sustained by him as a result of the buyer's breach.
See C.C. Art. 2002 (rev. 1984). Normally, the seller will be expected to resell the
thing the delivery of which the buyer has refused to take. Where there is a ready
market for the thing involved, it is reasonable to measure the seller's damages for
the buyer's breach by the difference between the sale price and the market price
at the time of the breach. That has been the approach generally followed by
Louisiana courts. See Friedman Iron & Supply Co. v. J.B. Beard Co., 222 La.
627, 63 So.2d 144 (1953); Cyrus W. Scott Mfg. Co. v. Stoma, 10 La.App. 469,
121 So. 335 (La.App. 2d Cir.1929); Wertham Bag Co. v. Roanoke Mercantile Co.,
Page 58 of 81
157 La. 312, 102 So. 412 (La.1924); Woodstock Iron Works v. Standard Pulley
Mfg. Co., 115 La. 829, 40 So. 236 (La.1905). There are, however, some decisions
that hold that the critical time for calculating damages is the time of delivery.
Thus, in Mutual Rice Co. of Louisiana v. Star Bottling Works, L.T.D., 163 La.
159, 111 So. 661 (1927), the Louisiana Supreme Court stated: When a buyer
breaches the contract of sale, the measure of damages which the seller is
entitled to is the difference between the price stipulated in the contract and the
market price at which the goods can be readily sold at the time and place of
delivery; and it is the duty of the seller to minimize his loss by reselling the
goods as soon as practicable after the buyer has refused to accept. Id. at 663.
6.4 Dissolution of Sale For Nonpayment of Price

Revised Article 2561 is a particular application of the principle of the law of
obligations according to which in a commutative contract the obligations
assumed by the parties are correlative; accordingly, where one party fails to
perform, the other party may sue for dissolution of the contract. See C.C. Arts.
1911, 2013 (rev. 1984). Thus, for the case of a sale, revised Article 2561 provides
in part that where the buyer fails to pay the price the seller may sue for
dissolution of the contract.
Upon dissolution of the sale, the parties must be restored, as much as possible,
to their juridical status vis a vis the object of the sale as it stood before the sale;
in other words, they must be placed in their status quo ante. Ragsdale v.
Ragsdale, 105 La. 405, 29 So. 906 (La.1901); Cahow v. Hughes, 169 So. 801
(La.App. 1st Cir., 1936); Louis Werner Saw Mill Co. v. White, 205 La. 242, 17
So.2d 264 (La.1944). That means that the thing is returned to the seller, and,
where the buyer has paid a part of the purchase price, that part must be
returned to him. Sliman v. McBee, 311 So.2d 248 (La.1975). However, Louisiana
courts have held that, while ordinarily in an action to rescind the sale the
plaintiff seller must tender so much of the price as has been paid, he need not
make such a tender where it is likely that, upon final adjustment, nothing will be
owed the defendant. Succession of Delaneuville v. Duhe, 114 La. 62, 38 So. 20
(1905); Cappel v. Hundley, 168 La. 15, 121 So. 176 (1929).
Finally, it should be added that, while the subject of revised Article 2561 is
judicial dissolution, that Article does not negate the possibility that dissolution
might be effected through some other means provided by law. See C.C. Arts.
2013-2024 (rev. 1984).
Page 59 of 81
Article 2561 of the Civil Code of 1870 was amended by Acts 1924, No. 108 in
order to make the right to dissolve transferable. Before the amendment, the
established jurisprudence, as represented in the leading case of Swan v. Gayle,
24 La.Ann. 498, 499 (1872), asserted that the right to dissolve was personal to
the vendor, and therefore not transferable. In Louis Werner Saw Mill Co. v. White,
17 So.2d 264 (La.1944), the Louisiana Supreme Court took great care in
clarifying the legislative history of the article and the amendment. For that
reason the revised Article preserves the notion, although with some language
changes, in spite of the fact that some inferences from the rule might be seen as
obvious.
DISSOLUTION FOR NONPAYMENT: EXTENSION OF TIME IN SALE OF

IMMOVABLES
The Louisiana Civil Code of 1870 evinced a clear policy of protecting the buyer of
immovables from what, for want of a better word, may be described as the
vagaries of real estate financing. First of all, in Article 2561 it established the
principle of judicial dissolution for all sales of immovables. Secondly, under
Article 2562 the buyer in default could be granted an extension for payment of
the price, provided such term exceed not six months.
The latter significant protection of the buyer of immovable property may have
been justified in the days when long-term real estate loans were a rare
occurrence. Thus, a buyer who financed part of the purchase price of a farm
expecting to pay the balance out of the proceeds of a particular crop might not
be able to pay the balance -- and, consequently, might lose the property -- if, for
instance, 1) his crop did not produce as much cash as expected, due to an
unexpected change in market prices, 2) the vendee of his crop defaulted on the
payment of the price or refused to accept the crop, 3) his vendee's bank refused
to honor the vendee's drafts, or any number of other conceivable contingencies.
The redactors opted for making available to the buyer of immovable property a
judicial respite for payment, which was conceived of as a reasonable balance of
all the interests involved.
It is doubtful, however, whether the situation contemplated by the redactors of
the Louisiana Civil Code of 1870 obtains in the contemporary world, and in fact
the opposite situation is more common. Thus, for instance, where a homeowner
sells his home and finances part -- or all -- of the purchase price for the vendee,
the vendee's failure to pay installments when due could be financially
devastating to the homeowner-seller who is counting on the proceeds of the
Page 60 of 81
installment note to make it possible for him to discharge his own obligations. It
seems more equitable, therefore, to reduce the length of the term of respite that
may be awarded to a buyer of immovables by a Louisiana court from six months
to sixty days. Accordingly, revised Article 2562 reduces the maximum term of the
grace period that a court may award to sixty days.
The word summarily, used in Article 2562 of the Civil Code of 1870 regarding
dissolution of the sale, has been studiously avoided in revised Article 2562
because of its procedural implications. The French original uses the expression
tout de suite which, in the context of the French article, simply means that the
court may not grant to the buyer an additional time for payment. From a
procedural standpoint, when there is danger of the seller's losing the price and
the thing, he may sue for dissolution and request sequestration to forestall
materialization of the danger. See C.C.P. Art. 3571.
Under this revision as under prior law, in sales of movables a court is without
authority to grant the buyer an extension of time for payment of the price. See
revised Article 2564.
VII. Lesion
The ancient concept of lesion had its origin in the Roman concept of laesio
enormis, designed to protect the poor against the powerful (potentiores). See
Sohm, Institutes of Roman Law 403 (3d ed. 1907); Buckland, Textbook of Roman
Law, 483 (1921). Pothier, whose work provided many of the articles in the
Louisiana Civil Code, conceived of lesion as a vice of consent. The idea was
reflected in Article 1860 of the Civil Code of 1870, which provided that the action
for lesion was founded on its being the effect of implied error or imposition; for,
in every commutative contract, equivalents are supposed to be given.... See also
Pothier, A Treatise on the Law of Obligations or Contracts 120 (Evans transl.
1806).
Under Article 2589 of the Louisiana Civil Code of 1870, the vendor who had sold
an immovable for less than half of its value was conclusively presumed to have
acted in error; the presumption was juris et de jure. Louisiana courts have held
that a vendor who had sold immovable property for less than half of its value will
be regarded as having acted in error or as having been imposed upon by the
purchaser, regardless of whether such error or imposition existed as a matter of
fact. Foos v. Creaghan, 226 La. 619, 76 So.2d 907 (La.1954). Thus, the only
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question of fact to be decided in a suit to rescind a sale for lesion beyond moiety
is whether the vendor has in fact sold the immovable for less than half of its
value at the time of the sale. Montegut v. Davis, 473 So.2d 73 (La.App. 5th
Cir.1985); Foos v. Creaghan, supra.
Article 2593 of the Louisiana Civil Code of 1870 specified (1) which sales of
immovables were subject to lesion, and (2) what party to the sale transaction
was entitled to bring an action to rescind a sale on account of lesion. Article
2594, on the other hand, exempted judicial sales from rescission for lesion
beyond moiety. Revised Article 2589 effects a merger of Articles 2589, 2593, and
2594 of the Louisiana Civil Code of 1870, without changing the law. It is believed
that clarity will be served by the merger of those Articles.
7.2 Action Against the Vendee Who Has Resold the Immovable
The Articles of the Louisiana Civil Code of 1870 did not clearly stipulate the
rights of the vendor in a lesionary sale where the vendee had alienated the
property to a third party at the time the action in lesion was brought. After the
vendee alienates the property, he is no longer able to return the immovable. In
instances where the vendee who has resold the property has acted in good faith,
the Louisiana Supreme Court has required him to give to the vendor whatever
profits he may have realized in the second sale. See O'Brien v. LeGette, 254 La.
252, 223 So.2d 165 (1969).
As under prior law, revised Article 2594 provides that when the buyer has resold
the property the seller cannot bring an action for lesion against the second
vendee. The seller may, however, recover against the original vendee the profit the
latter made in the second sale, but such recovery may not exceed the
supplement the seller would have recovered if the original buyer had chosen to
keep the immovable. C.C. Art. 2594(rev. 1992).
7.3 Peremption of Action For Lesion

