Section 4: Confusion or Merger of Rights

Article 1275. The obligation is extinguished from the time the characters of
creditor and debtor are merged in the same person.
Article 1276. Merger which takes place in the person of the principal debtor or
creditor benefits the guarantors. Confusion which takes place in the person of
any of the latter does not extinguish the obligation.
Article 1277. Confusion does not extinguish a joint obligation except as regards
the share corresponding to the creditor or debtor in whom the two characters
concur.
Section 5: Compensation

Article 1278. Compensation shall take place when two persons, in their own
right, are creditors and debtors of each other.
Article 1279. In order that compensation may be proper, it is necessary:
1) That each one of the obligors be bound principally, and that he be at the
same time a principal creditor of the other;
2) That both debts consist in a sum of money, or if the things due are
consumable, they be of the same kind, and also of the same quality if the
latter has been stated;
3) That the two debts are due;
4) That they be liquidated and demandable’
5) That over neither of them there be any retention or controversy,
commenced by third persons and communicated in due time of the debtor.
Article 1280. Notwithstanding the provisions of the preceding article, the
guarantor may set up compensation as regard what the creditor may owe the
principal debtor.