TITLE XX

INSURANCE

CHAPTER 1

GENERAL PROVISIONS

table of contents

Section 861. A contract of insurance is one in which a person agrees to make compensation or to pay a sum of money in case of contingent los or any other future event specified in the contract, and another person agrees to pay therefor a sum of money, called premium.

Section 862.

translation of sections 862 to 897 not available

CHAPTER II

INSURANCE AGAINST LOSS

PART I

General Provisions

table of contents

​ 

Gambling laws. Gambling agreement to risk (win or lose) something of value (money) on the outcome of a future subject of chance (event) not under his control or influence in the hope to receive a desired return (prize) on his risky action.

TITLE XVIII

GAMBLING AND BETTING

table of contents

Section 853. No obligation is created by gambling or betting. What has been given by reason of the gambling or betting may not be demanded back on the ground that no obligation existed.

These provisions apply also to an agreement whereby the losing party, for the purpose of satisfying a gambling debt or a bet, incurs an obligation towards the other party.

Section 854. A lottery contract or a raffle contract is binding if the lottery of the raffle is specially authorized or ratified by the Government. In all other cases the provisions of Section shall apply.

Section 855. Subject to the provisions of Sections 312 and 916, every bill or other given in whole or in part for any money won by gambling or betting, or for repaying money lent for such gambling or betting shall be invalid.

For the purpose of this provision, any money lent to a person while gambling or betting the time or place of such play shall be presumed to have been lent for such gambling or betting.

table of contents

TITLE XIX

CURRENT ACCOUNT

table of contents

Section 856. A contract of current account is one in which two person agree that henceforth or for a determinate period the amount of all or some only of the obligation arising from transactions between them shal be set off and that the balance only shall be paid.

Section 857. The entry of a bill in a current account is presumed to be made on condition that the bill will be paid. If the bill is not paid, the entry may be cancelled.

Section 858. If the parties have not fixed the period for striking the balance, such period shall be six months.

Section 859. In the absence of anything apearing to the contrary, either party may at any time terminate the contract of current account and have the balance struck.

Section 860. The difference, if not paid, bears interest from the day when the balance was struck.

table of contents

TITLE XVII

COMPROMISE

table of contents

Section 850. A compromise is a contract whereby the parties settle a dispute, whether actual or contemplated by mutual concessions.

Section 851. A contract of compromise is not enforceable by action unless there be some written evidence signed by the party liable or his agent.

Section 852. The effect of the compromise is to extinguish the claims abandoned by each party and to secure to each party the rights which are declared to belong to him.

table of contents

​ 

A broker is an individual or firm that acts as an intermediary between a buyer and seller and gets a commission, typically for bringing together the seller of a property with a buyer of a property, brokerage in Thai civil law.

TITLE XVI

BROKERAGE

table of contents

Section 845. A person who agrees to pay remuneration to a broker for indicating the opportunity for the conclusion of a contract, or for procuring a contract, is liable to pay the remuneration only if the contract is concluded in consequence of the indication or of the procurement by the broker. If the contract is concluded subject to a condition precedent, the broker's remuneration may not be claimed until the condition is fulfilled.

The broker is entitled to be reimbursed for expenses incurred only if it has been agreed upon. This applies even if a contract is not concluded.

Section 846. A broker's remuneration is deemed to have been impliedly agreed upon, if the business entrusted to the broker is, under the circumstances, only to be expected for remuneration.

If the amount of the remuneration is not fixed, the usual remuneration is deemed to have been agreed upon.

Section 847. A broker is not entitled to remuneration or to reimbursement of his expenses if, contrary to his engagement, he has acted also for the third party or has been promised by such third party a remuneration which is not consistent with the broker acting in good faith.

Section 848. A broker is not personally liable for the performance of the contracts entered into through his mediation, unless he has not communicated the name of a party to the other party.

Section 849. A broker is presumed to have no authority to receive on behalf of the parties payments or other performances due under the contract.

table of contents

Agency in Thailand, a agency contract or agency by law is a contract (power of attorney) where one person (the principal) grants authority for another person (the agent) to act on his behalf with a third party.

TITLE XV

AGENCY

CHAPTER I

GENERAL PROVISIONS

table of contents

Section 797. Agency is a contract whereby a person, called the agent, has authority to act for another person, called the principal, and agrees so to act.

Agency may be express or implied.

Section 798. If a transaction is by law required to be made in writing, the appointment of an agent for such transaction must also be made in writing.

If the transaction is required to be evidenced by writing, the appointment of an agent for such transaction must also be evidenced by writing.

Section 799. The principal who employs an incapable person as an agent is bound by the act of that agent.

Section 800. The agent who has a special authority may do on behalf of his principal whatever is necessary for the due execution of the matters entrusted to him.

Section 801. The agent who has a general authority may do all acts of management on behalf of his principal.

He cannot do such acts as:

1. Selling or mortgaging immovable property.
2. Letting immovable property for more than three years.
3. Making a gift.
4. Making a compromise.
5. Entering an action in Court.
6. Submitting a dispute to arbitration.

Section 802. In case of an emergency, the agent is presumed to have an authority to do, in order to protect his principal from loss, all such acts as would be done by a person of ordinary prudence.

Section 803. The agent is not entitled to receive remuneration unless it is provided by the contract, or may be implied from the course of dealing between the parties or by usage.

Section 804. If several agents have been appointed in one contract by the same principal for the same matters, it is presumed that they cannot act separately.

Section 805. An agent may not without his principal's consent enter into a juristic act in the name of his principal with himself in his own name, or as agent of a third party, unless the juristic act consists exclusively in the performance of an obligation.

Section 806. An undisclosed principal may declare himself and assume any contract entered into on his behalf. But the principal who allows his agent to act as a principal cannot prejudice the rights of the third person against the agent acquired before notice of agency.

table of contents

CHAPTER II

DUTIES AND LIABILITIES OF THE AGENT TO THE PRINCIPAL

Section 807. The agent must act according to the express or implied directions of the principal. In the absence of such directions, he must pursue the accustomed course of business in which he is employed.

The provisions of Section 659 concerning Deposit apply mutatis mutandis .

Section 808. The agent must act personally, unless he has authority to act by subagent.

Section 809. If required by principal, the agent must at all reasonable times give information as to the conditions of the matter entrusted to him. He must render an account after the agency has come to an end.

Section 810. The agent must hand over to the principal all the moneys and other properties which he receives in connection with the agency.

Section 811. If the agent has used for his own benefit money which ought to have handed over to the principal or to have used for the principal, he must pay interest thereon from the day when he used it for his own benefit.

Section 812. The agent is liable for any injury resulting from his negligence or non-execution of agency, or from an act done without or in excess of authority.

Section 813. The agent who appoints a subagent designated by the principal is liable only in case he knew his unfitness or untrustworthiness and omitted to inform the principal thereof or to revoke the subagency.

Section 814. The subagent is directly liable to the principal and vice versa.

table of contents

CHAPTER III

DUTIES AND LIABILITIES OF THE PRINCIPAL TO THE AGENT

Section 815. The principal must, if so required, advance to the agent such sums as are necessary for the execution of the matters entrusted to him.

Section 816. If the agent in executing the matters entrusted to him has made advances or expenses which could reasonably be regarded as necessary, he may claim from the principal reimbursement with interest from the day when they were made.

If the agent in executing the matters entrusted to him has assumed an obligation which could reasonably be regarded as necessary, he may require the principal to perform in his place or if the time of its maturity has not yet arrived, to give proper security.