Not all civil codes have incorporated the notion of lesion beyond moiety. The
modern trend is to reject the concept of an objective lesion, couched in a
conclusive presumption if the price fits a legal formula -- such as that provided
by Article 1674 of the French Civil Code and Article 2589 of the Louisiana Civil
Code of 1870 -- in favor of a subjective test. Under the modern approach, the
action for lesion is not limited to sales of immovables, nor is the right of action
granted to the seller exclusively. See Article 138 of the German Civil Code, and
Article 21 of the Swiss Code of Obligations. Significantly, Article 21 of the Swiss
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Code provides a prescriptive period of one year for actions for lesion.
Revised Article 2595 makes the limitation period to bring an action for lesion a
peremption, rather than a prescription, and shortens the term to one year. The
shortening of the limitation period to bring actions to rescind sales on account of
lesion should further the policy of security of transactions and help in clearing
titles to immovable property. Concerning the problem of fraud, this Article does
not affect the remedies available elsewhere.
VIII. Sale With Right of Redemption

A sale made with a right of redemption is a sale made with a resolutory
condition that gives to the seller the right of rescinding the sale by returning to
the buyer the purchase price of the thing sold and his expenses. See C.C. Art.
2567 (1870 & rev. 1992); Borda, Tratado de Derecho Civil Argentino, Contratos, I
at 254 (1974). It derives from the Roman pactum de retrovendo by which the
seller reserved the right to rescind the sale if he could make restitution of the
price to the buyer. See II Gerard, Manuel de Droit Romain 765 (1978).
The effects of a stipulation of redemption are that during the period that the
right of redemption is reserved any acts of alienation or encumbrance affecting
the property entered into by the buyer are ineffective with respect to the seller,
should the latter choose to exercise the right of redemption during the time
stipulated. See C.C. Arts. 2572, 2588 (1870 & rev. 1992). Thus, during the
period allowed for redemption, the property is effectively placed out of commerce.
Revised Article 2567 reproduces the substance of the source provision without
changing the law. According to revised Article 2567, the right of redemption is
the right to take back the thing from the buyer.
Louisiana courts have recognized the fact that in many cases a sale with a right
of redemption is not, in fact, a transaction intended by the parties as translative
of ownership, but is rather one that is hypothecary in nature. Thus, the
jurisprudence has established the principle that where in a sale with the right of
redemption the seller continues in possession as owner during the period
allowed for redemption, the transaction will be regarded as a security agreement.
See Malbury v. Colbert, 105 La. 467, 29 So. 871 (1901); Woods v. Stoma, 242
So.2d 320 (La.App. 2d Cir.1970). Where that is the case, the court declares the
simulated alienation to be ineffective as a sale. See Malbury v. Colbert, supra.
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In some instances the fact that the transaction was made under great financial
stress on the part of the alleged seller is quite clear. See, for example, Delcambre
v. Dubois, 263 So.2d 96 (La.App. 3d Cir.1972).
Revised Article 2569 establishes that a transaction which purports to be a sale
subject to redemption is, in fact, a simulation when it is shown that the true
intent of the parties was to enter into a security agreement.
8.2 Liability For Deterioration At the Time of Redemption

Under Article 2578 of the Louisiana Civil Code of 1870, the buyer was liable to
the redeeming seller for deterioration of the thing sold if such deterioration was
caused by the buyer's fault, even though the fault might be but a very slight one.
That was the so-called culpa levissima of the Roman law. Revised Article 2578
replaces that unduly burdensome standard with the more realistic prudent
administrator standard, the bon pre de famille of French civil law.
The Louisiana Civil Code is replete with examples in which a duty of care in the
preservation of the thing is imposed on one who holds a thing subject to the
right of another. Thus, with respect to the negotiorum gestor, or manager of
another's affairs, Article 2298 provides: In managing the business, he is obliged
to use all the care of a prudent administrator. That standard of care is also
applicable to the buyer in the contract of rent of lands (C.C. Art. 2784); to the
depositary in a contract of deposit (C.C. Art. 2945); to the pledgee in a contract
of pledge (C.C. Art. 3167); and to all those who hold a thing that belongs to
another or is subject to another's rights (C.C. Arts. 1759, 1983 (rev. 1984)).
Before the 1984 obligations revision, the prudent administrator standard to
which all those who hold another's property or a common thing are subject was
explicitly spelled out in Article 1908 of the Louisiana Civil Code. That article
provided:
The obligation of carefully keeping the thing, whether the object of the contract be solely the
utility of one of the parties, or whether its object be their common utility, subjects the person
who has the thing in his keeping to take all the care of it that could be expected from a prudent
administrator.
This obligation is more or less extended with regard to certain contracts, the effect of which,
in this respect, are explained under their respective titles.
Although Article 1908 was repealed by the 1984 Obligations revisions, the ideas
that it expresses must still be considered to be part of Louisiana obligations law,
since the prudent administrator standard is a corollary of the overriding duty of
good faith. Since the duty of good faith has been expanded by the 1984 revision
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to encompass all obligations and not merely those arising from contracts -- see
Civil Code Article 1759 -- it seems quite clear that, far from abolishing it, the
revision has strengthened the prudent administrator standard.
It seems more in keeping with the reasonable expectation of the parties to
establish the prudent administrator standard as the applicable standard of care
to which the buyer must answer in redemption cases. Any higher standard would
be unduly unrealistic and burdensome. Accordingly, revised Article 2578
changes the law in part by introducing the prudent administrator standard as
the measure by which to gauge the buyer's conduct vis a vis the thing sold
pending redemption.
IX. Assignment of Rights

