OBLIGATIONS

TITLE I
GENERAL PROVISIONS

CHAPTER I
SUBJECT OF OBLIGATIONS

Section 194
By virtue of an obligation, the creditor is entitled to claim performance from the debtor. The
performance may consist in forbearance.
Section 195
When the thing which forms the subject of an obligation is described only in kind, if its quality
cannot be determined by the nature of the juristic act or the intention of the parties, the
debtor must deliver a thing of medium quality.
If the debtor has done every thing required on his part for the delivery of such thing, or if he
on obtaining the consent of the creditor has designated a thing for delivery, such thing
becomes from that time the subject of the obligation.
Section 196
If a money debt is expressed in a foreign currency, payment may be made in Thai currency.
The commutation is made according to the rate of exchange current in the place of payment
at the time of payment.
Section 197
If a money debt is payable in a specific kind of money which is no longer current at the time
of payment, the payment shall be as if the kind of money were not specified.
Section 198
If several acts of performance are due in such manner that only one of them is to be done,
the right to elect belongs to the debtor unless otherwise stipulated.
Section 199
The election is made by a declaration of intention to the other party. The performance elected
is deemed to be the only one due from the beginning.
Section 200
If the election is to be made within a period of time, and the party who has the right of
election does not exercise it within such period, the right of election passes to the other party.
If no period of time was fixed, when the obligation becomes due, the party who has not the
right of election can notify the other party to exercise his right of election within a reasonable
time to be fixed in such notice.
Section 201
If a third person is to make the election, it is done by a declaration of intention made to the
debtor, who must inform the creditor.
If such third person cannot make the election or is unwilling to do so, the right of election
passes to the debtor.
Section 202
If one of the acts of performance is impossible from the beginning, or if it subsequently
becomes impossible, the obligation is limited to the other act of performance. This limitation
does not arise if the performance becomes impossible in consequence of a circumstance for
which the party not entitled to elect is responsible.
CHAPTER II
EFFECT OF OBLIGATIONS

PART I
NonPerformance

Section 203
If a time for performance is neither fixed nor to be inferred from the circumstances, the
creditor may demand the performance forthwith, and the debtor may perform his part
forthwith.
If a time is fixed, it is to be presumed, in case of doubt, that the creditor may not demand the
performance before that time; the debtor, however, may perform earlier.
Section 204
If the debtor does not perform after warning given by the creditor after maturity, he is in
default through the warning.
If a time by calendar is fixed for the performance, the debtor is in default without warning if
he does not perform at the fixed time. The same rule applies if a notice is required to precede
the performance, and the time is fixed in such manner that it may be reckoned by the
calendar from the time of notice.
Section 205
The debtor is not in default so long as the performance is not effected in consequence of a
circumstance of a circumstance for which he is not responsible.
Section 206
In obligations arising from an unlawful act, the debtor is in default from the time when he
committed it.
Section 207
a creditor is in default if, without legal ground, he does not accept the performance tendered
to him.
Section 208
The performance must be actually tendered to the creditor in the manner which it is to be
effected.
But if the creditor has declared to the debtor that he will not accept performance, or if for
effecting the performance an act of the creditor is necessary, it is sufficient for the debtor to
give him notice that all preparations for performance have been made and that it is for him to
accept it. In such cases the notice by the debtor is equivalent to a tender.
Section 209
If a time certain is fixed for the act to be done by the creditor, tender is required only if the
creditor does the act in due time.
Section 210
If the debtor is bound to perform his part only upon counter performance by the creditor, the
creditor is in default if, though prepared to accept the performance tendered, he does not
offer the required counterperformance.
Section 211
A creditor is not in default if the debtor is not in a position to affect the performance at the
time of tender, or, in the case provided by Section 209, at the time fixed for the act of the
creditor.
Section 212
If the time of performance is not fixed, or if the debtor is entitled to perform before the fixed
time, the creditor is not in default by reason of the fact that he is temporarily prevented from
accepting the tendered performance, unless the debtor has given him notice of this intended
performance a reasonable time beforehand.
Section 213
If a debtor fails to perform his obligation, the creditor may make a demand to the Court for
compulsory performance, except where the nature of the obligation does not permit it.
When the nature of an obligation does not permit of compulsory performance, if the subject of
the obligation is the doing of an act, the creditor may apply to the court to have it done by a
third person at the debtor's expense; but if the subject of the obligation is doing of a juristic
act, a judgment may be substituted for a declaration of intention by the debtor.
As to an obligation whose subject is the performance from an act, the creditor may demand
the removal of what has been done at the expense of the debtor and have proper measures
adopted for the future.
The provisions of the foregoing paragraphs do not affect the right to claim damages.
Section 214
Subject to the provisions of Section 733, the creditor is entitled to have his obligation
performed out of the whole of the property of his debtor including any money and other
property due to the debtor by third person.
Section 215
When the debtor does not perform the obligation in accordance with the true intent and
purpose of the same, the creditor may claim compensation for any damages caused thereby.
Section 216
If by a reason of default, the performance becomes useless to the creditor, he may refuse to
accept it and claim compensation for nonperformance.
Section 217
A debtor is responsible for all negligence during his default. He is also responsible for
impossibility of performance arising accidentally during the default, unless the injury would
have arises even if he had performed in due time.
Section 218
When the performance becomes impossible in consequence of a circumstance for which the
debtor is responsible, the debtor shall compensate the creditor for any damage arising from
the nonperformance.
In case of partial impossibility the creditor may, by declining the still possible part of the
performance, demand compensation for nonperformance of the entire obligation, if the still
possible part of performance is useless to him.
Section 219
The debtor is relieved from his obligation to perform if the performance becomes impossible in
consequence of a circumstance, for which he is not responsible, occurring after the creation of
the obligation.
If the debtor, after the creation of the obligation, becomes unable to perform, it is equivalent
to a circumstance rendering the performance impossible.
Section 220
A debtor is responsible for the fault of his agent, and of person whom he employs in
performing his obligation, to the same extent as for his own fault. In such case the provisions
of Section 373 have no application.
Section 221
A money debt bearing interest ceases to bear interest during the default of the creditor.
Section 222
The claim of damages is for compensation for all such damage as usually arises from non
performance.
The creditor may demand compensation even for such damage as has arisen from special
circumstances, if the party concerned foresaw or ought to have foreseen such circumstances.
Section 223
If any fault of the injured party has continued in causing the injury, the obligation to
compensate the injured party and the extent of the compensation to be made depends upon
the circumstances, especially upon how far the injury has been caused chiefly by the one or
the other party.
This applies also even if the fault of the injured party consisted only in an omission to call the
attention of the debtor to the danger of an unusually serious injury which the debtor neither
knew not ought to have known, or in an omission to avert or mitigate the injury. The
provisions of Section 220 shall be applied mutatis mutandis.
Section 224
A money dent bears interest during default seven and half percent per annum. If the creditor
can demand higher interest on any other legitimate ground, this shall continue to be paid.
Interest for default shall not be paid upon interest.
Proof of further damage is admissible.
Section 225
If the debtor is bound to make compensation for the value of an object which has perished
during the default, or which cannot be delivered for a reason which has arisen during the
default, the creditor may demand interest on the amount to be paid as compensation, from
the time which serves as the basis for the estimate of the value. The same rule applies if the
debtor is bound to make compensation for the diminution in value of an object which has
deteriorated during the default.
PART II
Subrogation