If the agent by reason of the execution of the matters entrusted to him has suffered damage without fault on his part he may claim compensation from the principal.

Section 817. In case remuneration is to be paid, it is payable, unless otherwise agreed, only after the agency has come to an end.

Section 818. The agent is not entitled to remuneration in respect of that part of his agency which he has misconducted.

Section 819. The agent is entitled to retain any property of the principal in his possession by reason of agency until he has been paid all that is due to him on account of agency.

table of contents

CHAPTER IV

LIABILITY OF PRINCIPAL AND AGENT TO THIRD PERSONS

Section 820. The principal is bound to third persons by the acts which the agent or the subagent has done within the scope of his authority by virtue of his agency.

Section 821. A person who holds out another person as his agent or knowingly allows another person to hold himself out as his agent, is liable to third persons in good faith in the same way as such person was his agent.

Section 822. If an agent does an act in excess of his authority, but the third person has reasonable grounds, arising from the act of the principal, to believe that it was within his authority, the provisions of the foregoing section apply correspondingly.

Section 823. If an agent does an act without authority or beyond the scope of his authority, such act does not bind the principal unless he ratifies it.

If the principal does not ratify, the agent is personally liable to third persons, unless he proves that such third persons knew he was acting without authority or beyond the scope of the authority.

Section 824. An agent who makes a contract on behalf of a principal who is, and has his domicile, in a foreign country is personally liable on the contract although the name of the principal has been disclosed, unless the terms of the contract are inconsistent with his liability.

Section 825. A principal is not bound by a contract entered into by his agent with a third person, if the contract was entered into by the agent in consideration of any property or other advantage privately given or promised to him by such third person, unless the principal has given his consent.

table of contents

EXTINCTION OF AGENCY

Section 826. Agency is extinguished by the principal revoking or by the agent renouncing the agency.

It is also extinguished when either party dies or becomes incapacitated or bankrupt, unless the contrary appears from the terms of the agreement or the nature of the business.

Section 827. The principal may revoke the authority and the agent may renounce the agency at any time.

Exept in case of unavoidable necessity, the party who revokes or renounces the agency at a time which is inconvenient to the other party is liable to such party for any injury resulting therefrom.

Section 828. When agency is extinguished by the death of the principal or by the principal becoming incapacitated or bankrupt, the agent must take all reasonable steps to protect the interest entrusted to him until the heirs or representatives of the principal can protect such interest.

Section 829. When agency is extinguished by the death of the agent or the agent becoming incapacitated or bankrupt, the heir or the person having lawful charge of the agent's estate must notify the principal and take steps to protect the interest of the principal as may be reasonable under the circumstances until the principal can protect such interest.

Section 830. The causes for extinction of agency, whether arising from the principal or agent, cannot be set up against the other party, until they have been notified to the other party or the latter has knowledge of them.

Section 831. The extinction of agency cannot be set up against a third person acting in good faith, unless the third person is ignorant of the fact through his own negligence.

Section 832. On extinction of agency, the principal is entitled to demand the surrender of any written authority given to the agent.

table of contents

CHAPTER VI

COMMISSION AGENCY

Section 833. A commission agent is a person who, in the course of his business undertakes to buy sell property or undertakes any other commercial transaction in his own name on account of the principal.

Section 834. Unless otherwise agreed, a commission agent is entitled to a usual rate of remuneration on every transaction concluded by him.

Section 835. The provisions of this Code concerning Agency apply to Commission Agency in so far as they are not contrary to the provisions of this Chapter.

Section 836. An incapacitated person cannot act as commission agent unless duly authorized to that effect.

Section 837. The commission agent, by a sale or purchase or any other transaction made on account of the principal, acquires rights against the other party to such transaction and becomes bound to him.

Section 838. If the other party to the transaction does not perform his obligation, the commission agent is not himself liable to the principal for the performance unless it is provided by the contract, or may be implied from the course of dealing between the principal an agent, or by local usage.

The commission agent who undertakes to guarantee the execution of a contract upon the terms mentioned in the foregoing paragraph is a del credere agent and is entitled to a special remuneration.

Section 839. When a commission agent has made a sale for a lower price or a purchase for a higher price than that designated by the principal, if the agent takes upon himself the difference, such sale or purchase takes effect against the principal.

Section 840. When a commission agent has made a sale for a higher price or purchase for a lower price than that designated by the principal, he cannot take the benefit on such transaction and must account it to the principal.

Section 841. The commission agent shall report his activities to the principal, and upon execution of the commission, shall inform the principal without delay.

Section 842. Where a property has been entrusted to a commission agent the provisions of this Code concerning Deposit apply mutatis mutandis.

In case of unavoidable necessity the commission agent may dispose of the property in a manner provided in Section 631 concerning Carriage.

Section 843. A commission agent who has been ordered to sell or buy a property which has an exchange quotation may himself be the buyer or seller, unless he is expressly forbidden by the contract. In such a case the price to be paid is determined by the quotation of such property on the exchange at the time when the commission agent gives notice of his being the buyer or seller.

On receiving such notice the principal is deemed to have accepted the transaction, unless he refuses it at once.

A commission agent may even in such case charge remuneration.

Section 844. Between the principal and the commission agent, a transaction concluded by the latter shall have the same effect as if it had been concluded directly in the name of the principal.

table of contents

TITLE XIV

WAREHOUSING

CHAPTER I

GENERAL PROVISIONS

table of contents

Section 770. A warehouseman is a person who, in the usual course of his business, undertakes the storage and custody of goods for remuneration.

Section 771. The provisions of this Code concerning Deposit apply to Warehousing in so far they are not contrary to the provisions of this Title.

Section 772. The provisions of sections 616, 619, 623, 625, 630, 631, and 632 concerning Carriage apply to Warehousing mutatis mutandis.

Section 773. The warehousman is bound to allow the holder of the warehouse receipt or the holder of the warrant to inspect the goods and to take samples at any reasonable time during business hours.

Section 774. The warehouseman cannot demand the removal if the goods by the depositor before expiration of the period agreed upon. If no time for the return of the goods was fixed, the warehousman may return them only on giving one month's notice to the depositor, provided that the latter shall not be compelled to remove the goods before two months have elapsed since delivery.

CHAPTER II

Warehouse receipt and warant

Section 775 

Translation 775 to 796 not available at the moment, come back soon.

table of contents

TITLE XIII

PLEDGE

CHAPTER I

GENERAL PROVISIONS

table of contents

Section 747. A pledge is a contract whereby a person, called the pledgor, delivers to another person, called the pledge, a movable property as a security for the performance of an obligation.

Section 748. The pledge is a security for the performance of the obligation and for the following accessories:

1. Interest.
2. Compensation in case of non-performance of the obligation.
3. Costs of enforcement of the pledge.
4. Expenses for the preservation of the pledged property.
5. Compensation for injury caused by non-apparent defects of the pledged property.

Section 749. The parties to a pledge may agree that the pledged property shall be kept by a third person.

Section 750. If the pledged property is a right represented by a written instrument, the pledge is void unless such instrument is delivered to the pledge and the pledge is notified in writing to the debtor of the right.

Section 751. If an instrument to order is pledged, such pledge cannot be set up against third persons unless its creation is endorsed upon the instrument.

No notification to the debtor under such instrument id necessary.

Section 752. If an instrument issued to a named person and not transferable by indorsement is pledged, the pledge must be stated on such instrument, and cannot be set up against the debtor under such instrument or third persons, unless it is notified to such debtor.

