Table of Contents

SECTION II - OF NOVATION

Art. 173. Novation takes place in three ways;
1st. When a debtor contracts a new debt to his creditor, which new debt is substituted to the old one which is extinguished;
2dly. When a new debtor is substituted to the old one which is discharged by the creditor;
3dly. When by the effect of a new engagement, a new creditor is substituted to the old one, with regard to whom the debtor is discharged.

Art. 174. Novation can take place only between persons capable of contracting; it is not presumed, the intention of making it must appear clearly on the face of the act.

Art. 175. Novation by the substitution of a new debtor, may take place without the concurrence of the former debtor.

Art. 176. The delegation by which a debtor gives to the creditor, another debtor, who obliges himself towards such creditor, does not operate a novation, unless the creditor has expressly declared that he intends to discharge his debtor who has made the delegation.

Art. 177. The creditor who has discharged the debtor by whom a delegation has been made, has no recourse against that debtor, if the person delegated becomes insolvent, unless the act contains an express reservation to that purpose, or unless the delegated person was in a state of open failure or insolvency at the time of the delegation.

Art. 178. The mere indication made by a debtor of a person who is to pay in his place does not operate a novation.
The same is to observed of the mere indication made by the creditor of a person who is to receive for him.

Art. 179. The privileges and mortgages of the former credit, are not transferred to that which is substituted to it, unless the creditor has expressly reserved them.

Art. 180. When novation takes place by the substitution of a new debtor, the original privileges and mortgages of the creditor cannot be transferred on the property of the new debtor.

Art. 181. When novation takes place between the creditor and one of the debtors in solido, the privileges and mortgages of the former credit, can be reserved only on the property of him who contracts the new debt.

Art. 182. By the novation made between the creditor and one of the debtors in solido, the co-debtors are discharged.
The novation that takes place with regard to the principal debtor, discharges the securities.
Nevertheless, if the creditor has required in the first case, the accession of the co-debtors, or in the second, that of the securities, the former credit subsists, if the co-debtors or the securities refuse to accede to the new arrangement.

 

SECTION III - OF THE REMISSION OF THE DEBT

Art. 183. The remission of the debt is either conventional, when it is expressly granted to the debtor, by a creditor having a capacity to alienate;
Or tacit, when the creditor voluntarily surrenders to his debtor, the original title under private signature constituting the obligation.

Art. 184. The surrender of the original title under private signature, to one of the debtors in solido, forms a presumption of the remission of the debt, or of its payment, in favor of his co-debtors; but proof may be adduced to the contrary.

Art. 185. The remission or conventional discharge in favor of one of the co-debtors in solido, discharges all the others, unless the creditor has expressly reserved his right against the latter.
In the latter case, he cannot claim the debt without making a deduction of the part of him to whom he has made the remission.

Art. 186. The remission of the thing given as a pledge does not suffice to raise a presumption of the remission of the debt.

Art. 187. The remission or conventional discharge granted to a principal debtor, discharges the securities;
That granted to the securities does not discharge the principal debtor;
That granted to one of the securities does not discharge the others.

Art. 188. What the creditor has received from one of the securities, in discharge of his suretyship, must be imputed to the debt and go towards the discharge of the principal debtor and the other securities.

 

SECTION IV - OF COMPENSATION

Art. 189. When two persons are indebted to each other, there takes place between them a compensation that extinguishes both the debts, in the manner and cases hereafter expressed.

Art. 190. Compensation takes place of course by the mere operation of law, even unknown to the debtors; the two debts are reciprocally extinguished as soon as they exist simultaneously to the amount of their respective sums.

Art. 191. Compensation takes place only between two debts having equally for their object, a sum of money or a certain quantity of comsumable things of one and the same kind, and which are equally liquidated and demandable.

Art. 192. The days of grace are no obstacle to the compensation.

Art. 193. Compensation takes place whatever be the causes of either of the debts, except in case:
1st, Of a demand of a restitution of a thing of which the owner has been unjustly deprived;
2d, Of a demand of restitution of a deposit and of a loan for use;
3d, Of a debt which has for its cause, aliments declared not liable to seizure.

Art. 194. The surety may oppose the compensation of what the creditor owes to the principal debtor.
But the principal debtor cannot oppose the compensation of what the creditor owes to the surety.
Neither can the debtor in solido oppose the compensation of what the creditor owes to his co-debtor.

Art. 195. The debtor who has accepted purely and simply the transfer which a creditor has made of his rights to a third person, can no longer oppose to the latter the compensation which before the acceptance, he might have opposed to the former.
As to the transfer which has not been accepted by the debtor, but which has been notified to him, it hinders only the compensation of credits posterior to that notification.

Art. 196. When the two debts are not payable both at one and the same place, the compensation of them cannot be opposed, without allowing for the expence of the remittance.

Art.  197. When there are several compensable debts due by the same person, the same rules are observed for the compensation, as are established for imputation in article the 156th of this title.

Art. 198. Compensation cannot take place to the prejudice of the rights acquired by a third person; therefore he who being a debtor, is become a creditor since the attachment made by a third person in his hands, cannot in prejudice to the person seizing, oppose compensation.

Art. 199. He who has paid a debt which was of right extinguished by compensation, can no longer in exercising the credit which he has not offered in compensation, avail himself to the prejudice of a third person of the privileges and mortgages that were attached to it, unless he had a just cause to be ignorant of the credit which was to compensate his debt.




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