Elements of Thai Civil Law [1 ed.] 9789004308923, 9789004308930

Citation preview

Elements of Thai Civil Law

Elements of Thai Civil Law By

Alessandro Stasi

LEIDEN | BOSTON

This publication has been typeset in the multilingual “Brill” typeface. With over 5,100 characters covering Latin, ipa, Greek, and Cyrillic, this typeface is especially suitable for use in the humanities. For more information, please see www.brill.com/brill-typeface. isbn 978-90-04-30893-0 (hardback) isbn 978-90-04-30892-3 (e-book) Copyright 2016 by Koninklijke Brill nv, Leiden, The Netherlands. Koninklijke Brill nv incorporates the imprints Brill, Brill Hes & De Graaf, Brill Nijhoff, Brill Rodopi and Hotei Publishing. All rights reserved. No part of this publication may be reproduced, translated, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without prior written permission from the publisher. Authorization to photocopy items for internal or personal use is granted by Koninklijke Brill nv provided that the appropriate fees are paid directly to The Copyright Clearance Center, 222 Rosewood Drive, Suite 910, Danvers, ma 01923, usa. Fees are subject to change. This book is printed on acid-free paper.

Contents Preface ix 1 Introduction 1 1 The Characteristics of Law 1 1.1 The Relationship between Law and Morality 2 1.2 The Relationship between Law and Religion 4 1.3 The Relationship between Law and Justice 4 1.4 The Relationship between Law and Social Convention 5 2 Sources of Law 7 2.1 The Constitution 7 2.2 Acts and Emergency Acts 8 2.3 Royal Decrees 10 2.4 Subordinate Legislation 10 3 Classification of the Law 10 3.1 Private Law and Public Law 11 3.2 Substantive Law and Procedural Law 13 4 Legal Systems 14 4.1 Civil Law 15 4.2 Common Law 15 5 Application of the Law 16 6 Organization of the Judicial System 18 2 General Rules of Civil Law 21 1 Juristic Facts 21 1.1 Licit and Illicit Acts 22 1.2 Classification of Licit Acts 23 2 Legal Persons 24 2.1 Natural Persons 25 2.2 Capacity to Perform Juristic Acts 26 2.3 Artificial Persons 29 2.4 Principal and Agent 31 3 Legal Object 33 3.1 Civil Rights 34 3.2 Property and Things 35 3.3 Classification of Property 36 3.4 Fruits 38 4 Legal Protection 39

vi 3 The Law of Obligations 41 1 The Nature of Obligations 42 2 Classification of Obligations 44 2.1 Contingent and Conditional Obligations 45 2.2 Conjunctive and Alternative Obligations 45 2.3 Several or Joint Obligations 46 2.4 Divisible and Indivisible Obligations 46 2.5 Ordinary, Privileged, and Mortgaged Obligations 46 2.6 Principal or Secondary Obligations 47 2.7 Liquid and Non-liquid Obligations 47 3 Performance 47 4 Non-performance 52 5 Other Grounds for Extinction of Obligations 56 5.1 Release 56 5.2 Set-off 57 5.3 Novation 59 5.4 Merger 60 4 Contractual Obligations 62 1 Essential Elements of a Contract 62 1.1 Agreement between the Parties 63 1.2 Object 64 1.3 Form 67 2 Formation of Contract 68 3 Vices of Consent 72 3.1 Mistake 72 3.2 Fraud 75 3.3 Duress 77 4 Validity of Contract 78 5 Discharge of a Contract 80 5.1 Performance and its Equivalents 80 5.2 Mutual Agreement 81 5.3 Breach of Contract 82 5.4 Impossibility of Performance 82 5.5 Prescription 83 6 Plurality of Parties 84 5 Specific Contracts 86 1 Sale 86 2 Exchange 90

Contents

Contents

3 Gift 91 4 Hire 93 4.1 Hire of Property 94 4.2 Hire of Services 97 4.3 Hire of Work 100 5 Loan 103 5.1 Loan for Use 103 5.2 Loan for Consumption 104 6 Guarantee 105 7 Mortgage 106 8 Pledge 108 6 Delictual Obligations 110 1 Elements of Delict Law 113 2 General Rules of Liability 118 3 Special Rules of Liability 120 3.1 Defamation 121 3.2 Unfair Competition 122 3.3 Liability for Damage done by Animals 123 3.4 Liability of Supervisors 124 3.5 Circulation of Vehicles 125 4 Strict Liability 125 4.1 Defective Products 125 4.2 Liability of Employers 126 4.3 Liability of Artificial Persons 127 4.4 Liability for Damage caused by Buildings 127 7 Quasi-Contractual Obligations 129 1 Management of Affairs without Mandate 129 2 Undue Enrichment 130 8 The Regulation of Property 134 1 The Right of Ownership 135 2 Acquisition of Ownership 136 2.1 Accession 136 2.2 Specification 138 2.3 Occupation 138 2.4 Acquisitive Prescription 139 3 Extent and Exercise of Ownership 141 3.1 Limits upon the Owner’s Right of Possession 142

vii

viii

Contents

4 5

3.2 Limits upon the Owner’s Right of Enjoyment 142 Possession 144 Other Real Rights 146 5.1 The Right of Servitudes 147

9

Family Law 155 1 Marriage 155 1.1 Capacity to Marry 156 1.2 Consent of Parents 156 1.3 Celebration of Marriage 157 1.4 Promise to Marry 157 2 Legal Effects of Marriage 158 2.1 General Effects 158 2.2 Patrimonial Effects 159 3 Dissolution of Marriage 161 3.1 Nullity and Voidability 161 3.2 Divorce 162 4 Filiation 163 4.1 Paternity and Legitimacy 164 4.2 Reciprocal Rights and Duties of Parents and Children 165 5 Adoption 166

10

Law of Inheritance 169 1 Basic Notions 169 2 Heirship 170 3 Statutory Right of Inheritance 172 4 Testamentary Right of Inheritance 173 4.1 The Capacity to Make a Will 174 4.2 Different Types of Wills 174 4.3 Effects and Interpretation of Wills 176 4.4 Revocation 177 4.5 Lapse of a Will 178 5 Administration of an Estate 178 References 181 Index 184

Preface The principal aim of this book is to illustrate the elementary principles of Thai civil law, in a simple and readable style that should appeal to a wide readership of students, practitioners, and academics. The text is organized around the major issues relating to civil law and provides a concise and systematic overview of the norms regulating legal relationships between private persons. The 10 chapters are each designed to present a detailed analysis of a particular area of Thai civil law as well as numerous examples of the main issues encountered in a legal practice without unnecessary detail. To some extent, each chapter is intended to address a specific topic which can be read independently of the rest of the book. Subject coverage includes: the law of obligations, property law, family law, and succession. It has not been the purpose of the author to develop any new legal concepts. The originality of the work essentially lies in the manner in which the material is presented. Meticulous use has been made of laws, cases, academic textbooks, and practitioner articles in order to present the subject in a clear and straightforward style that is understandable to readers unused to legal phraseology. If this work succeeds in contributing a better understanding of Thai civil law and introducing its readers to a more extended study of the subject, it will have served its purpose. On the occasion of the publication of this book, the author desires to acknowledge the financial support provided by Mahidol University Inter­ national College (MUIC) under the seed grant scheme. Without it, the study presented here could not have been completed in its current form. The author would like to acknowledge the assistance given by Professor Giuseppe Mario Saccone and Dr. Santichai Srisawet who meticulously reviewed the entire manuscript and made invaluable suggestions. Thanks are also due to Ms. Phatcharaporn Chokbunsuwa, Ms. Sukinee Lerdpienpitayakul, Ms. Suppaluk Jakkrod, and Mr. Thitiwat Ongsangkoon for their valuable assistance with translation and editing. They also greatly contributed to the research underpinning this book. In addition, the author would like to mention with gratitude the contribution of Professor Kamol Sandhikshertrin whose work of translation of The Civil and Commercial Code, Books 1–6, represents an essential reference for a large number of researchers and scholars dealing with the Thai legal system. All of these persons and institutions must be exonerated, however, from responsibility for any inaccuracies, errors, or omissions within the work, the author alone assuming full responsibility. To the best of the author’s knowledge, the law as stated in this work is current as of October 31, 2015.

chapter 1

Introduction 1

The Characteristics of Law

Law can be defined as a rule of conduct prescribed by the supreme authority in a state commanding that which is right and prohibiting that which is wrong. Law is a regulation standardizing or regulating social communities by prohibitions and commands. Its aim and objective represents a process of influencing social relations between individuals through prohibitions and commands which guarantee peaceable regulation of the society. The establishment and promotion of external order as well as the security of the conditions of social life can be considered as the main purpose of the law, as well as the end of the state. In this sense, external peace is considered as an inherent condition of life and as a result of the rule of law. Law is deeply intertwined with society: it is not possible to imagine any form of society without the existence of legal rule. If a person were to be placed in complete isolation upon an uninhabited island, he might be considered to be without law. However, as soon as other individuals came into relations with him, some customs and rules would inevitably apply to their relationships to regulate their rights and obligations. To attain such peaceable regulation of society, each individual must recognize the legal rights of others, and some forms of control are established. It follows that an authority in the society is necessary in order to create legal rules and execute them; that is to say, for the functioning of the legal system and the administration of justice. Although legal authority does not derive its legitimacy from the application of force and coercive instruments, coercion represents an important characteristic of the rule of law.1 In some circumstances, there may be the necessity to maintain legal order by supreme force, as in the case of wars or conflicts. In other circumstances, the law may involve penalties and measures of coercion to settle disputes between private individuals. Thus the expression peaceable regulation applies to the purposes of the law, not to the law itself. It would not be realistic to expect that a society would live in a prosperous and peaceful manner in the absence of legal sanctions.

1 P. Kasemsap, Got mai paeng: lak tua pai [General Principles of Thai Commercial Law], Bangkok, Thammasat University, 1981, p. 31.

© koninklijke brill nv, leiden, ���6 | doi 10.1163/9789004308923_002

2

chapter 1

Obligations and prohibitions which are imposed by legal rules create, in favor of those individuals whose interests are to be promoted, legal rights. When these rights are directed against other individuals, they are termed legal claims. The law protects the conditions established by such claims with a number of remedies, which include pleas, the right of self-defense, suits, protests and rights of necessity. In case of violation of these remedies, the regulated use of force becomes necessary and inevitable through military execution, police force and judicial execution. Legal rules are not exclusively made up of prohibitive rules dictating what is right or wrong, acceptable or unacceptable. Rather, laws may either be prohibitive, permissive, or mandatory. To the first category belong those rules of law which prohibit specific actions, such as, for example, in the command “You shall not steal” or “You shall not kill.” In the second category come all those rules which neither prohibit nor order the performance of a specific act. It includes laws that directly or indirectly authorize individuals to decide whether or not to do a certain thing. Finally, the third category applies to  mandatory rules which precisely order the performance of a certain behavior. The rule of law cannot be confined within fixed boundaries; it varies in conformity with the change of times, circumstances and conditions of society following the political, economic and social context in which they operate. What is defined under the law as prohibitive, permissive, or mandatory cannot be determined by any general and abstract norm, surviving from the beginning of time. Societies do not exist for the sake of law. On the contrary, laws exist for the sake of society. Laws are enacted depending on the needs, mores, customs and interests of societies, which constantly change. Therefore, a rule of law can be defined as such only if it is supported by a general consensus of opinion, or it is in accordance with the customary practice of the people concerned by it. Law is different from other social norms. Law applies to the external relations of individuals and their social communities. This means that the law is not concerned with the internal activities which relate to the domain of religion or morals. In some circumstances, what is considered by the law to be legally wrong may be morally right, and in other circumstances what is considered as legally right may be morally wrong. 1.1 The Relationship between Law and Morality A definition of moral rules and norms has never been agreed upon or explicitly set forth. It is possible to say that morality is a code of conduct adopted by a social group, as a whole, discerning what is right from what is wrong.

Introduction

3

The authority from which morality proceeds and is sustained is exclusively internal. The violation of moral rules is sanctioned by conscience or social disapprobation upon the person who oversteps the boundaries.2 It might not be constant, but could vary over time and space at least in some particulars, though a number of fundamental values are the same everywhere. Moral norms of conduct regulate inner thoughts and volitions of individuals, such as their internal feelings, ideas and inclinations (i.e., the forum internum), operating on external aspects of human life only in so far as they are a manifestation of internal thoughts. The end of this internal law is the selfrealization of the person through himself, and consequently the realization of the human community. Individuals who act morally do so because they recognize that they are members of the human family, and feel a sense of duty to contribute in part towards the progress of their community. In other words, the purpose of moral behavior is the creation and preservation of a harmony inside the human community. In this sense, obligations exist in morality, moral obligations of the individual against himself and his conscience, but no claims or titles against other members of the community. It follows that coercion does not represent an element which is considered in the moral valuation of certain acts. The conviction is the important aspect of morality. Intention itself is the main element which guides the actions of individuals in one direction or another. There are significant differences between morality and law in regard to their authority, the personal conviction on one hand, and human community on the other; their objects, the one being internal and the other external; their means, conscience on one side, legal coercion on the other; and in their purposes, in the one, internal harmony, in the other, external order and peace; yet the two are obviously linked. Moral obligations may also be legal obligations. In many cases a violation of the law also constitutes a breach of moral rules. Exceptions obviously exist depending on specific circumstances related to particular cases. It is indisputable that violations of moral norms do not always represent a violation of legal rule. However, the strict relationship between morality and law, among all their dissimilarities, is significant in many aspects. More precisely, such relationship is especially relevant in cases where external actions are considered by law as unlawful because they are against good morals. This means that in some circumstances moral relationships are elevated to the position of substantive legal advantages.

2 Y. Saengyouthai, Kuamroo buangton kiao kup kodmai tua pai [General Principles of Law], Bangkok, Thammasat University, 2011, p. 49.

4

chapter 1

1.2 The Relationship between Law and Religion Rules of law may sometimes be inspired by religious precepts. A further question which arises, then, concerns the relationship between law and religion. Religion is often defined, in the first instance, as a set of ideas, beliefs, ritual enactments and practices providing a sense of orientation and identity to a community of believers and shaping thinking, attitudes and behaviors. It implies the concept of the absolute as well as the direct relationship of all finite beings to it. Such belief responds to an instinctive need for metaphysical knowledge of the absolute or God. Accordingly, a religious person regulates his conduct in accordance with this instinctive need, and religion is seen as a fundamental source of rules which build up and explain, and apprehend and achieve, in harmonious motion, the relationship between the Supreme Being, the vital force, and the essential self. In short, religion involves the relationship between the world of humanity and the supreme power.3 As with morality, the authority of religion is not external, but internal. It is a set of values, ideas and beliefs that has an important impact on its identified members. Such a set of ideas and beliefs, which underlies the observable aspects of religions, is of high importance in the valuation of an action. This holds true also in those cases where religions have external authorities as a source of ideology and guidance in matters of faith. In fact, in the absence of an internal conviction, the obligations created by external sources would not be perceived as binding by the individuals. Religious rules differ from laws also in those cases when privations, sacrifices, slaughters, rites, or other external acts are required from believers. The difference lies in the authority which establishes the rules and in the aim of such rules (i.e., to become closer to God), as well as in their objects and means. 1.3 The Relationship between Law and Justice Further, it is important to consider the interaction between law and justice. Justice is a standard of rightness, fairness, and just conduct that regulates the interactions of human beings. More precisely, justice can be defined, albeit unsatisfactorily, as the notion of the personal conformability of a given action or condition derived from the feeling of morals, ethics and law, with regard to the rational perception of the individual. In this light, justice is above politics and originates through a process of reasoning based on rationality. In considering specific situations, people may think: “I act in this way because it is the

3 See in particular P. Auaychai, S. Charoenpanit and P. Potawanich, Got mai paeng nueng: luk tua pai [Introduction to Civil Law], Bangkok, Sampanpanit, 1982, p. 19.

Introduction

5

right thing to do” and by this they assume that their conduct directly matches with the specific need of the case. In other words, their behavior is dictated by reason and conscience. Such claim of justice, however, is not considered as rule of law in itself, even if the legal feeling of the community perceive it as just and would include them in the future development of the law. Until this sense or feeling of justice becomes a normative enactment, and until the legal feeling of the people is officially recognized as a legally binding norm, this ideal of justice does not represent the law.4 Judges have no authority to blend the reason of the law with their own sense of equity or fairness. They would commit a serious mistake by using their personal sense of justice against the law of the community, or by being partial in the exercise of their office. Hence it can be stated that the source of justice, as defined here, is entirely based on subjective decisions of the individual. Justice, indeed, is rarely considered as a process based entirely on reason, but rather a feeling which precedes the demand of the law and relies above all on consciousness—a principle of action which the law may eventually consider and develop but which does not create any rule of legal validity. 1.4 The Relationship between Law and Social Convention Social convention is another source of rules which deserves attention because of the various characteristics that it shares with the law. As with legal rules, social conventions provide norms, principles and standards of behavior governing the social relations between individuals and, as a consequence, the external conduct of mankind. This set of social conventions may derive from a particular context or a specific rank of social organizations. It may also be defined in accordance with local traditions, practices and customs which characterize certain communities. Thus, social conventions rely much more than legal norms on the cultural attitudes, manners, and mores of the members of the community. They exercise a deep influence on the habits, behavior, and attitudes of a given society in several regards, for instance, in the field of art, fashion, manners, and etiquette. This means that social conventions are primarily concerned with the external aspects of human behavior, which is transformed and made more compatible with the needs of the community or society.5

4 T. Kriwichian, Pasa got mai thai [The Language of Thai Law], Bangkok, Thammasat University, 2007, p. 22. 5 T. Minakanit, Sungkom gub got mai [The Law and the Society], Bangkok, Thammasat University, 2009, p. 13.

6

chapter 1

The relationship between law and social convention is hardly disputable. A conflict, however, may arise in so far as the legal rules requiring or prohibiting certain conducts are opposed to the conduct demanded by the social conventions of a specific group in society. The purpose of social conventions consists in initiating pleasant external behaviors and refining social conduct, in which personal feelings and convictions are equivalent elements. The mechanism by which social convention applies its sanction and uses its force is to be found in the attitude of the society or some groups inside the society. The types of sanctions may include marginalization, constrained opportunities, lack of integration, self-exclusion, and social exclusion. The authority of social conventions derives, on one hand, from the views of the day, and on the other from what is completely opposite to this, the implementation of customs and tradition as guardians of the society’s values. The perception of what is appropriate and what is inappropriate changes with space and time and how thinking is influenced by the progress of society.6 This also applies to legal rules. The contribution that social conventions bring to the legal environment deserves special attention. In fact, there are obligations deriving from social convention that are not infrequently also classified as natural obligations under the law. Besides, the non-observance of social conventions is in some cases regarded as a legal wrong and qualified as an act with legal consequences. Such legal consequences may involve, for example, removal from office, avoidance of juristic acts, deprivation of civil rights and liberties, disciplinary actions, and other punishments that infringe on the civil status of the offender. As a conclusive remark, it can be observed that a large variety of factors play a continuous role in influencing and shaping the evolution of laws and the ways in which laws are implemented. Among these, four are of particular importance: morality, religion, justice, and social convention. The formal interactions between them set the parameters of legality and the debates surrounding legislative processes. There are several analogies in these concepts, in that norms for human conduct derive directly or indirectly from them. In certain phases of human history, the transformation in the sources of these norms has been misinterpreted or totally ignored. Laws have often been confused with religious and moral rules. Such confusion, in some circumstances, has been of great impact on human civilization. Although the connection between these five sources of rules should not be overlooked, their logical distinction must be considered to properly define the notion of law and its difference from morals, religion, justice and social convention. 6 Ibid., p. 34.

Introduction

2

7

Sources of Law

The term “source of law” indicates the documents, writings, codes, or statutes which provide knowledge of legal rules. From a general standpoint, a mere fact with which a legal right is related may also be regarded as a source of law; as, for instance, the right of inheritance arising at birth or on death. From a legal perspective, a source of law can be defined as the cause producing a legal norm. The existence of a legal norm is based on the need for legal order. This alone may be considered as the primary source of law. However, it is necessary that the rules set out by need be established. The formal expression of legal norms regulating human conduct is an essential requirement of the law. For example, a rule limiting freedom of individuals will require a legislative (positive) expression. If the rule simply rests on the feeling, attitude, or general opinion of the community, this does not satisfy the requirements of the law. Law must be intended as a manifestation of state authority that is recorded in documents, writings, and official records and interpreted by the judiciary. The making of such decision is founded on the authority of the state, by virtue of its sovereign power for the interest of the people.7 This is to say that there is a legal authority in every state. Such legal authority may be in one person as in a dictatorial regime, or, in a group of people, like for instance in a parliamentary democracy. Law adopted in such form is referred to as enacted law. Hence, it can be stated that legal standards transform human relations into legal ones. In this process, the freedom of decision for any individual is legitimately restricted and protected; and legal rights and interests are created. In Thailand, law is expressed in the Constitution, acts and emergency acts, royal decrees, and subordinate legislation. 2.1 The Constitution Constitutional legislation is the foundation of all law and contains within itself some principles and rules which are considered as fundamental because they embody the basic will of the people. Thailand has a written Constitution which is the basic law in the kingdom, and all amendments must be in accord therewith. The Thai Interim Constitution B.E. 2557 (2014) concerns itself typically with the organization of the government, its activities, and powers.8 It represents the 7 See Y. Saengyouthai, op. cit., p. 167. 8 There is no official English version of the Interim Constitution B.E. 2557 (2014) at present. English translations can be found in various sources, where the translations differ. A recommended English translation can be found at: http://asean-law.senate.go.th/files/Thailand_2014.pdf.

8

chapter 1

supreme law on which all other laws are grounded and which they must obey. In this sense, the Thai Constitution can be defined as a written instrument which governs the powers of the legislature, the executive, and the judiciary. It defines the limits of such powers and guarantees the protection of individual rights. In this sense, constitutional law is beyond the reach of normal legislative enactments. The powers of the king, the government, the National Legislative Assembly, and the judiciary are derived from the Constitution of the Kingdom of Thailand and their acts are valid only in so far as they are consistent with the Constitution.9 It was intended by the National Council for Peace and Order which framed the Thai system of government in 2014 that amendments of the Constitution of the Kingdom of Thailand should be neither quick nor easy. So the National Council for Peace and Order decreed that no amendment should be lawful as a part of the Constitution unless it was decided by the Council of Ministers and the National Council for Peace and Order by introducing a draft amendment to the National Legislative Assembly for approval. In this regard, under Section 46 of the Constitution, the National Legislative Assembly has the power to approve or disapprove the draft constitutional amendment within fifteen days of the date of its receipt but it has no power to edit the draft without the consent of the Council of Ministers and the National Council for Peace and Order. Further, the Constitution states that the approval resolution must be adopted by no less than half of the total number of the existing members of the National Legislative Assembly. When the draft constitutional amendment has been approved by the National Legislative Assembly, the prime minister has to submit it to the king within fifteen days of its approval. The draft will then take effect upon having been signed by the king and published in the Government Gazette. The prime minister must countersign the draft. It should be pointed out, however, that the members of the National Legislative Assembly are unelected, being appointed by the ruling military junta, like all the others belonging to the so-called “five rivers”, which include: the National Council for Peace and Order, the Cabinet, the Constitution Drafting Council, National Reform Council, and National Legislative Assembly. 2.2 Acts and Emergency Acts The Constitution of the Kingdom of Thailand is the highest authority in the kingdom.10 Next in authority and rank to the Constitution come acts and 9 10

See T. Nipitikul, Got mai: kwam roo chabub pok pa [Introduction to Law], Bangkok, Openworlds, 2001, p. 15. R. Khurusuwan, Kotmaai paeng lak tua bpai [General principles of civil law], Bangkok, Nititham, 2012, p. 31.

Introduction

9

emergency acts, both of which are considered as legal sources by the Constitution. An act is a law approved by the National Legislative Assembly in accordance with the Constitution and under the powers granted to it. Acts include laws, codes, bills, and organic bills enacted by the National Legislative Assembly in pursuance of the powers provided in the Constitution. Such acts must not be contrary to the letter or spirit of the Constitution. If so, they are defined as “unconstitutional” and void. This means they have no legal effect. The National Legislative Assembly has power to enact standing orders on the selection and performance of its president, vice presidents, and committees, the conduct of meetings, the introduction and consideration of bills and organic bills, the introduction of motions, the conduct of debates, the adoption of resolutions, the conduct of interrogations, the maintenance of order, and other activities to exercise its authority. It must be noted, however, that the Constitution B.E. 2557 (2014) considerably limits the power of the National Legislative Assembly, subject and according to certain provisions. More precisely, Section  44 of the Constitution establishes that for the promotion of love and harmony amongst the people in the nation, or the prevention, abatement, or suppression of any act detrimental to national order or security, the royal throne, national economy or public administration, the Leader of the National Council for Peace and Order, with the approval of the National Council for Peace and Order, “may issue any order or direct any action to be done or not to be done, irrespective of whether the order or action would produce legislative, executive or judicial effect.” Such orders or actions, as well as their observance, are deemed lawful, constitutional, and final. After the exercise of such power, the President of the National Legislative Assembly and the prime minister are simply “informed without delay.” This provision abolishes the system of checks and balances which applied under the previous Constitution of B.E. 2550 (2007). Other than on the authority of the National Legislative Assembly, according to Section 21 of the provisional Constitution, the power to legislate is also vested in cases of emergency in the royal prerogatives or reserve powers of the king. Specifically, in case of an urgent need to maintain national security, public safety, or national economic security, to prevent a public disaster, or to have a law on tax or money which requires to be considered immediately and privately, the king has the prerogative to enact an emergency decree having the same force as an act. Upon promulgation of an emergency decree, the Council of Ministers presents the emergency decree to the National Legislative Assembly without delay. Should the emergency decree be approved by the National Legislative Assembly, it will continue to have the same force as an act. In the case of disapproval, the emergency decree will automatically lapse, without prejudice to the activities having been carried out during its effectiveness.