Section 226
A person is subrogated to the rights of a creditor is entitled to exercise in his own name all the
rights which the creditor had in respect of the obligation including any security for it.
By real subrogation, a property is substituted for another property in the same juristic position
as the previous one.
Section 227
When a creditor has received as compensation for damage the full value of the thing or right
which is the subject of the obligation, the debtor is, by operation of law, subrogated into the
position of the creditor with regard to such thing or right.
Section 228
If, in consequence of the circumstance which makes the performance impossible, the debtor
acquires a substitute or a claim for compensation for the object owed, the creditor may
demand delivery of the substitute received or may claim for compensation by himself.
If the creditor has a claim for compensation on account of nonperformance, the
compensation to be made to him is diminished, if he exercises the right specified in the
foregoing paragraph, by the value of the substitute received or of the claim for compensation.
Section 229
Subrogation takes place by operation of law and ensues to the benefit of the following
persons:
(1) The person who, being himself a creditor, pays another creditor who has priority to
him owing to such other creditor having a preferential right, pledge or mortgage.
(2) When acquires an immovable property, the person who uses the purchase price in
paying off the persons who have mortgages thereon.
(3) The person who, being bound with other or for others to pay a debt and was interested
in paying the same, has paid it.
Section 230
If the creditor levies compulsory execution upon an object belonging to the debtor, any person
who through the execution incurs danger of losing a right in the object is entitled to satisfying
the creditor. The same right belongs to the possessor of a thing if he incurs danger of losing
possession through the execution.
If a third person satisfies the creditor he is subrogated of the claim of the latter. Such claim
may not be enforced to the detriment of the creditor.
Section 231
If properties mortgaged, pledged or otherwise subject to a preferential right, are insured, the
mortgage, pledge or other preferential right extends to the claim against the insurer.
In case of immovable property, the insurer shall not pay the indemnity to the assured until he
has given notice of his intention to do so to the mortgagee or other preferred creditor, and
has not within one month from such notice received any objection to the payment, provided
always that the insurer knew or ought to have known of the mortgage or other preferential
right; however, any right registered in the Land Registry is deemed to be known to the
insurer. The same rule shall apply to mortgage of movables allowed by law.
In case of movable property, the insurer may pay the indemnity to the assured directly,
unless he knew or ought to have known of the pledge or other preferential right.
The insurer is not liable to the creditor if the insured property is restored or a substitute for it
is provided.
The same rule shall be applied mutatis mutandis in case of expropriation as well as in case of
indemnity due to the owner of the property for destruction or damage.
Section 232
If under the foregoing section a sum of money is being substituted for the property destroyed
or damaged, such sum shall in no case be delivered to the mortgage, pledge or other
preferred creditor before the obligation secured is due, and if the parties cannot come to an
agreement with the debtor, each of them is entitled to demand that the said sum be deposited
at the Deposit Office their common benefit unless the debtor gives proper security.
PART III
Exercising Debtor’s Claims

Section 233
If, to the prejudice of the creditor, the debtor refuses or neglects to exercise a claim the
creditor may, in order to protect his obligation, exercise such claim in his own name of behalf
of the debtor, except those which are purely personal to the debtor.
Section 234
The creditor who exercises a claim belonging to his debtor must summon the debtor to appear
in the action.
Section 235
A creditor may exercise a claim belonging to the debtor for the whole amount due to the
debtor, without regard to the amount due to him. But the defendant may satisfy the creditor
by paying the amount due to him alone, provided that if the original debtor has joined as a
plaintiff he may proceed to judgment for the balance.
In any case the creditor cannot obtain more than what is due to him.
Section 236
The defendant may set up against the creditor all defenses which he may have against the
debtor, excepting those which arose after the entry of the action.
PART IV
Cancellation of Fraudulent Acts

