Obligations Under California Law

California’s Civil Code, in Division 3, deals with obligations. Part 1, Title 2 concerns the interpretation of obligations. Chapter 3 sets forth conditional obligations. Section 1434 explains that an obligation is conditional, when the rights or duties of any party thereto depend upon the occurrence of an uncertain event.

Section 1435 states that conditions may be precedent, concurrent, or subsequent.

Section 1436 specifies that a condition precedent is one which is to be performed before some right dependent thereon accrues, or some act dependent is performed.

Section 1437 states that conditions concurrent are those which are mutually dependent, and are to be performed at the same time.

Section 1438 provides that a condition subsequent is one referring to a future event, upon the happening of which the obligation becomes no longer binding upon the other party, if he chooses to avail himself of the condition.

Section 1439 states that, before any party to an obligation can require another party to perform any act under it, he must fulfill all conditions precedent that are imposed upon himself; and must be able and offer to fulfill all conditions concurrent so imposed upon him on the like fulfillment by the other party, except as provided.

Section 1440 says that, if a party to an obligation gives notice to another, before the latter is in default, that he will not perform the same upon his part, and does not retract the notice before the time at which performance upon his part is due, the other party is entitled to enforce the obligation without previously performing or offering to perform any conditions upon his part in favor of the former party.

Section 1441 explains that a condition in a contract, the fulfillment of which is impossible or unlawful, within the meaning of the Article on the Object of Contracts, or which is repugnant to the nature of the interest created by the contract, is void.

Section 1442 requires a condition involving a forfeiture to be strictly interpreted against the party for whose benefit it is created.

Title 4 deals with the extinction of obligations and Chapter 5 is on novation. Section 1530 explains that novation is the substitution of a new obligation for an existing one.

Section 1531 explains that a novation is made by the substitution of a new obligation between the same parties, with intent to extinguish the old obligation; by the substitution of a new debtor in place of the old one, with intent to release the latter; or, by the substitution of a new creditor in place of the old one, with intent to transfer the rights of the latter to the former.

Section 1532 explains that novation is made by contract, and is subject to all the rules concerning contracts in general.

Section 1533 states that, when the obligation of a third person, or an order upon such person is accepted in satisfaction, the creditor may rescind the acceptance if the debtor prevents the person from complying with the order, or from fulfilling the obligation; or if, at the time the obligation or order is received, the person is insolvent, and this fact is unknown to the creditor, or if, before the creditor can with reasonable diligence present the order to the person upon whom it is given, he becomes insolvent.