10

chapter 1

2.3 Royal Decrees According to Section 22 of the Constitution of Thailand, the king has the prerogative to enact a royal decree not contrary to law, the prerogative to grant pardon, and other prerogatives in line with the customary practices of the government of Thailand under the democratic regime with the king as head of state. 2.4 Subordinate Legislation Under the Thai legal system there is an additional body of laws consisting of ministerial regulations, department regulations, orders, rules, and regulations issued by executive authorities under powers delegated from a legislature board. More precisely, primary legislation grants executive agencies power to administrate and implement the requirements provided by the law. Therefore, the sources of law include a high number of primary and secondary legal enactments, from the sections of the Constitution B.E. 2557 (2014) down to the rules of the municipal ordinances such as city, building, and health planning codes. In the kingdom of Thailand, judicial decisions are not a source of law binding on lower courts.11 Legal rules are enunciated and enforced by courts in deciding disputes which have arisen in connection with a particular legal relationship. Judges do not have any power to make law. In handing out their decisions, they must only apply and declare that which is already the rule of law. This is to say that the law-making bodies as explained above are the only lawmaking powers with the authority to pass rules which govern future cases. The Supreme Court of Justice is not bound to follow its own previous decisions, and lower courts are not bound to follow the precedents of higher courts. It must be noted, however, that in many circumstances courts go far beyond these rules.12 From time to time courts have to extend the application of legal rules to cases originally not contemplated by the legislator or to adapt them to the changing needs of society. Presumably, the extension of such applications must conform to certain customary practices or explicit procedural rules. 3

Classification of the Law

As new needs emerge, it is necessary to adopt, amend, add, or repeal a significant number of laws from time to time. In order to make the concept of law 11 12

Y. Saengyouthai, op. cit., p. 174. P. Kasemsap, op. cit., p. 45.

Introduction

11

more simple and understandable, several attempts have been made to classify the high number of principles and laws which form a legal system. If the objective is mainly scientific, then the aim is to create a logical classification of the laws. In this case, the branches of laws are mutually exclusive. If the objective of the classification, on the other hand, is mainly practical (i.e., how to apply legal rules to everyday situations), then the aim is to guarantee ease of reference. Accordingly, classifications are mainly based on the immediate purposes that the laws must accomplish.13 Classifications elaborated for the use of practitioners divide the legal rules into several categories of related areas, the parameters of which are set with more consideration to practical accessibility than to theoretical precision. It must be noted, however, that these classifications are in no way arbitrary. On the contrary, they are based on logic. The common classification of law is grounded in the nature of the legal relationships with which each body of law deals. We will thus proceed to an analysis of legal rules according to their immediate objects; in other words, a classification of the law on the basis of its various purposes. Such classification, as previously explained, is not a perfect division of law into separate groups; nor can it be.14 3.1 Private Law and Public Law All positive law is divided into public and private law, the former dealing with relationships of private individuals with each other, and the latter with the relationships between the individuals and the state. Private law is composed of civil law and commercial law. Civil law mainly applies to the legal relationships between individuals consisting of the law of persons, the law of obligations, property law, family law, and the law of succession, while commercial law is a separate system of laws which governs the conduct of persons and businesses engaged in commerce. The law of persons applies to the status of persons of specific classes, as those of insane mind or under age. Also, it regulates those rights which protect the legal interests in personal liberty, physical integrity, honor, health, and life as well as several relationships between individuals—for instance, parentage, tutorship, curatorship, emancipation, marriage. The law of obligations deals with the interests, rights, and obligations related to contracts, delicts, and quasi-contracts. It is also concerned with the mechanisms of prevention, compensation, and enforcement in case rights are violated. Property law is concerned with those rights which regulate the 13 14

T. Kriwichian, op. cit., p. 78. Y. Saengyouthai, op. cit., p. 200.

12

chapter 1

­ownership of private p ­ roperty. It covers the right of ownership, governs individuals’ obligations with regard to the use of property, defines the right of possession, and establishes the rules which apply to real rights.15 Family law is the branch of civil law that regulates the legal relationships of individuals who are connected to each other as family members, such as children, parents, wives, and husbands. This includes marriage contracts, divorce, and legal separation together with custody issues. As for succession law, the rules thereof govern all issues arising from death and transmission of the estate of a person after his death, the statutory rights of inheritance, the succession by will, and the administration and devolution of an estate. With regard to commercial law, it is the object of a separate body of laws, which includes company law, insolvency law, competition law, intellectual property law, employment law, and consumer protection, among others. It was originally created by merchants to regulate their own affairs. It must be stressed, however, that the independent characteristics of commercial law have progressively been lost and nowadays there is a progressive trend toward the absorption of commercial law by civil law. Public law is separated into constitutional law, international law, criminal law, and administrative law. Constitutional law, in its general public sense, governs the organization and the main functions of the state. This is the law whose object is to establish standards through which the stability of state sovereignty in its legitimate form is legally protected. International law is the set of rules by which sovereign states have expressly or tacitly agreed to regulate their relations with each other. Only sovereign and independent states are recognized by international law. It encompasses rules, customs, and precedents generally considered and accepted as legally binding in dealings between states and international entities. This branch of law includes several important principles, such as, for example, those relating to the peaceful settlement of disputes, the non-use of force and non-intervention in the domestic jurisdiction of states, by which the relationship between sovereign states is so far regulated that only few may consider violating them. Criminal law defines the absolute obligations of the individual toward the community. In the general classifications of law, it is regarded as a branch of public law because the enforcement of these community rights is to be accomplished directly by the state. Accordingly, criminal law can be defined as a body of laws by which specific acts or omissions are considered to be of such a nature that, if left unpunished by the authority of the state, they 15

T. Nipitikul, op. cit., pp. 32–38.

Introduction

13

would produce a serious damage to the state itself in its collective capacity. Examples of such crimes include murder, rape, assault, drug trafficking, forgery, fraud, burglary, theft, robbery, and arson. In order to guarantee the maintenance of the peace and the prevention of disorder, the state must, in its own name, undertake any legal actions and inflict punishment against all those threats that are deemed responsible for undermining the established authority of the state. Hence, the breach of criminal law must be subjected to punishment of the offender with a view to deterring him and other members of the community against similar conduct in the future. It is the damage to the state in its collective capacity which makes an act, or an omission to act, a crime. It must be added that usually a crime also involves a wrongful act against an individual. In the event that the victim suffers damages as a consequence of the crime, he may have legal redress under both criminal and civil law. Wrongful acts which produce damages to individuals and, as a result, form grounds for suits under delictual responsibility provisions, do not always constitute a crime because the action may not be of such a nature that it threatens significantly and directly the public peace, order, and security of society. Thus in these circumstances the sanction relies upon the decision of the victim on whether to sue the wrongdoer or not. An example will help illustrate this point. Suppose A lends his phone to his friend B and B carelessly loses it. In this case, the damage has been caused by slight negligence and there is no crime. The legal consequences would be different if B steals A’s phone. In fact, here both a crime against the state and a wrongful act against a private individual have been committed. For this reason, A may have a legal suit for damages and the state may punish B because his conduct tends to disrupt the public security and the peace. In other cases, crimes arise out of situations which are not regarded as wrongful acts by the law, like for example when using counterfeit products or exceeding speed limits. Administrative law is the branch of law that deals with the relationships arising between executive officials including officials of independent agencies and private individuals. It governs the exercise of authority by the government in the performance of its functions and embraces the entirety of legal principles which regulate the activity of the state administration. 3.2 Substantive Law and Procedural Law The abstract system of legal rights and obligations in society would not have any legal significance to the individual if there were not rules for the enforcement of these rights and obligations. Members of the society could not reciprocally control and correct each other’s actions in the absence of legal procedures,

14

chapter 1

methods, or machineries by which substantive law is enforced or made effective. For example, it would mean nothing to a contractual party to tell him that he has a valid contract with another party in the absence of some rules of implementation which guarantee the performance of the obligations assumed under the contract.16 Also, the abstract system of legal rights and obligations in society and the creation of legal procedures for their enforcement would have little importance without specific laws for the control and regulation of the procedure by which rights and obligations are made binding. Thus, the legal system is organized according to a fundamental distinction between substantive law and procedural law. The law of procedure, or adjective law, as it is sometimes called, is the law involving the rules by which a court enforces rights arising under other headings of law including civil lawsuits, criminal or administrative proceedings, while the law for whose enforcement it is required is defined as substantive law. Substantive laws deal with the rights and obligations of individuals in the abstract. Procedural law governs the machinery of the courts and prescribes formal steps to be taken in enforcing rights and obligations. For example, substantive law tells us that if A willfully injures B’s personal property, the latter has the right receive compensation from the former. However, this abstract rule set by substantive law will not automatically compensate B. Where there is a claim for a wrongful act related to property, the claimant has to activate the legal machinery in order to ensure the effectiveness of its claim. Procedural law will provide the necessary rules for enforcing B’s rights against A: how to bring the defendant to court; how to state a claim against the defendant; which kind of evidence is best to prove his claim, the kind of evidence which is admissible in court, and how inclusive the evidence should be; how to answer personal defenses which may eventually be raised; how to file a petition for a review of the proceedings in the case that he believes that an error has contributed to the trial court’s decision; and how to get satisfaction when the judgment of the court is favorable. 4

Legal Systems

Throughout history, countries have elaborated different legal systems in order to regulate human conduct and administer justice. Although many legal traditions exist in the world that share the characteristics of the rule of law, the two main juridical models today are that of common law and civil law. 16

Ibid., pp. 42–44.

Introduction

15

4.1 Civil Law Civil law operates over all Europe, except England and its colonies, and throughout Central and South America. Eastern European and East Asian countries also follow a civil law structure. As a general rule, it can be said that the division is mainly between the English-speaking countries including the geographical area known as the Commonwealth and the other countries of Western civilization. The civil law system refers to the legal system derived from Roman law including legal opinions and decisions of learned jurists as well as edicts of the senate, kings, and emperors. This important body of laws was codified in the Corpus Iuris Civilis (more popularly known as the Justinian Code) under the later Roman Empire by the Emperor Justinian and then arranged, modified, and classified via the intertwined strands of civil law, canon law, and theology. The first formal classification of this code into a logical system was undertaken by Napoleon, who appointed a commission of four legal experts and presided over the elaboration of the Code himself. The work of the codifiers debated in over 100 sessions of the Council of State led in 1804 to the Civil Code. Several adaptations of the Napoleonic Code were created over the years and adopted in the countries controlled by French arms, including the Netherlands, Spain, Portugal, Holland, Italy, Belgium and Poland. The introduction of the Civil Code in France in 1804 created a similar desire in Germany to systematize and unify the various heterogeneous laws in a coherent and analytical manner. Thus the ambitious work of codification started in 1881 and the German Civil Code (Bürgerliches Gesetzbuch, or BGB) became effective on January 1, 1900. While the Napoleonic Code relied on a casuistic approach attempting to regulate every possible situation, the German Civil Code was structured according to a more systematic and abstract approach. For this reason, the German Civil Code had a large influence on later instances of codification in Europe, Asia, and South America. Specifically, the legal systems of Indonesia, Japan, South Korea, Taiwan, Thailand, and the Philippines are based on the German civil law system.17 4.2 Common Law The case law tradition has its origins in the decisions of courts and similar tribunals that laid down legal rules in deciding disputes. The rules so made are called common or case law because they are not created only by decisions of legislatures. Thus, common law refers to the law developed by judges through 17

For more detailed discussion on this topic, see T. Kriwichian, op. cit., p. 35; see also N. Posataboot, Kam banyaai lak kotmaai ekachon [Principles of Thai Private Law], Bangkok, Ramkhamhaeng University Press, 2000, pp. 41 et seq.

16

chapter 1

their decisions. Precedents are an essential part of the common law legal system. After deciding individual cases, the rules of law developed by courts become a legally-binding precedent for the future. This means that judicial decisions stand as precedents for all subordinate courts of the same jurisdiction with regard to cases arising in the future. This is known as the common law doctrine of stare decisis, which means adhere to the decision or abide by decided cases. According to this doctrine, the legal rules delivered in the past have to be applied by the judges in the future with regard to cases involving similar legal principles. This is necessary, otherwise there would be no binding legal rule and everything would rely on the particular judge’s opinion. The common law rule that precedents are binding and must be followed does not mean, however, that previous decisions are always right and can never be changed. In many cases, justice requires the over-ruling of previous decisions which are found to be defective or incorrect. Time may also create new public opinion. Thus, rules of law which are clearly fallacious may be, and often are, upon reconsideration of the court upon the same points, reversed. It is not necessary that the legislative branch of the state adopt a new rule of law or the executive branch issue a decree. Since common law is judge-declared law, new principles may be directly developed by courts of justice from the legal rules established by the law-making body. Written statutes enacted by parliament may, of course, at any time change what has been the legal rule. 5

Application of the Law

The function of courts is to apply the legal rules to the varying situations as cases occur requiring their decision. They construe the law, applying it to the specific cases which arise for their consideration. Thus in case of disputes, judges have to consult the law in order to find the provisions which regulate a particular issue. It is convenient, before going any further, to introduce some considerations about the application of the law in the court system. The judicial application of legal rules is based on the generalization of a case into a legal principle and, then, the formulation of rules that encompass a variety of cases. As a consequence, a set of complex elements must be considered in the choice-of-law process. First, the legal principle; its substance, strength, and scope. In other words, the question of law in relation to the case. Second, the question of fact which must be demonstrated in a trial by reference to facts and evidence. Facts can be pleaded and proved by evidence, legal reasoning, general knowledge, assumption, legal standards, methods of interpretation and legal presumptions. Third, the technique of choice between

Introduction

17

conflicting legal rules for the same facts. Conflicts which may arise in the application of the law may be generic, or temporal. To avoid such contradictions, the law provides principles and procedures for the resolution of conflicts. In solving the generic collisions between coexistent laws, the court should take into account the nature of the law. Specifically, laws are categorized as general or special, incidental or consequential, subsidiary or absolute. In cases of temporal conflict of legal standards, one solution can be found in the following maxim Lex posterior derogat legi priori meaning that later laws repeal earlier laws. In this regard, Section 3 of the Civil and Commercial Code provides that from the day of operation of the Code, all other laws, byelaws and regulations, in so far as they deal with matters governed by the Code or are inconsistent with its provisions, have to be considered as repealed.18 This choice-of-law process is preceded by the judicial interpretation of the law. Courts have available to them several methods of interpretation which need to be noted. Interpretation is considered to be authentic when the legislator’s intention or purpose is used as a decisive criterion. Thus an authentic interpretation is an official interpretation of the law. If the interpretation is derived from unwritten practice, it is defined as usual interpretation. Both usual and authentic interpretation constitute what is generally called legal interpretation. For cases which do not fall within the authentic interpretation, the Civil and Commercial Code provides several rules of interpretation of the law to be applied.19 Specifically, Section 4 of the Code states that the law must be applied in all cases which come within the letter and spirit of any of its provisions. This means that in these cases courts have to take recourse to the traditional criteria of historical, logical or grammatical interpretation of legal provisions. Historical interpretation is based on the historical conditions accompanying the adoption of a certain law. Thus, the court will analyze the historical circumstances related to the creation of a given law including social, economic, or political factors. Logical interpretation means interpretation that is based on the content of the words and utilizes the arguments and rules of logic. Grammatical interpretation is based exclusively on the actual language of the provision contributing to the shaping of legal status. It must be noted that all these methods of interpretation may also be used together.20 18

19 20

A Thai version of the Civil and Commercial Code can be found in http://www.led.go.th/data center/pdf/1_5.pdf. There is no official English version. In the compilation of this book the author has used the English translation of K. Sandhikshetrin, Pramuan got mai paeng lae panit [The Civil and Commercial Code—Books I–VI and Glossary], Bangkok, Nitibannagarn, 2008. P. Kasemsap, op. cit., p. 54. Ibid., p. 90.

18

chapter 1

Where no provision is applicable, Section 4, paragraph 2, of the Civil and Commercial Code provides that the case must be decided by analogy to the provision most nearly applicable, and, in default of such provision, by the general principles of law. In other words, in the absence of specific legal rules, court may provide an interpretation of the law beyond the literal meaning by analogy.21 Analogy means that a given situation, which is not covered by the legal rule, is brought under the heading of an existing rule, which was created to regulate another situation. For example, rules concerning sale contracts are applicable to an exchange contract. This implies that a rule of law will extensively apply to a subject matter, which, according to the literal wording of the definition, falls outside its field of reference.22 6

Organization of the Judicial System

The courts are an essential component of the governmental structure created by the people in order to enforce their rights and administer justice. In the case of a conflict arising between individuals related to their rights and obligations, the court has to step in to settle the dispute by enforcing and protecting the legal standards. The Thai legal system recognizes four types of courts: the Constitutional Court, the Administrative Court, the Military Court, and the Courts of Justice.23 The jurisdiction of each court, as defined in the Constitution or in the laws, varies. As stated above, the Constitutional Court decides on the conformity of laws with the Constitution and other questions as provided in the Constitution, while the Military Courts and the Administrative Courts deal respectively with military criminal matters and administrative matters. The Court of Justice has jurisdiction over civil and criminal actions as well as all cases not being within the jurisdiction of other courts. It traces its origins to the time of the establishment of the Ministry of Justice in B.E. 2434 (1891). The Ministry of Justice was formed with the objective of bringing all the different courts of the different ministries under the administration of the Ministry of Justice. Since then, the Court of Justice has had jurisdiction in any dispute related to civil and criminal matters. The courts within the civil court system 21 22 23

Ibid., p. 97. T. Kriwichian, op. cit., p. 167. For an overview of the court system in Thailand, see C. Leksakulchai, Kam atibai pramuan got mhai witi pijarana kwam paeng pak tua pai lae pak ou-torn dee ga [General Principles of Civil Law: Introduction to the Thai Judicial System], Bangkok, Nititham, 1994.

Introduction

19

are organized into two ordinary resorts, namely courts of first instance, where cases are started, and courts of appeal, which are responsible for hearing cases already judged in lower courts for purposes of judicial review. The court of first instance conducts the original trial of cases and renders decisions on questions of fact and law. For general efficiency of the legal system, special courts with a particular class of litigation have been established in Thailand by special laws and, in particular, the Juvenile and Family Court, the Bankruptcy Court, the Labor Court, the Tax Court, the Intellectual Property and International Trade Court. They are limited-jurisdiction courts that deal exclusively with particular types of disputes and are composed of judges who possess technical skills and knowledge in specific areas of law. More precisely, the Juvenile and Family Court is devoted entirely to criminal cases where a child, whose age is over 7 but does not exceed 14, or a young person, whose age is over 14 but under 18, is alleged to have committed a criminal offense. Another specialized court is created under the Act for the Establishment of Labor Courts and Procedure for Labor Cases B.E. 2522 (1979) for settlement of disputed matters involving rights and duties under employment contract or conditions of employment.24 It also has jurisdiction over labor laws. A third specialized court is established under Act for the Establishment of the Tax Courts and Procedure for Tax Cases B.E. 2529 (1986) to have exclusive power to hear and determine all disputes related to claims of state on tax debt, tax refund, appeals made against a decision of an official or a committee prescribed by tax laws and other disputes concerning the matters prescribed by the law to be under the jurisdiction of the Tax Court.25 Fourth and last, the Intellectual Property and International Trade Court has the power to adjudicate both civil and criminal cases regarding intellectual property and civil cases regarding international trade. With regard to courts of appeal, they do not retry a case on the facts. Their objective is to decide whether the court of first instance has wrongly applied the laws related to the subject matter of the specific case. More precisely, parties may appeal against the decision of the court of first instance if they are dissatisfied with its decision. If the court of appeal is convinced that the decision of the court of first instance is correct, it will dismiss the appeal and 24

25

At present there is no official English translation of the Act for the Establishment of Labor Courts and Procedure for Labor Cases B.E. 2522 (1979). A recommended English translation can be found at: http://www.samuiforsale.com/law-texts/labour-law-procedure-for -the-court.html. There is no English translation of the Act for the Establishment of the Tax Courts and Procedure for Tax Cases B.E. 2529 (1986) at present.

20

chapter 1

c­ onfirm such decision. Conversely, if the court of appeal is convinced that the court of first instance erred in the ruling, it may reverse the decision or even remand the case to the lower court. Parties usually prefer not to extend the case beyond the court of appeal’s jurisdiction. As a matter of fact, in the majority of cases, parties consider whether anything substantial is to be gained by establishing an appeal to the Supreme Court of Thailand and, upon these considerations, prefer not to go any further into the case. In the event that parties decide to appeal a final judgment of any court of appeal, the Supreme Court will have jurisdiction over the case. The Thai Supreme Court sits in Bangkok and consists of the President, Vice Presidents, the Secretary, and a number of justices. At least three justices of the Supreme Court form a quorum. Plenary sessions of all judges of the Supreme Court, however, may be required by the President of the Supreme Court. Plenary sessions may be deemed necessary when issues of exceptional importance are reviewed or to hear cases where there are reasons for the overturning of its own precedents. A plenary session has a quorum of half of the total number of judges of the Supreme Court. It is the final court of appeal in all appealable cases in the whole kingdom.26 26

R. Khurusuwan, op. cit., p. 66.

chapter 2

General Rules of Civil Law The main object of civil law is to protect and promote the interests of private persons. Persons who possess a legal interest in a certain condition, privilege, property, or liberty have the power to compel others to respect that interest. Generally speaking, lawful interest means a private interest prominently expressed by the legal order in the form of a right. The protection of rights against interference, deprivation, and infringement constitute the purpose of civil law. It is important to note that the law does not recognize private interests only for the benefit of private individuals, but also for the benefit of society as a whole. Its vision is both individual and social. It follows, then, that the public authority protects only those private interests which conform to the common good, and lead to the advancement of the community. The purpose of civil law, therefore, is to provide protection for individual interests and, at the same time, promote the general welfare of the community. This can be defined as the social object of civil law.1 There are four fundamental elements underpinning civil laws: juristic facts, legal persons, legal objects, and legal protection. 1

Juristic Facts

The first element of civil law is the existence of a juristic fact. The relationship which gives rise to a legal interest to redress at law constitutes a private legal relationship and is created by a particular fact. As a consequence of this fact, legal relationships obtain a specific protection, and the corresponding interest is treated as a legal advantage. The means through which this is achieved is called a juristic fact. Very generally, juristic fact can be defined as any set of facts to which a legal rule applies and provides for certain consequences. Juristic facts, therefore, are specially designated facts having legal consequences, such as natural events or acts, and must be distinguished from those mere occurrences that have no legal relevance. They are necessary not only for

1 See in particular P. Sumawongse, Got mai paeng: luk tua pai [General Principles of Civil Law], Bangkok, Thammasat University, 1981, p. 23.

© koninklijke brill nv, leiden, ���6 | doi 10.1163/9789004308923_003

22

chapter 2

the creation of a legal advantage or a legal relationship, but also for their modification or extinction. Juristic facts include natural facts and legal acts. Natural facts are events which happen without human intervention, such as forces of nature, natural phenomenon, lapse of time, animal behavior, and the like. In other words, they occur independently of subjective intentions. Such events may be constructive, like the birth of persons, or the growth of fruits. They may be modificatory, as in the case of chemical or physical processes such as hydrolysis, bioaccumulation, photolysis, and biodegradation. Finally, they may be destructive, as in the destruction of property, or the death of persons or animals. In contrast, legal acts are voluntary and deliberate acts which give rise to legal relationships, e.g., the execution of a will, creation of contracts, and delicts. They are the result of human conduct and are designed to have legal consequences. 1.1 Licit and Illicit Acts In civil law legal acts are further divided into two large categories: licit acts (e.g., a will, a disclaimer, a sale agreement, a loan agreement, a promise, and the like) and illicit acts (e.g., the publication of libelous statements or the spreading of slanderous rumors). Licit acts are those which conform to the requirements of the law. They are defined under Section 149 of the Civil and Commercial Code as voluntary lawful acts, the immediate purpose of which is to establish between persons relations to create, modify, transfer, preserve, or extinguish rights. The juristic act is thus, an action intended to have and capable of having legal effects. It represents the functional form in which the subjective intention of the actor develops its activity in establishing rights within the boundaries of the legal system.2 In the case that the act is against the legal order, it is called an illicit act. Illicit acts are regulated under Sections  420 and following of the Civil and Commercial Code. More precisely, Section 420 states that “A person who, willfully or negligently, unlawfully injures the life, body, health, liberty, property, or any right of another person, is said to commit a wrongful act and is bound to make compensation therefore.” This means that an illicit act may create obligations to pay penalties, compensation, and damages to the victim of such act. Delictual obligations will be discussed in further chapters.

2 See J. Sodpipan, Kam atibai lak got mai nitigam sanya [Basic Principles of Law: Juristic Acts and Contracts], Bangkok, Winuchon, 2002, pp. 12 and 24.

General Rules Of Civil Law

23

1.2 Classification of Licit Acts Juristic acts arising out of licit acts are subdivided into unilateral and bilateral acts. Unilateral (one-sided) acts are dispositive acts which are performed without the will of other persons, like for example, the rejection of succession rights, the making of a will, the ratification of a contract, and the granting of authority to an agent. These acts only require a declaration of intention from one party to be legally effective.3 Bilateral or plurilateral acts (also called contractual acts) are agreements where two or more wills of private persons are expressed in accordance with legal order. They require both parties’ declaration of intention.4 The most important types of agreements are found in Book III of the Civil and Commercial Code concerning specific contracts. Bilateral juristic acts can further be divided into two groups depending on the specific objective they aim to achieve. The intention of the parties may converge on the same result, as for example, in the contract of a joint venture or partnership, or it can diverge such as in the contract for hire of property where the aim of the letter is to receive the rent but the aim of the hirer is to use the property for a limited period of time.5 Juristic acts can also be divided into other types, including principal and accessory. A principal juristic act is one which constitutes the main object of the engagement; it is performed essentially for itself and does not rely on the existence of other acts, for example, a contract of sale, a contract of hire of property or a contract of loan. In contrast, accessory juristic acts are those made for assuring the performance of a principal juristic act, such as the contract of guarantee, the contract of mortgage, or the contract of pledge. These acts require the creation of another legal relationship. Juristic acts can also be classified according to their nature, their form, and their object. As to their nature, juristic acts are divided into several categories. A juristic act can be regarded as executed if the act has been fully performed by the actor or executory if the act has not been performed entirely. In the first case, the actor has performed all his obligations while in the second case the actor still has obligations to carry out. The importance of this distinction lies on the timing element which determines when the actor has enforceable rights and duties. To illustrate, A sells and delivers to B a television set and B pays the price at the time of the sale. The contract is executed because the contracting parties have performed their respective obligations. Conversely, suppose that 3 J. Setabutr, Lak got mai paeng laksana nitigam lae sanya [Principles of Civil Law: Juristic Acts and Contracts], Bangkok, Thammasat University, 2008, p. 245. 4 Ibid., p. 247. 5 See C. Haemaratchata, Nitigam [Juristic Acts], Bangkok, Nititham, 1992, p. 9.

24

chapter 2

A agrees to work for company B for one year and company B promises to pay 40,000 baht per month. This is an executory contract because the terms have not been carried out by the parties yet. An important group of transactions form a peculiar category of juristic acts, the so-called personal juristic acts.6 Personal juristic acts are those which rely upon the personal qualities of the actor, i.e., his knowledge, skills, or experience. This is the case with a contract for hire of services or hire of work with a particular artist, which are concluded in consideration of the contractual party’s qualifications. As a consequence, the performance of the obligation related to the juristic act is discharged in the event of the death of the actor. With regard to their form, juristic acts may be formal or simple. As a general rule, juristic acts do not require a particular form and can be oral, written, or partly oral and partly written, or implied from conduct. In some specific cases provided by the law, however, juristic acts require a special form or method of creation to be valid. For instance, a will must be made according to the forms prescribed under the Civil and Commercial Code, that is to say, it must be made in writing, dated at the time of the making of the will and signed by the testator before at least two witnesses present at the same time. Another classification of juristic acts is based on their object. Depending on their object, juristic acts can be classified into onerous and gratuitous. Gratuitous juristic acts are formed when the performance of one party occurs without compensation in his favor. This is to say that the object of the act is the benefit of the party with whom it is made. All unilateral juristic acts are gratuitous acts while only a few bilateral juristic acts belong to this category (e.g., contract of loan for use, contract of gift, or contract of deposit which is undertaken gratuitously). Onerous juristic acts, on the other hand, are formed when one party gives, or promises to give, something to the another party in exchange of an equivalent payment in return. This type of juristic act is the most common among bilateral juristic act and includes contract of sale, contract of hire of property, contract of hire of service, contract of hire of work, etc. 2

Legal Persons

The second element of civil law is the protection of legal persons. Thai civil law operates a distinction between legal subjects and legal objects. The term legal subject applies to natural and artificial persons while the term legal object may refer to rights or property. 6 P. Auaychai, S. Charoenpanit and P. Potawanich, op. cit., pp. 45–6.

General Rules Of Civil Law

25

As regards legal subjects, Section 153 of the Civil and Commercial Code provides that legal acts must comply with the requirements concerning capacity of the person (Section 153). Thus it is necessary to define the meaning and the extent of legal personality as well as its areas of activity. Legal persons are defined as the owners or holders of their legal interests.7 In other words, p ­ ersons are entities which may own or hold these interests. Legal systems prescribe rules which identify what characteristics persons must have to enjoy capacity. This can be described as legal personality and is synonymous with capacity for rights. The term capacity for rights must be sharply distinguished from capacity for acts, which indicates the ability or power of a person to cause legal consequences through juristic acts or wrongful acts. The Thai legal system recognizes several types of capacity for rights, as well as capacity for acts. Under the Civil and Commercial Code, a main distinction is made between natural persons and artificial or juristic persons. Natural persons are individuals having legal capacity, which is the ability to exercise legal rights and bear legal obligations as provided by the law. Artificial persons are legal entities with a separate existence, such as companies, universities, and hospitals. 2.1 Natural Persons Under the Civil and Commercial Code, all human beings are recognized as having capacity for rights. In particular, Section 15 of the Code states that personality begins with the full completion of birth as a living child, and ends with death. This means that capacity for rights is applied to all persons without any specific connotation of ability. The exact moment when the personality begins is of great importance. Suppose, for instance, that daughter A is born after the death of her mother B, and dies a few minutes after delivery. In this case, A is entitled during those few minutes to B’s estate under her mother’s will or legitimate succession and then the estate passes to A’s father according to the Thai law of legitimate succession. In contrast, if A is born dead, she is considered never to have existed as a person. Thus B’s estate will pass directly to B’s statutory heirs or legatees, as the case may be. An exception to this rule regarding the beginning of the personality can be found under Section 15, paragraph 2, of the Civil and Commercial Code which states that an embryo (nasciturus) is capable of rights provided that it is born alive. By virtue of a legal fiction, an embryo is considered to be a legal subject 7 See J. Thingsapati, Kam atibai pramuan got mai paeng lae panit wa duay bookon [General Principles of Civil and Commercial Law: Natural and Juristic Persons], Bangkok, Thammasat University. 1984, p. 12.

26

chapter 2

when this is to its advantage.8 A classic example, in this regard, is the inheritance right which is granted to the nasciturus provided that it is born alive within 310 days after the decedent’s death (Section 1604, paragraph 2, Civil and Commercial Code). Death is the only way through which personality ends. The moment of death is legally important and corresponds to the moment of termination of brain activity or cessation of bodily impulses. It is determined by a medical doctor in the prescribed manner upon examination of the deceased person.9 When several persons have died in the same fatal event, and it is not possible to determine which of them perished first, they are presumed to have died simultaneously (Section 17, Civil and Commercial Code). This may have important implications. Let us take the example of a couple who die in the same fatal accident. If there is insufficient evidence to determine which death occurred earlier, they are considered to have died simultaneously and, therefore, neither of the spouses may inherit from the other. 2.2 Capacity to Perform Juristic Acts Even though a natural person may be the subject of rights and duties in the field of civil law, this does not automatically imply that a natural person enjoys general legal capacity to have rights and duties throughout his life. Restrictions may be based on the age and mental and physical condition of a natural person. Since it would not be possible to individually establish the ability of each person to independently carry out legal transactions and acquire legal rights and duties, the Civil and Commercial Code automatically recognizes full capacity after attaining majority. With respect to this, Section 19 of the Code provides that a natural person has full capacity after reaching the age of 20. All persons with legal capacity are entitled to engage in juristic acts by means of declarations of intention, own property, enforce contracts, and may be party to a legal dispute in their own right. Thai civil law also provides the right for a natural person to gain capacity earlier than the prescribed time through marriage. Specifically, when by law entry into marriage is permitted before attaining 20 years of age, a minor automatically acquires full active legal capacity from the moment of entering into the marriage.

