Explanation of Article 207
This article addresses the statement of "how an obligation is extinguished," which are the ways in which an obligation is terminated. The article stipulates that an obligation is extinguished by "fulfillment," which is the debtor executing their obligation, and this is the natural way for an obligation to be extinguished, except in cases exempted by the article, which are:
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First: "Specific Performance," which is when the debtor executes their obligation specifically, meaning the debtor fulfills their obligation as agreed upon, and they are not allowed to refrain from fulfilling it, except in cases exempted by the article, which are: if the fulfillment is "impossible" or "without the creditor's consent," in these cases, the obligation is not extinguished.
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Second: "Fulfillment by Substitute," which is when the debtor executes their obligation by providing something other than what was originally committed to, provided the creditor consents. For example, if the debtor is obligated to deliver a car and instead offers a sum of money, and the creditor accepts, in this case, the obligation is extinguished.
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Third: "Set-off," which is the extinguishment of two opposing obligations to the extent of the lesser amount, and it may be a legal set-off or an agreed set-off.
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Fourth: "Novation," which is the extinguishment of an obligation by creating a new obligation in its place, and it may be a renewal of the debt or a renewal of the parties.
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Fifth: "Delegation in Fulfillment," which is when a person executes the obligation of another person, and it may be a full delegation or a partial delegation.
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Sixth: "Settlement," which is a contract that resolves the dispute, ends the litigation, and leads to the extinguishment of the obligation.
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Seventh: "Release," which is the creditor's waiver of their right to the debt, leading to the extinguishment of the obligation.
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Eighth: "Impossibility of Performance," which is when the execution of the obligation becomes impossible without any action by the debtor, leading to the extinguishment of the obligation.
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Ninth: "Extinctive Prescription," which is the lapse of the right to claim the debt due to the passage of time, leading to the extinguishment of the obligation.
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Tenth: "Death of the Debtor," which is when the debtor dies, leading to the extinguishment of the obligation, unless the debt is related to property, in which case it transfers to the debtor's heirs.
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Eleventh: "Death of the Creditor," which is when the creditor dies, leading to the extinguishment of the obligation, unless the debt is related to property, in which case it transfers to the creditor's heirs.
This article is considered one of the most important articles related to how an obligation is extinguished, and it clarifies the multiple ways an obligation can be extinguished.
Related To
Article 207
A deferred debt shall not become due upon the creditor’s death; it shall become due upon the debtor’s death, unless the debt is secured by an in-kind security, the heirs provide a sufficient in-kind or personal security, or the creditor agrees to keep his debt deferred.