TITLE XI

Suretyship

Chapter I

General Provisions

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Section 680 Suretyship is a contract whereby a third person, called the surety, binds himself to a creditor to satisfy an obligation in the event that the debtor fails to perform it.

A contract of suretyship is not enforceable by action unless there is some written evidence signed by the surety.

Section 681 Suretyship can be given only for a valid obligation.

A future or conditional obligation may be secured for the event in which it would have effect.

An obligation, resulting from a contract which under mistake or incapacity does not bind the debtor, can be validly secured if the surety at the time when he binds himself knows such mistake or incapacity.

Section 682 A person may agree to be surety for another surety.

If several persons make themselves sureties for the same obligation they are liable as joint debtors, even though they do not assume the suretyship in common.

Section 683 The suretyship without limitation covers interest and compensation due by the debtor on account of the obligation and all charges accessory to it.

Section 684 The surety is liable for the costs of action to be paid by the debtor to the creditor, but he is not liable for such costs if the action was entered without first demanding performance from him.

Section 685 If, on enforcement of the contract of suretyship, the surety does not perform the whole of the obligation of the debtor, together with interest, compensation and accessories, the debtor remains liable to the creditor for the balance.

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Chapter II

Effects before performance

Section 686 As soon as the debtor is in default, the creditor is entitled to demand performance of the obligation for the surety.

Section 687 The surety is not bound to perform the obligation before the time fixed for performance, although the debtor can no longer take advantage of a time of commencement or ending.

Section 688 When the creditor demands performance of the obligation from the surety, the latter may require that the debtor be first called upon to perform unless the debtor has been adjudged bankrupt, or his whereabouts in Thailand in unknown.

Section 689 Even after the debtor has been called upon as provided in the forgoing section, if the surety can prove that the debtor has the means to perform and that execution would not be difficult, the creditor must first make execution against the property of the debtor.

Section 690 If the creditor holds real security belonging to the debtor, he must, on request of the surety, have the obligation performed first out of the real security.

Section 691 If the surety is bound jointly with the debtor, he has not the rights mentioned in Sections 688, 689 and 690.

Section 692 An interruption of prescription against the debtor is also an interuption against the surety.

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Chapter III

Effects after performance

Section 693 The surety who has perfmed the obligation has a right of recourse against the debtor for the principal and interest, and for the losses or damages which he may suffer by reason of the suretyship.

He is subrogated to the rights of the creditor against the debtor.

Section 694 In addition to the defences which the surety has against the creditor, he can also set up defences which the debtor has against the creditor.

Section 695 The surety who neglects to set up against the creditor defences of the debtor loses his right of recourse against the debtor to the extent of these defences, unless he proves that he did not know of such defences and that his ignorance was not due to his fault.

Section 696 The surety has no righ of recourse against the debtor, if he performs the obligation without informing the debtor who, in ignorance or the fact, performs it.

In such case, the surety may have only an action for undue enrichment against the creditor.

Section 697 If, owing to the creditor's own acts, the surety cannot be subrogated wholly or partially into the creditor's rights, mortgages, pledges and preferential rights which have been given before or at the time of suretyship for the performance of the obligation, the surety is discharged to the extent of the injury suffered by him thereby.

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Chapter V

Extinction of Suretyship

Section 698 The surety is discharged as soon as the obligation of the debtor is extinghuised by any cause whatsoever.

Section 699 The suretyship for a series of transactions without limit or time in favour of the creditor can be terminated by the surety for the future by giving notice to the creditor to that effect.

In such case the surety is not liable for transactions done by the debtor after the notice has reached the creditor.

Section 700 If suretyship has been given for an obligation which is to be performed at a definite time, and the creditor grants to the debtor an extension time, the surety is discharged.

The surety is not discharged if he agreed to the extension of time.

Section 701 The surety may tender performance of the obligation to the creditor from the time when performance is due.

If the creditor refuses to accept performance, the surety is discharged.

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Tags: civil law, contract law

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