8 For more detailed discussion on this topic, see A. Jaisamoot, Kaam atibaai pramuang got mai paeng lae panit wa duay bookon [General Principles of Civil and Commercial Law: Legal Personality], Bangkok, Thai Samakom Sangkomsasat, 1971, p. 6. 9 J. Thingsapati, op. cit., 1984, p. 32.

General Rules Of Civil Law

27

The lack of capacity to perform juristic acts refers to the capacity to enter into a particular transaction with regard to the mental state of the actor at the time the transaction needs to be made. The Civil and Commercial Code provides three main categories of persons lacking the legal capacity, namely, minors, incompetents, and quasi-incompetents. The first category of individuals who lack of legal capacity are minors. All natural persons not having attained the age of 20 years are deemed to be minors according to Thai law. Minors must obtain the consent of their legal representative to perform a valid juristic act. All acts performed by him without such consent are voidable unless otherwise provided by the law. As we will see in detail in chapter 4, voidable means that the act can be either made void or ratified by the legal representative. A void contract has no legal effect from the moment it was made by operation of law, automatically, without any declaration of the parties required. When a voidable transaction is avoided, it is to be regarded as void from its inception date. When a voidable transaction is ratified, it is then perfected and no longer subject to disaffirmance. As a general rule, parental authority is exercised by the parents jointly or, in certain circumstances, by one of them on his own. A person who is under the legal age and has no parents, or whose parents are deprived of their parental power, may be provided with a guardian during minority according to the provisions of Section 1585 of the Civil and Commercial Code. There are cases, however, where parental consent is not required by law. More precisely, minors can independently engage in those juristic acts which are strictly personal (e.g., marriage) or suitable to their condition in life and actually required for their reasonable needs, or solely benefit them (e.g., the release of debt, acceptance of legacy, or acceptance of inheritance without charge and condition). It must be added that according to Section 25 of the Civil and Commercial Code, minors, after reaching fifteen years of age, are also entitled to make a last will without prior approval from their legal representative. In contrast, the Civil and Commercial Code provides a number of juristic acts which require the previous permission of the court to be valid (Section 1574). Such acts include selling, exchanging, letting out property on hire-purchase, mortgaging, releasing mortgage to mortgagor, or transferring the right of mortgage on immovable property, extinguishing real rights of the minor on immovable property, creating servitude and other real rights on immovable property. Therefore, in these cases the person exercising parental power cannot dispose of the minor’s property without permission of the court.10 10

A. Jaisamoot, op. cit., p. 12.

28

chapter 2

The second category includes mentally incompetent persons. A person who is unsound of mind and incapable of managing his own affairs has no competence to engage in juristic acts. It follows that any act done by a person adjudged incompetent is voidable. It must be pointed out, however, that an insane person is incompetent only if he has been declared as such by the court and has been appointed a guardian on the application of the spouse, ascendants, descendants, public prosecutor, guardian, curator, or any other person taking care of him. An act performed by a person of unsound mind but not adjudged incompetent is voidable only when the act occurred at a time when he was actually of unsound mind, and it can be shown that the other party was aware of this weakness (Section 30, Civil and Commercial Code). The third category of individuals who lack legal capacity are quasi-­ incompetent persons. A person who has physical or mental infirmity, habitual prodigality or habitual intoxication, or other similar causes that make him incapable of managing his own affairs, or whose management is likely to cause detriment to his own property or family, may be adjudged quasi-incompetent by the court and placed under curatorship.11 As regards quasi-incompetent persons, the Civil and Commercial Code lists certain transactions which require the consent of the curator to be valid, such as investing in property; accepting the return from the invested property, principal, or other capital; contracting a loan or lending money, borrowing or leasing valuable movable property; giving security; hiring or letting property; making gifts or performing any act whose object is the acquisition of a real right (Section 34). Failure to comply with these provisions makes the transaction voidable. It follows that if the quasi-incompetent person performs a juristic act which is not listed under Section 34 of the Civil and Commercial Code, such act is deemed to be valid. For example, suppose A is adjudged quasi-incompetent by the court and wants to make a will to give his property to B. There is no provision of law which restricts the capacity of a quasi-incompetent person to make a will. Thus A’s will is legally valid provided that it complies with all the legal formalities required by the law. As regards delictual obligations, it is noteworthy to observe that under Thai law, a person, even though incapacitated, on account of minority or unsoundness of mind, is liable for the consequences of his wrongful act. The parents or his guardian are jointly liable with him, unless they can prove that proper care in performing their duty of supervision has been extended (Section 429, Civil and Commercial Code). 11

Ibid, p. 18.

General Rules Of Civil Law

29

2.3 Artificial Persons In law there are other entities endowed with legal personality which enjoy legal rights and have legal duties, such as registered partnerships, companies, certain associations, and universities. Although they are not human beings they are still treated by the law as if they were persons. In these cases, the legislator seeks to secure the protection of important social interests which are not involved in the personal interests of individuals. In this regard, Section 65 of the Civil and Commercial Code provides that an artificial person can come into existence only by virtue of the Code or of other law. Legal protection, therefore, is conferred on other categories of persons which are not human beings but artificial entities or groups of persons.12 The law does not necessarily need to create those interests because the necessities and ideals of the community spontaneously recognize them as a matter of fact. The law merely recognizes, under certain circumstances, the centrality of those interests and invests them with the necessary protection by transforming such interests into legal advantages. These legal entities are called artificial (juristic, moral, or fictitious) persons as opposed to natural persons.13 With reference to the rights and obligations of artificial persons, the Civil and Commercial Code states that they have rights and obligations in conformity with the provisions of the law “within the scope of their powers and duties, or their object as provided by or defined in the law, regulation or constitutive act” (Section 66). This is to say that limitations on the rights and duties of an artificial person may derive from the law, from its regulations or from its constitutive act. Under Thai law, for example, artificial persons undertaking finance, securities, and credit foncier businesses are required to obtain a license from the Minister of Finance before they commence the business operation. Similarly, a company which has as its main objective the business of insurance cannot operate a finance business as this would be beyond the scope of its objectives. By the same token, a state enterprise which is established by a specific law to operate a telecommunications business cannot operate a transportation business. Subject to the considerations set out above, it can be said that artificial persons enjoy the same rights and have the same obligations as natural persons, except those which by reason of their nature may only be enjoyed or incurred by a natural person.14 12 13 14

See R. Khurusuwan, Kotmaai paeng lak tua bpai [General principles of civil law], Bangkok, Nititham, 2012, p. 27. See T. Chanwirat, Hoon suan borisat [Partnership and Company Law], Bangkok, Winuchon, 1992, pp. 29–42. T. Minakanit, op. cit., pp. 52–3.

30

chapter 2

Natural persons have the right to choose whether to execute civil law juristic acts in person or by means of a representative. Artificial persons, on the contrary, do not have this alternative: they must act through representatives appointed by its organs. Pursuant to Section 70 of the Civil and Commercial Code, an artificial person must have one or several representatives as prescribed by the law, regulations, or its constitutive act. The will of an artificial person is declared through its representatives. In other words, representatives always have extensive powers of acting in the name and on behalf of the artificial person whom they represent. As a general rule, an act which is performed directly within the scope of the activities of the artificial person is considered to be legally binding. Certain restrictions may be imposed upon the power of representatives in accordance with the provisions of the law and subject to compliance with the regulations and the constitutive act of the artificial person. Such restrictions on the powers of the representatives, however, are not enforceable as against third parties acting in good faith. An artificial person is bound to make compensation for any damage done to other persons by its representatives or the person empowered to act on behalf of the artificial person in the exercise of their functions, saving its right of recourse against the causers of the damage. The same rule applies to wrongful acts committed by an employee in the course of his employment. In fact, according to Section 425 of the Civil and Commercial Code, an employer is jointly liable with his employee for the consequences of a wrongful act committed in the course of employment. For example, a company would be held vicariously liable for injuries inflicted by an overzealous security guard who unlawfully detains a customer against his will. A hospital may be liable for injuries inflicted by a doctor on his patients. Thai civil law divides artificial persons into the following categories: 1.

2.

The state, governmental ministries, departments, agencies, districts, munici­palities, provinces, towns, and similar public communities within the state in their private legal relations. This means that when public institutions are not engaged in the direct exercise of their authority and operate in their private capacity to satisfy their private economic necessities, they are treated the same as any other artificial person. This includes agreements made by the state in its private capacity, as when, for example, it borrows money. Groups of persons which agree to unite for a common undertaking with a view to sharing profits are considered under Thai civil law as artificial persons with the capacity to have rights and obligations. This includes

General Rules Of Civil Law

3.

4.

5.

31

limited partnerships, registered ordinary partnerships, private limited companies, and public limited companies. Both partnerships and companies are defined by the Civil and Commercial Code as contracts whereby two or more persons agree to unite for a common undertaking with a purpose of sharing profits (Section 1012). Associations are also recognized as artificial persons under Section 78 of the Civil and Commercial Code, which states that an association created for conducting any activity other than the realization of profits must have its regulations and must be registered according to the provisions of the Code. It follows that the association becomes an artificial person only after registration. Foundations, which are non-profit artificial persons who utilize complexes of property denoted by artificial persons, natural persons or other organizations for the accomplishment of specific purposes. Pursuant to the Civil and Commercial Code, foundations are defined as particular legal entities founded by individuals on the basis of voluntary property contributions (Section 110). Their aims may be public, charitable, cultural, religious, scientific, historical, educational or other non-profit-making activity for the public benefit. As with associations, they must be registered under the provisions of the Code in order to become an artificial person. Also, the property of a foundation must be managed for the implementation of its objects and not for the benefit of any person. Monasteries, religious associations, and institutions.

2.4 Principal and Agent In the complex commercial life of today, a large part of transactions are not carried out by the parties in person, but by others who have been empowered to act for them. If a natural person wants to buy an air ticket, he may find it convenient to call a travel agent for the purpose of obtaining a good price. If he wants to rent a house, he may find a real estate agency to look for a suitable place that fits his needs. Similarly, if a company wants to purchase a new building, it requires a natural person to represent it in the transaction. An agent is thus appointed to do something in the place of another to fulfill a particular purpose.15 According to the Civil and Commercial Code, both natural and artificial persons may enter into legal transactions by means of an agent. Agency is a legal relationship whereby a person, called the agent, has authority to act for another 15

P. Auaychai, S. Charoenpanit and P. Potawanich, op. cit., p. 245.

32

chapter 2

person, called the principal, and agrees thereby to act in transactions with third parties. For example, A appoints B to buy a hundred tons of wheat of a specified description from a third party C and to pay for it out of A’s money remaining in B’s hand. According to the instructions, B buys a hundred tons of wheat from C in A’s name. In this case, the transaction is A’s transaction: A can sue and be sued by C, while B cannot be sued. An agency relationship may be created by operation of the law (e.g., parent, curator, tutor, legal representative) or, more often, by contract within the scope of the principal authorization (delegate, proxy, attorney, broker, or factor). As a general rule, agency contracts are not subject to any formal requirements. This means that authority may be created expressly or implicitly by an oral or written agreement. However, if a transaction is by law required to be made in ­writing, the appointment of an agent for said transaction must also be made in writing. When the transaction is required to be evidenced by writing, the appointment of an agent for said transaction must also be evidenced by writing (Section 798, Civil and Commercial Code).16 Duties arising out of the agency relationship must be literally complied with. The agent is bound to obey the lawful directions of the principal and must act according to the express or implied directions of the principal. If the agent has general authority, he may undertake all acts of management on behalf of his principal except the transactions listed under Section 801 of the Civil and Commercial Code, such as selling or mortgaging immovable property, letting immovable property for more than three years, making gifts, making a compromise, entering an action in court, and submitting a dispute to arbitration. Conversely, when the agent has a special authority he may do on behalf of his principal whatever is necessary for the due execution of the ­matters entrusted to him provided that they are within the scope of his appointment. An example will help clarify this point. Suppose company A hires business manager B to manage operational issues relating to the organization and develop new business opportunities. Company A also hires C to carry out a single act, namely to collect a debt from Y. B is a general agent while C is a special agent. A general agent is an agent authorized to conduct a series of acts or transactions involving a continuity of service; a special agent is authorized by the principal to perform a specific act or transaction only for special occasions. Hence, the distinction between the general agent B and the special agent C lies in the scope of the authority the agent possesses.

16

See K. Boonyuen, Kam atibai pramuan got mhai paeng lae panit wa duay tua taen nai nah [General Principles of Civil and Commercial Law: Agency], Bangkok, Nittibanakan, 1993, p. 42.

General Rules Of Civil Law

33

The agent’s liability with regard to the juristic acts performed on behalf of his principal with third parties will depend on whether such acts are concluded within the authority conferred or ultra vires. The agent is, therefore, usually not bound to third persons by the acts which he has performed within the scope of his authority on behalf of the principal. In these cases, Section 820 of the Civil and Commercial Code states that the principal is liable for juristic acts which the agent has concluded within the authority granted to him by virtue of his agency. In contrast, if the agent performs an act without authority or beyond the scope of his authority, it is said to be ultra vires and such act does not bind the principal unless he ratifies it. Should the principal not expressly or impliedly ratify the juristic act, the agent would be 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.17 It must be added, however, that if an agent performs an act ultra vires in excess of his authority, but the third party has reasonable grounds to believe that the particular transaction was within his authority, the principal is liable (Section 822, Civil and Commercial Code). For example, a company carries on the business of manufacturing shoes and does not have among its objectives the business of shipping its goods to customers. If one of the company’s representatives agrees to ship merchandise to a customer and the customer agrees to make payment in exchange, the company is legally bound by said contract. In this case, the party dealing with the company has reasonable grounds, arising from the act of the company, to believe that the transaction was intra vires. 3

Legal Object

In the previous section we have defined the notion of legal persons and discussed the difference between natural persons and artificial persons who are considered to be, under Thai civil law, subjects of rights. It is now necessary to discuss the third element of civil law: the legal object. The legal object of an interest constitutes the basis of all private legal relationships and is purely a relationship of fact between one or more natural or artificial persons with respect to things or other persons. The legal object to which rights relate may either be a right itself or a thing. A relationship of a person with regard to other persons may constitute the subject matter of the law of obligations or family law. A relationship of a person with regard to a thing by virtue of which an object is owned by the subject 17

Ibid., p. 69.

34

chapter 2

entitled, forms property law. In all those cases where things are subjected to the right of ownership or other real right of a person, they constitute the objects of rights. 3.1 Civil Rights Under Thai civil law, legal persons are endowed with rights and subject to obligations which allow them to claim something, to do something or not to do something. In personal relationships and property relationships, individuals are vested with certain legally recognized and valid claims which entitle them to promote their private interests, e.g., rights of the personality, rights of status, property rights.18 The legal system recognizes the centrality of individual needs and seeks to promote the realization of those needs. Natural persons as well as artificial persons, therefore, are granted the power to act for the satisfaction of their interests provided that no prohibition has been imposed by the law. In this regard, Section 150 of the Civil and Commercial Code expressly provides that the object of legal transactions must be possible, in accordance with the law, public order, and good morals. The legal order distinguishes between patrimonial rights and non-patrimonial rights. Patrimonial rights refer to all those rights which are mainly of a pecuniary nature and give its holder material benefits. This is to say that they have an economic content and, for this reason, can be transferred. Non-patrimonial rights, on the other hand, are subjective rights, such as the right to life, right to health, right to corporal integrity, and family rights. Although these rights have no economic content, their violation may give rise to economic benefits, such as in case of inheritance or maintenance. Patrimonial rights may be divided into relative rights and absolute rights according to their nature and characteristics. Relative rights are those which are directed at the prestation by a person (inter partes). They include all those rights directed at the performance of an obligation. In contrast to this category of rights, absolute rights confer to the right holder a power that he can exercise erga omnes, i.e., they exist and are enforceable against all others. For example, ownership, intellectual property rights, right of inheritance, right to freedom, right to health, right to life, and the like. The reasonable and bona fide exercise of a right does not give rise to civil responsibility except where the right holder uses such right for an improper purpose. Abuse of rights generally refers to those cases when the exploitation of an individual right unlawfully infringes on the lawful freedom of other 18

P. Sumawongse, op. cit., p. 45.

General Rules Of Civil Law

35

persons or on the interests of the community in general. Thus the law intervenes to prevent the possible use of a right for an improper objective, such as violating someone else’s right. In Thai legal systems the principle of abuse of rights is given a broad compass. In this respect, the following limitation is applied to the exercise of any right to whatever category it may belong: “The exercise of a right which can only have the purpose of causing injury to another person is unlawful” (Section 421, Civil and Commercial Code). Such provision is of high practical relevance and retains an important role with respect to the Thai civil law system.19 Furthermore, civil rights should be exercised according to the fundamental principle of good faith. The principle of good faith is covered in Section 5 of the Civil and Commercial Code which provides that every person must, in the exercise of his rights and in the performance of his obligations, act in good faith. This principle is of particular relevance in contract negotiations. In fact, parties to a transaction should deal with each other by taking into account their respective legitimate interests. More precisely, parties should not deal maliciously or contrary to standards of fair dealing in the negotiations of commercial contracts.20 3.2 Property and Things The legal definition of things is contained in Section  137 of the Civil and Commercial Code which states that things are material objects. In everyday language the term “thing” covers all types of objects that surround us. However, not all these things can constitute the legal object of rights. As defined in civil law, the term things includes only those corporeal objects that can be controlled by human beings and can be the object of rights. Things outside of commerce cannot form the object of rights. The class of things outside of commerce refers to objects incapable of being owned by a private person, while things in commerce includes objects which can be owned. With respect to this, Section 143 of the Civil and Commercial Code states that things outside of commerce are things incapable of being appropriated, as well as those legally inalienable. Things outside of commerce include the moon, the sun, the sky, the rivers, the lakes, the sea, and the air. They also includes things which are common to all, those dedicated to serving the public and those subject to public use, such as public streets, harbors, and common land. 19 20

See P. Poonyapun, Kam atibai pramuan got mai paeng lae panit laksana lamerd [Elements of Civil and Commercial law: Delict Law], Bangkok, Thammasat University, 1978, p. 8. T. Minakanit, op. cit., p. 73.

36

chapter 2

Under the Thai legal system, the above classes of property cannot be owned by either natural persons or artificial persons. It must be added, however, that certain rights pertaining to things outside the commerce may be protected. For example, even if the air cannot be the object of the right of ownership, the landowner has some rights with regard to the air above his land, e.g., the right of enjoyment of the land free from smoke, fumes, or noxious substances.21 3.3 Classification of Property Property, as object, may be classified in multiple ways and different types of property may be governed by different legal rules. Under the Thai legal system, property is first classified on the basis of its nature, as corporeal and incorporeal, movable and immovable; and secondly, on the basis of its relation to persons, as in commerce and out of commerce. The importance of these concepts and techniques of classifications will be clear from the following chapters. By the definition of the Civil and Commercial Code, the term “thing” includes only corporeal objects (Section 137) while the term “property” applies to both corporeal objects and incorporeal objects capable of having a value and of being appropriated (Section 138). Corporeal things are those which are tangible, such as animals, land, books, watches, clothes, houses, and others. Incorporeal things are those which are not tangible, such as rights, authorship, inventions, money, debts, bonds, stocks, and other assets. In other words, corporeal property includes those objects that by their nature can be touched while incorporeal property consist of those objects that cannot.22 Although such classification has relatively little scientific importance, it is used as a basis for further distinctions. Corporeal objects may further be divided into divisible and indivisible things according to their nature. Divisible things are those which can be separated into real and distinct portions, each forming a perfect whole (Section 141, Civil and Commercial Code). Indivisible things are those which cannot be separated without the alteration of its substance, as well as those which are considered indivisible by law (Section 139, Civil and Commercial Code). Another distinction that can be found under the Civil and Commercial Code is between movables (e.g., furniture, clothing, goods, money, animals) and immovables (e.g., land and things fixed permanently to land or forming a body therewith). Usually this classification only applies to corporeal property. However, it must be pointed out that incorporeal objects are often considered 21 22

P. Sumawongse, op. cit., pp. 72–5. B. Suchiwa, Kam atibai pramuan got mai lakasasap [Elements of Thai Property Law], Bangkok, Institute of Legal Education Thai Bar Association, 2007, p. 3.

General Rules Of Civil Law

37

as movables or immovables by operation of the law, except for those cases where the law treats incorporeal property as a third and distinct class. The category of immovable property includes not only those objects which are physically immovable, but also certain types of movables which are equated to immovables by resorting to a legal fiction. For example, ships or vessels of six tons and over, steam launches or motor boats of five tons and over, and floating houses and beasts of burden are treated as immovable property under Section 456, paragraph 1, of the Civil and Commercial Code. Immovable property also includes real rights connected with the land or things fixed to or forming a body with land (Section 139, Civil and Commercial Code). The category of movables includes not only objects physically movable, but also certain incorporeal objects which are considered to be movable by operation of the law. According to Section 139 of the Civil and Commercial Code, immovable property denotes: (1) land; (2) property fixed permanently to land or forming a body therewith (under this heading fall growing trees and fruits; minerals, stones, and similar; certain movables annexed to land even though temporarily removed; certain movables not annexed to, but enjoyed along with, land or destined for perpetual use therewith); (3) real rights connected with land or objects fixed to or forming a body with land. Conversely, movable property denotes: (1) property other than immovable property; (2) rights connected with movables (Section 140, Civil and Commercial Code). Also, all kinds of property which can be classified as movable or immovable and do not explicitly fall under the class of immovable property is deemed to be movable. This includes a large number of incorporeal rights other than those which have already been considered.23 It must be pointed out that the question of whether property annexed to real property has become immovable through human addition depends on the facts and circumstances of the particular case. The Civil and Commercial Code does not expressly provide for such situations, but only states that “A component part of a thing is that which, according to its nature or local custom, is essential to its existence and cannot be separated without destroying, damaging or altering its form or nature. The owner of a thing has ownership in all its component parts” (Section 144). Here, case law has elaborated what these general terms mean and specified that components are considered to be attached to and part of the real property only when several conditions are fulfilled. Basically, the nature of the property must be capable of annexation to immovables, there must be a real annexation whether by physical attachment or by 23

See P. Waayupap, Kam atibaai kotmaai laksana sap [Fundamentals of Property Law], Bangkok, Institute of Legal Education Thai Bar Association, 2012, p. 23 et seq.

38

chapter 2

weight and the connection must be performed with the intention of the owner to create a permanent improvement of the immovable. This may result from transfer of ownership, merge of titles, or destruction of identity of movable objects as to cause it to lose its original nature of movable property and to become part of the real property. It follows that trees, when planted for an unlimited period of time, are deemed to be component parts of the land on which they stand. Yet, trees which grow only for a limited period of time and crops which may be harvested one or more times a year cannot be considered as component parts of the land (Section 145, Civil and Commercial Code). By the same token, things temporarily fixed to land or to a building do not become component parts of the land or building (Section 146, Civil and Commercial Code). The legal consequences, and therefore also the importance of the distinction of property as immovable or movable, is primarily based on the different formalities which are required for acquisition of property by juristic act. Specifically, Section  1299, paragraph 1, of the Civil and Commercial Code provides that the acquisition by juristic act of immovable property or real right related to it is not complete unless the juristic act is made in writing and the acquisition is registered by the competent official. In the case that the immovable property or the real right related to it is acquired otherwise than by juristic act, Section 1299, paragraph 2, of the Civil and Commercial Code specifies that the acquirer’s right cannot be dealt with through the register unless it has been registered, nor can it, without registration, be set against a third person who has, for value and in good faith, acquired and registered his right. Acquisition of movable property, on the other hand, is subject to less stringent conditions. In this regard, Section 1303 of the Civil and Commercial Code states that in the event that several persons claim to have acquired the same movable property under different titles, the person who is in possession of the property is preferred provided that he has acquired it for value and has obtained the possession in good faith. This provision, however, does not apply to lost property or property acquired through an offense. 3.4 Fruits Specific provisions apply to fruits which—according to Section 148 of the Civil and Commercial Code—refers to things that are generated or derived from other things. Fruits are separated into two kinds: natural fruits and legal fruits. Natural fruits are produced by the earth or by animals, e.g., the fruits of a fruit tree, the milk of a cow, the wool of a sheep, the eggs of a hen, the produce of fields and gardens. They are obtained from a thing in the normal possession or

General Rules Of Civil Law

39

in the use of the right holder and are capable of acquisition at the time when they are naturally separated from the principal thing.24 In particular circumstances, the owner of the fruits is not the same person as the owner of the principal thing. A classic example of acquisition of fruits by a non-owner is that of a hirer who is entitled to the fruits of a piece of land or a usufructuary who has the right to use and enjoy the fruits of another’s property for a specific period of time. Legal fruit denotes a thing or other interest obtained periodically by the owner from another person for the use of the thing. They arise from the use of the property through juristic acts, e.g., interest on capitals, annuities rent on hire of property, cash dividends from corporate stock, proceeds of pledges. They are calculated and may be acquired day by day or according to a fixed period of time.25 4

Legal Protection

The fourth element of civil law regards the legal relationship itself and the protection of the legal interest related to it. More precisely, the legal interests of the persons are protected to the extent allowed under applicable laws and regulations. As a practical matter, the protection provided depends on the importance that the legal order attributes to the specific interest of the individual having regard to its social function and on the practical possibility to achieve such protection through legal standards. It is possible to achieve protection in different manners. In a more theoretical way, the legal order protects the interests of individuals through the existence of legal sanctions. In this context, prohibition and command regulate the conduct of all members of society. When the members of society are aware of the legal rules and know the difference between lawful and unlawful conduct, they will act righteously in conformity to the laws. This means that it is necessary and sufficient for law-abiding persons to know which conduct is forbidden and which conduct is commanded by the legal order. According to this approach, then, justice, the mere creation of legal obligations, the existence of substantive law and procedural law, the establishment of courts and tribunals, and the possibility to obtain judicial redress are considered to be necessary in order to encourage individuals to perform those 24 25

P. Auaychai, S. Charoenpanit and P. Potawanich, op. cit., p. 73. B. Suchiwa, op. cit., p. 42.

40

chapter 2

activities which are commanded by the law and dissuade them from engaging in activities that are forbidden by the law. In a more practical way, the legal order protects the interests of members of society through justified measures of self-protection, protection of others, and similar measures authorized by the law. For example, under the Civil and Commercial Code, if a person damages or destroys a thing in order to avert an immediate common danger, he is not liable to make compensation, provided that the damage done is not out of proportion to the danger (Section 450, paragraph 1). However, if a person damages or destroys a thing in order to avert an immediate individual danger, he is bound to make restitution (Section  450, paragraph 2). Also, legal protection may be constituted de facto by means of lawsuits, legal complaints, and actions, or through precautionary measures of execution, security, and conservation.

chapter 3

The Law of Obligations The drafters of the Civil and Commercial Code decided to treat the law of obligations in Book II before other specific sections because they regarded contracts and other obligations as the most relevant source of acquisition of property. Under the Thai Code, the law of obligations regulates the rights and duties arising between individuals as a result of their private dealings. These specific rights and duties are only effective between the parties involved and are therefore referred to as personal rights, as opposed to real rights.1 A real right constitutes a claim which may be enforced universally against any person, but an obligation can only be asserted against some particular individuals. When a natural or artificial person is entitled to obtain performance from another, a legal relationship is said to exist between them which is called an obligation. An obligation may operate, for example, against the seller, if it arises from a purchase agreement, the borrower, if it arises from a contract of loan, and so on. The general rule is that although obligations may deal with movable or immovable property, they are different from property rights. The object of an obligation may either be the act of giving something to somebody (e.g., a thing, a sum of money, a right, a debt), or a performance which the debtor obliges himself to carry out or not to carry out. Civil obligations (also called perfect obligations) must be distinguished from natural obligations, which are not subject to any legal necessity. In all the specific cases of natural obligations regulated under the Civil and Commercial Code, there is a moral but not a juridical tie which binds the parties to the necessity of making some performance in accordance with the law. In the event of non-performance by a debtor of a natural obligation, there are no means to constrain him to perform or pay, natural obligations being based on justice and morality. Although the creditor of a natural obligation cannot compel the debtor to perform what is due, if the latter has performed it of his own volition, no suit will lie to recover back what has been paid or given in compliance with the obligation. A classic example of natural obligation can be found under Section  853 of the Civil and Commercial Code which states that “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 1 See J. Setabutr, Kam banyai got mai paeng laksana tua pai haeng nee [Principles of Civil Law: General Provisions on Obligations], Bangkok, Thammasat University, 2006, p. 2.