In his monumental treatise on the civil law, Planiol defines an assignment of
rights as follows: The assignment of credits is the contract whereby a creditor
voluntarily transfers his rights against the debtor to a third person who becomes
creditor in his place. The person who transfers takes the name of transferor or
assignor. The person who acquires the credit is the transferee or assignee. The
debtor against whom the credit exists and which is the object of the cession is
called the cede. Planiol et Ripert, Trait lmentaire de droit civil, Part 1, n. 1,
at 890 (La.St.L.Ins. transl. 1959). Revised Article 2642 provides in part: The
assignee is subrogated to the rights of the assignor against the debtor.
In early Roman law, obligations were regarded as strictly personal rights, and
therefore insusceptible of assignment. Even after transfer mortis causa of rights
was admitted by the law, the prohibition of assigning a credit or other
incorporeal by an act inter vivos persisted. The evasion of this prohibition
through the use of a special type of mandate, the procuratio in rem suam, is an
example of the ingenuity of the Roman legal mind.
In modern doctrine, an assignment of rights is viewed as a transaction whereby
a new creditor is substituted for the original one by way of a transfer. Where the
transaction involves the payment of a price in money, it is a sale. IV Messineo,
Manuale di Diritto Civile e Commerciale, vol. 2, Part II, Section 136 (8th ed.
1952).
The assignment may involve the transfer of a credit, but it may also involve any
other incorporeal, such as a copyright, a license, a patent, a real right, or the
like etc. The debtor's consent vel non to the transfer does not affect the validity of
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the assignment, since, as a general rule, the identity of the creditor should be
immaterial to the debtor who owes a performance. See Messineo, supra.
9.2 Delivery of Title

Louisiana jurisprudence has been to the effect that delivery of title between
transferor and transferee is essential to the validity of the assignment of the
right involved. In Scott v. Corkern, 231 La. 368, 91 So.2d 569, 571 (La.1956), the
Louisiana Supreme Court stated: Article 2642 of the Civil Code provides that
delivery of an assignment takes place as between transferrer and transferee by
the giving of title. Accordingly, a vesting of title in the transferee is essential to an
assignment. The court ignored its earlier decision in Marshall v. Parish of
Morehouse, 14 La.Ann. 689 (1859), which had held that a transfer of rights
without delivery of title was perfectly valid as between the transferor and the
transferee.
While the delivery of the title evidencing the claim is certainly an obligation
arising from the contract of assignment, the assignor's failure to deliver the
required instruments should not affect the validity of the assignment. Rather,
the assignee should be entitled to enforce his right to obtain the necessary
documentation by demanding specific performance and, where appropriate,
damages. Under revised Article 2654 the assignor of a right is obligated to deliver
to the assignee all documents in his possession that evidence the right. Failure
by the assignee to deliver such documents does not affect the validity of the
assignment.
9.3 Notification of the Debtor in Assignment of Rights
1. ARTICLE 2643 OF THE LOUISIANA CIVIL CODE OF 1870

Before its amendment in 1984 and 1985, Article 2643 of the Louisiana Civil
Code of 1870 provided: The transferee is only possessed, as it regards third
persons, after notice has been given to the debtor of the transfer having taken
place. The transferee may nevertheless become possessed by the acceptance of
the transfer by the debtor in an authentic act.
Article 2643 was amended in 1984, and again in 1985, in order to create certain
exceptions to the requirement of notification for the case of partial assignment.
As amended by Acts 1985, No. 97, former Civil Code Article 2643 read:
Art. 2643. Delivery as regards third persons, notice to debtor
The transferee is only possessed, as it regards third persons, after notice has been given to the
debtor of the transfer having taken place.
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The transferee may nevertheless become possessed by the acceptance of the transfer by the
debtor in an authentic act. A partial transfer and assignment is effective as to the debtor without
the necessity of giving notice thereof.
The legislative history of the amendments to former Article 2643 is obscure. The
enacting clause of Act 97 of 1985 does provide a clue, however, concerning
legislative intent. It states: To amend and reenact Civil Code Article 2643,
relative to the assignment or transfer of credits and other incorporeal rights, to
eliminate the requirement that a debtor consent to the assignment of part of a
debt to a third party, to provide for notice of partial transfer and assignment, and
to provide for related matters.
While it seems clear that the legislature did intend to eliminate the requirement
of notification in cases of partial assignment, the enacting clause appears to
indicate that the author of House Bill 562 of 1985, which became Act 97 of that
year, was of the opinion that the debtor's consent was also necessary for the
effectiveness of a partial assignment. This is a mistaken view. Under the civil law
as properly understood, the debtor's consent is never necessary; the debtor need
only be notified of the assignment.
2. PURPOSE OF NOTIFICATION; FRENCH DOCTRINE

According to French doctrine, the purpose of the Civil Code requirement that the
debtor be notified of the assignment is to let the debtor know that he has
changed creditors and to tell him who the new creditor is. See XIX BaudryLacantinerie et Saignat, Trait thorique et pratique de droit civil 813 (3d ed.
1908). The notification may be made by either the assignor or the assignee.
Ordinarily, the assignee will be more interested than the assignor in making
certain that the notification is effected, since it is only from the time that notice
is effected that the assignment will be effective vis--vis third parties. Id. at 815.
The requirement of notification in assignment cases, besides adding publicity to
the transaction, is an element of fairness which ought not be lightly altered. A
buyer who owes the price should know who the creditor is in order that he might
discharge the obligation by paying that party. There seems to be no logical or
policy reason for exempting partial assignments from the requirement of
notification.
3. DEBTOR'S CONSENT TO PARTIAL ASSIGNMENT OF A CREDIT