Section 237
The creditor is entitled to claim cancellation by the court of any juristic act done by the debtor
with knowledge that it would prejudice his creditor; but this does not apply if the person
enriched by such act did not know, at the time of the act, or the facts which could make it
prejudicial to the creditor, provided, however, that in case of gratuitous act the knowledge on
the part of the debtor alone is sufficient.
The provisions of the foregoing paragraph do not apply to a juristic act whose subject is not a
property right.
Section 238
The cancellation under the foregoing section cannot affect the right of a third person acquired
in good faith.
The foregoing paragraph does not apply if the right is acquired gratuitously.
Section 239
Cancellation operates in favor of all the creditors.
Section 240
A claim for cancellation cannot be brought later than one year from the time when the creditor
knew of the cause of cancellation, or later than ten years since the act was done.
PART V
Right of Retention

Section 241
If the possessor of a property belonging to another has an obligation in his favor relating to
the property possessed, he may retain the property until the obligation is performed; but this
does not apply, if the obligation is not yet due.
The provisions of the forgoing paragraph do not apply, if the possession begins by an unlawful
act.
Section 242
The right of retention does not exist if it is incompatible with the obligation assumed by the
creditor or with the instructions given by the debtor before or at the time of delivery of the
property or if it is against public order.
Section 243
In case of insolvency of the debtor, the creditor has the right of retention even if his claim is
not yet due. If the insolvency has occurred or become known to the creditor after the delivery
of the property, he can exercise the right of retention even if an obligation previously
assumed by him or the instruction given by the debtor, opposes it.
Section 244
The holder of a right of retention may exercise his right against the whole of the property
retained until the obligation is wholly performed.
Section 245
The holder of a right of retention may take the fruits of the property retained and appropriate
them to the performance of the obligation in preference to other creditors.
Such fruits must first be appropriated to the interest on the obligation, and if there is any
surplus must be appropriated to the principal.
Section 246
The holder of a right of retention is bound to take such appropriate care of the property
retained as might be expected from him in his situation.
The holder of a right of retention cannot use or let the property retained or give it as security,
without the consent of the debtor; but this does not apply to such use as is necessary for the
preservation of the property.
If the holder of a right of retention acts contrary to any provision of the foregoing paragraphs,
the debtor may claim the extinction of the right.
Section 247
If the holder of a right of retention incurs necessary expenses in respect to the property
retained he may require the owner to reimburse him.
Section 248
Subject to the provisions of Section 193/27, the exercise f a right of retention does not
prevent the running of prescription against the obligation.
Section 249
The debtor may claim the extinction of the right of retention on giving proper security.
Section 250
A right of retention is extinguished by the loss of possession of the property; but this does not
apply to the case where the property retained is let or pledged with the consent of the debtor.
PART VI
Preferential Rights