Section 753. If a named certificate for share or debenture is pledged, such pledge cannot be set up against the company or other third person, unless the creation of the pledge is entered in the company's book in accordance with the provisions of Title XXII relating to the transfer of shares or debentures.

Section 754. If the pledged right becomes due before the obligation for which it is security is due, the debtor of such right must deliver to the pledge the property which is the subject of the right and it becomes pledged in lieu of the pledged right.

If the pledged right is an obligation to pay a sum of money and becomes due before the obligation secured, the payment must be made jointly to the pledge and pledgor; if they cannot come to an agreement, each of them is entitled to demand that such sum be deposited in Deposited Office for their common benefit.

Section 755. If a right is pledged, it cannot be extinguished or modified to the injury of the pledge without the consent of the pledgee.

Section 756. Before the obligation is due, any agreement that the pledge shall, in case of non-performance, become the owner of the pledged property or disposed of it otherwise than in accordance with the provisions concerning Enforcement of Pledge, shall be invalid.

Section 757. The provisions of this Title XIII apply to contracts of pledge entered into with licensed pawnbrokers only in so far as they are not contrary to the Laws or Regulations concerning Pawnbrokers.

table of contents

CHAPTER II

RIGHTS AND DUTIES OF PLEDGOR AND PLEDGEE

Section 758. The pledge is entitled to retain all the pledged property until he has received full performance of the obligation and accessories.

Section 759. The pledge is bound to keep the pledged property in safe custody and take as much care of it as a person of ordinary prudence would take of his own property.

Section 760. If, without the consent of the pledgor, the pledgee usues the pledged property or lets a third person have custody over it, he is liable for any loss or damage to the pledged property, even caused by force majeure, unless he proves that the loss or damage would have happened in any case.

Section 761. Unless otherwise provided by the contract, if the pledged property procedures legal fruit or fruits, the pledgee shall appropriate them in payment of any interest that may be due to him, and, if no interest is due, in payment of the principal of the obligation secured.

Section 762. The pledgor is bound to reimburse the pledgee for any expenses which were necessary for the preservation or maintenance of the pledged property unless otherwise provided in the contract.

Section 763. The following actions cannot be entered later than six months after the return or sale by auction of the pledged property:

1. An action for compensation for damage caused to the pleged property by the pledge.
2. An action for reimbursement of expenses incurred for the preservation or maintenance of the pledged property.
3. An action for compensation for injury caused to the pledge by non-apparent defects in the pledged property.

table of contents

CHAPTER III

ENFORCEMENT OF PLEDGE

Section 764. On enforcement of the pledge the pledgee must first notify the debtor in writing to perform the obligation and accessories within a reasonable time to be fixed in the notice.

The pledgee must notify the pledgor in writing of the time and place of the auction.

Section 765. If notification is impracticable, the pledge may sell the pledged property by public auction after one month from the time the obligation became due.

Section 766. The pledgee of a bill shall, without previous notification being necessary, collect it on the day of its maturity.

Section 767. On enforcement of the pledge the pledgee must appropriate the net proceeds to extinction of the obligation and accessories and must return the surplus to the pledgor or any person entitled to it.

If the proceeds are less than amount due, the debtor of the obligation remains liable for the difference.

Section 768. If several properties are pledged as security for one obligation, the pledgee may sell such of them as he may select, but he may not sell more than is necessary for the satisfaction of his right.

table of contents

CHAPTER IV

EXTINCTION OF PLEDGE

Section 769. A pledge is extinguished:

1. When the obligation secured is extinguished otherwise than by prescription, or
2. When the pledgee allows the pledged property to return into the possession of the pledgor.

table of contents

TITLE XII

MORTGAGE

CHAPTER I

GENERAL PROVISIONS

table of contents

Section 702. A mortgage is a contract whereby a person, called the mortgagor, assigns a property to another person, called the mortgagee, as security for the performance of an obligation, without delivering the property to the mortgagee.

The mortgagee is entitled to be paid out of the mortgaged property in preference to ordinary creditors regardless as to whether or not the ownership of the property has been transferred to a third person.

Section 703. Immovables of any kind can be mortgaged.

The following movables can also be mortgaged provided they are registered according to law:

1. Ships of five tons and over
2. Floating houses
3. Beast of burden
4. Any other movables with regard to which the law may provide registration for that purpose.

Section 704. A contract of mortgage must specify the property mortgaged.

Section 705. No property can e mortgaged except by the ownerfor the time being.

Section 706. A person whose right of ownership over a property is subject to a condition may mortgage such property only subject to such condition.

Section 707. The provisions of Section 681 concerning Suretyship apply mutatis mutandis.

Section 708. A contract of mortgage must contain, in Thai currency, either the sum certain or a maximum amount for which the mortgaged property is assigned as security.

Section 709. A person may mortgage his property as security for the performance of an obligation by another person.

Section 710. The performance of one and the same obligation may be secured by the mortgage of several properties belonging either to one or to several owners.

The parties may agree:

1. That the mortgagee shall enforce his right against the mortgaged properties on a specific order.
2. That each property is security only for a specified part of the obligation.

Section 711. Before the obligation is due, any agreement that the mortgagee shall, in case of non-performance, become the owner of the mortgaged property or dispose of it otherwise than in accordance with the provisions concerning Enforcement of Mortgage, shall be invalid.

Section 712. Notwithstanding any clause in the contract to the contrary, a property mortgaged to one person may be mortgaged to another person during the continuance of the previous contract.

Section. 713. Unless otherwise agreed in the contract of mortgage, the mortgagor may pay off the mortgage by installments.

Section 714. A contract of mortgage must be made in writing and registered by the competent official.

table of contents

CHAPTER II

EXTENT OF MORTGAGE

Section 715. A mortgaged property is security for the performance of the obligation and for the following accessories:

1. Interest.
2. Compensation in case of non-performance of the obligation
3. Costs of enforcement of the mortgage.

Section 716. A mortgage, even part performance, extend to all the properties mortgaged and the whole of each of them.

Section 717. If a mortgaged property is divided into parcels, the mortgage continues notwithstanding to extend to each and all of such parcels.

Section 718. A mortgage extends to all things which are connected with the mortgaged property, subject, however to the restrictions contained in the following sections.

Section 719. A mortgage over land does not extend to the buildings erected by the mortgagor upon such land after the date of the mortgage, unless there is in the contract a special clause to that effect.

However, in any case, the mortgagee can have such buildings sold with the land, but he can exercise his preferential right only against the price obtained for the land.

Section 720. A mortgage over buildings erected or constructed made upon or under the land of another person does not extend to such land, and vice versa.

Section 721. A mortgage does not extend to the fruits of the mortgaged property except after the mortgagee has notified the mortgagor or the transferee of his intention to enforce the mortgage.

table of contents

CHAPTER III

RIGHTS AND DUTIES OF THE MORTGAGEE AND MORTGAGOR

Section 722. When a property has been mortgaged and a servitude or other real right is registered after the registration of the mortgage without the consent of the mortgagee, the mortgage has priority over the servitude or other real right and the latter will be erased from the register where its existence prejudice the right of the mortgagee on the enforcement of the mortgage.

Section 723. If the mortgaged property is damaged, or if one of the mortgaged properties is lost or damaged, so that the security becomes insufficient, the mortgagee may enforce the mortgage at once, unless the mortgagor has not been at fault and offers either to mortgage another property of sufficient value or to repair the damage within a reasonable time.

Section 724. A mortgagor, who has mortgaged his property as security for the performance of an obligation by another person and performs the obligation on behalf of the debtor to prevent the enforcement of the mortgage, is entitled to recover from the debtor the amount of the performance.