While a creditor may freely assign a credit without the debtor's consent, there
has been some question as to whether he may also -- in the absence of
agreement -- validly transfer only a part of the credit without such consent.
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At common law, partial assignments were unenforceable if the obligor objected

because of the rule against splitting the cause of action. Standard Discount Co.
v. Metropolitan Life Ins. Co., 321 Ill.App. 220, 53 N.E.2d 27 (1944). An added
reason given by most courts for the prohibition of partial assignment was that
such a practice had the potential of subjecting the debtor to a multiplicity of
suits. Andrews Elec. Co. v. St. Alphonse Catholic Total Abstinence Soc'y., 233
Mass. 20, 123 N.E. 103 (1919). However, the law, as a result of modern
procedural rules, has changed; the law is now to the effect that the partial
assignee may sue the debtor provided the procedural rules pertaining to joinder
of parties are complied with. See Schwartz v. Horowitz, 131 F.2d 506 (2d
Cir.1942); Zurcher v. Modern Mach. Corp., 24 N.J.Super. 158, 93 A.2d 778
(1952), affirmed 12 N.J. 465, 97 A.2d 437 (1953); Prudential Fed. Savings &
Loan Association v. Hartford Acc. & Indem. Co., 7 Utah 2d 366, 325 P.2d 899
(1958). According to one commentator: Today ... the partial assignee may sue at
law provided that all of the interested parties have been joined, or the assignee
complies with procedural rules that dispense with the necessity of joining other
partial assignees because it is fair to do so under the circumstances. Calamari
& Perillo, Contracts 755 (3d ed. 1987).
Louisiana courts have uniformly held that an obligation may not be partially
assigned without the debtor's consent. Mahaffey v. Benoit, 118 So.2d 162
(La.App. 1st Cir. 1960); Marmol v. Wright, 62 So.2d 528 (Orl.App. 1953); Salter v.
Walsworth, 167 So. 494 (La.App. 2d Cir.1936); Staples v. Rush, 99 So.2d 502
(La.App. 2d Cir. 1957); Red River Valley Bank & Trust Co. v. Louisiana Petrolithic
Const. Co., 142 La. 838, 77 So. 763 (1918); Meyer v. Vicksburg, Shreveport & P.
Railway Co., 35 La.Ann. 897 (1883); LeBlanc v. Parish of East Baton Rouge, 10
Rob. 25 (1845); Cantrelle v. LeGoaster, 3 Rob. 432 (1843); Miller v. Brigot, 8 La.
533 (1835). In Miller v. Brigot, supra, the Louisiana Supreme Court expressed
the rationale for the rule against partial assignments thusly:
No debtor is bound to pay a debt by portions, and it follows as a corollary, that no partial
transfer can be made by a creditor, so as to be binding on a debtor, even when notice is given,
except by express consent of the latter. 8 La. 536.
Concern over the debtor's exposure to a multiplicity of suits if partial
assignments were allowed has also been expressed in several of the above-cited
Louisiana cases. See, e.g., Marmol v. Wright, 62 So.2d 528 (Orl.App.1953).
Aside from procedural considerations, it is questionable whether, in the absence
of the debtor's consent, an obligation having a single debtor and creditor is
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capable of partial assignment under the substantive law of Louisiana. Article

1815 of the Louisiana Civil Code provides: An obligation is divisible when the
object of the performance is susceptible of division. An obligation is indivisible
when the object of the performance, because of its nature or because of the
intent of the parties, is not susceptible of division. Article 1816 adds: When
there is only one obligor and one obligee, a divisible obligation must be
performed as if it were indivisible.
Thus, it could be argued that under Articles 1815 and 1816 of the Civil Code, at
least in instances where there is only one obligor and one obligee, an obligation
may not be partially assigned without the debtor's consent, since in such
situations the obligation must be performed as if it were indivisible.
The law has been otherwise where the assignee is partially subrogated to a
particular obligation. That has been so, because the articles of the Louisiana
Civil Code appear to contemplate -- and allow -- that particular type of
assignment. See Civil Code Article 1827, comment (e), and Article 1826.
Paragraph two of Article 1826 provides: An original obligee who has been paid
only in part may exercise his right for the balance of the debt in preference to the
new obligee.
In Cox v. Heroman & Co., Inc., 298 So.2d 848 (La.1974), involving a situation of
partial subrogation, the Louisiana Supreme Court held that the rule against
partial assignments without the debtor's consent did not extend to cases where
subrogation -- whether legal or conventional -- was involved. According to the
Court:
There is a substantial conceptual difference between, on the one hand, an
assignment, which has the nature of the sale and acquisition of a credit so as to
permit its enforcement of the assignee, and, on the other hand a conventional
subrogation, which has for its primary purpose the negotiated discharge of a
debt due to the creditor. Civil Law Translations (Aubry & Rau, Obligations),
Section 321 (1965); Comment, 25 Tul.L.Rev. 358, 368-69 (1951). Thus, in a
subrogation the interest of a creditor (here, Reulet) in receiving payment of his
debt in return for subrogating the third party to his right to recover it, outweighs
the interest of the debtor (here, Cox) in avoiding the division of the debt he owes
into multiple claims, the policy of preventing partial assignments. No authority is
cited to us which prevents partial subrogation. The Civil Code, in fact, recognized
that a partial subrogation can take place in the case of a legal subrogation,
Article 2161, and that, in the case of both legal and conventional subrogation, a
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partial subrogation may take place, Article 2162.... We could find no decisions
which held that the consent of the debtor was necessary for the creditor to
subrogate part of the debt due by receiving payment from the third person. On
the other hand, we found decisions such as R.M.Walmsley & Co. v. Theus, 107
La. 417, 31 So. 869 (1902) and numerous collision insurer subrogation cases
which without discussion allowed a partial subrogation by the creditor
unconsented to by the debtor. 298 So.2d at 856.
The collision carrier subrogation cases alluded to in Cox are easily reconcilable
with the articles of the Louisiana Civil Code on indivisible obligations because in
the collision cases there is more than one obligor, and therefore the obligation
involved is not within the purview of Article 1816. But there would seem to be an
inconsistency in, on the one hand, allowing partial subrogation in cases where
there is one creditor and one debtor and yet, on the other, disallowing partial
assignment in such cases where there is no subrogation. If Cox was correctly
decided, then the only thing an assignor who wishes to assign a part of an
obligation without the debtor's consent need do is to grant a partial subrogation
to the assignee. The legislature's 1984 and 1985 amendments to former Civil
Code Article 2643 moreover, showed that the intent of the legislature was to
allow partial assignment without the debtor's consent. See Acts 1984, No. 921;
Acts 1985, No. 97. Revised Articles 2642 and 2643, conforming to a
contemporary commercial practice, permit validity of the partial assignment
without the consent of the debtor.
4. THE REVISION
Revised Article 2643 establishes the principle that, in order for an assignment of
a right to be binding on the debtor, he must have knowledge of the assignment.
Elementary notions of fairness compel such a result, for otherwise the debtor
could never be certain whether payment would bring about a discharge of the
obligation, since the original creditor might well no longer be the obligee of the
performance involved.
When the debtor has knowledge of the assignment, it seems useless to make him
accept by authentic act or give him formal acknowledgment of having received
notice of the assignment. Thus, under revised Article 2643, knowledge by the
debtor of the assignment binds the debtor.
With respect to third persons -- i.e., primarily the creditors of the assignor -revised Article 2643 continues the rule that the assignment is effective against
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such persons only after the debtor has received knowledge or notice of it; even
though in principle it is hard to see how the absence of a formal notice to the
debtor informing him of the assignment could prejudice them. The assignee may
not, of course, do -- or knowingly tolerate the doing of -- anything which will
deceive third persons into believing that the assignment has not taken place.
Thus, for instance, where the titles evidencing the debt are not delivered to the
assignee contemporaneously with the assignment, the assignee may be under a
duty to demand delivery of the titles; failure to do so may furnish the basis for
an estoppel to deny that the assignor was still the owner of the debt on grounds
of venire contra factum proprium, where third persons have relied to their
detriment on an apparent state of affairs that the assignee willingly or
negligently tolerated.
9.4 Warranty
The object of the warranty of the assignor of a credit right is merely the existence
of the right at the time of the agreement. He does not, therefore, warrant the
debtor's solvency or the collectability of the debt. 2 Planiol et Ripert, Trait
lmentaire de droit civil, Part I, at 904 (La.St.La.Ins. transl. 1959).
Since that warranty may be modified by agreement, it is possible for the assignee
to waive the limited warranty owed by the assignor. That might be done, for
instance, in case the right assigned were of doubtful soundness or subject to a
contingency that rendered it aleatory.
In Ratcliff v. McIlhenny, 157 La. 708, 102 So. 878 (La.1925), the Louisiana
Supreme Court held that the assignor of an option to buy immovable property
warrants only the existence of the option, but not the ability of the grantor of the
option to deliver title to the property.
With the exception of Ratcliff v. McIlhenny, supra, there have been no reported
decisions construing Articles 2647-49 of the Louisiana Civil Code of 1870 in over
100 years. Historically, the greater portion of the litigation in this area has dealt
with obligations in warranty of sellers of commercial paper. See, e.g., Hewitt v.
Waterman, 3 La.Ann. 716 (1848); Martin v. McMasters, 14 La. 420 (1840);
Barthet v. Andry, 14 La. 30 (1839); Romero v. Segura, 7 La. 307 (1834); Rippey v.
Dromgoole, 8 Mart. (O.S.) 709 (1820); Winston v. Tufts et al., 10 La.Ann. 23
(1855); Fonda v. Garland, 7 La.Ann. 201 (1852). That jurisprudence is now
inapposite, since the obligations in warranty of one who sells or otherwise
assigns negotiable instruments or other commercial paper are governed by R.S.
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10:3, especially R.S. 10:3-413 through 418.

