Obligations Subject to Term in Civil Code
Obligations Subject to Term or Deadline
Obligations subject to a term or deadline are governed by Civil Code articles 1125-1130. The Code does not define them.
Article 1125
Obligations for which compliance is designated a certain day are only payable when that day arrives.
These days are understood as those that must necessarily come, although we may not know exactly when.
If the uncertainty lies in whether or not the day will arrive, the obligation is conditional and shall be governed by the rules of the preceding section.
Article 1126
What would have been paid in advance in term obligations may not be repeated.
If the debtor paid without knowing the existence of the term, they are entitled to claim from the creditor the interest or fruits that the creditor received from the thing.
Article 1127
The appointment of a term in obligations is presumed to be for the benefit of both the creditor and the debtor, unless the wording or other circumstances indicate that it was made in favor of one or the other.
Article 1128
If the obligation does not specify a term, but the nature and circumstances make it apparent that a term was intended to be granted to the debtor, the court shall determine the duration of that term.
Courts will also set the length of time when it has been left to the will of the debtor.
Article 1129
The debtor will lose any right to the term:
- When, after the obligation is incurred, the debtor becomes insolvent, unless the debt is guaranteed.
- When the debtor does not provide the guarantees that were promised.
- When the debtor has impaired the guarantees after they were established, or when they disappear by accident, unless they are immediately replaced by new and equally secure guarantees.
Article 1130
If the term is indicated by days from a given date, that date will be excluded from the count, which should begin on the following day. These are obligations to which the parties have added an accidental element based on which the beginning of its effects is suspended or its effects cease upon the arrival or completion of the event.
What is the Term or Deadline?
It is a future event that is certain to occur. We know it will happen. For example, in the case of a date, it is certain that the date will come.
The difference between obligations subject to a term and those subject to a condition is that the former is certain and the latter is uncertain.
In an obligation subject to a term, the obligation will necessarily produce effects until it reaches the end, and then the obligation is extinguished.
The term may be initial (or suspensive) and final (or resolutory), indicating the time when the contract is extinguished and its effects cease.
We can also classify terms as regular, meaning that the obligation supports delay (i.e., it tells us the time we have to fulfill the obligation), or essential, which does not support delay because late performance would constitute a breach.
Finally, there is another classification of terms: certus quando, which means that the term is certain (every term is certain in itself because we know it will occur), and incertus quando, which is a term that is certain in itself but uncertain as to the time of its occurrence.
Legal Status of the Initial (Suspensive) Term
Is there an obligation before the term arrives? Yes, there is an obligation because we know the term will come. So we say that the obligation is constituted and born prior to the arrival of the term.
The legal position of the subjects of the obligation at this stage:
a) Creditor: The creditor has a right to credit, which is acquired when the obligation arises. However, they cannot exercise this right until the term occurs. The creditor may take protective actions to safeguard the claim. If the creditor dies, the receivable is transferred to their heirs, who can exercise it when the term arrives (unless the obligation is personal).
The same applies to the debtor.
Legal Status of the Final (Resolutory) Term
The consequence of the final term is the extinction of the obligation.
Scope: This type of term is very common in successive or long-lasting obligations.
It may appear explicitly in the contract or be implied. If it is neither expressed nor implied, the parties can go to court to determine the end of the obligation.
Effects: The major effect is extinction, which involves the termination of the legal relationship and the cessation of its effects. This effectiveness is not retroactive because the objective of the legal relationship is for it to produce effects until the term arrives. For example, in a lease, during the term of the contract, each party enjoys their respective rights, and at the end, these effects are not erased because neither party wishes them to be.