Thailand Civil and Commercial Code Sections-194-289
BOOK II
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 of a forbearance.
Section 195. When the thing that forms the subject of an obligation is described only in kind, and 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 everything required on his part for the delivery of such a thing, or if he has designated a thing for delivery with the consent of the creditor, that 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 at 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 If a money debt is payable in a specific kind of money which is no longer current at the time of payment, the payment shall be made as if the kind of money were not specified.
Section 198. If several acts of performance are due in such a 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 that 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 does not have the right of election can notify the other party to exercise his right of election within a reasonable time specified 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 a 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 apply if the performance becomes impossible due to a circumstance for which the party not entitled to elect is responsible.
CHAPTER II
EFFECT OF OBLIGATIONS
PART I: Non-Performance
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; however, the debtor may perform earlier.
Section 204 If the debtor does not perform after a warning given by the creditor after maturity, he is in default through the warning. If a fixed calendar date is set for the performance, the debtor is in default without a 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 a manner that it can be reckoned by the calendar from the time of notice.
Section 205 The debtor is not in default as long as the performance is not effected due to 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 he committed the act.
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 in which it is to be effected. However, if the creditor has declared to the debtor that he will not accept performance, or if an act of the creditor is necessary for effecting the performance, 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 fixed time is set for the act to be done by the creditor, tender is required only if the creditor performs 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 counter-performance.
Section 211 A creditor is not in default if the debtor is not in a position to effect 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 apply 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 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 the performance of a juristic act, a judgment may be substituted for a declaration of intention by the debtor. As for an obligation whose subject is the performance of 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 a 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, due to default, the performance becomes useless to the creditor, he may refuse to accept it and claim compensation for non-performance.
Section 217 A debtor is responsible for all negligence during his default. He is also responsible for the impossibility of performance arising accidentally during the default, unless the injury would have arisen even if he had performed in due time.
Section 218 When the performance becomes impossible due to a circumstance for which the debtor is responsible, the debtor shall compensate the creditor for any damage arising from the non-performance. In the case of partial impossibility, the creditor may, by declining the still possible part of the performance, demand compensation for the non-performance of the entire obligation, if the still possible part of the performance is useless to him.
Section 219 The debtor is relieved from his obligation to perform if the performance becomes impossible due to 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 persons whom he employs in performing his obligation, to the same extent as for his own fault. In such cases, 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 for damages is for compensation for all damage that usually arises from non-performance. The creditor may demand compensation even for damage arising 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 on the circumstances, especially on how far the injury has been caused chiefly by one party or the other. This applies even if the fault of the injured party consisted only in an omission to call attention to the danger of an unusually serious injury that the debtor neither knew nor ought to have known, or in an omission to avert or mitigate the injury. The provisions of Section 220 apply mutatis mutandis.
Section 224 A money debt bears interest during default at seven and a 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 that has perished during the default, or which cannot be delivered for a reason that arose during the default, the creditor may demand interest on the amount to be paid as compensation from the time that serves as the basis for estimating the value. The same rule applies if the debtor is bound to make compensation for the diminution in value of an object that has deteriorated during the default.
PART II
Subrogation
Section 226 A person who 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, as a 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 compensation by himself. If the creditor has a claim for compensation on account of non-performance, 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 benefits the following persons:
A person who, being himself a creditor, pays another creditor who has priority due to such other creditor having a preferential right, pledge, or mortgage.
A person who acquires an immovable property and uses the purchase price to pay off the persons who have mortgages thereon.
A person who, being bound with others or for others to pay a debt and being 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 satisfy 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 to 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 the 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 received any objection to the payment within one month from such notice, 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 applies to the mortgage of movables allowed by law. In the 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 apply mutatis mutandis in the case of expropriation as well as in the 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 substituted for the property destroyed or damaged, such sum shall in no case be delivered to the mortgagee, pledgee, or other preferred creditor before the obligation secured is due. 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 for their common benefit, unless the debtor provides 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 a claim in his own name on behalf of the debtor, except for those claims which are purely personal to the debtor.
Section 234 The creditor who exercises a claim belonging to the 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. However, the defendant may satisfy the creditor by paying only the amount due to him, 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, except for those defenses 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 the creditor. However, this does not apply if the person enriched by such an act did not know, at the time of the act, the facts that could make it prejudicial to the creditor. In the case of a gratuitous act, knowledge on the part of the debtor alone is sufficient. The provisions of this section do not apply to a juristic act whose subject is not a property right.
Section 238 Cancellation under the foregoing section cannot affect the right of a third person acquired in good faith. This paragraph does not apply if the right was acquired gratuitously.
Section 239 Cancellation operates in favor of all creditors.
Section 240 A claim for cancellation cannot be brought later than one year from the time when the creditor knew of the cause for cancellation, or later than ten years from the time 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. However, this does not apply if the obligation is not yet due. The provisions of this section do not apply if the possession began through 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 the case of the debtor’s insolvency, the creditor has the right of retention even if the creditor’s claim is not yet due. If insolvency has occurred or become known to the creditor after the delivery of the property, the creditor can exercise the right of retention even if an obligation previously assumed by him or instructions given by the debtor oppose it.
Section 244 The holder of a right of retention may exercise this 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 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, except for 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 of the property retained, he may require the owner to reimburse him.
Section 248 Subject to the provisions of Section 193/27, the exercise of 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 by providing proper security.
Section 250 A right of retention is extinguished by the loss of possession of the property; however, this does not apply in 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 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 on any of the following grounds has a preferential right over the whole property of the debtor:
- Expenses for the common benefit.
- Funeral expenses.
- Taxes and duties, and money to which an employee is entitled for services rendered to the debtor who is his employer.
