cable to two or more of the obligations, the performance shall be applied as follows: (1) If, at the time of performance, the intention or desire of the debtor that the performance should be applied to the extinction of any particular obligation, is manifested to the creditor, it shall be so applied. (2) If no such application is then made, the creditor, within a reasonable time after the performance, may apply it toward the extinction of any obligation, performance of which was due to him from the debtor at the time of the performance; except that if similar obligations were due to him both individually and as a trustee, he shall, unless otherwise directed by the debtor, apply the performance to the extinction of all such obligations in equal proportion. An application once made by the creditor may not be rescinded without the consent of the debtor. (3) If neither party makes an application within the time prescribed herein, the performance shall be applied to the extinction of obligations in the following order: (A) interest due at the time of the performance; (B) principal due at that time; (C) the obligation earliest in date of maturity; (D) an obligation not secured by a lien or collateral undertaking; (E) an obligation secured by a lien or collateral undertaking. If there is more than one obligation of a particular class the performance shall be applied to the extinction of all in that class ratably. Article B-Offer of Performance § 911. Extinction by offer An obligation is extinguished by an offer of performance, made in conformity to the rules herein prescribed, and with intent to extinguish the obligation. 912. Offer of partial performance An offer of partial performance is of no effect. § 913. Person required to make offer Only the debtor, or a person on his behalf and with his assent, may make an offer of performance. § 914. Person to whom offer may be made; place of offer An offer of performance shall be made to: (1) the creditor; (2) any one of two or more joint creditors; or (3) a person authorized by one or more of the creditors to receive or collect what is due under the obligation— if the creditor or authorized person is present at the place where the offer may be made; and if not, wherever the creditor may be found. § 915. Place of offer In the absence of an express provision to the contrary, an offer of performance may be made, at the option of the debtor: (1) at any place appointed by the creditor: (2) wherever the person to whom the offer ought to be made can be found; (3) if the person to whom the offer ought to be made can not with reasonable diligence be found within the Canal Zone, and within a reasonable distance from his residence or place of business, or if he evades the debtor, then at his residence or place of business, if the same can, with reasonable diligence, be found within the Canal Zone; or (4) if this cannot be done, then at any place within the Canal Zone. § 916. Time of offer (a) Where an obligation fixes a time for its performance, an offer of performance may be made only at that time. (b) Where an obligation does not fix the time for its performance, an offer of performance may be made at any time before the debtor, upon a reasonable demand, has refused to perform. § 917. Offer of compensation for delay Where delay in performance is capable of exact and entire compensation, and time has not been expressly declared to be of the essence of the obligation, an offer of performance, accompanied with an offer of compensation, may be made at any time after it is due, but without prejudice to any rights acquired by the creditor, or by any other person, in the meantime. § 918. Good faith of offer An offer of performance shall be made in good faith, and in such manner as is most likely, under the circumstances, to benefit the creditor. 919. Conditional offer An offer of performance shall be free from any conditions which the creditor is not bound, on his part, to perform. § 920. Ability and willingness to perform An offer of performance is of no effect if the person making it is not able and willing to perform according to the offer. § 921. Production of thing to be delivered The thing to be delivered, if any, need not in any case be actually produced, upon an offer of performance, unless the offer is accepted. § 922. Separation of thing offered A thing, when offered by way of performance, may not be mixed with other things from which it cannot be separated immediately and without difficulty. § 923. Offer dependent upon performance of condition When a debtor is entitled to the performance of a condition precedent to, or concurrent with, performance on his part, he may make his offer to depend upon the due performance of that condition. § 924. Written receipt A debtor may require from his creditor a written receipt for any property delivered in performance of his obligation. § 925. Extinction of pecuniary obligation by offer, deposit, and notice An obligation for the payment of money is extinguished by a due offer of payment, if the amount is immediately deposited in the name of the creditor, with a bank of deposit within the Canal Zone, of good repute, and notice thereof is given to the creditor. § 926. Objections to mode of offer All objections to the mode of an offer of performance, which the creditor has an opportunity to state at the time to the person making the offer, and which could be then obviated by him, are waived by the creditor, if not then stated. 8927. Title to thing offered The title to a thing duly offered in performance of an obligation passes to the creditor, if the debtor at the time signifies his intention to that effect. § 928. Custody of thing offered A person offering a thing, other than money, by way of performance, shall, if he means to treat it as belonging to the creditor, retain it as a depositary for hire, until the creditor accepts it, or until he has given reasonable notice to the creditor that he will retain it no longer, and, if with reasonable diligence he can find a suitable depositary therefor, until he has deposited it with the depositary. § 929. Effect of offer on interest and incidents of obligation An offer of payment or other performance, duly made, though the title to the thing offered is not transferred to the creditor, stops the running of interest on the obligation, and has the same effect upon all its incidents as a performance thereof. § 930. Retention of thing offered and refused If anything is given to a creditor by way of performance, which he refuses to accept