If the mortgage is enforced, the mortgagor is entitled to recover from the debtor the amount by which the mortgagee has been satisfied by such performance

Section 725. When two or more persons have separately mortgaged their properties as security for the performance of one and the same obligation by another person and no order has been specified, the mortgagor who has performed the obligation, or on whose property the mortgage has been enforced, has no right of recourse against the other mortgagors.

Section 726. When several persons have separately mortgaged their properties as security for the performance of one and the same obligation by another person and an order has been specified, the release granted by the mortgagee to one of the mortgagors discharges the subsequent mortgagors to the extent of the injury suffered by them thereby.

Section 727. If a person has mortgaged his property as security for the performance of an obligation by another person, the provisions of Sections 697, 700 and 701 concerning Suretyship shall apply mutatis mutandis.

table of contents

CHAPTER IV

ENFORCEMENT OF MORTGAGE

Section 728. For enforcement of mortgage the mortgagee must notify the debtor on writing to perform his obligation within a reasonable time to be fixed in the notice. If the debtor fails to comply with such notice, the mortgagee may enter an action in Court for a judgment ordering the mortgaged property to be seized and sold by public auction.

Section 729.

In addition to the remedy provided in the foregoing section, the mortgagee is entitled to claim foreclosure of the mortgage, subject to the following conditions:

1. The debtor has failed to pay interest for five years;
2. The mortgagor has not satisfied the Court that the value of the property is greater than the amount due; and
3. There are no other registered mortgages or preferential rights on the same property.

Section 730. When one and the same property is mortgaged to several mortgagees, they rank according to the respective dates and hours of registration, and the earlier mortgagee shall be satisfied before the later one.

Section 731. A later mortgage cannot enforce his right to the injury of an earlier one.

Section 732. The net proceeds of the auction shall be distributed to the mortgagees according to their ranks, and the surplus, if any, shall be delivered to the mortgagor.

Section 733. If the estimated value of the property, in case of foreclosure, is or the net proceeds, in case of auction, are less than the amount due, the debtor of the obligation is not liable for the difference.

Section 734. When several properties have been mortgaged to secure one and the same obligation and no order has been specified, the mortgagee may enforce his right against all or any of the properties; provided that he does not do so upon more properties than is necessary for the satisfaction of his right.

If the mortgagee enforces his right against all properties at the same time, the burden of the obligation is divided according to the respective value of the properties, except where the amounts of the mortgages have been specified for each property, in which case the division is made according to the respective amounts of the mortgages on such properties.

If, however, the mortgagee enforces his right against one of the properties, the mortgagee may receive performance of his entire obligation from such property. In that case the mortgagee who is next in rank shall be considered as being subrogated to the prior mortgagee and may enforce the mortgage in his stead to the amount which the prior mortgagee would have received from the other properties according to the provisions of the foregoing paragraph.

Section 735. When the mortgagee intends to enforce the mortgage against the transferee of a mortgaged property, the latter must be served with a written notice one month before the enforcement of the mortgage.

table of contents

CHAPTER V

RIGHTS AND DUTIES OF THE TRANSFEREE OF A MORTGAGED PROPERTY

Section 736. The transferee of a mortgaged property may remove the mortgage, provided that he is not the principal debtor, a surety or an heir of either of them.

Section 737. The transferee may remove

the mortgage at any time, but if he has been notified by the mortgagee of the mortgagee's intention to enforce the mortgage, he must do so within one month thereafter.

Section 738. The transferee who whishes to remove the mortgage must notify the principal debtor and make an offer to every registered creditor whether by way of mortgage or otherwise pay a reasonable amount corresponding to the value of the property.

The offer shall contain the following particulars:

1. The place and the description of the mortgaged property.
2. The date of transfer of ownership.
3. The name of the former owner.
4. The name and domicile of the transferee.
5. The sum offered.
6. A calculation of the total amount due to each of the creditors including accessories, and the sum which would be distributed to them according to their respective ranks.

A certifies copy of the entries in the official registered to the mortgaged property shall be enclosed.

Section 739. If any creditor refuses the offer, he must enter an action in Court within one month from the date of the offer for a judgment ordering the mortgaged property to be sold by public auction, provided that:

1. He advances the cost of sale;
2. He binds himself to make a bid or have a bid made above the sum offered by the transferee, and
3. He notifies his refusal to the transferee, other registered creditors, the former owner and the principal debtor.

Section 740. If the net proceeds of the auction are more than the sum offered by the transferee, the costs of the auction shall be borne by him; otherwise, the creditor demanding the sale shall bear the costs of the auction.

Section 741. When all the creditors have accepted the offer, either expressly or implied, the mortgage and preferential rights are removed by the transferee paying or depositing in lieu of performance the sum offered.

Section 742. When, by the enforcement or the removal of the mortgage, a person who has previously acquired the mortgaged property is deprived of the property, such deprivation has no retrospective effect, and the preferential rights registered by his own creditors of the mortgagor or other former owner.

In such case, if any rights over the mortgaged property existing in favour of or against the person who has so previously acquired the mortgaged property have been extinguished by merger at the time of his acquisition, they shall revive in his favour or against him after he has been deprived of the mortgaged property.

Section 743. The transferee is liable to damages if the property has been made less valuable by his act or negligence, and loss has thereby been suffered by the creditors having mortgages or preferential rights over the same. The transferee cannot, however, claim any sum spent by him, or reimbursement of his expenses for improvements, except so far as he has increased the value of the property, and only up to the amount of the increase of value at the time of auction.

table of contents

CHAPTER VI

EXTINCTION OF MORTGAGE

Section 744. A mortgage is extinguished:

1. By extinction of the obligation secured, otherwise than by prescription.
2. By release of the mortgage granted in writing to the mortgagor
3. By the mortgagor being discharged
4. By the mortgage being removed
5. By action sale of the mortgaged property by order of the Court as a result of enforcement or removal of mortgage
6. By foreclosure of the mortgage.

Section 745. The mortgagee may enforce the mortgage even after the obligation secured has been barred by prescription, but arrears of interest on the mortgage cannot be enforced for more than five years.

Section 746. Any performance, either wholly or partly, or any extinction, or any agreement modifying the mortgage or the obligation secured, must be registered by the competent official on the request of the interested party, failing which it cannot be set up against a third person.

table of contents

TITLE XI

Suretyship

Chapter I

General Provisions

table of contents

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.

table of contents

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.

table of contents

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.

table of contents

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.

table of contents

TITLE X

Deposit

Chapter I

General Provisions

table of contents

Section 657 A deposit is a contract whereby a person, called the depositor, delivers a property to another person, called the depositary, and the depositary agrees to keep it in his custody and return it.

Section 658 Remuneration for the deposit is deemed to have been impliedly agreed upon. If under the circumstances the undertaking of the deposit is to be expected only for the remuneration.

Section 659 If the deposit is undertaken gratuitously the depositary is bound to exercise as much care of the property deposited as he is accustomed to exercising in his own affairs.

If the deposit is undertaken with rumeneration the depositary is bound to exercise such care asn skill as a person of ordinairy prudence would exercise in the circumstances. This includes the exercise of special skill where such skill is required.

If the depositary professes a particular trade, business or calling, he is bound to exercise the degree of care and skill usual and requisite in such trade, business or calling.

Section 660 If without the permission of the depositor the depositary uses the property deposited or lets a third person have the use or custody of it, he is liable for any loss or damage to the property, even caused by force majeure, unless he proves that the loss or damage would have happened in any case.