Under revised Article 2646 an assignor of a right warrants the existence of the
right at the time of the assignment. The assignor does not warrant the solvency
of the debtor.
X. Giving in Payment
Giving in payment is a mode of sale in which a debtor gives a thing to his
creditor in payment of an antecedent debt. Revised Article 2655 defines giving in
payment as a contract whereby an obligor gives a thing to the obligee who
accepts it in payment of a debt. In such a transaction the debtor is the seller,
the creditor the buyer, and the price of the thing is the amount of the debt being
discharged. See 1 Litvinoff, Obligations -- 670 (1969); 6 Aubry & Rau, Cours de
droit civil franais 230, 238 (5th ed. 1920); 7 Planiol et Ripert, Trait pratique de
droit civil franais 658-663 (2d ed. 1954); 2 Planiol et Ripert, Trait lmentaire
de droit civil, Nos. 522, 528 (La.St.L.Ins. transl. 1959).
Giving in payment, or dation en paiement as it is more widely known in
Louisiana legal practice and in the civil-law world, is conceptually similar in
some respects to novation. But while in novation obligor and obligee contract for
a promise of giving something different in payment of a sum due, in giving in
payment one party delivers and the other accepts a thing in payment of a
preexisting debt. See 1 Litvinoff, Obligations 670-71 (1969); Dunaway v. Spain,
493 So.2d 577 (La.1986). It should be added that giving in payment has the
same extinctive effects as novation. See Litvinoff, supra, at 671.
The critical factor in determining whether the parties -- creditor and debtor -agreed to enter a giving in payment -- and therefor to extinguish the debt
involved -- is their intent. Dunaway, supra, at 579. Particular attention should
be given to the intent of the creditor, since the creditor is the party who has the
right to demand exactly what was due to him and need not accept the
substituted performance.
An act of giving in payment has the effect of transferring ownership of the thing
given in payment just like an ordinary sale. Quality Finance Co. of
Donaldsonville, Inc. v. Bourgue, 315 So.2d 656 (La.1975); Jones v. First National
Bank, Ruston, La., 215 La. 862, 41 So.2d 811 (La.1949). As in other sales, the
transfer of a thing in payment conveys the thing cum onere, that is, burdened
with any previously or subsequently recorded mortgages and other
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encumbrances. Quality Finance, supra; Third District Building Association v.

Forschler, 174 La. 828, 141 So. 849 (1932).
In hard economic times, giving in payment becomes a useful and convenient tool
for both lender and borrower of money secured by a mortgage on immovable
property. For the lender, it allows him to avoid the vagaries, expenses, and delays
of foreclosure and, frequently, intervening bankruptcy proceedings. For the
borrower, it extinguishes a debt that he can no longer afford to pay and may save
him from facing economic ruin or financial embarrassment. It is well to note,
however, that giving in payment is not without drawbacks. From the creditorlender's vantage point, aside from the possibility of a suit for revocation by the
seller on grounds of lesion, the creditor may face the possibility of having,
unbeknownst to him, assumed liability for monies borrowed by the debtor from
savings and loan institutions, pursuant to L.S.A. R.S. 6:824(A)(4). That section
presently provides:
(4) In every case in which property burdened with a mortgage or vendor's privilege in favor of
an association is sold, the effect of the sale, whether or not the payment of the mortgage or
vendor's privilege is assumed, constitutes the vendee as fully liable for the payment of the
amount due the association as if he had originally contracted the loan. However, where in order
to participate in or be eligible under any lending or financing program under the direction of or
authorized by any federal governmental department, agency, or corporation, it is necessary for
an association to use a standard mortgage form and promissory note, as for example, but not
limited to, standard mortgage forms of the Federal Home Loan Mortgage Corporation, then in
such event a borrower to whom the association loan is made shall repay the loan as provided in
such approved standard mortgage form.
The requirement of delivery for the perfection of a giving in payment is the most
significant difference between that transaction and other forms of sale. Under
both the regime of the Louisiana Civil Code of 1870 and that of the revised
articles on sales, a sale is normally perfected upon the mere consent of the
parties. Under revised Article 2656, on the other hand, delivery is essential to
the perfection of a giving in payment: Ownership is not transferred until delivery
is accomplished. See Durnford v. Brooks' Syndics, 3 Mart. (O.S.) 222 (1814);
Wilson v. Smith, 12 La. 375 (1838).
Otherwise, since giving in payment is a mode of sale, it follows that the rules
governing sales in general also apply to the giving in payment.
10.2 Giving in Partial Payment