Section 251
A holder of a preferential right has, according to the provisions of this Code or other laws, a
right as to the property of his debtor to receive there from performance of an obligation due
to him in preference to other creditors.
Section 252
The provisions of Section 244 apply correspondingly to preferential rights.
1. General Preferential Rights
Section 253
A person in whose favor an obligation exists based upon any of the following grounds has a
preferential right in the whole property of the debtor:
(1) Expenses for the common benefit.
(2) Funeral expenses
(3) Taxes and duties, and money to which an employee entitled for the service rendered
to the debtor who is his employer.
(4) Supplies of daily necessaries.
Section 254
The preferential right on account of expenses for the common benefit is for expenses incurred
for the common benefit of all the creditors in regard to preservation, liquidation or distribution
of the debtor’s property.
If any such expense was not incurred for the benefit of all the creditors, the preferential right
only exists against those creditors for whose benefit it was incurred.
Section 255
The preferential right on account of funeral expenses is for such funeral expenses as are
accordant to the station in life of the debtor.
Section 256
The preferential right on account of taxes and rates is for all land, property or other taxes or
local rates due from the debtor for the current year and the preceding year.
Section 257
The preferential right on account of money, to which an employee is entitled for services
rendered to the debtor who is his employer, is for basic pay, overtime pay, holiday pay,
holiday overtime pay, severance pay, special severance pay, and other money to which the
employee is entitled for services rendered to, for four months back not exceeding one hundred
thousand baht for each employee.
Section 258
The preferential right on account of supplies of the daily necessaries is for supplies for six
months back of food, drink, light, firewood and charcoal, necessary for the living of the
debtor, of members of his family, who live with him and whom he is bound to support, and of
his servants.
2. Special Preferential Rights
(a) PREFERENTIAL RIGHTS IN MOVABLES
Section 259
A person in whose favor an obligation exists based upon any of the following grounds has a
preferential right in particular movables of the debtor:
(1) Hiring of an immovable.
(2) Lodging in an inn.
(3) Carriage of passengers of goods.
(4) Preservation of movables.
(5) Sale of movables.
(6) Supply of seeds, young plants or mature.
(7) Agricultural or industrial services.
Section 260
The preferential right on account of the hiring of an immovable is for the hire of the
immovable and for other obligations of the hired arising from the relation of hiring, and is in
the movables of the hirer which are in or on the immovable.
Section 261
The preferential right of the letter of land is in such movables as have been brought by he
hirer upon the land hired or into buildings subservient to the use of such land, in such
movables as are destined for the use of such land and in such fruits of the land as are in the
possession of the hirer.
The preferential right of the letter or a building is in such movables as have been brought into
the building by the hirer.
Section 262
If a hirer of immovable property is transferred or sublet, the preferential right of the original
letter extends to the movables brought by the transferee or subhirer into the property. The
same applies to the money which the transferor or the subletter is to receive from the
transferee or subhirer.
Section 263
In case of a general liquidation of the property of the hirer, the preferential right of the letter
is only for the rent and other obligations of the last preceding, the current and the next
following rent period and for such damages as have arisen during the last preceding and the
current rent period.
Section 264
If the letter has received security money, he has a preferential right only with regard to that
part of his claim which is not covered by the security money.
Section 265
The preferential right on account of lodging in an inn is for what is due to the proprietor for
lodging and other services afforded to the traveler or guest in satisfaction of his needs,
including disbursements, and is in the luggage or other property of the traveler or guest which
is in the inn, hotel or other such place.
Section 266
The letter of an immovable property or the proprietor of an inn, hotel or other such place may
enforce his preferential right in the same manner as a pledge. The provisions of this Code
concerning Enforcement of Pledge apply mutatis mutandis.
Section 267
The preferential right on account of carriage is for charges for the carriage of a passenger or
goods and for accessory expenses, and is in all goods and luggage in the hands of the carrier.
Section 268
The letter of an immovable, the proprietor of an inn, or the carrier may enforce his
preferential right against movables belonging to a third person in the case contemplated in the
preceding eight sections, unless he knew in due time that they belong to the third person.
If such movables have been stolen or lost the provisions of the law concerning recovery of
possession shall be applied.
Sections 269
The preferential right on account of the preservation of a movable is for the expense of the
preservation of movable, and is in such movable.
The preferential right exists also for necessary expenses incurred for the purpose of having a
right relating to a movable preserved, acknowledged or enforced.
Section 270
The preferential right on account of the sale of a movable is for the price and interest thereon,
and is in such movable.
Section 271
The preferential right on account of the supply of seeds, young plants or manure is for the
price of seeds, young plants or manure and interest thereon, and is in the fruits which have
grown on the land for which those things have been used within one year after their use.
Section 272
The preferential right on account of agricultural and industrial services is as to the person
who rendered agricultural service for wages fro one year back, and as to a person who
rendered industrial services for wages for three months back, and is in the fruits or
manufactured things produced by his service.
(b) PREFERENTIAL RIGHTS IN IMMOVABLES
Section 273
A person in whose favor an obligation exists based upon any of the following grounds has a
preferential right in a particular immovable of the debtor:
(1) Preservation of an immovable
(2) Work done upon an immovable
(3) Sale of an immovable
Section 274
The preferential right on account of the preservation of an immovable is for the expense of
preservation of an immovable, and is in such immovable.
In case of the foregoing paragraph the provisions of Section 269 paragraph 2 apply
correspondingly.
Section 275
The preferential right on account of work done upon an immovable is for charges for the work
done upon an immovable of the debtor by a builder an architect or a contractor, and is in such
immovable.
This preferential right exists only if there is a present increase of the value of such immovable
due to such work, and is only in such increased value.
Section 276
The preferential right on account of the sale of an immovable is for the price and interest
thereon, and is in such immovable.
3. Rank of Preferential Rights
Section 277
When general preferential rights conflict, the rank of their precedence is according to the
order in Section 253.
When a preferential right conflicts with a special preferential right, the latter takes
precedence, but the preferential rights on account of expenses for the common benefit takes
precedence as against all creditors who are benefited thereby.
Section 278
When preferential rights in the same movable conflict, the rank of their precedence is as
follows:
(1) The preferential right on account of the hiring of an immovable, of lodging in an inn
and of carriage.
(2) The preferential right on account of the preservation of a movable, but if there are
several persons entitled as preserves, a later preserves takes precedence of an earlier
one.
(3) The preferential right on account of the sale of movable, of the supply of seeds, young
plants or manure, and of agriculture and industrial services.
If a person who has a preferential right of the first rank knew at the time when he acquired
his obligation that other persons have preferential rights of the second or third rank, he
cannot exercise his right of precedence against them. The same applies as against a person
who has preserved a thing for the benefit of a person having a preferential right of the first
rank.
As to fruits, a person who rendered agricultural services has the first rank, a supplier of seeds,
young plants or manures the second and the letter of the land third.
Section 279
When special preferential rights in the same immovable conflict, the rank of their precedence
is according to the order in Section 273.
In successive sales have been made of the same immovable, the rank of precedence of the
seller as between themselves is according to the priority of the sales.
Section 280
When several persons have preferential rights of the same rank in the same thing, each is to
receive performance in proportion to the amount of his obligation.
4. Effect of Preferential rights
Section 281
A preferential right in a movable cannot be exercised after the debtor has delivered the thing
to a third person who has acquired it from him.
Section 282
When a preferential right conflicts with a pledge of a movable, the pledgee has the same
rights as the holder of a preferential right of the first rank mentioned in Section 278.
Section 283
A person who has a general preferential right must receive performance first out of the
movable property of the debtor, and only in case that is insufficient he can receive
performance out of immovable.
As to immovable, he must receive performance first out of such immovable as are not subject
to a special security.
If a person who has a general preferential right negligently omits to intervene in a distribution
according to the provisions of the foregoing two paragraphs, he cannot exercise his
preferential right against a third person whose right is registered, to the extent of what he
would have received through such intervention.
The provisions of the foregoing three paragraphs do not apply, if the proceeds of an
immovable are to be distributed before those of other property, or if the proceeds of an
immovable which is the subject of a special security are to be distributed before the proceeds
of other immovable.
Section 284
A general preferential right, even though not registered in respect to an immovable, may be
set up against any creditor who has no special security, but this does not apply against a third
person who made registration.
Section 285
A preferential right on account of the preservation of an immovable retains its effect by being
registered immediately after the act of preservation is completed.
Section 286
A preferential right on account of work done upon an immovable retains its effect by a
provisional estimate of the cost being registered before the work has begun. If, however, the
costs of the work exceed the provisional estimate, there is no preferential right for the excess.
The increase of value of an immovable arising from the work done upon it is to be estimated
by experts appointed by the Court at the time of the intervention in the distribution.
Section 287
A preferential right registered in accordance with the provisions of the preceding two sections
can be exercised in preference to a mortgage.
Section 288
A preferential right on account of the sale of an immovable retains its effect by registering at
the same time with the contract of sale the fact that the price or the interest thereon has not
been paid.
Section 289
As to the effect of a preferential right, in addition to provisions of Section 281 to Section 288
inclusive, the provisions as to Mortgage apply correspondingly.
CHAPTER III
PLURALITY OF DEBTORS AND CREDITORS