Section 661 If a third person claims rights over the property deposited and enters an action against the depositary, or attaches the property, the depositay must forthwith give notice thereof to the depositor.

Section 662 If a time for return of the property deposited has been fixed, the depositary has no right to return the property before such time, except in case of unvoidable necessity.

Section 663 Although the parties have fixed a time for the return of the property deposited, the depositary must return it at any time on demand made by the depositor. Section 664 If the parties have fixed no time for the return of the property deposited,the depositary can return it at any time.

Section 665 The depositary is ound to return the property deposited tot the depositor, or to the person in whose name it was deposited, or to the person to whom he has been duly directed to return it.

Provided that if the depositor dies the property deposited shall be returned to his heir. Section 666 The depositary is bound to deliver with the property any fruits which may have accrued from it.

Section 667 Costs of returning the property deposited shall be borne by the depositor.

Section 668 The depositor is bound to reimburse the depositary for any expenses which were necessary for the preservation or maintenance of the property deposited, unless such expenses were incumbent upon the depositary under the contract of deposit.

Section 669 If no time for payment of remuneration is fixed by the contract or by custom, the remuneration is payable when the property deposited is returned. If fixed by periods the remuneration is payable at the end of each period.

Section 670 The depositary is entitles to retain the property deposited untill he has been paid all that is due to him on account of the deposit.

Section 671 No action for remuneration, reimbursement of expenses or compensation in connection with a deposit can be entered later than six months after the extinction of the contract.

table of contents

Chapter II

Special rules for the deposit of money

Section 672 If the deposited is one of money, it is presumed that the depositary is not to return the same specie, but only the same amount.

The depositary may use the money deposited and is only bound to return an equivalent amount. He is bound to return such amount even though the money deposited has been lost by force majeure.

Section 673 When the depositary is bound only to return the same amount of money, the depositor may not demand the return of the money before agreed time, nor may the depositary return it before such time.

table of contents

Chapter III

Special rules for innkeepers

Section 674 The proprietor of an inn, hotel or other such place is liable for any loss or damage to the property which the traveller or guest lodging with him may have brought.

Section 675 The proprietor is liable for loss or damage to the property of the traveller or guest, even caused by strangers going to and from the inn, hotel or other such place.

His liability is limited to the sum of five thousand baht if the property is specie, currency notes, bills, bonds, shares, debentures, warrants, jewels or other valuables, unless it has been deposited with him and its valie clearly stated.

But he is not liable for loss or damage caused by force majeure or by the nature of the property or by the fault of the traveller or guest or of his attendant or of a person whom he has received.

Section 676 On discovery of the loss or damage to the property not expressly deposited, the traveller or guest must communicate the fact to the proprietor of the inn, hotel or any such place at once, failling which teh proprietor shall be releived of the responsibility provided in Sections 674 and 675.

Section 677 A notice posted in the inn, hotel or other such place excluding or limiting the liability of the proprietor is void unless the traveller or guest expressly agreed to such exclusion or limitation of liability.

Section 678 No action for compensation for loss or damage caused to the property of the traveller or guest can be entered later than six months after the departure of the traveller or guest.

Section 679 The proprietor is entitled to retain the lugagge or other property of the traveller or guest which is in the inn, hotel or other such place untill he has been paid all that is due to him for lodging and other services afforded to the traveller or guest in satisfaction of his needs, including disbursements.

He may sell by public auction properties so retained and pay himself out of the proceeds of such sale the amount which is keepers,due to him, together with the cost and expenses of such sale. But he cannot exercise such right unless:

1. The properties have been left for six weeks without the debt being paid, and
2. At least one month before such sale he has caused to be inserted in one local newspaper and advertisement containing notice of the intended sale, together with a short description of the properties to be sold and the name of the owner, if known.

The surplus (if any) remaining after such payment must be paid to the owner of such properties or deposited at the Deposit Office according to the provisions of Sections 331 and 333.

table of contents

TITLE IX

LOAN

CHAPTER I

LOAN FOR USE

table of contents

Section 640. A loan agreement for use is a contract whereby a person, called the lender, lets another person, called the borrower, have gratuitously the use of a property, and the borrower agrees to return it after having made use thereof.

Section 641. A loan for use is complete only on delivery of the property lent.

Section 642. Costs of the contract, costs of delivery of the property lent and costs of return are born by the borrower.

Section 643. If the borrower uses the property lent for purposes other than ordinary purposes or purposes appearing from the contract, or lets a third person have the use of it, or keeps it longer than ought to, he is liable for any loss or damage to the property caused by force majeure unless he proves that the loss or damage would have happened in any case.

Section 644. The borrower is bound to take as much care of the property lent as a person of ordinary prudence would take of his own property.

Section 645. In any cases provided in Section 643, or if the borrower acts according to Section 644, the lender may terminate the contract.

Section 646. If no time is fixed, the property shall be returned after the borrower has made the use of it for the purpose appearing from the contract. The lender may claim the return of the property earlier, if so much time has elapsed that the borrower might have made the use of it.

If no time is fixed and no purpose appears from the contract, the lender may claim the return at any time.

Section 647. Expenses for ordinary maintenance of the property lent must be borne by the borrower.

Section 648. A loan for use is extinguished by the death of the borrower.

Section 649. No action for compensation in connection with a loan for use can be entered later than six months after the extinction of the contract.

table of contents

CHAPTER II

LOAN FOR CONSUMPTION

Section 650. A loan for consumption is a contract whereby the lender transfers to the borrower the ownership of a certain quantity of property which is consumed in the user, and the borrower agrees to return a property of the same kind, quality and quantity.

The contract is complete only on delivery of the property.

Section 651. Costs of the contract, costs of delivery of the property lent and costs of return are borne by the borrower.

Section 652. If no time for return of the property lent has been fixed, the lender may give notice to the borrower to return the property within a reasonable time to be fixed in the notice.

Section 653. A loan of money for a sum exceeding two thousand baht in capital is not enforceable by action unless there be some written evidence of the loan signed by the borrower.

No repayment of a loan of money evidenced by writing may be proved unless there be some written evidence signed by the lender, or the document evidencing the loan has been surrendered to the borrower or cancelled.

Section 654. Interest shall not exceed 15% per year; when a higher rate of interest is fixed by the contract, it shall be reduced to 15% per year.

Section 655. Interest shall not bear interest. The parties to a loan of money may, however, agree that the interest due for not less than one year shall be added to the capital, and that the whole shall bear interest, but such agreement must be made in writing.

Commercial usage for the calculation of compound interest in current accounts, as well as in similar commercial transactions, are not governed by the forgoing paragraph.

Section 656. If a loan is made for a sum of money, and the borrower accepts goods or other property instead of such sum, the amount of the debt due shall be considered as equal to the market value of the goods or property at the time and place of delivery.

If a loan is made for a sum of money, and the lender accepts goods or other property for the repayment of the loan, the amount of the debt extinguished thereby shall be considered as equal to the market value of the goods or property at the time and place of delivery.

Any agreement to the contrary is void.

table of contents

Title VIII

CARRIAGE

table of contents

Section 608 A carrier, within the meaning of this Title, is a person who in the usual course of business undertakes to transport goods or passengers for remuneration.

Section 609 The carriage of goods or passengers by the Royal State Railways Department of Siam or of postan articles by the Post and Telegraph Department are governed by the Laws and Regulations concerning such Department. The carriage of goods by sea is governed by the Laws and Regulations relating thereto.

table of contents

CHAPTER I

CARRIAGE OF GOODS

Section 610 The person making an agreement with a carrier for the transportation of goods is called the sender or consignor. The person whom the goods are forwarded is called the consignee. The remuneration to be paid for the transportation of the goods is called the freight.