For a long time the feasibility of effecting a partial giving in payment -- that is, of
entering into a dation en paiement that would only partially extinguish an
antecedent debt -- was a matter of considerable uncertainty. Presumably, since
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parties may make any type of agreement that they choose, provided that it is not
prohibited by law, it would seem that there would be no theoretical impediments
to their entering into a partial giving in payment, provided that the intent of the
parties to do so were clear.
The question of the validity of a partial giving in payment under Louisiana law
was put to rest by the Louisiana Supreme Court in the fairly recent case of
Dunaway v. Spain, 493 So.2d 577 (La.1986), where the court gave judicial
recognition to a partial giving in payment. In holding that a partial giving in
payment was perfectly valid under existing law, the court stated: Although we
have not found instances in the jurisprudence in which a thing was given to a
creditor in partial fulfillment of a debt, there is no logical reason why a debtor
and creditor cannot legally agree to such a transaction. Id. at 581.
When the parties enter into a partial giving in payment it is necessary to
determine the extent to which the antecedent debt is thereby discharged. If the
parties fail to stipulate the extent to which the antecedent debt is discharged,
then the courts must have a mechanism by which their presumed intent is to be
determined. Revised Article 2657 establishes a rebuttable presumption that the
parties intended a reduction equal to the fair market value of the thing given in
payment. That result is consistent with the holding in the Dunaway decision,
where the court determined the extent of the discharge by the fair market value
of the thing.
XI. Agreements Preparatory To the Sale

11.1 Introduction
The revision contains a new chapter devoted to contracts that frequently precede
acts of sale: the option, the contract to sell, and the right of first refusal. See
revised Articles 2620-2629. In the interest of clarity, and for systematic
purposes, it was deemed important to provide rules to govern those three
preparatory contracts in the same chapter.
11.2 The Option: General Principles

Louisiana courts have not been consistent in providing a definition of option
under Louisiana law. A line of decisions defines the option as: an offer, which
upon acceptance, ripens into a binding contract to buy and sell, and such
contract must be specific as to the thing, price and terms. McGill v. Gem
Builders, Inc., 393 So.2d 409, 411 (La.App. 1st Cir.1980); Herring v. Pollock, 339
So.2d 510 (La.App. 2d Cir.1976); McMikle v. O'Neal, 207 So.2d 922 (La.App. 2d
Page 74 of 81
Cir.1968). Other decisions have, on the other hand, labeled the option as a
contract. Deville v. Opelousas General Hospital, 432 So.2d 1131 (La.App. 3d
Cir.1983); Rogers v. Metrailer, 432 So.2d 390 (La.App. 1st Cir.1983); Moresi v.
Burleigh et al., 170 La. 270, 127 So. 624 (La.1930). In Rogers v. Metrailer, the
court defined the option as: an agreement by which one binds himself to
perform a certain act, usually to transfer property, for a stipulated price within a
designated time, leaving it to the discretion of the person to whom the option is
given to accept upon the terms specified. 432 So.2d 391.
While former Civil Code Article 2462 (1870) (as amended by Act 249 of 1910)
introduced the notion of the option to buy into the Louisiana Civil Code, that
code did not contain a definition of option in general until the revision of the law
of obligations in 1984. Current Article 1933 of the Louisiana Civil Code provides:
An option is a contract whereby the parties agree that the offeror is bound by
his offer for a specified period of time and that the offeree may accept within that
time. Thus, Article 1933 has adopted the contract notion of the option. The
characterization of the option as a contract rather than as a mere offer is very
significant. While a contract may be assigned and gives rise to rights and
obligations to the heirs and legatees of the parties to it, an offer expires at the
death of the offeror, does not pass to the heirs or legatees of the offeree, and
cannot be assigned. It should also be noted that the nontransferability rule
applies even with respect to irrevocable offers. See official comment b to Article
1933 of the Louisiana Civil Code.
Revised Article 2620 preserves the definition of the option as a contract. It also
adopts the rule developed by the Louisiana jurisprudence that prohibits
perpetual options. Thus, under the revised Article, the option must specify a
stipulated time as its term.
Revised Article 2620 also recognizes the fact that the option must be sufficiently
specific with respect to the thing offered for sale and the price that must be paid
therefor to allow for a contract to sell -- and, eventually a perfect sale -- to be
completed upon the optionee's election to exercise the option.
Revised Article 2620 also makes it quite clear that its provisions are applicable to
options to buy and sell. The source article -- Article 2462 of the Louisiana Civil
Code of 1870 -- was incomplete and confusing on this score.
11.3 Time When Option Becomes Effective

Revised Article 2621 provides, first of all, that the acceptance of an option is
Page 75 of 81
effective when received by the optionor. That result parallels the one reached
under Article 1934 of the Louisiana Civil Code for irrevocable offers. Bankston v.
Estate of Bankston, 401 So.2d 436 (La.App. 1st Cir.1981), and other cases
holding that an acceptance of an option is effective when notification thereof is
sent to the offeror are overruled. The same approach is taken by the Restatement
of Contracts, Second Section 63(b) (1981).
Like the source article -- Article 2462 of the Louisiana Civil Code of 1870 -revised Article 2621 provides that, upon acceptance, the option turns into a
contract to sell. Thus, an act of sale would still be needed in order to perfect the
sale. While the requirement of a further act following acceptance of the option
seems indispensable for immovables, it would also appear to make perfect sense
for the transfer of certain movables, such as a drilling rig or shares of stock. At
any rate, this is not a mandatory rule, and the parties are always at liberty to
provide otherwise in their agreement. See La.C.C. Arts. 7 (rev. 1987), 1983 (rev.
1984).
The second paragraph of revised Article 2621 provides that a rejection of an
option terminates the option. Thus, under that Article, upon the optionee's
rejection the option terminates, regardless of whether the time stipulated for
exercise of the option has expired. The weight of authority at common law is to
the effect that an option, supported by consideration, does not expire upon the
optionee's rejection. See J.R. Stone Co. v. Keate, 576 P.2d 1285 (Utah, 1978);
Ryder v. Wescoat, 535 S.W.2d 269 (Mo.Ct. of App.1976); Humble Oil & Refining
Co. v. Westside Inv. Corp., 428 S.W.2d 92 (Texas, 1968). The Restatement of
Contracts has codified that rule thusly: ... the power of acceptance under the
option contract is not terminated by rejection or counter-offer ... unless the
requirements are met for the discharge of a contractual duty. Restatement of
Contracts, Second, Section 37 (1981). However, at least one commentator
believes that it is quite doubtful whether the same result would obtain under the
U.C.C., particularly where the optionor has relied on the rejection. See
Farnsworth, Contracts 175 (1982). At civil law, the solution given by the revised
Article may be justified through application of general principles. Thus, upon
rejection of the option the optionee has taken a juridical position that he cannot
change without violating the overriding principle of good faith. See C.C. Arts.
1759, 1983 (rev. 1984). The optionee is precluded from attempting to exercise the
option thereafter by the principle of venire contra factum proprium.
Page 76 of 81
11.4 Warranty of The Assignor of An Option