Section 290
If several persons owe a divisible performance, or if a divisible performance is owed to several
persons, each debtor is, in case of doubt liable only for an equal share, and each creditor is
entitled to an equal share.
Section 291
If several persons owe an act of performance in such manner that each is bound to effect the
whole performance, though the creditor is entitled to obtain the whole performance only once
(i.e. joint debtors), the creditor may demand the performance at his option from any one of
the debtors, in the whole or in part. Until the whole performance has been effected all of the
debtors remain bound.
Section 292
Performance of the obligation by one joint debtor operates in favor of the other debtors. The
same rule applies to any act in lieu of performance, to the deposit of lieu of performance and
to set off.
A claim belonging to one of the joint debtors may not be set off by the other debtors.
Section 293
A release of the obligation granted to one of the joint debtors avails for the benefit of the
other debtors only in respect of the share of the debtor who has been released unless
otherwise agreed.
Section 294
The default of the creditor towards one joint debtor avails also in favor of the other debtors.
Section 295
Facts other than those specified in Sections 292 to 294 avail, unless the contrary appears
from the nature of the obligation, in favor of and as against only the joint debtor to whom
they particularly refer.
This applies, in particular, to the giving of notice, default, and immutability of fault,
impossibility of performance on the part of one joint debtor, prescription or its interruption,
and merger of the claim in debt.
Section 296
As between joint debtors are liable in equal shares, unless it is otherwise provided. If from
one of the joint debtors the contribution due from him cannot be obtained, the deficiency shall
be borne by the other debtors who are bound to make contribution; provided that one of the
joint debtors has been released from joint obligation, the creditor takes upon himself that
share which the debtor released by him ought to have born.
Section 297
If in a contract several persons bind themselves in common to effect a performance, they are
liable, in case of doubt, as joint debtors even in the case of a divisible performance.
Section 298
If several persons are entitled to demand an act of performance in such manner that each can
demand the whole performance, though the debtor is bound to effect the whole performance
only once (i.e. joint creditors), the debtor may at his option perform in favor of any one of the
creditors. This applies even if one of the creditors has already brought an action for the
performance.
Section 299
Default on the part of one joint creditor avails also against the other creditors.
If a claim and a debt become merged in one joint creditor, the rights of the other creditors
against the debtor are extinguished.
For the rest the provisions of Sections 292, 293 and 295 shall be applied mutatis mutandis.
In particular, if one joint creditor transfers his claim to another person, the rights of the other
creditors remain unaffected.
Section 300
Joint creditors are, as between themselves, entitled to equal shares, unless it is otherwise
provided.
Section 301
If several people owe an indivisible performance, they are liable as joint debtors.
Section 302
If an indivisible performance is owed to several persons, and if they are not joint creditors, the
debtor may only perform in favor of all in common, and each creditor may only demand the
performance in favor of all. Each creditor may demand that the debtor deposits the thing
owed for the benefit of all the creditors, or if the thing is not suitable to be deposited, that it
be consigned to a custodian appointed by the court.
For the rest a fact which refers only to one creditor does not avail in favor of nor as against
the other creditors.
CHAPTER IV
TRANSFER OF CLAIMS

Section 303
A claim may be transferred, unless its nature does not admit of it.
The provisions of the foregoing paragraph do not apply, if the parties have declared a contrary
intention. Such declaration of intention, however, cannot be set up against a third person
acting in good faith.
Section 304
A claim is not transferable if it is not subject to judicial attachment.
Section 305
With the transferred claim the rights of mortgage or pledge existing on its account and the
rights, arising from a surety established for it, pass to the transferee.
The transferee may also enforce any preferential right connected with the claim in case of
compulsory execution or bankruptcy.
Section 306
The transfer of an obligation performable to a specific creditor is not valid unless it is made in
writing. It can be set up against the debtor or third person only if a notice thereof has been
given to the debtor, or if the debtor has consented to the transfer. Such notice or consent be
in writing.
The debtor is discharged if he satisfies the transferor by way of payment or otherwise before
he has received notice of, or has agreed to, the transfer.
Section 307
If a right is claimed under different transfers, the first transfer notified, or agreed to, shall be
preferred.
Section 308
If a debtor has given the consent mentioned in Section 306 without reservation, he cannot set
up against the transferee a defense which he might have made against the transferor. If,
however, in order to extinguish the obligation, the debtor has made any payment to the
transferor, he may recover it, or if for such purpose he has assumed an obligation to the
transferor, he may treat it as if it did not exist.
If the debtor has only received a notice of the transfer, he may set up against the transferee
any defense which he had against the transferor before he received such notice. If the debtor
had against the transferor a claim not yet due at the time of the notice, he can set off such
claim provided that the same would become due not later than the claim transferred.
Section 309
The transfer of an obligation performable to order can be set up against the debtor or other
third person only if the transfer is indorsed on the instrument, and the instrument itself is
delivered to the transferee.
Section 310
The debtor of an obligation performable to order has the right, but is not bound, to verify the
identity of the holder of the instrument or the genuineness of his signature or seal; but if the
debtor acts in bad faith or with gross negligence, his performance is invalid.
Section 311
The provisions of the foregoing section apply correspondingly, if a creditor is designated in the
instrument, but it is added that performance shall e made to the holder of such instrument.
Section 312
The debtor of an obligation performable to order cannot set up against any transferee in good
faith defenses which he might have set up against the original creditor, except such as appear
on the face of the instrument or result naturally from its character.
Section 313
The provisions of the foregoing section apply correspondingly to obligations performance to
bearer.
CHAPTER V
EXTINCTION OF OBLIGATION

