Nature and Effects of Obligations

In the conduct of its operations, a business is required to observe a certain standard of care depending on that prescribed by the law or what has been agreed upon. By default, a person who is obliged to give something is also required to take care of the item with the proper diligence of a good father of a family except if there is a different standard of care required by law or through a stipulation of the parties.

Similarly, a person who is obliged to perform an obligation is required to observe the diligence of a good father of a family if the law or contract does not state the diligence which is to be observed in the performance thereof.

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Sources of Obligations

There may be various sources of obligations, including moral, ethical, and legal. For the purpose of understanding business law, the focus is on legal obligations which may be enforced against another person through the regular courts.

There are five sources of legal obligations, namely: (1) law; (2) contracts; (3) quasi-contracts; (4) acts or omissions punished by law; and (5) quasi-delicts.[1]

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