Section 611 The accessories of the freight comprise any customary expenses duly incurred by the carrier in course of transportation.

Section 612 If required by the carrier, the sender must suppy him with a way-bill. The way-bill must show the following particulars:

1. The nature of the goods sent, their weight or bulk and the nature, number and marking of the packages
2. The place of destination
3. The name or trade-name and address of the consigneee
4. The plance where and time when the way-bill is made out

The way-bill must be signed by the sender.

Section 613 If required by the sender, the carrier must supply him with a consigment note. The consignment note must show the following particulars:

1. Those mentioned in 612, subsections 1,2,and 3
2. The name or trade-name of the sender
3. The amount of freight
4. The place where and the time when the consignment note is made out

The consignment note must be signed by the carrier.

Section 614 Even though a consignment note has been made out to a named person, it can be transferred by indorsement, unless the indorsement is forbidden in the consignment note.

Section 615 If a consignment note has been made, delivery can be obtained only on its surrender or on proper security being given by the consignee.

Section 616 The carrier is liable for any loss, damage or delay in delivery of the goods entrusted to him, unless he proves that the loss, damage or delay is caused by force majeure or by the fault of the sender or consignee.

Section 617 The carrier is liable for loss, damage or delay caused by the fault of the other carries or persons to whom he entrusted the goods.

Section 618 If the goods were transported by several carriers, they are jointly liable for loss, damage or delay.

Section 619 If the goods are of a dangerous nature or are likely to cause injury to persons or property, the sender must declare their nature before making the contract of carriage, failing which he shall be liable for any injury caused by them.

Section 620 The carrier is not liable for specie, currency notes, bank notes, bills, bonds, shares, debentures, warrants, jewels, and other valuables, unless he is given notice of the value or nature of such goods when they are delivered to him.If their value is declared, the liability of the carrier is limited to such declared value.

Section 621 Compensation in case of delay in delivery cannot exceed the amount which could be awarded in case of total loss of goods.

Section 622 The carrier must notify the consignee as soon as the goods arrive.

Section 623

Section 633 If the goods were transported by several carriers, the last of them can exercise the rights described in Section 630, 631, 632 for the amounts due to them all for freight and accessories.

table of contents

CHAPTER II

CARRIAGE OF PASSENGERS

Section 634 The carrier of passengers is liable to a passenger for personal injuries and for the damages immediately resulting from delay suffered by reason of the transportation, unless the injury or delay is caused by force majeure or by the fault of such passenger.

Section 635 Luggage entrusted to the carrier in time must be delivered on the arrival of the passenger.

Section 636 If the passenger does not take delivery of the luggage within one month after its arrival, the carrier can sell it by public auction.If the luggage is of a perishable nature, the carrier can sell it by public auction twenty-four hours after its arrival.The provisions of section 632 apply mutatis mutandis.

Section 637 The rights and liabilities of the carrier for the luggage which has been entrusted to him are governed by Chapter I, even though the carrier did not make a separate charge for it.

Section 638 No liability is incurred by the carrier for the luggage which has not been entrusted to him, unless such luggage is lost or damaged by the fault of the carrier or of his employees.

Section 639 A provision in a ticket, receipt or such other document delivered by the carrier to the passenger excluding or limiting liability of the carrier is void, unless the passenger expressly agreed to such exclusion pr limitation of liability.

table of contents

TITLE VII

HIRE OF WORK

table of contents

Section 587. The hire of work is a contract whereby a person, called contractor, agrees to accomplish a definite work for another person, called employer, who agrees to pay him a remuneration of the result of the work.

Section 588. Tools or instruments which are necessary for the execution of the work are to be supplied by the contractor.

Section 589. If the materials for the work are to be supplied by the contractor, the contractor shall supply material in good quality.

Section 590. If the materials are to be supplied by the employer, the contractor shall use them carefully and without waste. He shall return the surplus after work is completed.

Section 591. If the defect or the delay of the work originates from the nature of the material supplied by the employer, or from instruction given by him, the contractor is not liable, unless the contractor knew of the unfitness of the materials or the impropriety of instructions, and did not give notice of it.

Section 592. The contractor is bound to allow the employer or his agents to inspect the work during its execution.

Section 593. If the contractor does not begin to work in a proper time or delays in proceeding with it contrary to the terms of the contract, or if, without the fault of the employer, he delays to proceed with it in a such a manner that it can be foreseen that the work will not be finished within the agreed period. The employer is entitled to cancel the contract without waiting for the time agreed upon for delivery.

Section 594. When it is possible to foresee with certainty, whilst the work is proceeding, that by the fault of the contractor, the work will be executed in a defective manner or contrary to the terms of the contract, the employer may notify the contractor to make good the defect or to comply with the terms of the contract within a reasonable time to be fixed in the notice, failing which the employer is entitled to have the work repaired or continued by a third person at the risks and expenses of the contractor.

Section 595. If the materials have been supplied by the contractor, his liability for defects is governed by the provisions of this code concerning sale.

Section 596. If the work is delivered after the time fixed in the contract, or if no time was fixed, after reasonable time has elapsed, the employer is entitled to a reduction of remuneration or when time is of the essence of the contract to rescission.

Section 597. If the employer has accepted the work without reservation, the contractor is not liable for the delay in delivery.

Section 598. If the employer has accepted a defective work either expressly or impliedly, the contractor is not liable unless the defect was such as could not be discovered when the work was accepted, or it had been concealed by the contractor.

Section 599. In case of delay in delivery or of delivery of a defective work, the employer is entitled to withhold the remuneration unless the contractor gives proper security.

Section 600. Unless otherwise provided in the contract, the contractor is only liable for defect appearing within one year after delivery of the work, or within five years if the work is for a structure on land other than a wooden building.

This limitation shall not apply if the contractor has concealed the defect.

Section 601. No action against the contractor can be entered later than one year after the defect appeared.

Section 602. The remuneration is payable on taking delivery of the work. If the work is to be accepted in parts and the remuneration has been specified for the several parts, the remuneration for each part is payable at the time of its acceptance.

Section 603. If the materials have been supplied by the contractor, and the work is destroyed or damaged before due delivery, the contractor bears the loss provided that such loss is not caused by any act of the employer.

In such case no remuneration is payable.

Section 604. If the materials have been supplied by the employer and the work is destroyed or damaged before due delivery, the employer bears the loss provided that such loss is caused by any act of the contractor.

In such case, no remuneration is payable unless the loss is caused by any act of the employer.

Section 605. As long as the work is not finished, the employer can terminate the contract on making compensation to the contractor for any injury resulting from the termination of the contract.

Section 606. If the personal qualification of the contractor is of the essence of the contract and the contractor dies, or without his fault becomes incapable to carry on the work the contract comes to an end.

If any part of the work already done is useful to the employer, he is bound to accept it and pay a reasonable remuneration.

Section 607. The contractor may appoint sub-contractor to work for him in all or in part, except in the major part of contract that required the ability of the contractor.

The contractor is still responsible for the work and any mistake of the sub-contractor.

table of contents

TITLE V

HIRE-PURCHASE

table of contents

Section 572. A hire-purchase is a contract whereby an owner of a property lets it out on hire and promises to sell it to, or that it shall become the property of, the hirer, conditionally on his making a certain number of payments.

The contract of hire-purchase is void unless made in writing.

Section 573. The hirer may at any time terminate the contract by redelivering the property at his own expense to the owner.