© koninklijke brill nv, leiden, ���6 | doi 10.1163/9789004308923_004

42

chapter 3

obligation existed. This means that the debtor is not bound to pay, but if he spontaneously pays he cannot reclaim the money on the ground that it was not owed.” Also, when the action is barred by prescription, a natural obligation still  subsists, although the civil obligation is extinguished. In this regard, Section 193/28 of the Civil and Commercial Code states that “If any act of performance is done in satisfaction of a claim barred by prescription, the value of such performance may not be demanded back, even if the performance has been effected in ignorance of the prescription.” 1

The Nature of Obligations

According to the traditional classification, obligations are divided into three categories depending on the object of the performance, namely, obligations to give, to do, and not to do something. If the obligation is to give something or to do something, it is termed a positive obligation. When the obligation is to refrain from doing something, it is termed a negative obligation. It must also be pointed out that these types of obligations may operate upon the same person. Suppose, for example, that A agrees to make a ring according to a drawing and to deliver it to B for a pre-determined price. In this case A is under an obligation to do something (i.e., to make the ring) and then to give (i.e., to deliver the ring). The Civil and Commercial Code accords particular importance to the obligation to give something, that is the obligation to transfer the ownership or other real right on property to someone else. Property may be movable or immovable, fungible or non-fungible, tangible or intangible. In this particular type of obligation, the objective intent of the contractual parties (in case of contractual obligations), or the provisions of the law (in case of non-contractual obligations), is to transfer the ownership or other real right over the property to the obligee. It must be added that the expression “to give” also includes the obligation to deliver specific things to the obligee such as, for example, the obligation of the letter to deliver the property hired in a good state of repair to the hirer (Section  546, Civil and Commercial Code) or the obligation of the lender to deliver the property loaned to the borrower (Section 641, Civil and Commercial Code). As regards the effects of the obligations to give, these will be discussed in detail in the coming paragraphs. Suffice it to mention here that, as a general rule, the obligation to give something to the obligee automatically transfers the right of ownership or other real right over the property provided that the obligor is the true owner or the person legally entitled to the possession. In some cases, however, the transfer of ownership or other real right does not operate

The Law Of Obligations

43

automatically. The law may impose specific requirements, such as the necessity of a written form, registration, or delivery of the thing.2 For example, according to Section 456 of the Civil and Commercial Code, a sale of immovable property is void unless it is made in writing and registered by the competent official. Also, Section  523 of the Civil and Commercial Code requires delivery as an essential element for the validity of a contract of gift. Hence, a gift is valid only on delivery of the property given. The obligation to do exists when the obligor is bound to do something or to perform an act. There is a number of ways in which an obligation to do can be expressed. In a hire of property contract, for instance, the letter is obliged to ensure the hirer’s peaceful enjoyment for the duration of the contract, while the hirer is bound to take as much care of the property hired as a person of ordinary prudence would take of his own property, and to do ordinary maintenance and petty repairs (Section 553, Civil and Commercial Code). Similarly, in a hire of services contract, the employee agrees to render services to the employer (Section 575, Civil and Commercial Code) and in a hire of work contract, the contractor agrees to accomplish a specific task for the employer (Section 587, Civil and Commercial Code). A contract may also include an obligation to do coupled with an obligation to give.3 Therefore, the depositary has the obligation to keep the property deposited in his custody, but he is also bound to return it (Section 587, Civil and Commercial Code). Also, in a loan for use contract, the borrower is bound to take as much care of the property loaned as a person of ordinary prudence and return it according to the contract (Sections  640 and 644, Civil and Commercial Code). The obligations to do may owe their existence to a source outside the contract. Therefore, a person who takes charge of an affair for another without having received mandate from him or being otherwise entitled to do so in respect of him is bound to complete the performance of the act which he has begun, as if he held a proper mandate (Sections 395 and following, Civil and Commercial Code). Obligations to do may likewise arise directly from the provisions of the law, like, for example, the obligations which derive from the status of a person. For instance, the Civil and Commercial Code states that children are bound to maintain their parents (Section 1563). Parents, on the other hand, are bound to maintain their children and to provide proper education for them during

2 J. Sodpipan, op. cit., pp. 33–42. 3 J. Setabutr, op. cit., 2006, p. 46.

44

chapter 3

their minority (Sections 1564, Civil and Commercial Code). But this obligation is precisely framed by the Code which specifies that when the children are sui juris, parents are bound to maintain them only when they are infirm and unable to earn their living. Also, there is no duty for a brother to maintain his sister. The obligation not to do something is an obligation to refrain from doing something that otherwise one would have the right to do. This is the case when, for example, A says to B, “If you promise to refrain from smoking for one month, I will pay you 500 baht” and B promises. Here the obligor promises to refrain from performing an act that he had a legal right to perform. Similarly, in a confidentiality agreement, an employee may promise not to disclose any an employer’s confidential or proprietary information brought to his knowledge during the course of the employment. Finally, non-compete clauses in a publishing agreement may prevent the author from creating competing works for other publishers. Obligations not to do may also find their source outside the contract. As we will see in later chapters, adjacent landowners are bound by the law to certain restrictions. For example, according to Section 1341 of the Civil and Commercial Code, the owner of an immovable property must not construct roofs or other structures which cause rain water to fall upon the adjoining property. 2

Classification of Obligations

The Thai Civil and Commercial Code deals with the general rules which apply to all obligations without regard to whether they are derived from contracts or any other form of liability, before it defines the different types of contracts. Although this classification is based on logical considerations, it is inconvenient in practice. As a matter of fact, some specific modalities of obligations, like conditions and time limitations, are directly related to contract law. Other modalities of obligations, such as joint and several liability, would be better analyzed under the general heading of contracts even if they may arise in the absence of agreement. For now, we will limit our attention to the main classifications of obligations, and discuss them in detail in subsequent sections. Obligations may be pure and simple, may be subject to a term or condition, may be currently existing, or may arise in the future. A pure and simple obligation is an absolute engagement which is not encumbered with any conditions or time limitations: the obligor binds himself unconditionally and without reserve. It produces its effects immediately and may be enforced without delay. However, these types of obligations may always be modified by mutual ­agreement of the

The Law Of Obligations

45

contracting parties or, in some circumstances, by the law. Accordingly, in such a case the obligation will produce different effects from what might be expected from a pure and simple obligation. 2.1 Contingent and Conditional Obligations Obligations are generally legal, valid, and immediately binding. This means that the obligee has the right to enforce performance by its obligor without delay and the obligor has no available defense against that enforcement. But the obligation may also be subject to a condition and, consequently, receive all its effects at the moment a future and uncertain event happens. For instance, A promises B to pay 1,000 baht, if racehorse Y wins a particular race. In this case, a future and uncertain event will affect the commencement of the effects of A’s promise. If time is given for the performance of the obligation, the performance is made to depend on the occurrence of a certain and future event that constitutes the term. This is to say that the obligation becomes immediately binding, but rights and duties under the obligation are suspended until the happening of the stated event. For example, A promises B to pay 1,000 baht on December 5, 2017. In this case, a future and certain event will affect the commencement of the effects of A’s promise. 2.2 Conjunctive and Alternative Obligations In general, the object of obligations is a specific thing, i.e., the performance of a positive action or a negative action. In some cases, however, the object may be composed of two or more acts. In such cases there are several possibilities. The obligation may contain several parts or objects that are connected. Here the obligor must perform all the acts so that he can obtain a discharge. In this case, each act is regarded as the object of a separate obligation and the obligation is said to be conjunctive. For example, if A promises to deliver his motorcycle and his helmet to B, such promise binds A to multiple acts of performance that may be separately rendered or enforced. Or the obligation may require the obligor to perform only one act in order to obtain a discharge and extinguish the obligation. In this case, two or more things are promised disjunctively and the obligation is considered to be alternative. For example, A agrees to give B a smartphone or 15,000 baht. Alternative obligations must be distinguished from facultative obligations which arise when one act is due, but another may be performed as a substitute. Here, there is no alternative provided; the obligor is given the right to substitute the act due with another that is not due.

46

chapter 3

2.3 Several or Joint Obligations An obligation may also be several or joint if there are several debtors or several creditors. In these cases it may be that the obligation is split between each person: each debtor is bound to bear a specific share of the total obligation and each creditor is entitled to a specific share of the total obligation. This is said to be a joint obligation. It may also be that the obligation is a several and joint one. This occurs when each of the debtors is liable in respect of the same liability and owes an obligation for the whole, or each of the creditors has the right to demand performance of the whole debt. In the first case the debtors are considered to be several and joint debtors, and in the second case the creditors are considered to be several and joint creditors. 2.4 Divisible and Indivisible Obligations Obligations can further be divided into divisible and indivisible. An obligation is divisible when it is capable of partial performance. This means that the object of the performance is susceptible to division. Pursuant to Section 141 of the Civil and Commercial Code, divisible things are those which can be separated into real and distinct portions, each forming a perfect whole. For example, A promises to deliver twenty kilos of rice to B as follows: ten kilos to be delivered on January 31 and ten kilos to be delivered on February 28. On the other hand, an obligation is indivisible when the object of the performance, because of its nature, because of the law, or because of the intent of the parties, does not admit any division. Laptops, books, phones, for instance, are not susceptible to division without the destruction of their substance. In this regard, Section 142 of the Civil and Commercial Code provides that indivisible things are those which cannot be separated without alteration to its substance, as well as those which are considered indivisible by law. 2.5 Ordinary, Privileged, and Mortgaged Obligations In the language of Thai civil law, an obligation is commonly referred to as an ordinary obligation. This means that the creditor has no specific guarantee for the performance of the obligation. In the event of insolvency of the debtor, the debtor’s assets may be taken, and its proceeds distributed among the creditors according to their rank as privileged, mortgagee, or ordinary. A creditor is called privileged when he has, according to the provisions of the Civil and Commercial Code or other laws, a right as regards the property of the debtor to receive performance of an obligation due to him in preference to other creditors (Section  251, Civil and Commercial Code). The obligation is mortgaged when the creditor is entitled to be paid out of the mortgaged property in preference to ordinary creditors, regardless of whether or not the ownership of the

The Law Of Obligations

47

property has been transferred to a third person (Section 702, paragraph 2, Civil and Commercial Code). 2.6 Principal or Secondary Obligations Obligations may be principal or secondary with regard to the person or the property. The obligation is principal if it arises from the main object of the engagement between the parties. For example, in a contract of sale of a dog, the principal obligation of the seller is to deliver the dog to the buyer. An obligation which depends upon a principal obligation is secondary. For example, the obligation to take reasonable care of the dog until delivery is regarded as an accessory engagement. With regard to the person, the obligation is principal when the debtor engages to perform a certain act for himself. A secondary obligation is that which is made in order to assure the performance of another person’s obligation to a third party, such as the obligation of a guarantor in a contract of guarantee or the obligation of a pledgee which is contracted to secure the payment of the another person’s principal obligation. Thus there can be no secondary obligation without a principal obligation. 2.7 Liquid and Non-liquid Obligations An obligation is regarded as liquid when the amount of the debt is certain and not disputed on reasonable grounds. For example, A owes B a debt of 10,000 baht for some work which B has done. In this case the amount due is not in dispute. The result would be different if A hit B and injured him. When a wrongful act is committed, the victim is entitled to obtain compensation. In the absence of agreement between the victim and the wrongdoer, however, the amount of damages is difficult to calculate. Therefore, the debt is considered to be illiquid meaning that its amount is not certain or readily ascertainable. 3 Performance Performance of an obligation means the fulfillment of its contents. It occurs when the obligor faithfully and appropriately does something or abstains from doing something. Generally speaking, the obligor is bound to do or forbear from doing some particular act with the prudence and care of a reasonable person.4 Thus the subject of the performance of the obligation is the exact execution of the prestation stipulated in the contract or by law with regard to 4 S. Maneesawat, Nee [The Law of Obligations], Bangkok, Winuchon, 1993, p. 27.

48

chapter 3

the proper place, the proper time, the proper kind, the proper quality, and the proper value. The rules governing performance of obligations are provided for by the Civil and Commercial Code under Sections 194–202 and 314–339. The provisions in these sections deal with, among other things, the modes of performance, time and place of performance, and performance by third parties. The mode of performance is subject to the specific nature of the obligation. If the obligation arises out of a juristic act, the mode of performance mainly depends on the intention of the parties stated expressly or evident from the circumstances; if the obligation arises by operation of law applicable to the specific situation, then the mode of performance is regulated under such provisions of law.5 As a general rule, the Civil and Commercial Code states that by virtue of an obligation the creditor is entitled to claim performance from the debtor (Section 194). Full performance of an obligation extinguishes it. It may be rendered directly by the obligor or by his agent generally or specially authorized for that purpose. Indeed, performance may be rendered by a third person, even against the knowledge of the obligee, with the result that the obligation will be extinguished, unless the performance is of such a personal nature that the obligee has an interest in performance only by the obligor in person. In practice, performance of this type can effectively be made by an independent person in the name of the obligor only for those obligations consisting in giving, but rarely for obligations of doing. Specifically, Section 314, paragraph 1 of the Civil and Commercial Code states that 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. However, Section 314, paragraph 2 of the Civil and Commercial Code points out that a person who has no interest in the performance cannot make performance against the will of the debtor. Also, a minor or other legally incompetent person cannot discharge a debt without consent from his legal representative. Should he do so, the amount of money or other property transferred can be recovered by legal action.6 Pursuant to Section  315 of the Civil and Commercial Code, performance must be made to the creditor or a person having authority to receive performance on his behalf. In other words, performance may be made to the creditor, to his representative, or to other persons who are entitled to receive payment 5 S. Pramod, Pramuan got mai paeng lae panit wa duay nitigam lae nee [The Civil and Commercial Code: Law of Obligations and Juristic Acts], Bangkok, Aksorn, 1965, p. 382. 6 K. Panthulap, Kam atibai pramuan got mhai paeng lae panit wa duay nee [Elements of Civil and Commercial Law: The Law of Obligations], Bangkok, Ramkhamhaeng University, 1979, p. 123.

The Law Of Obligations

49

to the extent of that performance. Performance made to the creditor’s duly constituted agent extinguishes the obligation only if the agent has acted within the scope of his authority. If a person acting as an agent acts without authority to receive payment, its acts are not binding upon the creditor unless the creditor ratifies the transaction. When the debtor is bound to deliver things designated only as to kind, and the quality of such things has not been determined in detail by the appropriate provisions or by the legal act, the debtor must deliver things of average quality. In this regard, Section 195, paragraph 1 of the Civil and Commercial Code provides that 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 a money debt is expressed in a foreign currency, payment must be made in Thai currency in the absence of provision to the contrary. The commutation is made according to the rate of exchange current in the place of payment at the time of payment (Section 196, Civil and Commercial Code). It is necessary to distinguish between the performance of obligations which  must be executed in installments from the performance of obligations which must be executed at one time. In fact, the creditor has the right to refuse to accept partial performance by the debtor if full performance is due.7 In this regard, Section 320 of the Civil and Commercial Code provides that the creditor cannot be compelled to receive part performance or any other performance than that which is due to him. However, if the creditor accepts, part performance extinguishes the corresponding proportion of the debt. Unless authorized by the creditor, substituted performance cannot be accomplished. If the parties agree for the discharge of an existing claim by a substituted performance, such performance extinguishes the obligation. In contrast, when obligations are alternative, the debtor has the right to select which alternative to perform, unless otherwise provided by the agreement. The extinction of one of the things due in the alternative does not extinguish the obligation. The normal effect of performance is to extinguish the obligation. This means that performance not only discharges the principal debtor from his liability to the principal creditor, but it also releases co-debtors and sureties from their obligations towards the creditor in question. If a co-debtor performs the obligations of his principal, he may file a claim for payment against the debtor and this is sufficient to keep the debt alive.8 If a thing, a claim against a third 7 S. Maneesawat, op. cit., p. 29. 8 N. Posataboot, op. cit., pp. 162 et seq.

50

chapter 3

person, or any other right is given in lieu of performance, the debtor is liable for defect and for eviction in the same manner as the seller (Section 322, Civil and Commercial Code). Under the general framework of the performance of obligations, payment may be proved by different modes of evidence and supported by different factual allegations.9 It is usual for this purpose to produce a receipt signed by the creditor or the creditor’s agent, but the fact of payment may be proved by other lawful evidence. A debtor has the right to require the issuance of a receipt from the creditor upon payment of the whole amount or of a partial amount. In this regard, Section 326 of the Civil and Commercial Code provides that 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. Questions in regard to the appropriation of payments arise when a debtor owes several distinct debts to the same creditor and makes payment which is not sufficient to cover the whole amount. The rules relating to the appropriation of payment are stated under Section  328 of the Civil and Commercial Code and can be briefly summarized. Specifically, when a debtor is bound to the creditor to undertake similar acts of performance by virtue of several obligations, and the performance effected by him is insufficient for the discharge of all debts, that debt is discharged which he specifies on effecting the performance. For example, A owes B 18,000 baht under a contract. B writes an e-mail to A and demands payment of this sum. Upon receipt of the letter, A transfers 18,000 baht to B’s bank account. In this case, the payment is made toward the discharge of the debt for which B has demanded payment. However, where no express intimation of payment is made and the debtor makes no specification, then the law appropriates the payment in the following order: (a) to the debt which is due first; (b) to the debt which affords the creditor least security, then (c) to the debt which is most burdensome to the debtor; and subject thereto (d) to the debt which is the oldest and in the case of debts of equal date, finally (e) to all such debts proportionately to their amount. An important matter to consider in relation to payment is the subject of interest if payment is not made by the due date. Section 329 of the Civil and Commercial Code states that 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 9 S. Maneesawat, op. cit., p. 37.

The Law Of Obligations

51

lastly to the principal performance. Payment of the interest may either be awarded by the law of damages if one party is in default, or mutually agreed by the parties. Next, as regards the legal rate of interest, Section 224, paragraph 1 of the Civil and Commercial Code stipulates that a money debt bears interest during default seven and half per cent per annum. If the creditor can demand higher interest on any other lawful ground, this shall continue to be paid. This means that if parties agree on the payment of interest in excess of seven and half percent per annum, such higher interest may be claimed for the period of the default. Further, Section 224, paragraph 2, of the Civil and Commercial Code prohibits the awarding of compound interest. In the absence of an express agreement between the parties, interest cannot be applied except by the operation of the law as damage. Where interest is agreed to be paid but no rate is fixed, the current rate of interest is applied. In this regard, Section 7 of the Civil and Commercial Code states that “Whenever interest is to be paid, and the rate is not fixed by a juristic act or by an express provision in the law, it shall be seven and a half per cent per year.” Tender can be defined as an attempted performance made by a debtor to perform his obligation. In order to be valid, tender must be made to the person of the creditor or to someone authorized to act for him and must comply with the terms of the original obligation. By proper tender of performance a discharge is effected, from the time of the tender, of all responsibilities arising out of non-performance (Section 330, Civil and Commercial Code).10 The tender must be made at a proper place, at a proper time, and in a proper form. The Civil and Commercial Code provides special rules concerning the place and time of payment by which the parties are mutually bound in the absence of a contrary agreement or of any special circumstances. With regard to the place, performance must be made at the place in which the debtor is domiciled unless another place of performance arises from the nature of the obligation or is designated by the parties. However, if a specific thing is to be delivered, the debtor is generally not compelled to bring it to the domicile of the creditor. Pursuant to Section 324 of the Civil and Commercial Code, if a specific thing is to be delivered which at the time of making the contract was located elsewhere, the delivery is to be made at the place where the thing was at the time when the obligation arose. This means that the debtor is not as a rule bound to find the creditor. On the contrary, the onus is on the creditor to find the debtor for performance of the obligation. 10

Ibid., p. 54.

52

chapter 3

With regard to time, the basic rule in Thai civil law is that the time may be agreed by the parties. When no time for performance is expressly agreed or where it is not implied from the circumstances, an obligation must be performed immediately. If the debtor does not fulfill the performance immediately upon the creditor’s demand, he is in default. Specifically, Section  203, paragraph 1 of the Civil and Commercial Code states that if a time for performance is neither fixed nor to be inferred from the circumstances, the creditor is entitled to demand the performance immediately, and the debtor has to perform his part immediately. However, the debtor should be granted a reasonable period of time to carry out the performance of his obligation. If performance is to be rendered at a fixed time or upon the happening of an uncertain event, it is to be presumed, in case of doubt, that the creditor may not demand the performance before that time or the event happens. The debtor, however, has the right to perform earlier (Section 203, paragraph 2 of the Civil and Commercial Code). It follows that when parties prescribe a specific day by which performance is due, the debtor is not in default until the day for performance pursuant to the underlying obligation has expired. If a time by calendar is fixed for the performance, the debtor is in default when he does not fulfill his obligation within the specified time limit. In this case, the creditor does not need to put the debtor in default by sending a formal notice. It is noteworthy that under Section 206 of the Civil and Commercial Code, in obligations arising from an unlawful act, the debtor is in default from the time when he committed it. 4 Non-performance In this section we will discuss what happens in the case of non-performance or improper performance of the debtor. As a general rule, the debtor is not considered to be in default if the performance or the complete performance of his obligation has been prevented by an impediment beyond his control. This means that debtor’s non-performance of an obligation is excused if it is due to a circumstance for which he is not responsible.11 The provisions of the Civil and Commercial Code fail to establish a formal classification of the grounds on which non-performance may be claimed.12 It can be stated, however, that they include all those cases where the juristic act is voidable because it is made as a result of a mistake as to a quality of the 11 12

Ibid., p. 28. S. Pramod, op. cit., p. 419.

The Law Of Obligations

53

person, fraud, duress, or capacity; or void because it is made as a result of a mistake as to an essential element of the juristic act, or its object is illegal, impossible, or contrary to public order or good morals. Also, the parties can render the operation of the obligation dependent on a suspensive condition. In these cases, performance cannot be demanded until the future uncertain event has happened. Finally, there is the question of synallagmatic agreements where each party binds himself to give, to do, or not to do something, and each acquires a right to what the other promises. These agreements contain mutual promises whereby each party is at the same time obligor and obligee. When in the agreement performance by one party is expressly made conditional upon performance by the other party, then the question arises of whether (and if so in what circumstances) the duty of performance by one is conditional on performance by the other. It may be that the parties have to perform their promises simultaneously or successively. In the first case, fulfillment of each obligation is a concurrent condition to the other and each party is entitled to reject performance, unless the other party performs the whole of his obligation at the same time. In this regard, Section 210 of the Civil and Commercial Code states that 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. In the second case, one is to perform before the other. In other words, the performance of one party is considered to be a condition precedent of the obligation that lies on the other. Accordingly, if the debtor is bound to perform only after the counter-performance 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  332, Civil and Commercial Code). For example, suppose that A buys land from B, who agrees to sign the land over provided that A pays him 200,000 baht. In an ordinary contract of sale, delivery of the goods and payment of the price are concurrent conditions unless otherwise agreed by the parties. This means that A must be ready and willing to pay 200,000 baht in exchange for possession of the land and B must be ready and willing to give possession of the land in exchange for 200,000 baht. If A does not pay, B is not required to deliver; if B does not give possession of the land, or announces his intention not to deliver, A is not required to pay. Thus if one party sues for payment without tendering delivery, or for delivery without tendering payment, the other is not bound to perform.13 13

J. Sodpipan, op. cit., p. 55.

54

chapter 3

It must be added, however, that in the case of partial impossibility the creditor may, by declining the still possible part of the performance, demand compensation for non-performance of the entire obligation, if the still possible part of performance is useless to him.14 Therefore, in the example above, partial performance from one of the parties will justify the other party’s refusal to perform. Every failure in performance of an obligation requires the debtor to repair the damage which the creditor suffers as a direct consequence of his non-­ performance or misperformance. The Civil and Commercial Code prescribes the consequences of non-performance to the defaulting party of breach of contract. The consequences are essentially two: specific performance and damages. As regards specific performance, Section 213, paragraph 1 of the Civil and Commercial Code, provides that 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. In other words, each party to a contract who is ready to perform his own obligation has the right to seek complete performance of the obligation from the other party. However, 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 to an obligation whose subject is forbearance 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. It must be pointed out that courts retain a general discretion to choose between granting specific performance and damages. Under the provisions of the Civil and Commercial Code, if the nature of the obligation does not permit compulsory performance and the subject of the obligation is the performance of an act, the court may decide to have it done by a third person at the debtor’s expense (Section 213, paragraph 2). As a practical matter, specific performance is awarded in cases where money damages are deemed to provide inadequate relief in the circumstances. An additional remedy provided by courts is damages. The right to damages arises independently from the specific type of non-performance. A party is entitled to damages for loss caused by the other party’s breach of contract. This means that the party who fails to perform his contract is liable to make ­compensation to the aggrieved party (Section  213, paragraph 4, Civil and Commercial Code). Specifically, the claim of damages is for compensation for all such damage as usually arises from non-performance. Thus it is necessary in 14

S. Maneesawat, op. cit., p. 42.

The Law Of Obligations

55

each case to quantify all types of damages which may be available to a party in the class of contracts in question. 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 222, paragraph 2, Civil and Commercial Code). As a general rule, the creditor of the non- or imperfectly performed obligation must offer sufficient proof that he has suffered damage. Although in a number of cases it is not easy to evaluate and quantify the damages in terms of money, this does not relieve the court of the mandatory duty of assessing them based upon all facts and circumstances of the particular case. Besides, if the plaintiff is able to show evidence legally sufficient to enable the court to determine the extent of the defendant’s liability, he is compelled to do so without leaving to the court the difficult task of estimating the damage and injury. It may happen, however, that a plaintiff proves a breach of contract, but fails to show the amount of damages that he has suffered or to determine to what extent the damage alleged in the complaint was caused by the defendant. The issue then arises as to whether or not the plaintiff is entitled to nominal damages. To warrant recovery of nominal damages, however, Thai courts require proof of unlawful invasion of rights. Under Thai civil law, the parties are free, subject to very broad limits, to tailor their own remedies as they prefer. Thus they may agree on the payment of a penalty in addition to full damages in the case of non-performance of the obligation.15 When the parties agree on a penalty for breach of an obligation whose fulfillment is of particular importance for them, the penalty must be paid by the party in default. More precisely, pursuant to Section 379 of the Civil and Commercial Code, if the debtor promises the creditor the payment of a sum of money as penalty if he does not perform his obligation or does not perform it in the proper manner, the penalty is payable if he is in default. If the amount of the penalty seems disproportionately high compared with the actual loss or the severity of the breach, it is within the competence of the court to reduce it to a reasonable amount. In judging the reasonableness, every legitimate interest of the creditor, not merely his financial interests, must be taken into account (Section  383, paragraph 1, Civil and Commercial Code). However, after payment of the penalty the claim for reduction is barred. The provisions of the Civil and Commercial Code regarding penalties distinguish two different cases, namely the case of a penalty stipulated in lieu of damages and the case where a penalty is due to the creditor without regard to the other rights that belong to him. 15

S. Pramod, op. cit., p. 423.

56

chapter 3

When the penalty is promised for non-performance, the creditor has the right to choose between two remedies. Specifically, he may at his choice claim the penalty or specific performance, and if he has a claim for compensation by reason of the breach, he may demand the penalty as the minimum amount of the damage. Proof of further damage is admissible (Section  380, Civil and Commercial Code). When the debtor has promised the penalty for the case of his not performing the obligation in the proper manner, or at the fixed time, the creditor has the right to claim performance together with the penalty. In other words, he may demand the payable penalty as well as the performance of the obligation (Section 381, Civil and Commercial Code). However, if the creditor accepts the performance he may demand the penalty only if he reserved the right to the penalty on acceptance. Additionally, a creditor may claim for compensation on account of improper performance. In such a case, he may demand damages instead of the penalty. When a performance other than the payment of a sum of money is promised, it is not possible for the creditor to recover damages in addition to the penalty. The penalty falls due when the debtor fails to comply with the terms of the obligation. If the performance due consists in a forbearance from specific acts, the penalty is due as soon as any act in contravention of the obligation is committed. As to the burden of proof, if the debtor contests the forfeiture of the penalty on the ground of having performed his obligation, he must prove performance, unless the performance due consisted in forbearance. 5

Other Grounds for Extinction of Obligations

Although performance represents the most common and obvious way to extinguish an obligation, the Civil and Commercial Code provides for several other modes. Specifically, an obligation may be extinguished in one of the following ways: release, set-off, novation, merger. It will be necessary to discuss these in order. 5.1 Release A debt may be released even before the day of payment by remission, i.e., a declaration of intention on the part of the creditor who manifests an intention to release the obligation. Thus if the creditor declares to the debtor an intention to release the obligation, the obligation is extinguished. Unless there is a

The Law Of Obligations

57

specific agreement to the contrary, a release is presumed to be an act of liberality by the creditor who, without receiving any price or equivalent, renounces his claim.16 As a general rule, it is not necessary to specify the reason which causes the creditor to release the obligation and no particular form is required. It is simply necessary to ascertain the intention of the creditor as expressed to the debtor or other person who acts on his behalf by words, acts, or conduct. However, the Civil and Commercial Code provides that if the 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 (Section 340, paragraph 2). This means that if an instrument of debt is returned to the debtor, the debt is presumed to be discharged. Furthermore, it must be pointed out that a promise not to sue is generally considered as a release except when it is based on personal knowledge and relationships. For example, the promise not to sue the person of the debtor does not automatically operate as release for the debtor’s heirs. 5.2 Set-off Set-off (or compensation) operates as a means of extinguishing obligations and takes place when both parties are creditors and debtors to each other. For example, suppose that A owes 10,000 baht to B, who in turn owes A 15,000 baht. If the requirements for set-off are fulfilled, A may declare to B that he sets-off his own obligation. Thus, the first loan agreement terminates by set-off, and B remains indebted to A in the sum of 5,000 baht, corresponding to the part of the obligation not paid through set-off. According to Section 341 of the Civil and Commercial Code, 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 set-off to the extent to which the amounts of the obligations correspond, unless the nature of one of the obligations does not admit of it. It follows that set-off is only allowed between countering claims of the same nature which are both liquid (i.e., immediately and unconditionally due) and collectible (i.e., not subject to term or condition). Therefore, the object of both obligations must be a mutual fungible debt which is fully due and enforceable by action. For example, money may be set off against money or rice of a certain quality against rice of the same quality, but not rice of one quality against rice of another. 16