as such, he is not bound to return it without demand; but if he retains it, he is a gratuitous depositary thereof. Article C-Prevention of Performance or Offer § 941. Causes excusing performance or offer The want of performance of an obligation, or of an offer of performance, in whole or in part, or any delay therein, is excused by the following causes, to the extent to which they operate: (1) when the performance or offer is prevented or delayed by the act of the creditor, or by the operation of law, even though there may have been a stipulation that this shall not be an excuse; (2) when it is prevented or delayed by an irresistible, superhuman cause, or by the act of public enemies of the United States, unless the parties have expressly agreed to the contrary; or (3) when the debtor is induced not to make it, by any act of the creditor intended or naturally tending to have that effect, done at or before the time at which the performance or offer may be made, and not rescinded before that time. 942. Performance prevented by creditor If the performance of an obligation is prevented by the creditor, the debtor is entitled to all the benefits which he would have obtained if it had been performed by both parties. 8943. Performance prevented by cause excusing it If the performance of an obligation is prevented by any cause excusing performance, other than the act of the creditor, the debtor is entitled to a ratable proportion of the consideration to which he would have been entitled upon full performance, according to the benefit which the creditor receives from the actual performance. § 944. Refusal to accept performance before offer A refusal by a creditor to accept performance, made before an offer thereof, is equivalent to an offer and refusal, unless, before performance is actually due, he gives notice to the debtor of his willingness to accept it. Article D-Accord and Satisfaction 8 951. Accord defined An accord is an agreement to accept in extinction of an obligation, something different from or less than that to which the person agreeing to accept is entitled. § 952. Effect of accord Though the parties to an accord are bound to execute it, it does not extinguish the obligation until it is fully executed. § 953. Satisfaction defined Acceptance, by the creditor, of the consideration of an accord extinguishes the obligation, and is called satisfaction. § 954. Part performance Part performance of an obligation, either before or after a breach thereof, when expressly accepted by the creditor in writing, in satisfaction, or rendered in pursuance of an agreement in writing for that purpose, though without any new consideration, extinguishes the obligation. Article E-Novation § 961. Novation defined Novation is the substitution of a new obligation for an existing one. § 962. Methods of novation Novation is made by the substitution of: (1) a new obligation between the same parties, with intent to extinguish the old obligation; (2) a new debtor in place of the old one, with intent to release the latter; or (3) a new creditor in place of the old one, with intent to transfer the rights of the latter to the former. § 963. Applicability of contract rules Novation is made by contract, and is subject to all the rules concerning contracts in general. 8964. Rescission of novation When the obligation of, or an order upon, a third person is accepted in satisfaction, the creditor may rescind the acceptance if: (1) the debtor prevents the person from complying with the order or from fulfilling the obligation; or (2) at the time the obligation or order is received, the person is insolvent and this fact is unknown to the creditor; or (3) before the creditor can with reasonable diligence present the order to the person upon whom it is given, he becomes insolvent. Article F-Release § 971. Extinction of obligation by release An obligation is extinguished by a release therefrom given to the debtor by the creditor, upon a new consideration, or in writing, with or without new consideration. § 972. Extent of general release A general release does not extend to claims which the creditor does not know or suspect to exist in his favor at the time of executing the release, which if known by him must have materially affected his settlement with the debtor. 973. Release of joint debtor A release of one of two or more joint debtors does not extinguish the obligations of any of the others, unless they are mere guarantors; nor does it affect their right to contribution from him. CHAPTER 31-NATURE OF A CONTRACT SUBCHAPTER I-DEFINITIONS Sec. 1001. Contract defined. 1002. Essential elements of contract. SUBCHAPTER II-PARTIES 1021. Persons capable of contracting. 1022. Capacity of minors and persons of unsound mind. 1023. Identification of parties necessary. 1024. Contract for benefit of third person. SUBCHAPTER III-CONSENT 1041. Essentials of consent. 1042. Voidable consent. 1043. Causes defeating reality or freedom of consent. 1044. When causes exist. 1045. Duress. 1046. Menace. 1047. Kinds of fraud. 1048. Actual fraud. 1049. Constructive fraud. 1050. Actual fraud as question of fact. 1051. Undue influence. 1052. Kinds of mistake. 1053. Mistake of fact. 1054. Mistake of law. 1055. Mistake of foreign laws. 1056. Mutuality of consent. 1057. Communication of consent. 1058. Communication of acceptance of proposal. 1059. Completion of communication. 1060. Acceptance of proposal. 1061. Absolute or qualified acceptance. 1062. Time for revoking proposal. 1063. Method of revoking proposal. 1064. Ratification of voidable contract. 1065. Consent by acceptance of benefits. 1081. Object defined. SUBCHAPTER IV-OBJECT 1082. Requisites of the object. 1083. Impossibility defined. 1084. Unlawful, impossible, or unascertainable object. 1085. One of several objects unlawful. SUBCHAPTER V-CONSIDERATION 1101. Good consideration defined. 1102. Legal or moral obligation. 1103. Lawful consideration. 1104. Effect of illegal consideration. 1105. Executed or executory consideration. 1106. Executory consideration. 1107. Ascertainment of consideration. 1108. Impossibility of ascertaining consideration. 1109. Written instrument. 1110. Burden of proving want of consideration. Subchapter I-Definitions 8 1001. Contract defined A contract is an agreement to do or not to do a certain thing. § 1002. Essential elements of contract It is essential to the existence of a contract that there should be: (1) parties capable of contracting; (2) their consent; (3) a lawful object; and (4) a sufficient cause or consideration. |