Section 574. The owner may also terminate the contract in case of default of two successive payments, or breach of any material part of the contract; in which case all previous payments are forfeited to the owner who is entitled to resume possession of the property.

In case of breach of contract by default of the last payment, the owner is entitled to forfeit previous payment and resume possession of the property only after the expiration of one installment period.

table of contents

Tenancy laws (governing lease and rentals)

There is no special law created for lease and rent of immovable property by individual foreigners in Thailand and foreigners may lease immovable property (including land for residential purposes) as provided by the Civil and Commercial Code. The term of the lease contract cannot exceed thirty years, once the contract comes to an end, it can be renewed (the owner willing to renew the contract), but it must not exceed thirty years from the date of renewal.

TITLE III

GIFT

table of contents

Section 521. A gift is a contract whereby a person, called the donor, transfers gratuitously a property of his own to another person, called the donee, and the donee accepts such property.

Section 522. A gift may be made by granting to the donee the release of an obligation or by performing an obligation due from the donee.

Section 523. A gift is valid only on delivery of the property given.

Section 524. If a right represented by a written instrument is given, the gift is not valid unless such instrument is delivered to the donee and the gift is notified in writing to the debtor of the right.

Section 525. The gift of a property the sale of which must be made in writing and registered by such competent official is valid only when so made and registered by the competent official. In such case it is valid without delivery.

Section 526. If a gift or a promise for a gift has been made in writing and registered by the competent official and the donor does not deliver to the donee the property given, the donee is entitled to claim the delivery of it or its value, but he is not entitled to any additional compensation.

Section 527. If a donor binds himself to make periodical performance the obligation is extinguished on the death either of the donor or the donee unless a contrary intention appears from the obligation.

Section 528. If the gift is encumbered with a charge and the donee fails to perform the charge, the donor may, under the conditions specified for the right of rescission in the case of reciprocal contracts, demand the return of the gift under the provisions relating to the return of undue enrichment in so far as the gift ought to have been applied to the performance of the change.

This claim is barred if a third party is entitled to require the performance of the charge.

Section 529. If the property given is not sufficient to satisfy the charge, the donee has to perform only to the extent of the value of the property.

Section 530. If the gift encumbered with a charge, the donor is liable for defect or eviction in the same manner as the seller but only to the extent of the charge.

Section 531. The donor can claim revocation of a gift for an act of ingratitude only in the following cases.

1. If the donee committed a serious criminal offence punishable under the Penal Code against the donor, or
2. If the donee seriously defamed or insulted the donor, or
3. If the donee refused the donor who is in need of the necessaries of life while he was able to supply them.

Section. 532. The heir of the donor can claim revocation only if the donee has intentionally and unlawfully killed the donor or prevented him from revoking the gift.

However, the heir may continue an action which has been duly entered by the donor.

Section 533. A gift cannot be revoked if the donor has forgiven the donee, or if six months have elapsed since the time when the act of ingratitude came to knowledge of the person entitled to claim revocation.

No action can be claimed later than ten years after such act.

Section 534. If the gift is revoked, the property shall be returned under the provisions of this Code concerning Undue Enrichment.

Section 535. The following gifts are not revocable for ingratitude:

1. Gifts purely remuneratory
2. Gifts encumbered with a charge
3. Gifts made in compliance with a moral duty
4. Gifts made in consideration of marriage

Section 536. A gift to take effect at the death of the donor is governed by the provisions of Law concerning Inheritance and Wills.

table of contents

CHAPTER IV

SOME PARTICULAR KINDS OF SALES

PART I

Sale with Right of Redemption

table of contents

Section 491. Sale with right of redemption is a contract of sale whereby the ownership of the property sold passes to the buyer subject to an agreement that the seller can redeem that property.

Section 492. Where the property sold is redeemed within the period fixed by the contract or by law, or where the person who redeems deposits the price of redemption to a deposit office within the period by waiving the right to withdraw the price, the ownership of the property shall be vested in the person who redeems from the time of payment or deposit of the price, as the case may be.

In the case of deposit under paragraph one, an official of the deposit office shall immediately give notice of it to the redeemed person, whereby the person who redeems does not have to comply with Section 333 paragraph three.

Section 493. The parties may agree that the buyer shall not dispose of the property sold. If he disposes of it contrary to his agreement, he shall be liable to the seller for any injury resulting thereby.

Section 494. The right of redemption cannot be exercised later than:

1. Ten years after the time of the sale in case of immovable property.
2. Three years after the time of sale in case of movable property.

Section 495. If a longer period is provided in the contract, it shall be reduced to ten years and three years respectively.

Section 496. The period of redemption may be afterward extended by a contract, but if the total period is in excess of the period under Section 494, it shall be reduced to the period under Section 494.

The extension of the period under paragraph one must, at least, have some written evidence signed by the redeemed person. In case of the property whose sale must be made in writing and registered by the competent official, the extension can not be set up against a third person who has, for value and in good faith, acquired and registered his right unless such writing or written evidence is registered or recorded by the competent official.

Section 497. The right of redemption may be exercised only by:

1. The original seller or his heirs, or
2. The transferee of the right, or
3. Any person expressly allowed to redeem by a contract.

Section 498. The right of redemption may be exercised only against:

1. The original buyer
2. The transferee of the property or of a right on the property, provided that, in case of movable property, he knew at the time of the transfer that such property was subject to a right of redemption.

Section 499. If no price of redemption id fixed, the property may be redeemed by reimbursing the price of the sale.

If the price of redemption or the price of the sale, at the time of redemption, is higher than the real price of the sale more than fifteen percent per year, it shall be redeemed at a real price including fifteen percent per year of profit.

Section 500. Costs of the sale borne by the buyer must be reimbursed together with the price.

Costs of redemption are borne by the person who redeems.

Section 501. The property must be returned in the condition in which it is at the time of redemption, provided that if the property has been destroyed or deteriorated through the fault of the buyer he must pay compensation therefore.

Section 502. The person who redeems the property recovers it free from any rights created by the original buyer or his heirs or transferee before redemption.

If a hire of property held subject to a right of redemption is registered by the competent official, it shall be valid for not more than one year of its remaining duration, provided that it is not made for the purpose of injuring the seller.

table of contents

PART II

Sale by Sample; Sale by Description; Sale on Approval

Section 503. In a sale by sample, the seller is bound to deliver property or properties corresponding to the sample.

In a sale by description, the seller is bound to deliver property corresponding to the description.

Section 504. No action for liability on account of non-correspondence to the sample or description can be entered later than one year after delivery.

Section505. A sale on approval is the selling contract that the buyer having an option to buy when verifying the buying property.

Section 506. To verify the property, if there is no buying deadline, the seller may specify the reasonable deadline period and give a notice to the buyer to accept or reject the buying or not.

Section 507. The property that the buyer having option to verify before delivery, if the buyer does not accept it within the deadline stated in the contract or commercial practice or deadline setting by the seller, the selling contract is unbound.

Section 508. When the property is delivered to the buyer for verifying, the selling and the buying shall be absolutely completed in the following cases:

1. If the buyer does not reject the purchasing within deadline specified in the contract or by commercial practice or setting by the seller; or
2. If the buyer does not return the property to the seller within the said deadline; or
3. If the buyer fully uses all the property or in some parts; or
4. If the buyer sells the property or makes any buying signals.

PART III

Sale by Auction

Section 509. The auction shall be completed when the auctioneer accepts the final price by knocking the wood hammer or any practical acts in auct ion; otherwise the bidder can withdraw his bid in anytime.