J. Setabutr, op. cit., 2006, p. 82.

58

chapter 3

The right of set-off is made by notice to the other party which specifies the obligation against which compensation is exercised and operates retroactively.17 This means that the declaration of intention by one party to another relates back in its effect to the time when both obligations began to exist. ­Set-off does not operate, however, if the parties have declared a contrary intention or compensation is made subject to any term or condition (Section 342, Civil and Commercial Code). A set-off may be made even though the place of performance or destination of the two obligations is different; but the party who makes the set-off must indemnify the other party for any loss caused. It may happen, for instance, that one party is unable to receive the other party’s delivery at the proper place. In this case, the party against whom the right of set-off is exercised is entitled to claim compensation for any damage suffered (Section 343, Civil and Commercial Code). In the event the debt is due and the creditor brings a legal action against the debtor in a civil court to collect the debt, the debtor may plead the affirmative defense of extinguishment of the obligation by set-off. In this case set-off is not effected by contract but by order of the court. Thus, the creditor’s obligation is considered to be extinguished from the time the counter-claim was filed. A claim barred by prescription does not exclude set-off if it was not barred at the time when it could have been set-off against the other claim (Section 344, Civil and Commercial Code). A debt can be extinguished through compensation except where the law provides otherwise. In some cases set-off is forbidden on grounds of public policy following the provisions stipulated under the Civil and Commercial Code. Specifically, the debtor cannot avail himself of a set-off against the creditor when the claim arises from an unlawful act (Section  345, Civil and Commercial Code) or it is exempted from judicial attachment (Section 346, Civil and Commercial Code). Therefore, a person who has obtained possession of property by theft or other illegal means may not allege compensation as a defense against the owner’s claim to recover his property. Also, 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 344, Civil and Commercial Code). The effect of compensation is that the obligations are discharged in whole or in part. If the two obligations differ in amount, compensation will discharge the obligations up to the amount of the lesser obligation. Accordingly, a declaration of compensation exempts the parties from liability in the case of 17

K. Panthulap, op. cit., p. 141.

The Law Of Obligations

59

accidental destruction of the property, discharges a penalty agreed to be paid in the event of non-performance, and arrests the accrual of interest. 5.3 Novation Under Thai Civil law, novation refers to the substitution, change, or renewal of an obligation either by changing its object (i.e., novation by substitution of the subject matter), or by replacing the person of the debtor (i.e., novation by substitution of the obligor), or by subrogating a third party to the rights of the creditor (i.e., novation by substitution of the obligee). In other words, novation is an agreement whereby the parties extinguish an old obligation and replace it with a new relationship of a different content or nature. For instance, A owes B 300,000 baht and an agreement is reached between them whereby A agrees to transfer a plot of land to B instead of paying the monetary debt. Similarly, suppose that A owes 300,000 baht to B and B owes 300,000 baht to C. A, B, and C all agree that C shall accept A as his debtor, instead of B. That would be a novation of the contract. The legal meaning of novation under the Civil and Commercial Code is broad in scope. Section 349 of the Code provides that when the parties have concluded a contract changing the essential elements of an obligation, such obligation is extinguished by novation. This may be the case, for example, of a conditional obligation which is made unconditional, or a condition which is added to an unconditional obligation, or a condition which is simply changed. It is to be noted, however, that the novation is without effect if the original obligation did not exist. With regard to the form of an agreement of novation, it does not require any specific form and does not have to be in writing. Where a new debt relationship is contracted, however, there is no presumption of novation in respect of an old one.18 It follows that an extension of time given by the creditor to the debtor to perform an obligation does not amount to novation and does not discharge the debtor. Additionally, according to Section 351 of the Civil and Commercial Code, if the obligation resulting from novation does not come into existence, or is annulled on the ground of illegality or due to reasons unknown to the parties, the original obligation is not extinguished. This means that novation does not produce any effect if the new obligation is void or voidable and avoided. An example will help clarify this point. Suppose that A owes B 15,000 baht on a gambling debt upon a promissory note which falls due on 15 February. Subsequently, A and B execute another promissory note revoking the first and 18

N. Posataboot, op. cit., p. 199.

60

chapter 3

extending the time of payment to 15 March. In this case, since the first obligation arising from gambling is void by reason of the unlawfulness of the transaction, then also the second is considered to be wholly void. In the case that the parties to a novation agree to substitute an old obligation with a new one, then the original agreement is discharged and need not be performed. This means that the debtor is relieved of his old liabilities. The parties to a novation agreement may also decide to transfer a right of pledge or mortgage given as security for it to the new obligation to the extent of the subject of the original obligation. However, if such security was given by a third person, his consent is necessary (Section 352, Civil and Commercial Code). Novation occurs not only when the debtor contracts toward his creditor a new debt which replaces the old one, but also when a new debtor replaces the original debtor, who is then released by the creditor. The consent of all three parties is needed, including the debtor. Specifically, Section 350 of the Civil and Commercial Code states that 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. By the same token, the Code does not permit the debtor to transfer his liability to a third person without the consent of the creditor and, of course, the third person. It follows that novation directly depends on the intention to novate the existing obligation between the parties. For novation to occur, the parties must expressly declare that the purpose of their agreement is to replace an existing obligation. Modification of an obligation, made without intention to substitute it with a new obligation, does not constitute novation. Accordingly, the simple assignment of a claim that the debtor has against a third party to the creditor does not constitute novation because the debtor is not completely relieved of liability. Novation creates a new obligation while the assignment of a claim is a continuation of the same obligation.19 With regard to the substitution by novation of a new creditor (the third kind of novation mentioned above), it is governed by the provisions of the Civil and Commercial Code concerning transfer of claims. In this regard, Section 303 of the Civil and Commercial Code states that a claim may be transferred, unless its nature does not admit it or parties have declared a contrary intention. 5.4 Merger An obligation may become extinguished by merger. Merger refers to the extinction of an obligation due to the confusion of rights and duties of the same person. It takes place when rights and liabilities in an obligation become vested 19

K. Panthulap, op. cit., p. 143.

The Law Of Obligations

61

in the same person. In other words, one person becomes both debtor and creditor with regard to the same performance.20 This may occur, for example, when a guarantor becomes principal debtor, or when the debtor succeeds as heir to the creditor with regard to the same debt. It must be pointed out, however, that if the obligation becomes the subject of the right of a third person, which would be disadvantageously affected by a merger, then there will be no merger (Section 353, Civil and Commercial Code).21

20 21

See S. Ratthanakorn, Nee [The Law of Obligations], Bangkok, Nittibanakan, 2007, p. 497. Ibid., p. 499.

chapter 4

Contractual Obligations In Thai Civil law, as in the majority of systems of law around the world, the object of the law of contract is to promote security of transactions and protect the justifiable expectations of the contracting parties. What type of agreements should the law enforce and why? This is the question to be answered, and it is answered by different legal systems in different ways. The theoretical definition of contract, however, does not change depending on time and space. A contract is an agreement between two or more parties which creates a legal obligation between them and is normally constituted by an offer and an acceptance. When an agreement produces these legal effects it is regarded as a contract. If an agreement does not produce these effects, then it is not considered a contract at all; it is said to be void and no person is bound by it. It may also happen that an agreement is voidable. This means that the contract is valid but it can be legally voided at the option of one or both of the parties. For example, contracts for immoral purposes are usually void; contracts made by minors are usually voidable. Cases of nullity and voidability will be discussed in the following sections. From the considerations above, it is clear that contract law is not concerned with all kinds of agreements, but merely with those directly or indirectly aimed at creating a legal engagement. A classical example of non-binding agreements is an invitation to lunch which is made by the host and accepted by the guest. In the event that the guest does not show up on the expected day, there is no legal remedy or redress available for the host. This relationship is based on social conventions and is certainly not a legal engagement. If the parties do not desire to create a legal obligation the law will not attach any legal consequences. Thus there may be no agreement if words have been spoken or acts committed in anger, in jest, or in excitement because the parties did not seriously intend to affect legal relationships. We shall consider the law of contracts and discuss in some detail the essential elements of a contract, i.e., the conditions of its existence; its formation and effect; its validity; its determination. These will therefore be the main subjects of the following sections. 1

Essential Elements of a Contract

To form a binding contract, there are several requirements which must be present. The requirements of a contract are the agreement between the parties, the © koninklijke brill nv, leiden, ���6 | doi 10.1163/9789004308923_005

Contractual Obligations

63

lawful object, and the special form when required by the law. The absence of any of these requirements makes the contract void, voidable, or unenforceable, depending on the circumstances. 1.1 Agreement between the Parties Agreement is considered to be the essence of the contract since one of the main objectives of contract law is to govern, construe, and enforce the rights and duties of the parties as they arise from their mutual agreement. It is achieved from the moment the offeror receives the other party’s acceptance. Under Thai civil law, the agreement is composed of two main elements, namely the capacity of the parties and the declaration of intention.1 With regard to the first aspect, parties entering into contractual obligations must have legal capacity to act. As we have already observed, legal incapacity refers to the inability to manage one’s own affairs and applies to the following categories of persons: minors, incompetents, and quasi-incompetents. As for the second element, the declaration of intention refers to the modes by which a party has outwardly expressed his intention to establish, modify, or terminate a legal relationship. In the absence of such intention, the agreement does not create legal obligations. To determine whether the contract exists or not, it is necessary to analyze the subjective intention of the actor in the light of the circumstances in which it was expressed, and particularly from what the actor did and said. Since consideration does not constitute an essential requirement of a contract under Thai civil law, it becomes of the utmost importance to determine explicitly the intention of the parties. There is no willingness of the parties if the contract arises out of mistake, fraud, or duress. Therefore, the intention is considered to be lacking. Conversely, if any of the contracting parties enters a usual business contract, then the intention is considered to be sufficiently made out for all legal purposes unless evidence is adduced to the contrary. It must be pointed out, however, that according to Section  154 of the Civil and Commercial Code a declaration of intention is not void on the ground that the declarant in the recesses of his mind does not intended to be bound by his expressed intention, unless this hidden intention was known to the other party. The declaration of intention is void only if it is made with the connivance of the other party which is fictitious (Section 155, Civil and Commercial Code). However, such invalidity cannot be set up against third persons injured by the fictitious declaration of intention and acting in good faith. 1 J. Setabutr, op. cit., 2008, p. 134.

64

chapter 4

The declaration of intention may be express or implied. A declaration of intention is express when it is manifested partly or wholly by written or spoken words. It may be derived from e-mails, letters, telegrams, faxes, documents signed in the presence of a notary public, or even advertisements. This is the case when, for example, A enters into a contract in writing with B for the purchase of land. Similarly, when A offers to sell his laptop to B for 15,000 baht and, after some negotiations, B accepts, then it is an express oral contract. A declaration of intention may also be communicated by certain acts which custom or usage has rendered equivalent to words. Implied declaration of intention, on the other hand, occurs when there is no word or action by which the intention is expressly declared. The terms of a contract result from an implied agreement of the parties. For instance, when a man steps onto a bus, there is no sign which is used to communicate his will to enter into a contractual relation with the bus company. Here, the intention of the actor results from an implied and objective conduct. Consequently, the passenger must purchase a ticket, otherwise he will be in breach of contract and so liable for non-performance. He cannot claim that his conduct does not amount to acceptance of the contractual terms because his behavior logically presupposes the intention to enter into a contractual relationship. A particular application of the rule of implied declaration of intention is the tacit renewal of a contract. For example, under Section  570 of the Civil and Commercial Code, if, at the end of the agreed period, the hirer remains in possession of the property and the letter does not object, the parties are deemed to have renewed the contract for an indefinite period. 1.2 Object Another essential element of a valid contract is that it must not be directed at an illegal object. In civil law legal systems, the fundamental grounds of invalidity do not differ significantly. Yet, the notion of invalidity evolves over time according to the evolution of society and depending on the degree to which a practice becomes socially accepted.2 Unlawful contracts have no legal effect and are not binding. It is not possible to bring a legal action upon them. However, if a contract includes a series of agreements, some of which are legal and others illegal, then the court will enforce only those legal agreements which can be separated from the unlawful ones. Yet, it is not always easy to draw a specific line in dividing legal contracts from illegal when it comes to business and commerce. Some 2 C. Haemaratchata, op. cit., p. 43.

Contractual Obligations

65

c­ ontracts may be related to unlawful activities without being in themselves unlawful. The Civil and Commercial Code contemplates several circumstances under which the object of the contract is unlawful. Specifically, Section  150 of the Code provides that an object is unlawful if it is expressly prohibited by law or is impossible, or is contrary to public order or good morals. Each circumstance will receive full discussion below. The object of the contract is lawful when it does not infringe the law. Contracts violating a legal provision are deemed null and void. An agreement is forbidden by law when it violates a norm prohibiting that activity or when it is punishable under any other legal provision irrespective of whether the command is the result of primary or subordinate legislation. Thus unlawfulness applies to any rule, regulation, or order of competent authority. For example, contracts reducing the protection that the law accords to specific categories of persons, contracts leading to corruption in public life, usury, or bribery are prohibited by law. To the same category may be assigned those contracts which attempt to pervert the course of justice, including interference with witnesses, contracts to condone the committing of a criminal offense, contracts to commit a crime, and contracts ordering, soliciting, suggesting, or inducing the committing of a crime. Such contracts are void because their object is to defeat the provisions of the Penal Code. Among unlawful agreements which do not fall within the purview of criminal law, are those involving gambling, contracts to defraud third parties, contracts to injure third parties, contracts for compound interest beyond a certain rate and term, or contracts with interest in excess of a certain rate, which are illegal under the Civil and Commercial Code. Courts usually agree that promises which are merely foolish and contracts which only oppress one party without benefiting the other, although not illegal, should not be enforced. Gambling and betting transactions occupy a particular position under the Civil and Commercial Code. Specifically, according to Section 853 of the Code no obligation is created by gambling or betting. A party who has paid the amount of his loss under a gambling or betting contract, however, may not recover it on the ground that no obligation to make the payment existed. Also, Section 855 of the Civil and Commercial Code states that all promises, contracts, notes, bills, bonds, pledges, or other securities given for money won by gambling or betting, or for repaying money lent for such gambling or betting are considered to be void. The object of the contract is deemed to be unlawful when it is physically impossible according to the prevailing standard of knowledge; e.g., A promises to give B 10,000 baht if B touches the sky with the tip of his finger. In this case,

66

chapter 4

the contract is unlawful because it contains an obligation which is impossible to carry out. The same applies to contracts intended to create a legal relationship which is considered to be legally impossible. For example, a person agrees to establish a right of servitude over his own land in favor of himself without complying with the provisions of the Civil and Commercial Code. However, a contract may involve the performance of future things (for instance, manufactured goods not yet in existence, or a house to be erected) or future rights (for instance, a copyright on a song). The expression “public order” is not defined by the Civil and Commercial Code. It is a rather vague and wide expression reflecting the needs and values of society at a particular time. What constitutes public order is not a static notion, but one which changes as society changes. Generally speaking, it can be said that a contract is void when it tends to injure the fundamental principles on which the legal order relies. A contract which is against the public interest or which is likely to deprive a person of some right or interest or the legitimate expectation of a benefit is void. This includes contracts which tend to interfere with good government, contracts in conflict with the proper discharge of official duties and responsibilities, and, more generally, contracts against the public interest of the state in its internal relationships. The constitutional law, the criminal law, the administrative and fiscal law, are founded on principles of public policy, their aim being the protection of the collective interest of individuals. Two private parties cannot infringe or alter the imperative norms of the country. Most of the agreements which tend to be against public policy concern relationships of an economic nature, as well as family relationships. For example, agreements in restraint of marriage are deemed void and of no effect. Thus if A promises to marry B immediately upon the death of her husband, the agreement is void because its object is against public order. The result is the same if A agrees to pay 40,000 baht to B if a divorce is granted based on evidence provided by B. Similarly, an agreement between two parties by which it is stipulated that whoever of the two marries first must pay the other a certain sum of money is devoid of legal effect. Other categories of contracts concluded with reference to an illegal object relate to the law of succession. More precisely, contracts concerning the succession of a certain person who is still alive are considered to be contrary to public policy, even if they are performed with said person’s agreement. These contracts are void because they tend to speculate on a person’s death and represent a limitation to the freedom of testamentary disposition. Thus two persons cannot reciprocally agree that they will succeed to each other nor can a person enter into a contract to nominate another person as his heir against a deceased person’s property. Yet contracts concerning the property of a

Contractual Obligations

67

deceased person are fully valid and binding. It must also be added that provisions in prenuptial contracts dealing with a future separation, divorce, succession of the spouses with regard to the property of a third person, and their other rights are valid under Thai law. Immoral contracts represent a specific class of contracts which are generally considered to be contrary to public order.3 As it has been explained in previous chapters, morality can be defined in many ways and it varies according to culture, time, and place. Usually it is not a matter of difficulty to state that a contract is expressly forbidden by law or is a crime, but it may be problematic to determine in which case a contract is contrary to good morals. In deciding whether a contract is against good morals, the judge has to assess moral values by reference to criteria of evaluation accepted by the community. Some examples of contracts that have been held by the Supreme Court to be contrary to good morals are contracts of permanent separation between the spouses as these agreements would be in violation of the obligation of cohabitation and contracts by which a parent obliges himself to give up his child to be nurtured by someone else as these agreements would be in violation of the obligation of maintenance. Other examples include contracts whose object is the furtherance of sexual immorality (e.g., A lets B a house for prostitution), contracts which perpetually reduce the disposing capacity of an individual (e.g., A willingly agrees to divest himself of the control of his property), and contracts which provide for a payment as a reward to induce a person to perform his legal obligation (e.g., a thief cannot recover a sum of money that has been promised to him for the return of the stolen property). 1.3 Form As a general rule, contractual parties are free to determine the form of their contract. This means that the declaration of intention may be manifested in different forms depending on the particular needs of the parties unless it is otherwise provided by the contract, or by the law. When the law does not require any special form, an agreement may be made by any act from which the actor’s intention may be deduced. Thus offer and acceptance can be expressed by spoken or written words, by conduct, or by signs which usage has rendered equivalent to words, subject of course to the above-mentioned conditions that all contracts indifferently should meet. In particular circumstances, however, the law or the agreement between the parties may require a special form to be used in order for the contract to be valid and legally enforceable. Pursuant to Section 152 of the Civil and Com­ mercial Code, an act which is not in the form prescribed by law is void. 3 K. Panthulap, op. cit., p. 189.

68

chapter 4

Specifically, the Code imposes strict form requirements on contracts for the transfer of real rights, as well as for other contracts affecting rights of inheritance or family relationships. Less strict form requirements are obligatory for certain types of transactions by which personal rights may be acquired or modified. All transactions other than formal transactions are informal and may be evidenced by any means, including the use of witnesses. It must be noted that any classes of contracts which will be mentioned in the further development of this book may be made informally, unless specific formalities for contracts of that type are explicitly mentioned. Under the Civil and Commercial Code there are four principal types of formalities. Contracts may sometimes need to be evidenced by writing, by registration with the competent authority, by written form and registration with the competent authority, or by written notice of the competent authority. A contract not complying with these requisites is void.4 Certain classes of contracts must be made in writing. This means that the written document must be signed. The written form is, for example required for the contract of hire-purchase. According to Section 572 of the Code, the contract of hire-purchase is void unless made in writing. Other contracts require registration with the competent authority. This is the case, for instance, of the creation of associations. In this regard, Section 78 of the Civil and Commercial Code states that an association must be registered to be valid. A contract of mortgage falls into the third class of contracts. Specifically, Section 714 of the Civil and Commercial Code requires that a contract of mortgage must be made in writing and registered by the competent official. Another example of this type of requirement can be found under Section 456 of the Code which provides that a sale of immovable property is void unless it is made in writing and registered by the competent official. Finally, as an example of the fourth category, Section 735 of the Civil and Commercial Code states that 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. 2

Formation of Contract

The conventional method of establishing agreement is through the process of offer and acceptance. An offer can be defined as a manifestation of an intention 4 Ibid., p. 195.

Contractual Obligations

69

to enter into a contract on a specific set of terms made by one party to another party.5 The person making an offer is called the offeror. The person to whom the offer is made is called the offeree. Offers are to be distinguished from ­soli­citations, invitations to make an offer, or other statements during the ­pre-­contractual stage in that offers confer on the other party the power of accep­tance. The power of acceptance is the voluntary act of acceptance of the offer in the manner requested or authorized by the offeror. In other words, it is the legal act that brings the contract into existence. For example, if A offers to buy B’s book for 1,000 baht and B accepts, the contract is complete from the moment that B’s answer makes known to A his acceptance of the offer. Thus if A says “I offer to buy your book for a sum of 1,000 baht” and B answers, “I accept”, this is a valid contract consisting of mutual promises which the law regards as an obligation. A’s proposal gives B the power to accept and form a contract. More precisely, the contract is completed by B’s acceptance, expressing an intention to sell, given in reply to A’s offer, expressing an intention to buy. B’s acceptance is manifested by an unconditional consent to the terms of the offer and binds both parties into a contract. Under the Thai legal system, however, an offer and acceptance do not require a specified form or formality to be valid. Both offer and acceptance must manifest the internal intention of the contracting parties to be bound by the terms of the contract. Thus offer and acceptance can be written, oral, or implied by conduct. For instance, if A offers to sell his watch to B for 10,000 baht, B can accept orally or in writing, or B can accept the offer by actually paying the purchase price. The contract is implied by B’s conduct. Similarly, when A takes a songthaew to go to work, A enters into an implied contract which obligates him to pay the cost of the ride once he arrives at his destination, even if A did not expressly declare “I will pay for the ride once reaching the designated place.” The songthaew driver has the obligation, in turn, to bring A to his destination. The driver breaches the terms and conditions of the implied contract in the case of negligence which results in the failure of his obligation to bring A to his destination. Conversely, if the driver fulfills all his obligations but A refuses to pay the cost of the ride, the driver has a legal remedy against A for breach of an implied contract. Although an unaccepted offer does not bind the offeror until acceptance, before acceptance it may not be revoked. More precisely, Section 354 of the Civil and Commercial Code specifies that if a period for acceptance is specified in the offer, the offeror cannot withdraw the offer within such period. In the case that the offeror does not specify a period for acceptance, the offer cannot 5 C. Haemaratchata, op. cit., p. 72.

70

chapter 4

be withdrawn within a time in which notice of acceptance might reasonably be expected (Section 355, Civil and Commercial Code). However, if the offer is made to a person who is present without specifying a period for acceptance, it may be accepted only there and then (Section  356, Civil and Commercial Code). Once accepted, the offer becomes irrevocable. An offer may be rejected either expressly or implicitly by non-acceptance within a reasonable period of time. Pursuant to Section 357 of the Civil and Commercial Code, if the offer is not accepted in due time, or in the manner prescribed for acceptance, or, where no time is specified, within a reasonable time, it ceases to be binding. This means that the offer lapses and no contract arises. Also, the offer terminates in the event of the death of the offeror, if the offeree had notice of the fact of the death before acceptance (Section 360, Civil and Commercial Code). If the offeree is interested in making a contract, but under different terms and conditions (for example, at a higher price, lower quality, longer period of time, and the like), the offeree may respond by making a counter-offer. In this regard, Section 359, paragraph 2 of the Civil and Commercial Code states that “A purported acceptance subject to additions, restrictions, or other modifications is deemed to be a refusal coupled with a new offer.” For example, A offers to buy B’s bicycle for 3,000 baht. B responds “Your price is too low, I will offer to sell my bicycle for 5,000 baht.” B’s response is based on terms which do not conform to the original offer. As a consequence, it is viewed as a rejection of the original offer and as a proposal of a new offer. The valid formation of a contract represents today one of the most crucial and most disputed issues in contract law. In the case of negotiations by post or other similar means of communication, it is not always easy to determine if a contract has validly been formed. Thus it is necessary to discuss the criteria that the legislator uses to separate late acceptance from late arrival of acceptance. If the acceptance is late because of late dispatch, it is ineffective unless the original offeror immediately indicates its assent to the contract. The situation is different if the acceptance arrives late because of late dispatch. When the offeree replies within the time limits for the acceptance, but the acceptance arrives out of time because of an unexpected delay in transmission, Section 358 of the Civil and Commercial Code applies. In an attempt to distinguish between late acceptance and late arrival of acceptance, the Code states that 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 must without delay give notice to the other party of the delayed arrival. If the offeror fails to give such notice, the notice of the acceptance is deemed not to have been out of time and a valid contract is

Contractual Obligations

71

formed between the parties. An example will help to clarify this point. Suppose A offers in writing to sell B a dining table for a sum of 7,000 baht and states that it will keep the offer open for two weeks. Immediately after receiving the mail, B sends an acceptance letter to A via an express postal service which is considered to be a fast and reliable service. The acceptance, however, is misdelivered and reaches A only after the two week period. In these circumstances, B has a reasonable expectation that the acceptance will be received on time. Thus, Section 358 of the Civil and Commercial Code will apply and the existence of a contract will depend upon A’s behavior. If A gives notice to B of the delayed arrival without delay, acceptance is not effective, hence the contract is not perfected. If A fails to give notice to B, the acceptance becomes effective and a contract exists between them. Thus Thai civil law provides that the late arrival will be effective as an acceptance when some unforeseen delay in transmission occurs through no fault of the offeree, unless the offeror, without delay, gives notice to the other party of the delayed arrival. It must also be pointed out that when all the terms necessary to a contract are technically present but the offer is indefinite or so vague that its meaning cannot be certainly ascertained then it cannot constitute a valid contract. An offer cannot be a general intention to give something or to do something. For example, if A walks onto a car dealer’s lot and offers to pay 800,000 for “a car”, this statement is not considered as an offer because it is not definite enough. It would be different if A offered to pay the same sum of money for a specific car, like a rare 1955 Gullwing 300SL Mercedes-Benz. In this case, A’s statement would probably meet the requirements of a valid offer. As a general rule, contractual parties are free, at their own discretion, to include in the contract any terms and conditions they think necessary. Once the contract is completed, the parties are bound, each to the other, to do what they have undertaken. When both parties have, expressly or by reasonable implication, agreed on the essential terms of a contract, the contract is binding and the function of the court is limited to ascertaining what the rights and duties of the parties are. Generally, the court will determine whether the agreement is valid and in particular whether the agreement infringes any positive legal rule or negatively affects the interests of the society, whether the parties have the capacity to act for themselves, whether they are entitled, and whether the contract meets all the other requirements of the law. If the essential terms are agreed upon, but ancillary terms are missing or ambiguous, the contract is still binding on the parties and the court may settle those terms according to custom and usage of trade. If a norm is mandatory, the contracting parties must act in accordance with it. They cannot depart from an express legal provision. But if, as is often the case, the norm is permissive and provides considerable discretion to do or

72

chapter 4

refrain from doing something, then the parties are free to derogate from the provision at their discretion. This means that in such situations, the legal norm is binding only in the absence of an express agreement between the parties to the contrary. This chapter will discuss the provisions of law which apply, insofar as the parties have not expressly derogated from them. 3

Vices of Consent

Under Thai civil law, a contract derives its validity from the free consent of the individuals who entered into it. Contracting parties must have consented to the terms and conditions of the contract, and such consent must be free. Consent is free when it is not procured by mistake, fraud, or duress. 3.1 Mistake Mistake (or error) can be defined as a false representation of the reality. It occurs when one or both parties are under a misconception with regard to the object of the contract. In other words, mistake consists in a misrepresentation of reality which causes a contracting party to believe that a fact or state of facts are existent, when they are not.6 It is necessary to distinguish the different circumstances in which mistakes may be said to exist. Under the Thai Civil and Commercial Code, mistakes can only be mistakes of fact according to the legal maxim “ignorance of the law does not excuse.” This statement may seem harsh, but it is carefully framed and strictly enforced in courts of justice. No one is allowed to excuse himself from performance of a contract by pleading ignorance of a rule of law. Thus, in the case of doubt regarding the legality of a given contract, the primary responsibility of the parties is to ensure that the contract is performed in accordance with the law. Ignorance or good faith does not excuse a person nor relieve him from liability upon a contract. For instance, A offers to sell B a parcel of land for 5,000,000 baht and B accepts the offer mistakenly thinking that local zoning laws permit construction of buildings on the land. In this case, the contract is valid and B cannot claim mistake in an attempt to recover the 5,000,000 baht from A on the basis that he did not know the local zoning law. Neither poor judgment nor ignorance of the law is an excuse. The notion of mistake of law must be sharply separated from the notion of mistake of fact, that is, a fundamental misapprehension regarding the existence of a fact that induce a contract. As to the formation of the contract 6 J. Setabutr, op. cit., 2008, p. 134.