PART I
Performance

Section 314
Performance of an obligation may be made by any third person, unless its nature does not
admit of it, or the parties concerned have declared a contrary intention.
A person, who has no interest in the performance, cannot make performance against the will
of the debtor.
Section 315
Performance must be made to the creditor or a person having authority to receive
performance on his behalf. A performance made to a person who has no authority to receive
is valid if the creditor ratifies it.
Section 316
If performance is made to the apparent possessor of an obligation, it is valid only if the person
making performance acted in good faith.
Section 317
Except in the case mentioned in the foregoing section, a performance made to a person who is
not entitled to receive it, is valid only to the extent to which the creditor has been enriched
thereby.
Section 318
A person who holds a receipt is deemed to have a right to receive performance; but this does
not apply, if the person making performance knows that such right does not exist or is
ignorant thereof by reason of his negligence.
Section 319
When a third debtor who has been ordered by a Court to refrain from making performance,
has made the same to his own creditor, the seizing creditor may, in so far as he has sustained
damage, demand another performance from the third debtor.
The provisions of the foregoing paragraph do not prevent the third debtor from exercising the
right to recourse against his own creditor.
Section 320
The creditor cannot be compelled to receive part performance or any other performance than
that which due to him.
Section 321
An obligation is extinguished if the creditor accepts in lieu of performance another
performance than agreed upon.
If the debtor, for the purpose of satisfying the creditor, assumes a new obligation towards
him, is not to be presumed, in case of doubt, that he assumes the obligation in lieu of
performance.
If performance is made by making, transferring, or endorsing a bull or warrant, the obligation
is extinguished only if such bill or warrant is paid.
Section 322
If a thing, a claim against a third person or any other right is given in lieu of performance, the
debtor shall be liable for defect and for eviction in the same manner as the seller.
Section 323
If the subject of an obligation is the delivery of a specific thing, the person making
performance must deliver the thing in connection in which it is at the same time when delivery
is to be made.
The debtor must, until he delivers it, keep the thing with such care as a person of ordinary
prudence would take of his own property.
Section 324
When there is no special declaration of intention as to the place of performance, if a specific
thing is to be delivered, the delivery is to be made at the place where the thing was at the
time when the obligation arose; other kinds of performance must be made at the place of the
creditor's present domicile.
Section 325
When there is no declaration of intention as to the expenses of performance, such expenses
are to be borne by the debtor; if, however, because of the creditor's transfer of his domicile or
any other act of his the expenses are increased, such increase must be borne by the creditor.
Section 326
The person making performance is entitled to a receipt from the person who receives
performance, and if the performance is wholly performed, he is entitled to have the document
embodying the obligation surrendered to him or cancelled. If such document is declared to be
lost, he is entitled to have the extinction of the obligation mentioned in the receipt or in a
separate document.
If the obligation is partly performed or if the document gives the creditor any other right, the
debtor is only entitled to a receipt and to have the performance noted in the document.
Section 327
In case of interest or other periodical performance, if the creditor gives a receipt for one term
without any reservation, it is presumed that he has received performance for the previous
terms.
If he gives receipt for the capital, it is presumed that he has received the interest.
If the document embodying the obligation has been surrendered, it is presumed that the
obligation has been extinguished.
Section 328
If a debtor is bound to the creditor to do similar acts of performance by virtue of several
obligations, and if the performance effected by him is insufficient for the discharge of all
debts, that debt is discharged which he specifies on effecting the performance.
If the debtor makes no specification, then that debt which is due is first discharged; among
several debts due that one is first discharged which affords the creditor least security; among
several equal secured debts the one most burdensome to the debtor; among several equally
burdensome debts the oldest debt; and where several are equally old every debt
proportionately.
Section 329
If the debtor, besides the principal performance, has to pay interest and costs, the value of an
act of performance sufficient to discharge the whole debt is applied first to the costs, then to
the interest, and lastly to the principal performance.
Section 330
By proper tender of performance a discharge is effected, from the time of the tender, from all
responsibilities arising out of nonperformance.
Section 331
If the creditor refuses or is unable to accept performance, the person performing may be
discharged from the obligation by depositing for the creditor's benefit the thing forming the
subject of the obligation. The same applies cannot ascertain the right or identity of the
creditor, if the person performing without fault on his part,
Section 332
If the debtor is bound to perform only after the counterperformance has been effected by the
creditor, he may make the right of the creditor to receive the thing deposited dependent upon
counterperformance by the creditor.
Section 333
A deposit must be made to the deposit office or the place where the obligation is to be
performed.
If there are no special provisions by law or regulations as to the deposit offices, the court
must, on application of the person performing, designate a deposit office and appoint a
custodian of the thing deposited.
The depositor must without delay give notice of the deposit to the creditor.
Section 334
The debtor has the right to withdraw the thing deposited. If he withdraws it, the deposit is
deemed never to have been made.
The right of withdrawal is barred:
(1) If the debtor declares to the deposit office that he waives his right of withdrawal.
(2) If the creditor declares his acceptance to the deposit office.
(3) If the deposit has been ordered or confirmed by the court and the fact is notified to the
deposit office.
Section 335
The right of withdrawal is not subject to judicial attachment.
If bankruptcy proceedings are instituted against the property of the debtor, the right of
withdrawal cannot be exercised during the bankruptcy proceedings.
Section 336
If the thing forming the subject of performance is not suitable for deposit, or if in regard to
the thing there is an apprehension that it may perish or be destroyed or damaged, the person
performing may, with the permission of the court, sell it at auction and deposit the proceeds.
The same applies, if the keeping of the thing would be unreasonably expensive.
Section 337
The auction is not permissible until after the creditor has been warned of it. The warning may
be dispensed with if the thing is liable to deterioration, and there is danger in delaying the
auction.
The debtor shall without delay notify the creditor of the auction; if the debtor fails to do so, he
is liable for compensation.
The warning and the notice may be dispensed with if they are impracticable.
The time and place of the auction, with a general description of the thing, shall be publicly
advertised.
Section 338
The cost of the deposit or of the auction shall be borne by the creditor, unless the deposit be
withdrawn by the debtor.
Section 339
The right of the creditor to the deposit is extinguished after the lapse of ten years since
receipt of notice of the deposit.
After the right of the creditor is extinguished the debtor is entitled to withdraw even if he has
waived the right of withdrawal.
PART II
Release