- Supplies of daily necessities.
Section 254 The preferential right on account of expenses for the common benefit is for expenses incurred for the common benefit of all creditors in regard to the preservation, liquidation, or distribution of the debtor’s property. If any such expense was not incurred for the benefit of all creditors, the preferential right exists only against those creditors for whose benefit it was incurred.
Section 255 The preferential right on account of funeral expenses covers funeral expenses that are commensurate with the debtor’s station in life.
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 includes 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 for up to four months back, not exceeding one hundred thousand baht for each employee.
Section 258 The preferential right on account of supplies of daily necessities covers supplies for up to six months back of food, drink, light, firewood, and charcoal necessary for the living of the debtor, members of his family who live with him and whom he is bound to support, and his servants.
2. Special Preferential Rights
(A) PREFERENTIAL RIGHTS IN MOVABLES
Section 259 A person in whose favor an obligation exists based on any of the following grounds has a preferential right in particular movables of the debtor:
- Hiring of an immovable.
- Lodging in an inn.
- Carriage of passengers or goods.
- Preservation of movables.
- Sale of movables.
- Supply of seeds, young plants, or manure.
- 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 arising from the hiring relationship, and is in the movables of the hirer that are in or on the immovable.
Section 261 The preferential right of the lessor of land is in such movables as have been brought by the hirer onto the land or into buildings used for the land, in such movables as are destined for the use of the land, and in such fruits of the land as are in the possession of the hirer. The preferential right of the lessor of a building is in such movables as have been brought into the building by the hirer.
Section 262 If an immovable property is transferred or sublet, the preferential right of the original lessor extends to the movables brought by the transferee or sub-hirer into the property. The same applies to the money which the transferor or sub-lessor is to receive from the transferee or sub-hirer.
Section 263 In the case of a general liquidation of the property of the hirer, the preferential right of the lessor is only for the rent and other obligations for the last preceding period, the current period, and the next following rent period, as well as for damages that have arisen during the last preceding and the current rent period.
Section 264 If the lessor 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 provided to the traveler or guest to satisfy their 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 lessor 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 pledgee. The provisions of this Code concerning the 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 lessor 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 cases contemplated in the preceding eight sections, unless he knew in due time that they belonged to a third person. If such movables have been stolen or lost, the provisions of the law concerning the recovery of possession shall apply.
Section 269 The preferential right on account of the preservation of a movable is for the expenses incurred for the preservation of the movable, and is in the movable itself. The preferential right also exists 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 the movable itself.
Section 271 The preferential right on account of the supply of seeds, young plants, or manure is for the price of the seeds, young plants, or manure and interest thereon, and is in the fruits that 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 covers wages for agricultural services for up to one year back and for industrial services for up to three months back, and is in the fruits or manufactured goods produced by those services.
(B) PREFERENTIAL RIGHTS IN IMMOVABLES
Section 273 A person in whose favor an obligation exists based on any of the following grounds has a preferential right in a particular immovable of the debtor:
- Preservation of an immovable.
- Work done upon an immovable.
- Sale of an immovable.
Section 274 The preferential right on account of the preservation of an immovable is for the expenses of preserving the immovable, and is in the immovable itself. In this case, the provisions of Section 269, paragraph 2 apply correspondingly.
Section 275 The preferential right on account of work done upon an immovable is for the charges for the work done upon the immovable by a builder, architect, or contractor, and is in the immovable itself. This preferential right exists only if there is a present increase in the value of the immovable due to such work, and is only in the amount of that 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 the immovable itself.
3. Rank of Preferential Rights
Section 277 When general preferential rights conflict, the rank of their precedence is according to the order specified in Section 253. When a preferential right conflicts with a special preferential right, the special right takes precedence. However, the preferential right on account of expenses for the common benefit takes precedence over all creditors who are benefited thereby.
Section 278 When preferential rights in the same movable conflict, the rank of their precedence is as follows:
- The preferential right on account of the hiring of an immovable, lodging in an inn, or carriage.
- The preferential right on account of the preservation of a movable. If there are several persons entitled as preservers, a later preserver takes precedence over an earlier one.
- The preferential right on account of the sale of a movable, the supply of seeds, young plants or manure, and agricultural and industrial services.
If a person with a preferential right of the first rank knew at the time of acquiring their obligation that other persons had preferential rights of the second or third rank, they cannot exercise their right of precedence against those persons. The same applies to a person who has preserved a thing for the benefit of a person having a preferential right of the first rank.
Regarding fruits, a person who rendered agricultural services has the first rank, a supplier of seeds, young plants, or manure has the second rank, and the lessor of the land has the third rank.
Section 279 When special preferential rights in the same immovable conflict, the rank of their precedence is according to the order specified in Section 273. In cases of successive sales of the same immovable, the rank of precedence among the sellers is based on the priority of the sales.
Section 280 When several persons have preferential rights of the same rank in the same thing, each person is entitled to receive performance in proportion to the amount of their 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 them.
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 if that is insufficient can they receive performance out of immovables. Regarding immovables, performance must be received first out of those immovables not subject to a special security.
If a person with a general preferential right negligently omits to intervene in a distribution according to the provisions of the foregoing two paragraphs, they cannot exercise their preferential right against a third person whose right is registered, to the extent of what they 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 immovables.
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. However, this does not apply against a third person who made the 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 registering a provisional estimate of the cost before the work begins. If, however, the cost of the work exceeds the provisional estimate, there is no preferential right for the excess.
The increase in the 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 the fact that the price or the interest thereon has not been paid at the same time as the contract of sale.
Section 289 Regarding the effect of a preferential right, in addition to the provisions of Sections 281 to 288 inclusive, the provisions concerning mortgages apply correspondingly.
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