Under revised Article 2622, the assignor of an option warrants the existence of
the option but does not warrant that the person who granted it can be required
to make a final sale. The revised Article changes the interpretation and
application of the law made by the jurisprudence in Ratcliff v. McIlhenny, 102
So. 878 (1925) and its progeny, since the Article provides that, if the grantor of
the option proves unable to make a final sale when the option is exercised by its
assignee, the assignee has against the assignor the same rights as a buyer
without warranty has against his seller; that is, the assignee of the option may
recover whatever he gave for the assignment, but he may not recover other
damages from the assignor.
In Lemoine v. City of Shreveport, 184 La. 221, 165 So. 873 (1936), the defendant
had assigned to the plaintiff without recourse a promissory note secured by a
mortgage on immovable property. Upon the plaintiff's inability to execute a
judgment on the note, he demanded from the defendant a return of the purchase
price of the note plus attorney's fees as stipulated in the note. The court held
that although the plaintiff was entitled to a return of the purchase price for
breach of warranty, he had no right to recover attorney's fees as stipulated in the
note, since the note was issued without recourse.
11.5 Contract To Sell: General Principles

The expression contract to sell has been adopted by Louisiana courts. A
contract to sell is an agreement to buy and sell where the parties are looking
forward to a sale to take place in the future, but which is not yet a sale and does
not transfer ownership. See Litvinoff, Of the Promise of Sale and Contract to
Sell, 34 La.L.Rev. 1017, 1068 (1974); Bornemann v. Richards, 245 La. 851, 151
So.2d 741 (1964); Scott v. Apgar, 238 La. 29, 113 So.2d 457 (1959); Davis v.
McCain, 171 La. 1011, 132 So. 758 (1931); Buckman v. Stafford, Derbes & Roy,
Inc., 167 La. 540, 119 So. 701 (1929).
The notion of the contract to sell in Louisiana law arose from Article 2462 of the
Civil Code of 1870, and is the same as a bilateral promise of sale. See Smith, An
Analytical Discussion of the Promise of Sale and Related Subjects, Including
Earnest Money, 20 La.L.Rev. 522, 529 (1960). Revised Article 2623 codifies the
expression contract to sell, but also preserves the notion of a bilateral promise
of sale.
Page 77 of 81
11.6 Deposit And Earnest Money

One of the strongest presumptions in Louisiana law is that any sum paid by the
buyer in connection with a contract to sell is earnest money, -- that is, a sum of
money given by the buyer to the seller with the understanding that the buyer
may validly recede from the contract by forfeiting that sum. That presumption
has traditionally applied unless the parties specifically stipulated to the contrary.
See Litvinoff, Of the Promise of Sale and the Contract to Sell, 34 La.L.Rev.
1017, 1073-1074 (1974). The presumption obtains even when the sum paid is
referred to by the parties as money given to bind the contract or as payment on
account of the purchase price. See Maloney v. Aschaffenburg, 143 La. 509, 78
So. 761 (1917); Haeuser v. Schiro, 235 La. 909, 106 So.2d 306 (1958); Ducuy v.
Falgoust, 228 La. 533, 83 So.2d 118 (1955); McCain v. Hicks, 150 La. 43, 90 So.
506 (1922). That jurisprudentially-created presumption had no basis in the
legislation and, in many cases, was in fact contrary to the intention of the
parties. Moreover, it frequently led to unconscionable and impractical results.
Revised Article 2624 abandons the presumption favoring earnest money adopted
by Louisiana courts for one more in tune with the presumptive intention of the
parties. Thus, under the draft article a sum of money paid in connection with a
contract to sell is presumed to be a deposit towards the purchase of the thing
involved. However, where the evidence indicates that the parties intended the
sum paid to be earnest money the presumption of deposit does not apply.
One of the most significant prior decisions on earnest money was that in the
case of Ducuy v. Falgoust, 228 La. 533, 83 So.2d 118 (1955), where a seller sued
for specific performance of a contract to sell immovable property. On original
hearing, the Louisiana Supreme Court held that the seller had to return to the
buyer the deposit, since the seller's title was unmerchantable. Upon the buyer's
application, the court granted a rehearing limited to the issue of whether the
buyer was entitled to double the deposit as liquidated damages.
After a detailed examination of earnest money under Roman and French law,
the court proceeded to determine whether the deposit involved in Ducuy was
earnest money under Article 2463 of the Louisiana Civil Code of 1870. The
language used in the contract to sell provided that: In the event ... the vendor
does not comply with this agreement to sell within the time specified, purchaser
shall have the right either to demand the return of double the deposit, or specific
performance. In the court's view, such a clause negatived any presumption that
the deposit was intended by the parties as earnest money. According to the
Page 78 of 81
court: Thus, it may be seen that the parties did not intend the deposit as
earnest. It was not given for the purpose of securing to the parties the privilege
of withdrawing from the contract, for neither was free to withdraw. Both
specifically reserved to themselves the right to demand specific performance, at
their option. 83 So.2d at 122-123 .
Although the above-quoted language suggests that the court would have ordered
specific performance of the contract to sell therein involved, it did not do so,
since it found that a cloud on the seller's title furnished grounds for dissolving
the contract to sell. With respect to the remedy to which the buyer became
entitled as a result of the seller's failure to deliver merchantable title, the court
stated: Consequently, inasmuch as the plaintiffs cannot specifically comply with
the agreement they entered into, being without a valid and merchantable title to
convey, the defendant is entitled to the return of the $780 deposited by him, plus
an equal amount as stipulated damages. 83 So.2d at 124.
The Ducuy court's assumption that a reservation of specific performance is
necessary in order to make that remedy available in cases where a deposit is
given in connection with a contract of sale is totally unwarranted. Nowhere in
the law is there a basis for establishing the presumption in favor of earnest
money which underlies that conclusion. The obligation to perform the contract to
sell arises by virtue of the contract itself, there being no need for a specific
reservation to that effect. See C.C. Art. 1986, 2046 (rev. 1984).
In addition, the court's characterization of the deposit in Ducuy as a stipulated
damages sum was totally unwarranted. That is so because, first of all, the
court made a specific factual finding that the buyer had given the sum involved
as a deposit on the purchase price and not as earnest money. Thus, Article
2463 of the Louisiana Civil Code of 1870 was inapplicable to that situation,
either directly or by analogy. Secondly, there was no basis in that case for
presuming that it was the intention of the parties for the sum deposited to
constitute a stipulated damages figure.
Accordingly, in instances where the sum given by the buyer in connection with
an agreement to purchase is indeed a deposit on the purchase price, the buyer,
in instances where the seller is unable or unwilling to transfer good title to the
property, should be allowed to recover whatever damages he has actually
sustained as a result of the seller's breach. On the other hand, in instances
where the sum given in connection with an agreement to purchase is, in fact,
earnest money, it makes perfect sense to regard this sum as liquidated damages
Page 79 of 81
when one of the parties is unable to perform for reasons other than a fortuitous
event. Revised Article 2624 follows that approach.
11.7 Right of First Refusal: General Principles

