Practice question
A debtor validly undertakes to manufacture equipment and agrees to a penalty for noncompliance. No express option to substitute payment for performance exists. The debtor prefers a more profitable customer and tenders only the penalty. Can the debtor compel acceptance as an agreed buyout under Article 1227?
- No; the necessary express reservation is absent
- Yes, every penalty is a unilateral buyout
- Yes, higher profit automatically discharges obligations
- Yes, tender makes the creditor’s performance right disappear
- Yes, a commercial debtor controls every remedy
Legal references
- Civil Code, Articles 1226-1230, 1701-1703, 2224-2235: https://lawphil.net/statutes/repacts/ra1949/ra_386_1949.html
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