Contractual Obligations

73

between the parties, a mistake of fact will make the contract void only if it affects an essential element of the contract. To be effective, a mistake must be serious. Accordingly, the mistaken party has the right to avoid the contract if, when the contract was performed, the mistake was of such importance that a reasonable person would only have performed the contract on materially different terms or would not have concluded it at all if the true state of affairs had been known. Pursuant to Section 156 of the Civil and Commercial Code, a declaration of intention is void if made under a misapprehension as to an essential element of the juristic act. In order to perform a contract, it is necessary that the parties agree upon its essential terms. If one of these fundamental elements is absent, then the contract cannot be considered legally binding. There may be the external signs of agreement but no actual consensus between the parties. The mistake as to an essential element of the contract are for instance a mistake as to a character of the contract, a mistake as to a person to be a partner of the contract, and a mistake as to a property being an object of the contract. Suppose employer A gives a monetary bonus based on sales of the company’s products to employee B, erroneously thinking he is employee C. In this case, the contract is void from its inception. In the case that the declaration of intention is made under a misapprehension either as to a quality of the person or as to a quality of the property, it is voidable (Section 157, Civil and Commercial Code). It must be pointed out, however, that according to Section  157, paragraph 2 of the Civil and Com­ mercial Code, it is not every error as to persons or property which amounts to mistake and lays down the foundation for the rescission of a contract. When the identity of the contracting party is not an essential element, the contract remains valid and enforceable despite the mistake. This is to say that the ­mistake must be related to the quality of the person or the property which is considered as essential in the ordinary course of trade, and without which such contract would have not been made. Therefore, when buyer A sends an order to supplier B but, by mistake, the order is executed by supplier C, the order value of the goods must be paid for in full without regard to the identity of the person who has supplied them. It is interesting to point out that, under the Civil and Commercial Code, an  essential mistake may render the contract void (Section  156, Civil and Commercial Code) or voidable (Section 157, Civil and Commercial Code) only when it is not due to the gross negligence of the party seeking to set it aside. This means that a party is entitled to relief upon the ground of mistake provided that such party is not itself at fault and the mistake is essential. It would be unfair to allow the actor to avoid the contract when he is grossly negligent

74

chapter 4

in committing the mistake.7 Accordingly, the mistake, to be effective, must be essential and non-recognizable by the person making the declaration. A mistake is considered recognizable when, with respect to the content, the quality of the contracting parties or the circumstances of the contract, it would have been detected by a reasonable person. For example, A agrees to sell to B a Picasso painting and B agrees to pay him a certain sum of money. Later on, the painting turns out to be a fake. In the absence of gross negligence from B, the contract is void because the mistake is of such significance that the parties would not have entered into the contract had they known the truth. When considering the situations in which a contract may be vitiated for mistake it is essential to determine what the reciprocal relationship underlying the agreement between the parties is. This means that it is necessary to examine the object of the contract and the result sought to be accomplished by the parties. Obviously, mistakes which affect external elements of the contract are deprived of any legal relevance. Perhaps an example will help clarify this point. Suppose that a manufacturer of socks offers to ship 100 pairs of men’s socks to a retailer at 20 baht per pair, and the retailer accepts this offer, thereby promising to pay 20 baht per pair of socks. In this case, the contract has simply been concluded. The manufacturer of socks cannot claim mistake and obtain rescission of the contract on the basis that he intended to charge 40 baht per pair of socks. Similarly, the mistake involved may relate to the quality of the object and still be valid. For instance, A agrees to buy from B a necklace mistakenly thinking it is made of gold when it is merely gilded. In this case the sale agreement is not affected by reason of the mistake and the contract remains valid. It would be different if the parties did not reach an agreement as to the object of the transaction. Suppose in a jewelry store the jeweler takes out from the glass counter a tray of golden necklaces. If the jeweler thinks the transaction is for necklace A while the customer indicates he intends to purchase necklace B, a contract is not formed. The agreement necessary to constitute a valid contract is absent. Even when a contract is made under a material misapprehension of facts, this does not necessarily imply the nullity of the contract. It is possible to state that, at least to some extent, contracts exist independently of the parties’ actual consents. Thus when determining the consequences of a material misapprehension of facts, the court will adopt an objective approach to contractual intention and will take into consideration the circumstances surrounding the making of the contract. This means that it will analyze the objective ­meaning of a statement as it appears from the parties’ words. The subjective 7 J. Sodpipan, op. cit., pp. 88–94.

Contractual Obligations

75

intention of the parties cannot replace the objective meaning of a statement as its legal meaning. For example, A offers to sell his Sony notebook to B, intending to offer his Acer notebook. He says “I will sell you this Sony notebook for 15,000 baht”. If B accepts, they have a valid contract and, as a rule, A is bound by the intention he manifested. A’s statement has the meaning its form of expression objectively conveys. This means that he is obliged to fulfill the obligation to deliver B a Sony notebook. A court will not relieve A from the consequences of his mistake since his conduct objectively manifests the intention to sell a specific brand of notebook. Besides these cases where the consequence of mistake is to exclude the agreement between the parties, there are also situations where both parties agree but they share a mistaken belief (i.e., common mistake in contract formation). This may be the case of an agreement between the parties which is based on a misapprehension about the facts or the law related to the contract. For example, A agrees to sell his dog to B for 20,000 baht and B accepts the offer, but neither know that the dog is already dead. In this case the contract is void because B in entering into the contract has based himself on the same incorrect assumption as the party in error A. Similarly, suppose that the contract of carriage between A and B relates to the cargo of a ship called Y. If there are two ships named Y (one arriving later than the other) and each party has in mind a different ship, then the contract is void. If both parties intend the same ship, they are bound to the contract because there is no mistake. From all that has been stated above, it is clear that a contract which has been concluded under the influence of a mistake and which would not have been entered into had there been a correct assessment of the facts, is void unless it is due to the gross negligence of the mistaken party. This means that a mistake is grounds for avoiding the contract without regard to the question of whether it is imputable to information given by the other party or not. A contract may be vitiated by mistake even if the other party to the transaction is not responsible. The annulment, however, cannot be grounded on a mistake as to a future fact known to be uncertain or a mistake for which, given the object of the contract, the party seeking relief should remain responsible. 3.2 Fraud Fraud can be defined as a misrepresentation or omission of a material fact made with the intention to deceive and induce another party to take some action detrimental to his own interest.8 It occurs when a party knowingly establishes a fraudulent set of circumstances in order to obtain an unjust 8 C. Haemaratchata, op. cit., p. 65.

76

chapter 4

advantage, or to cause a loss or inconvenience to the other party. A contract which is performed as a result of fraud is voidable (Section  159, Civil and Commercial Code). Accordingly, the victim of fraud may, at his choice, void the contract, ratify the contract, raise the fraud as a defense, or sue for damages. In any case, a person who has been induced by fraud to enter into a contract is entitled to recover the damages he has sustained by reason of the false representations unless he has waived his right to claim damages. If both parties acted fraudulently, neither of them can allege it to void the act or to claim compensation (Section 163, Civil and Commercial Code). The Civil and Commercial Code distinguishes between two types of fraud: fundamental fraud and incidental fraud. The first category refers to those cases where a party is induced to contract with another by a deliberately false or ­misleading statement. Consent to any agreement is said to be induced by fraud when it would not have been given had not such cause existed. In this regard, Section 159, paragraph 2 of the Civil and Commercial Code provides that a declaration of intention is voidable on account of fraud only when without fraud the contract would not have been made. A few examples will help illustrate this point. If A knows that the painting he is selling to B is a forgery but sells it as an original, the contract is voidable. This means that B may either avoid the contract or let it stand as valid. If B intends to avoid the contract he has the right to do so within a reasonable period time by entering an action for rescission. Similarly, if A, a minor, induces B, the vendor of a liquor store, to sell him alcoholic beverages by falsely representing that he is of full age, the vendor may either repudiate the contract or affirm the contract. In these cases the fraudulent assertion or representation is considered to be an essential element of the contract. The second category applies when a person, though he enters of his own accord into the contract, is induced to accept more disadvantageous terms than he would otherwise have done. Deception is insufficient to compel consent. In these cases, fraud is considered to be merely incidental to the contract: the victim would still have entered into the contract, but on better terms, whether as regards quality or price or otherwise. For example, the owner of a second-hand shop might lie about the duration of the phone’s battery to get a better price. Here, the buyer would have paid a lower price had he known the actual battery life of the phone. Incidental fraud thus leads a person to contract on more onerous terms than he otherwise would have accepted. The ­consequences are not the same as if the contract were void because of fundamental fraud. Incidental fraud does not annul the contract. The contract is valid, even though, without the deception, the innocent party would have included different terms. However, the contracting party in bad faith is liable for damages resulting from the fraud (Section 161, Civil and Commercial Code).

Contractual Obligations

77

When the deception is practiced by a third party, the contract can be annulled only if the other contracting party knew about the fraud or should have known about it (Section 159, paragraph 3, Civil and Commercial Code). This means that there is no difference in terms of the validity of the contract between the situation where B is induced to contract with A by the false assertion of A that the painting is an original and the situation where A—before entering into negotiations with B—tells C to come around and to falsely pretend to be a museum curator in order to assess the authenticity of the painting. In both situations the contract is voidable. As a general rule, fraud implies an active intention to deceive or ensnare another person, or circumvent the law. With regard to some types of contract, however, fraud may also result from silence or inaction. The intentional silence of one of the parties with respect to a fact or quality of which the other party is ignorant is deemed to be fraud if it is proved that, without it, the contract would not have been concluded (Section 162, Civil and Commercial Code). For example, in policies of insurance, silence or inaction may be sufficient to accomplish the fraudulent purpose. Therefore, there is an obligation of disclosure: the insured must disclose all material facts which may influence the decision of the other contracting party. Similarly, in a contract of sale, the seller is bound to disclose all material defects of the property to the buyer. 3.3 Duress Duress, or fear, is also a ground for invalidity of the contract. Duress can be defined as an unlawful threat of injury or violence to influence a party to contract.9 Pursuant to Section 164, paragraph 1 of the Civil and Commercial Code, a declaration of intention is voidable if made under duress. It is not every type of duress that is considered as a vice of consent by the legal system, but only a genuine and reasonable fear, due regard being had to the sex, age, position, health, and temperament of the parties, and all other circumstances which may relate to that contract. In this respect, Section 164, paragraph 2 of the Civil and Commercial Code, provides that duress, in order to make a contract voidable, must be imminent and so severe that it overcomes the will of the victim and without it the act would not have been made. In other words, it must be capable of overwhelming a reasonable person. Duress must give rise to a fear of unlawful violence. Accordingly, the threat of the normal exercise of a right is not considered as unlawful. This is the case, for example, of a creditor who demands security for a debt under threat of suit if such security is not given as required, or of a judge who exerts duress on a 9 J. Setabutr, op. cit., 2008, p. 173.

78

chapter 4

debtor to sell his property and satisfy his debts. Lawful duress has no legal effect. By the same token, mere threats cannot constitute duress unless they are of a serious nature and the victim has been coerced by that pressure. Therefore, reverential fear is not cause for annulment of a contract (Section 165, Civil and Commercial Code). Generally speaking, duress involves the use of improper threats or acts by one party to coerce the other party into making a contract he would not otherwise have made. But it is possible that one is induced by duress exercised by a third person to confer a benefit upon another. In this respect, Section 166 of the Civil and Commercial Code provides that duress is grounds for annulment of the contract, even when it is exercised by a third person. It is important to point out that duress only applies to those cases of threatened violence or undue pressure exerted by one contracting party on the other. A contract concluded under physical violence would, under Thai law, not be considered as a declaration of intention at all. In the absence of an essential element of the contract (i.e., the consent), the contract would be void, not voidable. The distinction between voidness and voidability will be discussed in the next section. 4

Validity of Contract

Contracts may be valid or invalid. The first are legally-binding agreements that are made by the mutual consent of the parties in conformity with all legal requirements. The second are agreements that, by virtue of their nature, cannot be enforced in a court of law. To say that a contract is valid between the parties means that it has been concluded in accordance with the provisions of the law and, as a consequence, the contract is apt to produce legal effects. In contrast, a contract is considered to be invalid when it has not been concluded in accordance with the provisions of the law and, therefore, it is unable to produce legal effects (void, i.e., destitute of legal effect) or is unable to produce effects of a permanent nature (voidable, i.e., may be disaffirmed or ratified by one or both of the parties).10 A void contract cannot be ratified, and its nullity may be alleged at any time by any interested person. If any part of a contract is void the whole contract is void, unless it may be assumed under the circumstances of the case that the parties intended the valid part of the contract to be separable from the invalid part. Where a void contract complies with the requirements of another 10

C. Haemaratchata, op. cit., p. 88.

Contractual Obligations

79

contract which is not void, however, it is considered to be valid as such if the intention of the parties was to conclude the other contract. In this regard, Section  174 of the Civil and Commercial Code provides that the contract is valid “if it may be assumed that such validity would have been intended by the parties, had they known of the invalidity of the intended act.” The cases where a contract is void are listed exhaustively. Thereby, and, as noted in the section above, contracts are void when they are in derogation of mandatory rules, their object is impossible, or offends against public order or good morals. Also, the absence of one of the necessary elements of the contract (i.e., agreement between the parties, the lawful object, and the special form when required by the law) leads to nullity of the contract. The return of a property arising from a void act is governed by the provisions on undue enrichment under Sections 406 and following of the Civil and Commercial Code. As regards voidable contracts, Section 176 of the Civil and Commercial Code states that when a voidable contract is avoided, it is deemed to have been void from the beginning and the parties must be restored to the condition in which they were previously. If it is not possible to restore them, they must be indemnified with an equivalent. By the same token, when a person entitled to avoid a voidable contract ratifies it, the contract is deemed to have been valid from the beginning; but the right of third persons cannot be affected by it. Contracts are voidable when they are made by persons without capacity to act. This category applies to minors, and persons judged incompetent and quasi-incompetent without the consent of parents, guardians, or curators. More precisely, a minor must obtain the consent of his legal representative to enter into contracts, except for those contracts by which he simply acquires rights or avoids obligations. All contracts made by the minor without such consent may be annulled (Section  21, Civil and Commercial Code). Similarly, a person adjudged incompetent cannot enter into contracts without authori­ zation of the guardian. This means that contracts performed by incompetent  persons are voidable. It must be added, however, that the contract concluded by a person of unsound mind but not adjudged incompetent is voidable only  when the act was done at a time he was actually of unsound mind, and the other party had knowledge of such unsoundness (Section 30, Civil and Commercial Code). As regards persons adjudged quasi-incompetent, Section 32 of the Civil and Commercial Code defines them as “persons who have physical or mental infirmity, habitual prodigality, or habitual intoxication or other similar causes that make them incapable of managing their own affairs, or whose management is likely to cause detriment to their own property or family.” The Code provides a list of certain contracts which require the consent of the curator to be valid such as contracting a loan, lending money,

80

chapter 4

borrowing or leasing movable property, giving security, hiring or letting property, or making a gift (Section 34). The notion of validity and invalidity of contracts should be held distinct from the notion of enforceability or unenforceability of contracts. As the term indicates, unenforceable contracts are contracts which cannot be enforced in a court of law because of some technical defects. This may happen because the terms of the contract are vague or incomplete. For example, a hire of immovable property is not enforceable by action unless there is some written evidence signed by the party liable (Section  538, Civil and Commercial Code). Similarly, a loan of money for a sum exceeding 2,000 baht in capital is not enforceable by action unless there is some written evidence of the loan signed by the borrower (Section 653, Civil and Commercial Code). By the same token, a contract of guarantee is not enforceable by action unless there is some written evidence signed by the guarantor (Section  680, Civil and Commercial Code). 5

Discharge of a Contract

Discharge of a contract means termination of the contract. Under the Civil and Commercial Code, there are several ways to terminate a contract, including the following: performance, mutual agreement, breach of contract, impossibility of performance, and prescription. It must be noted, however, that specific types of contract may have their own conditions for contract termination. 5.1 Performance and its Equivalents A contract creates rights and obligations as between the parties to the contract and the fulfillment of the obligations by the contracting parties is the termination of a contract. Thus, the most common method of the discharge of a contract is the performance of the parties. The importance of performance has already been discussed in previous pages. It is necessary now to deal with some processes which in specific circumstances generate the same legal effects as if the contract had been actually performed. Tender is an offer of performance by a debtor or other person on his behalf and with his assent made with the intent to extinguish the obligation. According to Section 330 of the Civil and Commercial Code, by proper tender of performance a discharge is effected, from the time of the tender, from all responsibilities arising out of non-performance. This means that a party who has entered into a contract to give something or to do something for the

Contractual Obligations

81

benefit of another is deemed to have fulfilled it if he offers performance of his obligation at the proper time and place and the offer is refused. For example, A agrees to deliver one thousand tonnes of wheat of a specific quality to B’s warehouse and B agrees to pay the price only after delivery. To make a valid tender, A must bring one thousand tonnes of wheat to B’s warehouse, on the appointed day, according to the terms and conditions of the contract. It follows that, if A makes an offer of performance to B, and the offer has not been accepted, B is not responsible for non-performance, nor does he lose his rights under the contract. When properly made, tender has the effect of putting the other party in default. The tender of principal and interest due generally releases the debtor from future court costs and stops the running of interest on the debt. In this respect, Section 221 of the Civil and Commercial Code states that a money debt bearing interest ceases to bear interest during the default of the creditor.11 An obligation can also be extinguished by deposit under Section 331 of the Civil and Commercial Code. Specifically, 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 at the expense of the creditor. A deposit must be made to the deposit office or the place where the obligation is to be performed. However, if there are no special provisions by law or regulations as to the deposit offices, the debtor has the right, with the approval of the court, to designate a deposit office and appoint a custodian of the thing deposited (Section 333, paragraph 2, Civil and Commercial Code). Such deposit, validly made, is equivalent to payment and the thing deposited remains at the risk of the creditor. 5.2 Mutual Agreement Since a contract is created by voluntary mutual agreement of the parties, it can likewise be legally discharged by voluntary mutual agreement of the parties. There are two ways to exercise the right of termination. An agreement to discharge an obligation may be made in a distinct contract or it may be incorporated into the original contract. In the first case, there must be a consensual conduct of the parties to discharge their contractual obligations and duties. For instance, the seller and the buyer may decide to cancel an order: the buyer need not pay the price, and the seller is no longer obligated to supply the goods. The new agreement discharges the old one. In the second case, parties may terminate the contract through the agreed conditions. The terms of the contract may allow a party to exercise the right of 11

J. Sodpipan, op. cit., p. 122.

82

chapter 4

termination if a specific obligation is not performed in the prescribed manner or if some conditions are met. For example, A and B are getting divorced. A agrees to make alimony payments to B at the rate of 20,000 per month, and C joins in the contract as guarantor until B remarries. If B has not placed C in default by means of a demand before the happening of the event, the liability of C terminates. But if there has been default in payment of alimony on the part of A before the condition is satisfied, then C is unconditionally liable for A’s default. 5.3 Breach of Contract If a party to a contract fails to perform his obligations when they become due, then that party is considered to be in breach. In these cases, the non-defaulting party may either rescind the contract or demand that the obligations be performed. When the non-defaulting party opts for the second alternative, he must fix a reasonable period and notify the defaulting party to perform within this period. Should the defaulting party fail to meet its obligations by the new deadline, the contract is dissolved by operation of law (Section 387, Civil and Commercial Code). Furthermore, if the object of a contract according to its nature or to an intention declared by the parties can be accomplished only by performance at a fixed time or within a fixed period, and such time or period has passed without one of the parties having performed, the other party may rescind the contract without any prior notice (Section 388, Civil and Commercial Code). It must be pointed out that in the case that there are several debtors or several creditors, the right of rescission may be exercised only by all and against all. If the right of rescission is extinguished in respect of one of those persons entitled, it is extinguished also in respect of the others (Section 390, Civil and Commercial Code). Regardless of its choice, the non-defaulting party is entitled to compensation for damages (Section 391, paragraph 4, Civil and Commercial Code). 5.4 Impossibility of Performance According to Section 150 of the Civil and Commercial Code, if a contract contains an obligation to perform an impossible act, it is void. If the performance of a contract is possible when it is concluded but later becomes impossible by reason of some event which the debtor could not prevent, the parties are discharged from liability. More precisely, when through no fault of the debtor a contract becomes impossible in consequence of a circumstance occurring after the creation of the obligation, Section  219 of the Civil and Commercial Code states that the debtor is relieved from his obligation to

Contractual Obligations

83

perform. For example, A agrees to build a house, and B agrees to pay 2,000,000 baht. If the contract subsequently becomes impossible to perform because the zoning laws are changed, the contract becomes void. It is interesting to note that if the debtor, after the creation of the obligation, becomes unable to perform, it is equivalent to a circumstance rendering the performance impossible. On the other hand, when the performance becomes impossible in consequence of a circumstance for which the debtor is responsible, the creditor has the right to rescind the contract (Section 389, Civil and Commercial Code) and the debtor shall compensate the creditor for any damage arising from the nonperformance (Section 218, Civil and Commercial Code). 5.5 Prescription Prescription can be defined as a release of a debt effected by the expiration of a certain period of time. Section 193/9 of the Civil and Commercial Code states that a claim is barred by prescription if it has not been enforced within the period of time fixed by law. After the lapse of the period of prescription for claims, the debtor is entitled to refuse performance (Section 193/10, Civil and Commercial Code). This means that prescription is a means of defense or exception to an action, and not a ground of action. It does not extinguish the obligation by operation of law. The periods of prescription of actions fixed by the Civil and Commercial Code vary greatly depending on the specific claim. According to Section 193/30 of the Code, the period of prescription for which no other period is provided by law is ten years. In many cases, however, the terms are much shorter. Therefore, to select a few cases from the Civil and Commercial Code, claims related to arrears of interest, rent or hire of property, salaries, annuities, pensions, allowances for maintenance, and all other periodical payments are prescribed in five years (Section 193/33), claims arising from the acknowledgment of liabilities by the debtor in writing in two years (Section 193 /35), and claims for damages arising from wrongful act in one year (Section 448). Prescription begins and run from the moment when the claim can be enforced (Section  193/12, Civil and Commercial Code). However, when the creditor is a person under disability (minors, person of unsound mind whether adjudged incompetent or not) and the claim would have expired while the said person did not have full capacity, then prescription is not completed until the expiration of one year after he has acquired full capacity (Section 193/20, Civil and Commercial Code). Prescription is interrupted, that is to say the running of the prescriptive period stops, if (1) the debtor has acknowledged the claim towards the creditor by written acknowledgement, by part payment, payment of interest, giving security, or by any unequivocal act which implies the

84

chapter 4

acknowledgment of the claim; (2) the creditor enters an action for the establishment of the claim or for requiring performance; (3) the creditor applies for receiving a debt to arbitration; (4) the creditor submits the dispute to arbitration; (5) the creditor does any act which brings an effect equivalent to entering an action (Section  193/14, Civil and Commercial Code). Interruption of the prescription against the principal debtor is also effective against the secondary debtor. This is the case, for example, of a guarantor who guarantees the performance of the principal debtor. When a debt bears interest and it is prescribed, interest on the debt is prescribed with it. 6

Plurality of Parties

The parties to a contract are liable or entitled as joint debtors or joint creditors when two or more concur in one and the same obligation as principals with the intention to bind themselves in respect of the whole performance and not only to a proportional share of the total performance. The obligation of a joint debtor is different from that of a guarantor. Each joint debtor is liable for the full amount of the joint debt as principal. The liability of the guarantor, on the other hand, is secondary and arises only if there is a default on the part of the principal debtor. For joint liability to arise, it is not enough that two or more persons stipulate together the same thing or promise together at the same time. It is necessary to have the intention to be bound for the whole performance of the contract. In the absence of evidence of such intention, the parties, are not jointly liable and each joint debtor is only liable for his pro rata share of the debt. In this respect, Section 290 of the Civil and Commercial Code states that “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.” Joint and several liability applies only in cases where several persons owe performance in such a way that each is obliged to effect the entire performance, but the creditor is only entitled to demand the performance once (Section 291, Civil and Commercial Code). In such cases, the creditor may at his discretion demand full or part performance from each of the debtors. Apart from contract stipulation, joint liability arises by law in a number of different circumstances. For example, according to the Civil and Commercial Code, an employer is jointly liable with his employee for the consequences of a wrongful act (Section 425), parents are jointly liable with a minor for the consequences of his wrongful act (Section 429), and persons holding a share in common are jointly liable to the company for payment of the amount of the

Contractual Obligations

85

share (Section 1118). Similarly, if some goods are transported by several carriers, they are jointly liable for loss, damage, or delay (Section 618). Once the performance is complete by a joint and several debtor, it is also effective for the other co-debtors. It must be stressed, however, that joint debtors are liable in equal shares between themselves, unless it is otherwise provided (Section 296 of the Civil and Commercial Code). The principle above-mentioned with regard to joint debtors also applies to the situation where there is a plurality of creditors. Thus in the case of several creditors each creditor is only entitled to his pro rata share of the performance which constitutes the object of the contract unless it appears otherwise from the law or the source of the obligation.12 However, if several persons are entitled to demand performance in such a way that each may demand the entire performance but the debtor is only obliged to effect the performance once (joint and several creditors), the debtor may at his discretion effect performance to each of the creditors (Section 298, Civil and Commercial Code). Yet, joint creditors are liable in equal shares between themselves, unless it is otherwise provided (Section 300, Civil and Commercial Code). Therefore, when one joint debtor extinguishes the whole debt, or one joint creditor recovers the whole debt, the other joint debtors in the one case may be sued, and the other joint creditors in the other case may sue, with regard to their pro rata part of the debt or credit. When the agreement provides that several joint creditors are entitled to be paid in full, or that several joint debtors are required to render the performance in its entirety, the provisions of the Civil and Commercial Code apply. In case of a joint and several obligation of the debtors, the creditor has the right to demand performance both from all the debtors jointly and from any one of them separately, for the whole or for part of the debt; and his choice to sue one debtor does not preclude him from maintaining an action against another. Joint debtors are obligated until the time when the contract is performed in full. In case of plurality of creditors, performance of the obligation by one joint debtor operates in favor of the other debtors. The same rule applies in case of any act in lieu of performance, deposit in lieu of performance, and set-off (Section 292, paragraph 1, Civil and Commercial Code). Also, the default of the creditor towards one joint debtor avails also in favor of the other debtors (Section  294, Civil and Commercial Code). But 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 293, Civil and Commercial Code). 12

C. Haemaratchata, op. cit., p. 128.

chapter 5

Specific Contracts Title 1 of the Third Book of the Civil and Commercial Code includes special rules governing nominate contracts. As stated above, the principles which regulate contracts in general apply to every class of contract irrespective of the object or the parties involved. These rules may be complemented by special provisions directly fixed by the contracting parties or by the law. In addition to categories of contracts expressly regulated by the law, there are other types of agreements which are created by the practice of business and have as their objective the satisfaction of the needs of business organizations (e.g., leasing, licensing, time-sharing, consulting, factoring, franchising, etc.). Thai civil law recognizes such a category as innominate contracts under the principle of freedom of contract and treats such contractual schemes as enforceable if they embody interests deserving of protection by the legal system.1 The normative regulation of nominate contracts under the Civil and Com­ mercial Code covers nearly thirty categories of contracts. Other contractual  agreements are governed by separate statutory provisions. Nominate contracts are regulated specifically because they concern particular relations between persons which occur frequently and are always constituted in the same form. In this section, we will provide a brief overview of some special contracts which are of very common application. Most of these rules governing the validity of nominate contracts are dispositive (supplementary) norms and apply only in so far as the contracting parties have not reached an agreement to the contrary. 1 Sale Under the Civil and Commercial Code, sale is a contract whereby a person, called the seller, transfers to another person, called the buyer, the ownership of property, and the buyer agrees to pay the seller a price for it (Section  453). 1 For more detailed discussion on this topic, see P. Hutasingha, Got mai paeng lae panit wa duay nitigam lae sunya [Civil and Commercial Law: Juristic Acts and Contracts], Bangkok, Nittibanakan, 1977, p. 102.

© koninklijke brill nv, leiden, ���6 | doi 10.1163/9789004308923_006

Specific Contracts

87

According to the definition, it can be seen that the contract of sale is a promissory juristic act which requires the mutual consent of the parties to it. If there is an agreement of the two parties’ intention, a binding contract arises. Delivery of property is not an essential element to make the contract come into being unless otherwise provided by the party. This element distinguishes a contract of sale from a deposit contract, a gift contract, or a loan contract. A sale contract is a consensual contract which is effective from the moment that the sale is complete. This means that the ownership of the property sold is considered transferred to the buyer from the moment when the contract of sale is entered into. But if the sale is made subject to a suspensive condition or to a time clause, the property does not pass until the condition is satisfied or the time has arrived (Section 459, Civil and Commercial Code). Also, it must be noted that in the case of the sale of unascertained property, the ownership is not transferred until the property has been numbered, counted, weighed, measured, or selected, or its identity has been otherwise rendered certain. The object and the price must be specifically established to create a valid sale contract. The object may be either a thing or patrimonial rights. It is not an essential requirement that the purchased object is already in existence at the time of conclusion of the contract. It may exist in the present or in the future.2 Aside from the object, the price is another essential requirement of the sale contract. It must be expressed in money and must be complete, certain, or readily ascertainable. In this regard, Section 487 of the Civil and Commercial Code states that the price of the property sold may be fixed by the contract, or may be left to be fixed in a manner thereby agreed, or may be determined by the course of dealing between the parties. When the price is not determined as aforementioned, there is a presumption that the buyer must pay a reasonable price. For a sale contract to be valid, a special form is necessary only if the object of the contract is immovable property. Specifically, the Civil and Commercial Code provides that a sale of immovable property must be made in writing and registered by the competent official (Section 456, paragraph 1). The same rule applies to ships or vessels of six tons and over, to steam launches or motor boats of five tons and over, to floating houses, and to beasts of burden. With regard to movable property, written form is not required and the intention of the parties can take any form including gestures, conduct, or signs. A sale contract of movable property for a price of 20,000 baht or more, however, is not

2 See P. Poonyapun and P. Sathaman, Kam atibai got mai paeng lae panit laksana sue kai [General Principles of Civil and Commercial Law: Sale], Bangkok, Sawaengsuttikan, 1981, pp. 74–5.