A right of first refusal, or pacte de preference, may be defined as a promise
whereby the promisor obligates himself to give the promisee a first choice to
make a certain transaction should the promisor ever decide to make that
transaction. See Litvinoff, Consent Revisited: Offer Acceptance Option Right of
First Refusal and Contracts of Adhesion in the Revision of the Louisiana Law of
Obligations, 47 La.L.Rev. 753 (1987). See also 2 Litvinoff, Obligations 187-188
(1975). Thus, in the law of sales, a right of first refusal is a promise to offer a
first chance to buy a thing to another when and if the seller desires to sell that
thing.
Promises involving rights of first refusal, or preemption, were once fairly common
in situations where the vendor of a thing wished to preserve the opportunity of
repurchasing it in the future if the vendee ever wanted to put it up for sale.
Thus, Article 1072 of the Civil Code of Austria provides: A person who sells
property upon the condition that the buyer must offer it for sale to him in the
event that the buyer wishes to sell it again has a right of preemption.
While there exist certain similarities between the option and the right of first
refusal, upon closer scrutiny it seems quite clear that there are marked
differences between the two types of agreement. Thus, while the grantor of an
option to buy is unconditionally bound to sell the thing to the optionee from the
time the optionee elects to accept the offer contained in the option, the grantor of
a right of first refusal is only conditionally bound: all that the promisor of a right
of first refusal promises is to offer the property to the promisee if the promisor
ever wishes to sell it. See Litvinoff, Consent Revisited: Offer Acceptance Option
Right of First Refusal and Contracts of Adhesion in the Revision of the Louisiana
Law of Obligations, 47 La.L.Rev. 753-754 (1987).
Revised Article 2625 defines the right of first refusal as an agreement whereby a
party commits himself not to sell a certain thing without first offering it to a
certain person. That Article makes it crystal clear that the right of first refusal
may be enforced by specific performance.
11.8 Time Limitations For Exercising Options And Rights of First Refusal
While Louisiana jurisprudence asserted that rights of first refusal for a perpetual
or indefinite term were null -- see, e.g., Crawford v. Deshotels, 359 So.2d 118
Page 80 of 81
(La.1978) -- there was no legislation or jurisprudence limiting the length of the

duration of an option or a right of first refusal. A limitation on the duration of
options and rights of first refusal is desirable, since options and rights of first
refusal take valuable property out of commerce, frequently for fairly lengthy time
periods. Revised Article 2628 places a limitation on the duration of options and
rights of first refusal on immovable property by setting their maximum length at
10 years.
Page 81 of 81

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Loyola University New Orleans, College of Law

Sales and Leases: January 2015 -- Prof. Gruning

Sale: Expos des Motifs

5.3 Thing Not of the Kind Specified in the Contract................................................................................................32

Sale: Expos des motifs (2012 dwg)

Louisiana Civil Code.

Book III. Of the Different Modes of Acquiring the Ownership of Things:

1.2 Applicability of Other Titles

1.3 Purchase of a Thing Already Owned

1.4 Sale of a Future Thing

1.5 Sale of a Hope

revolve around the extension of the risk assumed by the parties.

1.6 Price: Essential Elements

paragraph presents no problem if it is read as a reference to lesion. It is

1.7 No Price Fixed by the Parties

1.8 Price Left to Determination by Third Person

1.9 Sale of the Thing of Another

sale of a thing belonging to another is null.

1.10 Time of Transfer 0f Ownership

1.11 Time of Transfer of Risk

II. Sales of Movables

sales to be exclusively devoted to the sale of movable property. In this revision,

2.2 Additional Terms in the Acceptance

to the seller for a quantity of cellophane adhesive manufactured by the latter.

2.3 Obligation To Deliver Conforming Things

2.4 Buyer's Right of inspection

2.5 Acceptance And Rejection of Nonconforming Things

2.6 Partial Acceptance

commercial units and reject nonconforming ones. In case of partial acceptance

2.7 Merchant Buyer's Duty Upon Rejection

2.8 Purchase of Substitute Things By the Buyer

2.9 Cure of Nonconformity

2.10 Ownership of Things in Transit

2.11 Judicial Dissolution

2.12 Payment Against Documents

It is important to note, however, that even though in a documentary sale the

III. Sales of Immovables

3.2 Manners of Sale

methods of selling immovable property were recognized:

IV. Delivery and Eviction

4.2 Methods of Making Delivery

4.3 Retention of Possession By Seller; Presumption of Simulation

4.4 Incorporeals, Method of Making Delivery

4.5 Delivery Excused Until Payment of the Price

4.6 Condition of Thing At Time of Delivery

4.7 Eviction: General Principles

4.8 Modification Or Exclusion of Warranty

4.9 Transferring One's Rights To A Thing (Sale By Quitclaim Deed)

unsatisfactory approach to the question of good faith. In Board of

4.10 Rights of the Buyer Against the Seller in Case of Eviction

4.10 Restitution of Full Price Despite Deterioration

4.11 Call in Warranty

5.2 Apparent Defects

5.3 Thing Not of the Kind Specified in the Contract

In Runers v. Stran-Steel, 317 So.2d 657 (La.App. 3d Cir.1975), a case involving

5.4 Time of Existence of Defect

5.5 Liability of the Good Faith Seller

redhibition; [SIC? 'rescission' is the correct word] tender is not required to

5.6 Notice of the Existence of Defect

5.8 Multiple Sellers And Multiple Buyers

I. THE LOUISIANA CIVIL CODE OF 1870

concurrence on the part of the creditors characterizes indivisible actions -- see

II. LOUISIANA JURISPRUDENCE

III. THE REVISION