Section 340
If the creditor declares to the debtor an intention to release the obligation, it is extinguished.
When an obligation has been evidenced by writing, the release must also be in writing or the
document embodying the obligation be surrendered to the debtor or cancelled.
PART III
Setoff

Section 341
If two persons are bound to each other by obligations whose subject is of the same kind and
both of which are due, either debtor may be discharged from his obligation by setoff to the
extent to which the amounts of the obligations correspond, unless the nature of one of the
obligations does not admit of it.
The provisions of the foregoing paragraph do not apply, if the parties have declared a contrary
intention; but such intention cannot be set up against a third person acting in good faith.
Section 342
Setoff is made by a declaration of intention by one party to another. A condition or time
commencement or ending cannot be added to such declaration.
The declaration of intention mentioned in the foregoing paragraph relates back in its effect to
the time when both obligations could first have been setoff.
Section 343
A setoff may be made even though the place of performance of the two obligations is
different; but the party who makes the setoff must indemnify the other party for any damage
caused thereby.
Section 344
A claim against which there is a defense may not be setoff. Prescription does not exclude setoff,
if the claim barred by prescription was not barred at the time at which it could have been
setoff against the other claim.
Section 345
If an obligation arises from an unlawful act, the debtor cannot avail himself of a setoff
against the creditor.
Section 346
If a claim is not subject to judicial attachment, it is not subject to setoff.
Section 347
A third debtor who has received from the court an order of prohibition of payment cannot set
up against the seizing creditor an obligation subsequently acquired by him.
Section 348
If either party has several claims suitable for setoff, the party making the setoff may specify
the claims which are to be setoff against each other. If the setoff is declared without such
specification, or if the other party objects without delay, provisions of Section 328 paragraph
2 shall be applied mutatis mutandis.
If the party making the setoff owes the other party interest and costs in addition to the
principal performance, the provisions of Section 329 shall be applied mutatis mutandis.
PART IV
Novation

Section 349
When the parties concerned have concluded a contract changing the essential elements of an
obligation, such obligation is extinguished by novation.
If a conditional obligation is made unconditional, or a condition is added to an unconditional
obligation, or if a condition is changed, it is regarded as a change of an essential element of
such obligation.
A novation by a change of the creditor is governed by the provisions of this Code concerning
transfer of claims.
Section 350
A novation by a change of the debtor may be effected by a contract between the creditor and
the new debtor, but this cannot be done against the will of the original debtor.
Section 351
If the obligation resulting from a novation does not come into existence, or is annulled,
because of an illegality in its ground or because of some reason unknown to the parties, the
original obligation is not extinguish.
Section 352
The parties to a novation may, to the extent of the subject of the original obligation, transfer
a right of pledge or mortgage given as security for it to the new obligation; but if such
security was given by a third person, his consent is necessary.

his consent is necessary.
PART V
Merger

Section 353
If rights and liabilities in an obligation become vested in the same person, the obligation is
extinguished, except when it has become the subject of the right of a third person, or when a
bill has been reindorsed according Section 917 paragraph 3.
TITLE II
CONTRACT