88

chapter 5

enforceable by action unless there is some written evidence signed by the party liable, partial payment is made or partial performance has taken place. As a general rule, goods are at the buyer’s risk from the moment of the conclusion of the contract unless provided otherwise by the parties. Thus, the buyer has to bear the risk of loss or accidental damage of a good sold when ownership of property is transferred. There are cases, however, where the transfer of risk occurs under different circumstances. The sale contract may be a conditional agreement subject to a suspensive condition or the amount of the sale price may remain to be determined with reference to an objective measure. For example, if the price is not fixed but determinable with regard to the market price on a particular day, or if it is established by an independent third party. This means that in order to determine when the risk passes from the seller to the buyer, it is necessary to know when a sale contract is concluded. When the sale contract is concluded, then the risk of loss or accidental damage will pass to the buyer. Several elements should be considered such as the property sold, the quality and quantity of the property, the price, and the nature of the contract. As long as all the essential elements are not yet met, the contract is not deemed concluded and the risk is not transferred. The agreement may be considered complete by the parties for their own purposes though not concluded for the purpose of passing the risk from the seller to the buyer. It is not an essential requirement in a sale contract that the seller should be the owner of the property. A person may agree to transfer property belonging to a third person in a contract made under mandate. If the title of the seller, however, is defective or limited, the buyer is entitled to the regular actions for breach of contract. In this respect, Section 475 of the Civil and Commercial Code provides that the seller is liable for the consequences of any disturbance caused to the peaceful possession of the buyer by any person having a right over the property sold which existed at the time of sale or by the fault of the seller. The warranty against eviction includes a warranty of title and warranty against encumbrances. Thus, 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. In other words, in the case of eviction or threatened eviction the buyer is entitled to the return of the purchase price as well as compensation for judicial expenses and damages. For example, if A steals a notebook from B and sells it to C who buys it in good faith without knowing of the theft then B may assert his right over the notebook and recover it from C. In this case, A would be liable for damages

Specific Contracts

89

because he sold property which did not belong to him. If necessary, the buyer is also entitled to summon the seller to appear in the action with a third person in order to enable the court to settle disputes between all the parties. Should the seller refuse to appear in the action and to take the part of the buyer as joint defendant or joint plaintiff, he is deemed liable.3 In the case that the property sold has, at the time of the eviction, increased in value for some unforeseen reason (e.g., unexpected changes in market conditions enhances the value of the shares of a company, gas or oil is found in commercial quantities upon private land, a house’s value increases due to a new infrastructure investment, a van Gogh hides under a non-attributed painting), the seller is not bound to pay this increase in value over the price to the buyer. Thus damages must be computed from the time of the breach without regard to unforeseen and exceptional circumstances. They include only those losses that are foreseeable and objectively reasonable to expect at the time of the sale. In contrast, the buyer cannot claim damages or refund of the price paid if he has knowingly and dishonestly purchased property belonging to another. This is stated under Section 476 of the Civil and Commercial Code which provides that the seller is not liable for a disturbance caused by a person whose rights were known to the buyer at the time of sale. In the absence of a contrary agreement, the seller is bound to warrant that the property sold is free of defects which make it unfit for its ordinary use or materially diminish its value. In this regard, Section  472 of the Civil and Commercial Code states that in the case of any defect in the property sold which impairs either its value or its fitness for ordinary purposes, or for the purpose of the contract, the seller is liable. This applies whether the seller knew of the existence of the defect or not. For example, if a grocery store sells organic food, there is an implied warranty that it has been processed in accordance with specified organic production standards and without the use of food additives, pesticides, or synthetic fertilizers. The warranty, however, does not apply if the buyer knew of the defects of the property at the time of its purchase or should have known if he had exercised such care as might be expected from a person of ordinary prudence. Also, the seller is not liable if the defect was apparent at the time of the delivery, and the buyer accepts the property without reservation, and if the property was sold by public auction. As a general rule, the parties to a contract of sale may exclude liability for defects or eviction, including liability arising by operation of the law; but such clause has no effect if the seller has, in bad faith, omitted to mention such 3 See S. Chumwisoot, Seuh khai rakplian hai [Sale, Exchange, and Gift], Bangkok, Winuchon, 1992, p. 43.

90

chapter 5

defects to the buyer (Section 483, Civil and Commercial Code). This is to say that a non-liability clause cannot exempt the seller from the consequences of his own acts or of facts which he knew and concealed. In order to protect the interests of the seller or the buyer, parties may give additional express warranties in addition to warranty of title and warranty against hidden defects. Additional guarantees are usually given to cover the proper functioning of certain goods such as cars, computers, phones, and other electronic devices. A commercial warranty, for example, may cover possible failures of structural components of the product, its replacement, and labor for repairs which occur as a result of normal use within a certain period of time from the date of purchase. These failures may occur even when the product sold is free of defect.4 In the case of defect, the buyer may bring an action in order to rescind the sale contract and recover the price he paid as well as the interest from the date of payment. The buyer is also entitled to recover any expense which he necessarily incurred in obtaining the property, such as customs, tolls, and the like. The action for liability for defect, however, is limited by a short period of prescription. According to Section  474 of the Civil and Commercial Code, an action for liability for defect cannot be entered into later than one year after the discovery of the defect. 2 Exchange Exchange (or barter) is a legal relationship arising from an exchange contract by which both parties transfer the right of ownership to each other without the payment of a price (Section  518, Civil and Commercial Code). For instance, A may agree to give B his phone in exchange for B’s laptop. As a general rule, the provisions governing sale contracts apply to the contract of exchange to the extent they are consistent with the nature of such contracts (e.g., the norms regarding the price do not apply). The distinction between a sale contract and an exchange contract is based on the fact that in the former, the buyer agrees to pay a price for receiving a thing, while in the latter, parties mutually exchange one thing for another thing. This implies that both parties to an exchange contract are considered to be the seller and, at the same time, the buyer for the transfer of the property, each of them being bound precisely to transfer ownership of the property to the other.5 4 P. Poonyapun and P. Sathaman, op. cit., p. 132. 5 S. Chumwisoot, op. cit., p. 91.

Specific Contracts

91

It must be noted that in Thai civil law, exchange is a non-gratuitous consensual contract, i.e., the obligation arises independently from the delivery of the property and it is legally sufficient to support a lawsuit in itself. 3 Gift Gift (or donation) is defined in Thai civil law as a contract. According to Section 521 of the Civil and Commercial Code, a gift is an agreement whereby one party, the donor, transfers gratuitously a property of his own to another party, the donee, and the donee accepts such property. A gift may also be made by granting to the donee the release of an obligation or by performing an obligation due from the donee. Apart from the express intention of the donor to transfer his property gratuitously, the contract of gift also requires acceptance of the gift by the donee or other person qualified to accept on his behalf. It follows that the contract of gift is a bilateral juristic act which requires the declaration of intention by both parties to be legally effective. As in the case of other ordinary contracts, it is based on an offer (by a donor) that is accepted (by a donee). Prior to acceptance by the donee, the contract is not formed and the donor may still decide to cancel the gift. Upon delivery of the property, however, the gift becomes property of the donee and it cannot be revoked merely on the will of the donor unless expressly permitted by law.6 As in the case of sale contracts, a distinction must be made between the exchange of consent between the donor and the donee and the delivery of the property. A contract of gift is valid only on delivery of the property given (Section 523, Civil and Commercial Code). This means that the contract takes effect only when the object of the gift is transferred to the other party. The general rule is that a contract of gift is not presumed. The intention to voluntarily and gratuitously transfer ownership must be shown by the party alleging it. The capacity of the parties to form the contract of gift follows the general rule mentioned above for other contracts. In order to be a donor, a person must be legally qualified to make a binding agreement and have the ability to understand its effects. Minors cannot make a gift nor can legal representatives without the permission of the court (Section  1574, Civil and Commercial Code). By the same token, the Civil and Commercial Code provides that a quasi-incompetent person cannot make a gift without the consent 6 See T. Meenaganit, Got mai beuang ton taang turakit, [Principles of Thai Business Law], Bangkok, Thammasat University, 2012, p. 152.

92

chapter 5

of his curator (Section 34), and the agent who has a general authority cannot make a gift on behalf of his principal (Section 801). Usually the creation of a gift does not require any special form to be binding. However, a contract of gift is subject to particular formal requirements when its object is immovable property, rights in immovable property and movable property which, for economic reasons, is categorized as immovable by the operation of the law. In these cases, the contract must be made in writing and registered by the competent official. For instance, the gift of land must be made in written form and comply with the registration procedures. If a gift or a promise for a gift has been made in writing and registered by the competent official, the transfer of ownership is valid without delivery of the property. Should the donor refuse to deliver to the donee the property given, the donee has an action against the donor to enforce his right. Specifically, the donee is entitled to claim the delivery of the property given or its value. Special conditions are imposed when the donor wants to transfer a right to the donee which is evidenced by a written instrument. In order to make a valid gift, Section 524 of the Civil and Commercial Code requires that the written instrument must be delivered to the donee and the gift must be notified in writing to the debtor of the right. A contract of gift being non-onerous with a single obligation, there is no implied guarantee against hidden defects or against eviction. Only in the case that the gift is encumbered with a charge is the donor liable for defect or eviction in the same manner as the seller but only to the extent of the charge (Section 530, Civil and Commercial Code). If a definite and specific property does not belong to the donor, the contract of gift is void. In principle, gifts cannot be revoked and the property already handed over by the donor cannot be recovered. This rigid rule only admits three exceptions that are contained in Section 531 of the Civil and Commercial Code and relates to acts of ingratitude of the donee. First, the donor can claim revocation of a gift if the donee commits a serious criminal offense against the donor, such as misappropriation of property, theft, violence, fraud, physical assault, slander, pressure in connection with wills, and other crimes punishable under the Penal Code. Second, the donor can revoke any donation if the donee has grievously defamed or insulted the donor. The third and last case where revocation can be requested regards those situations where the donee refuses to help the donor who is in need of the basic necessities for existence although he was able to supply them. It must be added, however, that these grounds of revocation do not extend to gifts encumbered with a charge, remuneratory gifts, gifts made in compliance with a moral duty or to gifts made in consideration of marriage (Section 535, Civil and Commercial Code).

Specific Contracts

93

A particular type of gift—or we should say a gift made in particular circumstances—is the donatio mortis causa, which is the gift of personal property made in contemplation of the death of the donor, to be valid only in that event. It operates in part as a contract and in part as a will. A donatio mortis causa resembles a contract in that it is based on an agreement between two parties whereby one party, without being under any legal obligation to do so, gives or grants something irrevocably to another, who accepts it.7 On the other hand, a donatio mortis causa shares many similarities with wills. Pursuant to Section 536 of the Civil and Commercial Code, a gift to take effect on the death of the donor is governed by the provisions of law concerning inheritance and wills. Like regular wills, it takes effect only on the death of the donor after all creditors in the distribution of a decedent’s estate have been fully satisfied and is revocable at any time by the donor during life. In the event of the death of the donee before the donor, a donation mortis causa is automatically revoked by operation of the law. Also, the Civil and Commercial Code stipulates for this particular type of gift the same form requirements governing testate succession, which is the written form and the presence of two witnesses (Section 1656). It is not always easy to distinguish the donatio mortis causa from the regular contract of gift. In fact, the donatio mortis causa must be made in contemplation of the death but does not necessarily require as an essential condition that the donor be under a present danger of death nor that the donor be dying. The donor must be moved with the consideration of his mortality. The intention of the donor is the main element. In the case of doubt about the intention of the donor, there is a legal presumption of donatio inter vivos.8 It is possible to effect a donatio mortis causa either by contract with the donee, in which case the property object of the gift remains in possession of the donor, or by delivery to the donee. In this second case, a donatio mortis causa may be made under a resolutive condition (i.e., the ownership of the gift sought to be transferred reverts to the donor if the donee predeceases him) or suspensive condition (i.e., the ownership of the gift is transferred to the donee only in the case that he survives the donor). 4 Hire In Thai civil law, the contract of hire has a broad application. It applies not only to the hire of property, but also to the hire of services, and the hire of work contracts. 7 On this point, see in particular S. Chumwisoot, op. cit., p. 234. 8 T. Meenaganit, op. cit., p. 154.

94

chapter 5

4.1 Hire of Property In a hire of property contract the owner of a piece of property, called the letter, agrees to let another person, called the hirer, have the use or benefit of said property for a limited period of time in exchange for the payment of a rent (Section  537, Civil and Commercial Code). It follows that when the hire of property contract terminates, the hirer has to relinquish his possession and return the property to its owner.9 According to this contract, the property is not transferred from one person to another. The hirer is only entitled to the exclusive possession and quiet enjoyment of the property for a period of time. The ownership of the property remains with the letter. Contract of hire may be made for the duration of the life of the letter or of the hirer. If a definite period of duration is specified in the contract, it cannot exceed thirty years for immovable property. If it is made for a longer period or permanently, it is automatically reduced to the duration of thirty years. According to Section 540 of the Civil and Commercial Code, a fixed-term contract may be renewed by agreement, but it must not exceed thirty years from the time of renewal. In contrast, if the object of a hire contract is movable property, the maximum duration period does not apply and it may be concluded for a longer period. As regards the form needed for the expression of a hire of property contract, the law provides special requirements for the hire of immovable property. Specifically, an agreement to hire an immovable is not enforceable by action unless there be some written evidence signed by the party liable. If the hire is for more than three years or for the life of the letter or hirer, it is enforceable only for three years unless it is made in writing and registered by the competent official. Other hire of property agreements are not subject to any formal requirement. Both the rights and the obligations of the letter and the hirer derive from the contract. The contract rules contained in the Civil and Commercial Code are generally default provisions that apply where the disputing parties have not agreed otherwise. With respect to the duty of the letter, the Code provides that the letter has to deliver the material or physical property to the hirer in a good state of repair and to preserve it in that state during the agreed time (Section 546, Civil and Commercial Code). This includes all those accessories which are considered as necessary to the use of the property such as the key of a car, the halter of a horse, the lock of a bicycle, and the like.

9 For more detailed discussion on this topic, see P. Ekchariyakorn, Kam atibai pramuan got mai paeng lae panit laksana chao sup [Principles of Civil and Commercial Law: Hire of Property], Bangkok, Winuchon, 2005.

Specific Contracts

95

After delivery of the property, the letter is restrained from interfering with the hirer occupation and use, and must protect him against interference by third parties. This is to say that the letter has to guarantee that the hired property is free from such defects which may prevent its being used for the purpose of the contract. The implied warranty against defects and eviction is governed by the provisions of the Civil and Commercial Code concerning the contract of sale, mutatis mutandis. In this regard, Section 550 of the Civil and Commercial Code specifies that the letter is liable for any defects which arise during the continuance of the contract and he must make all the repairs which may become necessary, except those which are by law or custom to be done by the hirer.10 During the duration of the contract, the letter has the obligation to maintain the hired property in proper condition, thus making it suitable for its intended use or for the purpose contemplated by the contract. It follows that the letter is bound to reimburse the hirer for any necessary and reasonable expenses incurred by him for the preservation of the property hired, except expenses for ordinary maintenance and petty repairs (Section 547, Civil and Commercial Code). When a letter refuses to execute those reasonable repairs which the law requires him to do, the hirer may effect such repairs himself and deduct the necessary cost from the rent. With regard to the duties of the hirer, the payment of the rent is one of the most important elements of the hire of property contract. The amount and time of payment are provided in the contract. In the absence of any provision that is applicable to the time of payment, the rent is payable at the end of each period for which the rent is agreed. That is to say, if a property is hired at so much per year, the rent is payable at the end of each year, if a property is hired at so much per month, the rent is payable at the end of each month. If the hirer fails to pay the rent on the dates agreed upon, the letter is entitled sue him to collect the rent due and to terminate the contract. Nonetheless, if the property hired is payable at monthly or longer intervals, the letter must first notify the hirer that payment is required within a period of at least fifteen days. The Code states that the hirer cannot use the property hired for the purpose other than that which is ordinary and usual, or which has been provided in the contract (Section 552). This means that the hirer has to take proper care of the property let. He has no right to impair or damage the property nor to use it for a different purpose than the one agreed on. Other fundamental obligations of the hirer are to allow inspections and repairs to be carried out, to retain the property and return it to the letter on the 10

Ibid., p. 101.

96

chapter 5

expiry of the contract in a good state of repair. Specifically, Section 558 of the Civil and Commercial Code states that the hirer may not make alterations in, or addition to, the property hired without the permission of the letter. If he does so without such permission, he must, on request of the letter, restore the property to its former condition, and he is liable to the letter for any loss or damage that may result from such alteration or addition. It follows that the hirer is liable for any loss or damage caused to the property hired by his own fault or by the fault of persons living with him or being his subhirer; but he is not liable for loss or damage resulting from proper use. As general rule, contracting parties are not liable for the loss of or damage to the property hired unless such loss or damage was the result of fault or negligence. Therefore, the letter of a building is not liable for fortuitous destruction by fire and is under no obligation to reconstruct. By the same token, a letter is not in principle liable for hidden defects which he did not know of nor could with reasonable diligence in the discharge of his duties have known of; but if the property no longer serves the ordinary use for which it was hired or needs repairs (e.g., security, plumbing, electrical, and other structural problems), the letter may incur liability for infringing his contractual obligations. In other words, he would not be liable on the ground of negligence but for not providing what the contract requires him to provide. With respect to the hirer’s liability for damage to the property hired, apart from minor deteriorations which usually arise from the fault of the hirer, subhirer, family members, or other guests and which are not due to the poor conditions of the deteriorated property, a hirer will not be liable, unless the deteriorations are the direct consequences of his wrongful act. If the hirer remains in possession of the property at the end of the agreed period, without objection on the part of the letter, the parties are deemed to have renewed the contract for an indefinite period (tacit relocation). In certain circumstances, the hirer may dispose of his interest either by sublease or assignment. Sublease is a contract between the original hirer and another party who rents the whole or part of the property. According to Section 544 of the Civil and Commercial Code, a hirer can sublet or transfer his rights in the whole or part of the property hired to a third person only if expressly provided by the contract of hire. Thus, the legal relation of letter and hirer is established between the original hirer and the subhirer. For instance, hirer A rents a house from B under a contract in writing for five years. Unless otherwise stipulated in the contract of hire, A is entitled to rent out the property to C for a period shorter than that covered by his own contract. It must be noted, however, that although there is a transfer of the hirer’s rights of possession and use between hirer and subhirer, the hirer does not cease

Specific Contracts

97

to be liable to the letter. In our example, the sublease agreement does not relieve A of any of his obligations toward B. As between letter and subhirer, Section 545 provides that if the hirer rightfully sublets the property hired, the subhirer is directly liable to the letter. In such case a payment of rent made in advance by the subhirer to the hirer who sublets cannot be set up against the letter. An assignment differs from a sublease in that its effect is to substitute a third party (assignee) in the place of the original hirer, who accordingly is discharged from his liabilities under the contract. Since the assignment releases the hirer of all obligations and transfers those obligations to the new party, it necessarily requires the letter’s consent. In the absence of such consent, the assignment is not valid.11 The hire of property contract may terminate for a number of reasons, including voluntary agreement between the parties, destruction of the subject matter, breach, and expiration of the agreed time limit fixed in the contract or implied under the circumstances. It must also be pointed out that a contract of hire of immovable property is not extinguished by the transfer of ownership of the property hired. The transferee is entitled to the rights and is subjected to the duties of the transferor towards the hirer (Section 569, Civil and Commercial Code). 4.2 Hire of Services A contract of hire of services is an agreement between an employee and an employer whereby the employee agrees to render services to the employer in return for remuneration. Thus an employer is a person who agrees to accept an employee for work by paying a wage and includes both natural and artificial persons; an employee is a person who, regardless of the name used, agrees to work for an employer in return for remuneration, in the form of salaries, wages, commissions, stock options, incentives, production bonuses, and other incentives. Employment of certain categories of employees may be subject to special restriction. For example, all foreign citizens and expatriates need to apply for a work permit in order to be employed in Thailand. Hire of services is an exchange contract which does not require special formalities for its validity. It may be concluded explicitly in writing or verbally or by implied conduct. In most circumstances, when a person puts his personal services under the control of another, the promise of remuneration is implied. It cannot be expected that the services are to be rendered gratuitously.

11

Ibid., p. 139.

98

chapter 5

The distinguishing feature of the hire of services contract lies in the fact that personal services are provided on one side and remuneration on the other.12 As long as no contrary intention is expressed, a hire of services contract is of a personal nature: parties must personally execute their respective obligations and cannot assign their rights to third parties. More precisely, the characteristics of the employees are generally regarded as an essential element of the hire of services contract. Thus, the employer may transfer his right to a third person only with the consent of the employee. The employee, as a general rule, must perform the work by himself and cannot have another person work in his place without the consent of the employer. Such consent may be given expressly or implicitly, verbally or in writing. If the employee allows another person to perform his services, whether temporarily or permanently, without the consent of the employer, the employer is entitled to terminate the contract. On the other hand, the characteristics of the employer do not always represent an essential element of the contract. In this regard, Section 584 of the Civil and Commercial Code states that the death of the employer terminates a hire of services contract only if the personality of the employer forms an essential part of said contract. During the course of the hire of services contract, the employee is under legal subordination to the employer, which means that he is bound to perform his duties as agreed under the contract and must carry out the instruction given to him by the employer. In doing so, the employee has to use reasonable care and skill. If the employee either expressly or implicitly claims to have special skills, he must have those skills and use them in his work. The absence of such skills would entitle the employer to terminate the contract. The Civil and Commercial Code provides the obligation to obey the reasonable and lawful instruction of an employer with regard to the workplace, pace of working, working time, and amount of work. The employee, however, has the right to refuse to perform those tasks which are unlawful or not covered under the hire of services contract. The legal relationship of subordination also implies a duty of confidentiality which extends to information about the employer’s business and trade secrets obtained in the course of the employment. Disclosure of such information would be considered as a serious breach of hire of services contract entitling the employer not only to terminate the contract but also to claim damages.

12

See W. Wichianchom, Ruam got mai raeng ngaan [Thai Labor Law], Bangkok, Thammasat University, 2000, p. 54.

Specific Contracts

99

The essential purpose of labor law is to reduce the disparities in bargaining power between employee and employer and protect employees from discrimination and unfair treatment. Thus, the Civil and Commercial Code mainly sets obligations for employers. The employer’s duty to provide remuneration is a fundamental counterpart to the employee’s obligation to work. In the absence of remuneration, the contract does not come into existence. For example, a work provided on voluntary basis cannot be considered a hire of services contract. The employer’s obligation to provide remuneration is comprehensively regulated by special laws.13 The Civil and Commercial Code provides certain further obligations for the employer, such as the obligation to issue a certificate of employment describing the employee’s duties at the end of the hire of services contract (Section 585) and the obligation to pay for returning costs (Section 586). With regard to this second point, the Code states that if the employee has been brought from elsewhere at the expense of the employer, the employer is bound, when the hire of service comes to an end to pay the cost of the return journey unless otherwise provided in the contract. The payment of the returning cost, however, is subject to the fulfillment of two conditions, namely the contract must not been terminated or extinguished by reason of the act or fault of the employee, and the employee must return to the workplace within a reasonable time.14 As regards termination, parties can end a hire of services contract in a number of ways. There are five main methods of terminating an employment contract, namely termination upon notice, agreement to discharge contractual obligations, breach of contract, death, and expiration of the contractual term. Termination upon notice is regulated under Section  582 of the Civil and Commercial Code and applies exclusively to open-ended contracts. It states that either party can terminate an open-ended contract by giving notice to the other party at or before any time of payment. The notice takes effect from the time when the party is informed and the employment relationship terminates at the end of the notice period. The length of the notice period, however, cannot exceed three months. Hire of services contracts may also terminate by mutual consent when the parties agree to discharge their contractual obligations to one another. The right to terminate the contract by mutual consent follows from the general principle of freedom of contract according to which, as a rule, parties are free to deal with each other, decide on the content of their contractual obligations 13 14

On this point, see S. Sukatadsani, Jaeng raeng ngaan jaeng tam kong rup khon [Hire of Work, Hire of Services, and Carriage], Bangkok, Winuchon, 1992, pp. 206–7. W. Wichianchom, op. cit., p. 101.

100

chapter 5

and bring an end to the agreement at any time without incurring in any liability. Termination should be confirmed in a written document stating that contracting parties mutually decide to end the employment relationship and settling all outstanding issues. Breach of agreement by either party is another ground for termination of a hire of services contract. Parties to the contract may, at any time, request a competent court to terminate the employment agreement for the reasons specifically and expressly provided for by the law. Apart from the grounds already mentioned, an employer may put an end to the contract without notice or compensation when the employee willfully disobeys or habitually neglects the lawful commands of his employer, absents himself for services, is guilty of gross misconduct, or otherwise acts in a manner incompatible with the due and faithful discharge of his duty (Section 583, Civil and Commercial Code). Any special clause in the contract concerning termination by breach other than those stated by the law will be considered as void and of no effect. As already discussed above, the death of the employee is a reason for termination of the contract since the employment relationship is strictly personal while the death of the employer puts an end to the contract only when the personality of the employer represents an essential element of the contract. The end of the contractual term constitutes another important ground for termination. It is not necessary to give prior notification of termination and the employee is not allowed to claim for statutory redundancy payment, reinstatement, severance payment, or compensation for unfair dismissal. However, if after the end of the agreed period the employee continues to render his services without any opposition from the employer, the parties are presumed to have made a new contract of hire. The new contract will be based on the same terms and conditions as the original but it will be considered as continuing for an indefinite period. This means that either party is entitled to terminate the contract by giving prior notice. 4.3 Hire of Work The hire of work is a contract between a contractor and an employer whereby the contractor agrees to accomplish a specific task according to the assignment of the employer and to turn it over to the employer. The employer agrees to accept the result of this work and pay remuneration for it. Typical examples of this type of contract include construction of a house or a building, repair of a car, and private teaching and coaching. Hire of work is a bilateral juristic act which may be gratuitous or non-gratuitous. Most of the time, however, these contracts are non-gratuitous and remuneration is presumed by law if payment is justified under the circumstances.

Specific Contracts

101

Hire of work should be distinguished from other types of contracts. It differs from a hire of services contract in that the result of work, and not the work itself, is the subject matter of the contract. Unlike the employee, the contractor is not obliged to perform the work under the control of the employer. His activities are carried out independently and the instruments which are necessary for the execution of the work are to be supplied by the contractor himself unless otherwise provided by the contracting parties.15 Hire of work must be also distinguished from a sale contract: the former, unlike the latter, is concluded for the manufacture or processing of a thing by the contractor by his work. The object of a contract of sale, on the other hand, usually consist in property which already exists at the time the contract is entered into. It must be added that while the object of contracts of sale may be either fungible or infungible things, the object of hire of work contracts is always represented by infungible things. Apart from the obligation to supply tools and instruments, the contractor is bound to complete the work on time. If the work is delivered after the time fixed in the contract, or if no time was fixed, after a reasonable time, the employer is entitled to claim the reduction of the remuneration. When time is of the essence of the contract, the employer is also entitled to rescission. Under Section  592 of the Civil and Commercial Code, the contractor is bound to allow the employer or his agents to inspect the work during its execution. When it is possible to foresee with certainty 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. If there is a failure to comply with these specifications, the employer is entitled to have the work repaired or continued by a third person at the risks and expenses of the contractor. If the defects appear after the completion of the work, the contractor is only liable for defects appearing within one year of delivery of the work or within five years if the work is construction, unless otherwise provided in the contract. As a general rule, the contractor’s liability is governed by the provisions concerning sale. It must be noted, however, that according to Section 591 of the Civil and Commercial Code, the contractor is not liable if the defect of the work originates from the nature of the material supplied by the employer or from instruction given by him. Similarly, the contractor is not liable if the employer has accepted the work without reservation (Section 597, Civil and Commercial Code). 15

T. Meenaganit, op. cit., p. 189.

102

chapter 5

The contractor is generally not bound to perform all of the work personally. In fact, the contractor may appoint subcontractors to work for him in all or in part “except in the major part of the contract that requires the ability of the contractor” (Section 607, Civil and Commercial Code). The contractor, however, is still responsible for the work and any mistakes of the subcontractor. As regards the employer, the main obligation of the employer is to pay the agreed fees for the work carried out by the contractor at the times and in the manner stipulated in the contract. Such payment can be made in installments or in a single payment. Generally, 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 various parts, however, the remuneration for each part is payable at the time of its acceptance.16 In addition to payment of the fees, the employer has additional obligations arising out of the nature of the hire of work contract, which include the obligation to cooperate fully with the contractor, to warn him about defects, and to accept the work within the time agreed. A hire of work contract may terminate either by law or by contract. The first category mainly applies to termination upon completion of the contract. This means that a contract for the completion of a certain task or project ends automatically on completion of such work. Personal inability of the contractor is another reason of termination of contract by law. In this regard, Section 606 of the Civil and Commercial Code provides that the contract comes to an end when the personal qualification of the contractor is of the essence of the contract and the contractor dies, or through no fault of his own becomes incapable of carrying on the work. Termination by contract may also occur as a result of breach by the contractor or the employer for the reasons mentioned above. Furthermore, Section 605 of the Civil and Commercial Code provides that the employer is entitled to terminate the contract at his sole discretion prior to completion of the work on making compensation to the contractor for any loss resulting from the termination of the contract (i.e., termination for convenience). This means that the employer is entitled to end the hire of work contract for any reason and at any time although the contractor is not in default. Compensation may include the actual cost of the work, the estimated profits prevented on the entire contract, the interest from the date of termination until the date of payment, and other expenses such as legal fees and commissions.17

16 17

S. Sukatadsani, op. cit., p. 139. T. Meenaganit, op. cit., p. 191.

Specific Contracts

103

5 Loan Loans may be of two kinds, namely loan for use and loan for consumption. 5.1 Loan for Use The contract of loan for use is an agreement 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 within a certain period. It follows that only non-consumable things may be the object of a loan for use, such as cars, phones, books, or houses, as these can be enjoyed again and again. Loan for use is, in some of its features, very similar to a contract of gift. As in a contract of gift, a party receives a considerable pecuniary advantage from the other. Its main difference from the contract of gift is that there is no transfer of ownership of the thing loaned. The title of the property does not pass to the borrower: the borrower only has the right to use the thing borrowed.18 Delivery is an essential element of loan for use contracts. According to Section 641 of the Civil and Commercial Code, a loan for use requires delivery of the property lent to be effective and the loan does not exist until the thing lent is delivered. This means that the contract is complete upon voluntary transfer of possession of goods from the lender to the borrower. As the loan for use is a unilateral gratuitous juristic act, the Civil and Commercial Code mitigates the liabilities and obligations of the lender. Therefore, the lender does not incur any liability for defects or eviction and is entitled to unilaterally terminate the contract without fault in a number of circumstances. Specifically, the borrower is liable if he uses the property lent for purposes other than ordinary purposes or purposes contemplated by the contract. In this regard, Section 644 of the Civil and Commercial Code requires that the borrower takes as much care of the property lent as a person of ordinary prudence would take of his own property. If the borrower makes an unauthorized use of the property loaned or lets it to a third person, 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 643, Civil and Commercial Code). The lender may also terminate the loan in case of death of the borrower.19

18

19

On this point see J. Setabutr, Kwam roo bueng ton haeng got mai paeng lae panit wa duay yuem fak sap [Introduction to Civil and Commercial Law: Contract of Loan and Deposit], Bangkok, Thammasat University, 1985, pp. 84–7. T. Meenaganit, op. cit., p. 203.