Section 510. During bidding process, the bidder must comply with the bidding procedure that the auctioneer has announced in each bidding.

Section 511. The auctioneer cannot make a bid or let any person to make a bid for his own benefit that he is control the bidding process.

Section 512. The seller cannot make a bid or let any person to make a bid, except specified in the bidding terms and conditions that the seller has the right to bid.

Section 513. If the auctioneer thinks that the bidding price is not high enough, he may withdraw the said property auction.

Section 514. The bidder shall be unbound from his bid when other person offers a higher bidding price, even though the said bidding is complete or not, or when the auctioneer withdraws the said property auction.

Section 515. Bidder who offers the highest bidding price must pay in cash when the auction is complete or the deadline specified in the bidding advertising.

Section 516. If the bidder who offers the highest bidding price does not pay the money, the auctioneer may renew the auction. If the renew bidding price is lower than the previous one, such default bidder must liable for the short.

Section 517. If some or all of the proceed from auction is unpaid that the cause comes from the ignorance of the auctioneer under Section 515 or Section 516, the auctioneer has to liable for the unpaid amount.

table of contents

TITLE II

EXCHANGE

Section 518. Exchange is the contract that both parties transfer the right of ownership to each other.

Section 519. In any provisions of the laws relating to the selling and buying, the exchange is also included in such provision by implying that both parties are seller and buyer for such transfer of such properties.

Section 520. If any exchanging party accepts to add money with the exchange of property to anther, the selling price shall include such additional cash payment too.

table of contents

CHAPTER III

DUTIES OF THE BUYER

table of contents

Section 486. The buyer is bound to take delivery of the property sold and to pay the price in accordance with the terms of the contract of sale.

Section 487. The price of the property sold may be fixed by the contract, or may be left to be fixed in manner thereby agreed, or may be determined by the course of dealing between the parties.

When the price is not determined as aforesaid, the buyer must pay a reasonable price.

Section 488. If the buyer has discovered defects in the property sold, he is entitled to withhold the price or part of it still unpaid, unless the seller gives proper security.

Section 489. The buyer is also entitled to withhold the price wholly or partly, if he is threatened, or has good reason to believe that he is about to be threatened, with an action by a mortgagee or by a person claiming the property sold, until the seller has caused the danger with which he is threatened to cease, or until the seller has given proper security.

Section 490. If a time is fixed for the delivery of the property sold, it is presumed that the same time is fixed for the payment of the price.

table of contents

CHAPTER II

DUTIES AND LIABILITIES OF THE SELLER

PART I

Delivery

table of contents

Section 461. The seller is bound to deliver to the buyer the property sold.

Section 462. Delivery may be made by doing anything which has the effect of putting the property at the disposal of the buyer.

Section 463. If the contract provides that the property sold shall be sent from one place to another, delivery takes place at the moment when the property is delivered to the carrier.

Section 464. The costs of transportation of the property sold to a place other than the place of performance are to be borne by the buyer.

Section 465. In a sale of movable property:

1. Where the seller delivers the property less than he contracted for, the buyer may reject it; but if the buyer accepts it, he must pay the proportionate price.
2. Where the seller delivers the property more than he contracted for, the buyer may accept the property according to the contract and reject the rest, or he may reject the whole. If the buyer accepts the whole of the property so delivered, he must pay the proportionate price.
3. Where the seller delivers the property he contracted for mixed with the property of a different description not included in the contract, the buyer may accept the property according to the contract and reject the rest, or he may reject the whole.

Section 466. In a sale of immovable property where the total area is specified and the seller delivers the property less or more than he contracted for, the buyer has the option either to reject or accept it and pay the proportionate price.

If the deficiency or excess does not exceed five per cent of the total area so specified the buyer is bound to accept it and pay the proportionate price, provided that the buyer can rescind the contract if the deficiency or excess is such that had he known of it he would not have entered into the contract.

Section 467. No action for liability on account of deficiency or excess can be entered later than one year after delivery.

Section 468. When there is no time clause for payment of the price, the seller is entitled to retain the property sold until the price is paid.

Section 469. Even though there is a time clause for payment, if the buyer becomes bankrupt before delivery, or was bankrupt at the time of sale without the knowledge of the seller, or impairs or reduces security given for payment, the seller is entitled to retain the property sold, unless the buyer gives proper security.

Section 470. When the buyer is in default, the seller who retains the property under the foregoing sections can, instead of using the ordinary remedies for non-performance, notify the buyer in writing to pay the price and incidental charges, within a reasonable time to be fixed in the notice.

If the buyer fails to comply with the notice, the seller can sell the property by public auction.

Section 471. The seller shall deduct from the net proceeds of the public auction what is due to him for the price and incidental charges and deliver forthwith any surplus to the buyer.

table of contents

PART II

Liability for Defect

Section 472. In case of any defect in the property sold which impairs either its value or its fitness for ordinary purposes, or for the purposes of the contract, the seller is liable.

The foregoing provision applies whether the seller knew or did not know of the existence of the defect.

Section 473. The seller is not liable in the following cases:

1. If the buyer knew of the defect at the time of sale, or would have known of it if he had exercised such care as might be expected from a person of ordinary prudence.
2. If the defect was apparent at the time of the delivery, and the buyer accepts the property without reservation.
3. If the property was sold by public auction.

Section 474. No action for liability for defect can be entered later than one year after the discovery of the defect.

table of contents

PART III

Liability for Eviction

Section 475. The seller is liable for the consequences of any disturbance caused to the peaceful possession of the buyer by any person having over the property sold a right existing at the time of sale or by the fault of the seller.

Section 476. The seller is not liable for a disturbance caused by a person whose rights were known to the buyer at the time of sale.

Section 477. In any case of disturbance where an action arises between the buyer and a third person, the buyer is entitled to summon the seller to appear in the action to be joint defendant or joint plaintiff with the buyer, in order to enable the Court to settle disputes between all the parties to them in one action.

Section 478. The seller is also entitled, if he thinks proper, to intervene in the action in order to deny the claim of the third person.

Section 479. The seller is liable if, by reason of eviction, the buyer is deprived of the whole or part of the property sold or if the property is subject to a right, the existence of which impairs its value, fitness, use or benefit and of which the buyer had no knowledge at the time of sale.

Section 480. If an immovable property is declared to be subject to a servitude established by law, the seller is not liable unless he has expressly guaranteed that the property was free from servitudes, or from that particular servitude.

Section 481. If the seller was not a party to the original action, or if the buyer has made a compromise with the third person, or has yielded to his claim, no action for liability on account of eviction can be entered later than three months after final judgment in the original action, or after the date of the compromise, or of the yielding to the third person.

Section 482. The seller is not liable for eviction in the following cases:

1. If no action was entered, and the seller proves that the rights of the buyer were lost on account of the fault of the buyer, or
2. If the buyer did not summon the seller to appear in the action, and the seller proves that he would have succeeded in the action if summoned to appear, or
3. If the seller appeared in the action, but the claim of the buyer was dismissed on account of the fault of the buyer.

In any case the seller is liable whenever he is summoned to appear in the action and refuses to take the part of the buyer as joint defendant or joint plaintiff.

table of contents

PART IV

Clause for Non-Liability

Section 483. The parties to a contract of sale may agree that the seller shall not incur any liability for defects or eviction.

Section 484. Unless the non-liability clause specifies otherwise, such clause does not exempt the seller from the repayment of the price.

Section 485. A non-liability clause cannot exempt the seller from the consequences of his own acts or of facts which he knew and concealed.

table of contents