Page 32 - Obligations & Contracts Module 1-2

*Requisites for Valid Payment/Performance

Time of payment - time stipulated

Effect of payment – extinguish obligation

*Except: court order to retain debt

*Substantial Performance

1. Attempt in Good Faith to perform without willful or intentional departure

2. Deviation is slight

3. Omission/Defect is technical or unimportant

4. Must not be so material that intention of parties is not attained

*Effect of Substantial Performance in Good Faith

1. Obligor may recover as though there has been strict complete fulfillment,

less damages suffered by the obligee

2. Right to rescind cannot be used for slight breach

*Special Rules/Forms of Payment - Special Forms:

a. Application of Payments – the designation of the debt which payment shall

be made, out of 2 or more debts owing the same creditor: stipulation or

application of party given benefit of period – OK; to be valid: must be

debtor’s choice or with consent of debtor