CHAPTER I
FORMATION OF CONTRACT

Section 354
An offer to make a contract in which a period for acceptance is specified cannot be withdrawn
within such period.
Section 355
A person who, without specifying a period for acceptance, makes an offer to another at a
distance cannot withdraw his offer within a time which notice of acceptance might reasonably
be expected.
Section 356
An offer made to a person who is present without specifying a period for acceptance may be
accepted only there and then. This applies also to an offer made by one person to another on
the telephone.
Section 357
An offer ceases to be binding if it is refused to the offeror, or if it is not accepted in due time
according to the three foregoing sections.
Section 358
If the notice of acceptance arrives out of time, but it is apparent that it was sent in such
manner that in the ordinary course of things it ought to have arrived in due time, the offeror,
unless he has already done so, must without delay give notice to the other party of the
delayed arrival.
If the offeror fails to give notice mentioned in the foregoing paragraph, the notice of the
acceptance is deemed not to have been out of time.
Section 359
If the acceptance of an offer arrives out of time, it is deemed to be a new offer.
An acceptance with additions, restrictions or other modifications is deemed to be a refusal
coupled with a new offer.
Section 360
The provisions of Section 169 paragraph 2 do not apply, if the offeror has declared a contrary
intention, or if before accepting the other party had notice of the fact of his death or loss of
capacity.
Section 361
A contract between persons at a distance comes into existence at the time when the notice of
acceptance reaches the offeror.
In accordance to the declared intention of the offeror or to ordinary usage no notice of
acceptance is necessary; the contract comes into existence at the time of the occurrence of
fact which is considered as a declaration to accept.
Section 362
A person who by advertisement promises that he will give a reward to whoever shall de a
certain act is bound to give such reward to any person who does the act, even if such person
did not act with a view to the reward.
Section 363
In the case of the foregoing section the promised person may so long as there is no person
who has completed the specific act, withdraw his promise by the same means which used for
advertising, unless he declared in the advertisement that he would not withdraw it.
If a promise cannot be withdrawn by the means of the aforesaid, withdraw may be made by
other means, but in such case it is valid only against those persons who know of it.
If the promised person has fixed a period within which the specified act must be done, he is
presumed to have renounced his right of withdrawal.
Section 364
If there are several persons who have done the act specified in the advertisement, only that
one who does it first has a right to receive an equal share of the reward.
If several persons do such act at the same time, each one has a right to receive an equal
share of the reward. But if the reward is in its nature indivisible, or if by the terms of the
promise only one person is to receive the reward, it is decided by lot.
The provisions of the foregoing two paragraphs do not apply, if in the advertisement a
different intention is declared.
Section 365
A promise of reward which has a prize competition is valid only if a period of time is fixed in
the advertisement.
The decision whether any competitor fulfils the conditions of the promise within the period, or
which one among several competitors deserves the preference, shall be made by the umpire
named in the advertisement, or in the absence of any such, by the promised person of the
reward. The decision is binding upon the parties concerned.

In case of equality of merit the provisions of Section 364 paragraph 3 apply correspondingly.
The transfer of ownership of the thing produced may be demanded by the promised person
only of he has specified in the advertisement that such transfer shall be made.
Section 366
So long as the parties have not agreed upon all points of a contract upon which, according to
the declaration of even one party, agreement is essential, the contract is, in case of doubt, not
concluded. An understanding concerning particular points is not binding, even if they have
been noted down.
If it is agreed that the contemplated contract shall be put into writing, in case of doubt, the
contract is not concluded until it is put in writing.
Section 367
If the parties to a contract, which they regarded as concluded, have in fact not agreed as to
one point upon which an agreement was to be settled, those parts which were agreed upon
are valid in so far as it may be inferred that the contract would have been concluded even
without a settlement of this point.
Section 368
Contracts shall be interpreted according to the requirements of good faith, ordinary usage
being taken into consideration.
CHAPTER II
EFFECT OF CONTRACT

Section 369
A party to a reciprocal contract may refuse to perform his obligation until the other party
performs or tenders performance of his obligation. But this does not apply, if the other party's
obligation is not yet due.
Section 370
If the object of a reciprocal contract is the creation or transfer of a real right in a specific
thing, and such thing is lost or damaged by a cause which is not attributable to the debtor,
the loss or damage fails upon the creditor.
To a nonspecific thing the provisions of the foregoing paragraph apply from the time when
the thing has become specific in accordance with the provisions of Section 195 paragraph 2.
Section 371
The provision of the foregoing section does not apply, if the thing which forms the subject of a
reciprocal contra depending upon a condition precedent is lost or destroyed while the
condition is pending.
If the thing is damaged by a cause not attributable to the creditor, the latter, when the
condition is fulfilled, may at his option either demand performance with reduction of his
counter performance or rescind the contract, provided that in the case where the cause of the
damage is attributable to the debtor, the creditor's right to compensate is not affected
thereby.
Section 372
Except in the cases mentioned in the two foregoing sections, if an obligation becomes
impossible of performance by a cause not attributable to either party, the debtor has no right
to receive the counter performance.
If performance becomes impossible by a cause attributable to the creditor, the debtor does
not lose his right to the counter performance. He must however, deduct what he saves in
consequence of release from the performance, or what he acquires or maliciously omits to
acquire by a different application of his faculties. The same rule applies in the performance
due from one party becomes impossible, in consequence of a circumstance for which he is not
responsible, at the time when the other party is in default to acceptance.
Section 373
An agreement made in advance exonerating a debtor from his own fraud or gross negligence
is void.
Section 374
If a party by a contract agrees to make a performance to a third person, the latter has a right
to claim such performance directly from the debtor.
In the case of the foregoing paragraph the right of the third person comes into existence at
the time when he declares to the debtor his intention to take the benefit of the contract.
Section 375
After the right of the third person has come into existence in accordance with the provisions of
the foregoing section, it cannot be charged or extinguished by the parties to the contract.
Section 376
Defenses arising from the contract mentioned in Section 374 can be set up by the debtor
against the third person who receives the benefit of the contract.
CHAPTER III
EARNEST AND STIPULATED PENALTY

Section 377
If, on entering into a contract, something is given as earnest, this is deemed to be proof of
the conclusion of the contract. I also serves as a security that the contract shall be performed.
Section 378
In the absence of agreement to the contrary, earnest is:
(1) To be returned or treated as partpayment upon performance
(2) To be forfeited, if the party giving it fails to perform, or if the performance becomes
impossible in consequence of the circumstance for which he is responsible or if the
rescission of the contract is due to his fault.
(3) To be returned, if the party receiving it fails to perform, or, if the performance
becomes impossible in consequence of a circumstance for which he is responsible.