104

chapter 5

As to the time of return of the property lent, if the duration is fixed in the loan contract, then the contract terminates with the expiry of that period. If no time is fixed, the property must be returned after the borrower has made use of it for the purpose contemplated by the contract. For instance, if A borrows a DVD from B and no term is provided in the loan agreement, B has the obligation to return the DVD immediately after its use. In the case that no purpose appears from the contract, Section  646 of the Civil and Commercial Code states that the lender may claim the return of the thing at any time. In the example above mentioned, A is entitled to demand restitution of the DVD on demand. 5.2 Loan for Consumption A loan for consumption is a contract by which the lender transfers to the borrower the ownership of a certain quantity of property, and the borrower agrees to return a property of the same kind, quality and quantity. By means of the loan contract, ownership of consumable things is transferred from the lender to the borrower. Thus, there is an actual alienation of the property. Loan for consumption is a real contract which requires delivery of the property to be valid. Such property may consist in money, food, or other things that can be measured, counted, or weighed. Upon delivery, the contract is concluded and the borrower is under a unilateral obligation to return the exact equivalent of the same kind and quality. The contract does not impose any reciprocal obligation upon the lender. The loan contract can be gratuitous or non-gratuitous. Parties determine the nature of the contract by deciding whether the borrower must pay interest or not to the lender. Generally, loans for consumption are classified according to the object of the contract between monetary and non-monetary loans. If a loan is made for a sum of money, the Civil and Commercial Code provides special rules with regard to the form of the contract and the interest rate. More precisely, Section 653 of the Code states that a loan of money for a sum exceeding 2,000 baht in capital is not enforceable by action unless there be some written evidence of the loan signed by the borrower. If the loan is made for an amount of 2,000 baht or less, the contract is valid and enforceable irrespective of whether it is made verbally or in writing. In order to avoid predatory lending and maintain a normal order of loans, the laws establish certain protections for borrowers. Specifically, Section 654 of the Civil and Commercial Code fixes a legal limit of 15% per year to the interest rate that can be charged on a loan. If a higher rate of interest is fixed by the contract, it is automatically reduced to 15% per year. In contrast, when interest

105

Specific Contracts

must be paid but no rate has been specified, a legal default interest of 7.5% per year is applied. To protect borrowers from improper lending practices, compound interest is not allowed unless by a special agreement in writing.20 .

6 Guarantee Pursuant to Section  680 of the Civil and Commercial Code, guarantee (or surety­ship) is a contract whereby a third person, called the guarantor, binds himself to a creditor to satisfy an obligation in the event that the debtor fails to perform it. This means that in a contract of guarantee one person assumes a secondary liability for the obligations of another person under the main ­contract. The principal obligation may be present, future or conditional, but cannot be prohibited by law, impossible, or contrary to public order or good morals. Any person who has the legal capacity to contract can conclude a valid binding contract of guarantee. It follows that an obligation resulting from a contract which is concluded under incapacity does not bind the debtor. In such a case, it cannot be validly secured unless the guarantor at the time when he binds himself is aware of such incapacity (Section 681, paragraph 3, Civil and Commercial Code). Under Thai civil law, a contract of guarantee does not require to be in writing to be valid. But according to Section  680, paragraph 2 of the Civil and Commercial Code, a contract of guarantee is not enforceable by action unless there is some written evidence signed by the guarantor. Thus a contract stipulated for charging a party with the debt, default, or obligation of another can be enforced in courts only if it is in writing and signed by the party making it or by his legal representative. This does not necessarily require, however, that the written document must include all the terms and conditions agreed upon by the parties.21 As soon as the debtor is in default, the creditor is entitled to demand per­ formance of the obligation for the guarantor. In Thai civil law, however, a ­guarantor may not be sued before the principal debtor. In fact, the Civil and  Commercial Code provides that in the case that the creditor demands 20 21

J. Setabutr, op. cit., 1985, p. 122. See C. Chantrathip, Kam atibai pramuan got mhai paeng lae panit laksana kum prakun jum nong jum num [General Principles of Civil and Commercial Law: Mortgage, Pledge, and Guarantee], Bangkok, Thammasat University, 2007, pp. 79–92.

106

chapter 5

­ erformance of the obligation from the guarantor, “the latter may require that p the debtor be first called upon to perform unless the debtor has been adjudged bankrupt or his domicile in Thailand is unknown” (Section 688). This means that the creditor must commence a suit against the principal before claiming from the guarantor. If he fails to do so, the guarantor may set up in his defense the provisions of Section 688 of the Code. Also, the guarantor has the additional advantage of requiring that the creditor’s claims should first be recovered from the debtor’s assets; but to do this, he must prove that the debtor has  the means to perform the obligation and that execution would not be difficult. Furthermore, it is important to note that special provisions apply to those cases where the underlying obligation is secured by several guarantees. In fact, Section 690 of the Civil and Commercial Code states that if the creditor holds a real security belonging to the debtor which was created before the date of the guarantee or concurrently with it, he must, on request of the guarantor, have the obligation performed first out of the real security. The guarantor who has performed 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 guarantee. He is also subrogated to the rights of the creditor against the debtor. However, if the guarantor performs the obligation without informing the debtor and the debtor, in ignorance of the fact, performs the same obligation, then the guarantor has no right of recourse against the debtor. In such case, the guarantor may only have an action for undue enrichment against the creditor (Section  696, Civil and Commercial Code). A contract of guarantee is terminated by any act which extinguishes the underlying obligation and by any material modification of the underlying contract. This is expressly provided in Section 698 of the Civil and Commercial Code which states that “The guarantor is discharged as soon as the obligation of the debtor is extinguished by any cause whatsoever.” 7 Mortgage Mortgage (or hypothec) is a real security over immovable property which grants the creditor the right to be paid out of the property with priority over the remaining ordinary unsecured creditors regardless of whether or not the ownership of the property has been transferred to a third person. It is defined under the Civil and Commercial Code as a contract whereby a person, called the mortgagor, assigns a property to another person, called the mortgagee, as

Specific Contracts

107

security for the performance of an obligation, without delivering the property to the mortgagee (Section 702). This implies that a mortgage can be created only if the underlying debt is valid. It is not required, however, that the principal obligation should exist at the time of the creation of the contract. A person whose right of ownership over a property is subject to a condition may mortgage the property subject to such condition.22 The contract of mortgage affects the whole or a part of a property for the security of an engagement without divesting the owner of his title. Specifically, mortgage relates to immovable property as well as some kinds of movable objects such as ships of five tons and over, floating houses, vehicles, and other movables with regard to which the law may provide registration. Only the lawful owner of an immovable property is entitled to mortgage the property and secure the performance of an obligation owed to another person. The contract is void if it is concluded by a grantor that is not the lawful owner of the property at the time of its creation. The property object of the mortgage, however, may belong to the principal debtor or a third party who may decide to use his property as security for the performance of an obligation by another person. In order to be valid, the contract of mortgage must meet formal requirements. According to Section 714 of the Civil and Commercial Code, a contract of mortgage must be made in writing and registered by the competent official. If it is not concluded in the correct form, it is void, and of no effect in law. The main purpose of this section is to protect third persons who might subsequently be induced to deal with the mortgagor. Upon failure of the debtor to perform the obligation, the mortgage becomes legally enforceable. According to Section  728 of the Civil and Commercial Code, the mortgagee must notify the debtor in writing to perform his obligation within a reasonable time which cannot be less than 60 days from the date the debtor has received 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. If there is surplus money remaining after the auction proceeds are distributed to the mortgagee, the mortgagor is entitled to receive it (Section  732, Civil and Commercial Code). In contract, when the net proceeds of the auction are less than the amount due, the debtor of the obligation is not liable for the difference (Section 733, Civil and Commercial Code). In certain circumstances, the mortgagee may decide to claim foreclosure of the mortgaged property, instead of sale by public auction. Foreclosure is available 22

T. Meenaganit, op. cit., pp. 229 et seq.

108

chapter 5

only if there is no other mortgage or preferential rights on the same property, the debtor has failed to pay interest for five years, and the mortgagee has satisfied the court that the value of the mortgaged property is less than the amount due. 8 Pledge Under Thai civil law, pledge is a means of securing the performance of an obligation by which a creditor is entitled to have the pledged property in priority to other creditors in case of default of payment. Section 747 of the Civil and Commercial Code defines a pledge as a contract whereby a person, called the pledgor, delivers to another person, called the pledgee, a movable property as a security for the performance of an obligation. Pledge is a real contract and requires delivery before it can become effective. The movable thing which is object of the pledge can be delivered to the creditor or to a third party (Section 749, Civil and Commercial Code). There is no particular formal requirement that is imposed by law on pledge. It may be written, verbal, or implied by the conduct of the parties. According to the provisions of the Civil and Commercial Code, the pledgee’s principal right is to retain all the pledged property until he has received full performance of the obligation and accessories (Section 749). Correspondingly, his main duty is 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. Under the contract of pledge, the pledgor has the right to reclaim the property on payment of the debt. If, without the consent of the pledgor, the pledgee uses the pledged property or lets a third person have custody over it, he is liable for any loss or damage, even caused by force majeure, unless he proves that the loss or damage would have happened in any case.23 When the debtor breaches the obligation, the pledgee is entitled to foreclose on the pledged property. Specifically, the pledgee must first notify the debtor in writing to perform the obligation within a reasonable time, specified in said notice. If the debtor fails to perform the secured obligation, the pledgee may sell the pledged property through a public auction. On enforcement of the pledge, the pledgee must appropriate the net proceeds to the extinction of the obligation and accessories and must return the surplus to the pledgor

23

C. Chantrathip, op. cit., p. 123. On this topic, see also T. Pohtong, Kam banyai got mai paeng lae panit wa duay pragun book kon lae sup [General Principles of Civil and Commercial Law: Guarantee and Pledge], Bangkok, Thammasat University, 1984, p. 84.

Specific Contracts

109

or any person entitled to it. By the same logic, if the amount received from the sale of the pledged property is less than the amount due, the debtor of the obligation remains liable for the difference. The contract of pledge expires when the pledgee returns the property to the pledgor, the debt for which it has been granted has been paid in full, or the obligation secured is extinguished otherwise than by prescription. Upon complete and full satisfaction of the debt, the pledgee must return the property to  the debtor, who is bound to reimburse the pledgee for any expenses which have been necessary for the preservation or maintenance of the pledged property unless otherwise provided in the contract (Section  762, Civil and Commercial Code).

chapter 6

Delictual Obligations The second main category of obligations is that which arises from non-contractual liability for damage, i.e., delicts or civil injuries. A delict may be defined as a breach of legal duty which gives rise to action in favor of the victim. In this area of law, as also in many others, Thai rules are modeled upon the German Civil Code (Bürgerliches Gesetzbuch, or BGB) which grants the right to compensation at the suit of the injured party in case of unlawful infringement of a right. The purpose of delict law is to provide compensation to those who have suffered losses or injuries because of the wrongful conduct of others. With respect to this, Section 420 of the Code states that “A person who, willfully or negligently unlawfully injures the life, body, health, liberty, property or any right of another person is said to commit a wrongful act and is bound to make compensation therefore.” This means that every culpable act that causes damage to another either by commission or omission obliges the person who did it to compensate for it. In this way the legislator wishes to prevent harm as a result of unsafe behavior.1 Hence, if a person knowingly causes damage to another, he must compensate the injured party. To take a simple case as an example, it is the obligation of a lifeguard to ensure the safety of the swimmers at the pool, supervise the pool area, and instruct people how to swim. If he illegally fails to monitor and observe the pool area for safety, he is answerable in damages resulting from negligence. The wrongdoer is liable towards anyone who has suffered damage by reason of the wrongful act. There are also cases where a person is strictly liable or absolutely liable, even though the damage to the victim occurred without intention or negligence on his part. For convenience, the issues related to special forms of liability other than liability for fault (fault liability) will be discussed in the next part of this chapter. Any person who is affected or injured by a wrongful act may bring an action for delict to recover damages by way of compensation. Thus, an artificial person is entitled to sue a wrongdoer in a court for unlawful act or omission which endangers its property or its reputation and may affect its business. In litigation, minors are represented or assisted by their parents or surviving parent, or, in the absence of these, by the legal representatives. Incompetent persons are 1 See J. Setabutr, Lak got mai paeng laksana lamerd [Principles of Civil Law: The Law of Delict], Bangkok, Thammasat University, 1980, p. 78.

© koninklijke brill nv, leiden, ���6 | doi 10.1163/9789004308923_007

Delictual Obligations

111

represented by their guardians while quasi-incompetent persons must obtain the consent of their curators for entering an action in court or undertaking any legal proceedings (Section 34, Civil and Commercial Code). The claim for compensation of pecuniary damages arising out of a delict may be assigned or inherited upon the victim’s death to heirs or personal representatives. In contrast, the right to compensation for non-pecuniary loss is regarded as a personal right. This means that it is not transferable and does not pass to the heirs of the injured person unless it has been acknowledged by contract or an action on it has been commenced before the death (Section 446, Civil and Commercial Code). As discussed in Chapter 2, the capacity for committing wrongful acts is governed by different rules than the capacity for juristic acts. Any person may be liable for a wrongful act, even if he did not have sufficient intelligence to understand and appreciate the consequences of his actions. According to the Civil and Commercial Code, a person, even if incapacitated, on account of minority or unsoundness of mind, is liable for the consequences of his wrongful act (Section  429). However, on closer inspection such a difference lacks practical relevance. Under Thai law, neither incapacity nor minority affects the liability for delicts, but as a delict must be caused either willfully or negligently, then it is very unlikely that incapacitated persons may be held liable for an injury they have caused. In other words, it would be very difficult to prove that a minor or an incapacitated adult had the knowledge and experience necessary to foresee the risks or dangers involved with the action. For example, suppose a 5-year-old girl and her mother enter a toy shop to buy a birthday gift for a friend. While walking inside the shop, the girl carelessly breaks a lamp. In this case, it is hardly plausible that a 5-year-old girl would be held liable for the consequences of her conduct. As regards the wrongdoer, there are also cases of dual and shared liability. Specifically, any person who has in any way aided, encouraged, instigated, or assisted the committing of a wrongful act is deemed to be a joint actor (Section 432, paragraph 2, Civil and Commercial Code). Suppose, for example, that A opens a grill restaurant in Bangkok but his business is not as lucrative as he had hoped. A’s brother, B, suggests using cheap and toxic ingredients in order to reduce costs and maximize profits. If customer C is taken to the local hospital for food poisoning after eating the contaminated food, then A and B are considered to be joint wrongdoers. The example involves two actors, A and B, who have committed the wrongful act together and have thus contributed to the damage’s occurrence. Joint liability also applies to those cases where several persons assume liability for a separately committed wrongful act leading to one damage to the same victim (Section 432, paragraph 1, Civil and Commercial Code). To take a

112

chapter 6

simple case as an example, A buys a dog from a breeder for 40,000 baht. One afternoon, while A is taking his dog for a walk in a park, a motorcycle negligently hits the dog at high speed. A second motorcycle following closely behind the first collides with the dog causing the animal’s death. The drivers of the motorcycles are held liable in solidum because they jointly committed an unlawful act. In other words, each joint wrongdoer is bound to make compensation for the aggregate damage done by all. Upon payment of the claim by any one of said wrongdoers, the others are automatically discharged. The same principle of shared liability applies to other situations. As will be seen in detail in later sections, principals and employers are liable for the wrongful acts of their agents or employees authorized by them or committed within the scope of their employment. This rule applies without regard to whether the principal or the employer personally breaches a duty. By the same token, parents are jointly liable for their children, unless they can prove that proper care in performing their duty of supervision has been exercised (Section 429, Civil and Commercial Code). As wrongful acts often cause harm to persons other than the party directly injured, the Civil and Commercial Code extends the right to sue and claim compensation to different categories of persons. Firstly, the person who pays for the funeral and other necessary expenses for the victim of a wrongful act is entitled to claim compensation from the wrongdoer. Section 443 of the Civil and Commercial Code also adds that in the case that the death does not ensue immediately, compensation includes all the expenses for medical treatment incurred by a victim who later dies. Secondly, a person who has a right of maintenance from the deceased killed by a wrongful act is entitled to claim compensation. For instance, parents may file a lawsuit against the wrongdoer for the wrongful death of their child and a child may file a lawsuit for the wrongful death of his parents. A wife may seek pecuniary compensation for her husband’s death. This also includes the right of maintenance of the unborn child who has been deprived of his legal support until such a time as necessary, taking into account the probable length of life of the deceased victim. Thirdly, any party entitled to the services of the victim of the wrongful act may claim compensation with regard to the loss of such services.2 Thus, if the injured person was bound by law to perform a service in favor of a third person in his household or industry, the person bound to make compensation must compensate the third person for the loss of such service. This rule applies in respect to those wrongful acts causing death, causing injury to the body or health of another, or deprivation of liberty (Section 445, Civil and Commercial Code). 2 T. Meenaganit, op. cit., p. 103.

Delictual Obligations

113

It must be pointed out that each type of damages which can be claimed by the categories of persons above mentioned in the case of the death of the victim of a wrongful act is completely distinct from the claims which the decedent’s heirs may have against the wrongdoer. In other words, each type of non-pecuniary damages can be claimed separately. For instance, a right to compensation for the loss of services or loss of maintenance may be enforced by third persons concurrently with the claims of the heirs regarding loss of income and expenses for medical treatment during the period preceding the victim’s death. The fact that the damage to the secondary victims of the wrongful act is considered to be a separate delict which forms the basis of an independent claim for compensation against the wrongdoer in separate proceedings would per se imply that the contributory negligence of the primary victim does not disallow or decrease the claims of such secondary victims; in this regard, however, the Civil and Commercial Code explicitly states that contributory negligence applies indistinctly to the claims of primary victims as well as the claims of secondary victims or their heirs (Section 442).3 Actions arising out of delict are prescribed by the lapse of one year from the day when the wrongful act and the person bound to make compensation became known to the victim, or ten years from the day when the wrongful act was committed. However, if the damages are claimed on account of an act punishable under the criminal law for which a longer prescription is provided, the longer prescription will apply (Section 448, Civil and Commercial Code). Before discussing particular instances of wrongful behavior, we will analyze the theory of delictual liability in general. In Thai delict law, the subjective elements of a wrongful act may either be constituted by negligence or willful misconduct. Apart from a few exceptions, delictual causes of action are always based on fault. 1

Elements of Delict Law

Any act or omission which damages some protected interest of the victim and gives rise to a liability is known in Thai law as a wrongful act. Although a wrongful act does not necessarily cause pecuniary damage to the victim, it always leads to a claim for pecuniary compensation. In some cases the wrongdoer 3 See in particular J. Thingsapati, Kam atibai pramuan got mai paeng lae panit banpa song wa duay moon haeng nee [General Principles of Civil and Commercial Law: Law of Obligations], Bangkok, Thammasat University, 1983, p. 177.

114

chapter 6

may be held liable for damages arising from civil wrongs only if a pecuniary loss is established; in other cases the liability may be pleaded independently from the evidence of a pecuniary loss; in other cases again pecuniary damage may be established but a claim for reparation cannot be brought because the act or the omission does not constitute a violation of the law. Thus a person may be held liable for willful or negligent injury to another’s right even in the absence of pecuniary damage. In the case of injury to the body or health of another, or in the case of deprivation of liberty, the wrongdoer is liable for non-pecuniary damages, i.e., he must compensate the victim for the damages which are not readily quantified or valued in money, such as physical pain, suffering, loss of enjoyment of life, and disfigurement. In other circumstances, a person may be held liable for willful or negligent injury to another’s right only if a pecuniary loss is established. This liability regime applies to patrimonial damages, i.e., the reduction in the financial position of the victim of the injury which results from the wrongful act. A wrongful act may also lead to a claim under both regimes of liability and such claims may be brought in the same proceeding or separately. In all these cases, the assessment of the loss is left entirely to the judgment and discretion of the court. This means that the court will determine the manner and the extent of the compensation according to the circumstances and the gravity of the wrongful act (Section 438, Civil and Commercial Code). Exceptionally, the damages awarded are punitive. Punitive (or exemplary) damages are damages other than compensatory or nominal damages, imposed to punish the wrongdoer for particularly reckless, outrageous, or malicious misconduct, and to deter similar conduct in the future. For example, under the Liability for Damages Arising from Unsafe Products Act, B.E. 2551, punitive damages can be awarded if the entrepreneurs knew the products were unsafe, failed to discover the products were unsafe because of gross negligence, or failed to take proper action to prevent damage after learning that the products where unsafe.4 Under Section 420 of the Civil and Commercial Code, the injury must be unlawful. Hence, there is a common element to both regimes of liability: in order to give rise to compensation, the action (or omission) must be in violation of a legal duty owed by the wrongdoer to the victim. If there is no obligation there is no right, and, of consequence, no violation of right. When the 4 At present there is no official English version of the Liability for Damages Arising from Unsafe Products Act, B.E. 2551. English translations can be found in various sources, where the translations differ. A recommended English translation can be found at: http://www.ctlo .com/mediacenter/Publications/2011-03-28-ProductLiability-En-WN.pdf.

Delictual Obligations

115

wrongful act is willful, the assessment of liability is easy because the classes of willful wrongs are clearly defined. Conversely, courts face more difficulties when they have to determine the negligence of individuals and the liability they face as a consequence of their action. Legal negligence is difficult to define and attempts to comprehensively delimit its denotation have not proved very satisfactory. The degree of care which a reasonable person is bound to take depends upon the situation of the parties and the circumstances of each particular case. Under Thai civil law, negligence can be expressed as a failure to exercise that degree of care, prudence and foresight that a person of ordinary diligence would exercise under like circumstances.5 If a person’s behavior falls below the relevant standard of care established by the legal system for the protection of others against unreasonable risks, a wrongful act is said to have been committed. It may be explicitly fixed by a mandatory rule provided for by the law or generally imposed under the circumstances of the situation. It has been reaffirmed by the Supreme Court in several decisions that liability for unintentional damage depends upon the element of negligence. Individuals are required to observe in their interactions with others the degree of care which a reasonable, prudent person would demonstrate. The law does not provide any direct definition of reasonable person and the existing definitions are mostly based on the views of academics, juristic professionals, or other sources outside the legal doctrine. The reasonable person (also known as person of ordinary prudence) is a hypothetical person that sets the legal standard for determining whether someone’s actions (or inactions) can be considered lawful or not. The reasonable person is an average person in terms of exercising the care, skills, and judgment in conduct that is required by society from its members in order to protect individual and common interests. The reasonable person standard holds that every person has a duty to behave as a reasonable person would in the same situation, i.e., duty of care. The conduct of a reasonable person is used as a comparative standard for determining liability. The reasonable person standard encompasses an objective test in which the conduct of the defendant is compared to the conduct of the reasonable person under the similar circumstances. The duty of care sets the limit where peoples’ actions do not infringe the interests of others. Failure to exercise reasonable behavior leads to a breach of duty of care and creates liability if it results in harm to others. The person of ordinary prudence standard serves as a means to determine whether the duty of care is breached. The act may be performed carefully and still be a dangerous 5 P. Poonyapun, op. cit., pp. 35–6.

116

chapter 6

act that inflicts injury. The court analyses how a person of ordinary prudence would have acted in a particular situation and evaluates the subjective awareness of the actor about the risk of harm with regard to reasonable person standard. If it is clear that the harm would have been foreseen by a reasonable person, the duty to take care is defined and it only remains to determine whether failure in that duty has caused damage. It must be pointed out that, in principle, mere omission does not constitute negligence.6 Delict law does not impose liability for nonfeasance or mere omission to do something for another person. However, in some specific circumstances there may be a prior conduct which gives rise to a positive obligation to act. For example, a doctor is under no obligation to operate on every patient who requests treatment, but once he agrees to perform the operation, he must follow normal medical procedures and practices. This means that the doctor may be held liable for damage in case of omission to inform, examine, or provide beneficial treatment to his patient. Similarly, a town in Thailand is not obliged to repair a bridge or road within its township, but if it decides to do so it must take all reasonable precautions to prevent the occurrence of any injury to person or property, otherwise it would be liable to an action for negligence. As regards the burden of proof in an ordinary negligence case, the general rule is that the plaintiff must allege that the accident was caused by a wrongful act on the part of the defendant. He must prove that the damage was caused, in whole or in part, by an act or omission of the defendant. There must be proof that the defendant acted without the degree of care that a reasonable person would have used under similar circumstances. In some circumstances, however, the facts speak for themselves and the court may infer that negligence has occurred after excluding other reasonably likely causes for the damage. Even if direct evidence of causation is lacking, the victim can file a lawsuit and seek compensation on the basis of well-defined circumstantial evidence. This is the case, for example, of a brick which falls from a building onto the head of a passer-by. According to Section  436 of the Civil and Commercial Code, an occupier of a building is responsible for damage arising from things which fall from it or are thrown into an improper place. It follows that circumstantial evidence of the fact which allegedly caused the damage is considered to be sufficient to make a case legally adequate. As a consequence of this presumption, the defendant is required to rebut the prima facie evidence of the wrong by explaining the reasons for the accident and showing that in the circumstances he was not negligent. To take the same example as above, the occupier of the building may rebut the presumption of negligence by proving 6 J. Thingsapati, op. cit., 1983, p. 127.

Delictual Obligations

117

that he has taken all the necessary measures to prevent the bricks from falling down into the street. Specifically, the defendant must give evidence for the purpose of showing presence of reasonable care or absence of negligence. But as has often been said by the courts, such presumption does not lead to a shift of the burden of proof. In other words, the burden is on the plaintiff to produce sufficient evidence to prove its case. A common defense in court in delictual cases is that the damage was wholly or partly caused by an act or omission of the plaintiff. In this regard, Sections 223 and 442 of the Civil and Commercial Code provide that if the injured party has contributed to the injury through his own fault, the obligation to compensate and the extent of the compensation to be made depends upon the circumstances, especially upon how far the injury has been caused mainly by the one or the other party. A person may, in appropriate cases, be relieved of liability when an act is considered justifiable. Under the Civil and Commercial Code, there are instances of damage suffered from justifiable acts of self-defense or self-help which do not give any right of action to the party who suffers from their effects. In other words, these acts though harmful to others are not unlawful because no legal right is infringed. To take a simple case as an example, no action lies against a judge for anything done or said by him in the honest exercise of his judicial office. Therefore the damage may be suffered from a justifiable act without breach of a legal right. The result would not be the same if the judge acted corruptly, dishonestly, maliciously, or with intent to injure: this immunity would not apply and he might be liable. Another example can be found under Section 449 of the Civil and Commercial Code which states that a person who, acting in lawful defense or under a lawful command, has caused injury to another person is not liable to make compensation. Acts or omissions of this type do not qualify as wrongs. Similarly, if a person damages or destroys a thing in order to avert an immediate common danger, he is not liable to make compensation, provided the damage done is not out of proportion to the danger (Section 450, Civil and Commercial Code). This is to say that when an act is committed with a lawful excuse or justification, this precludes legal liability in delict law even though it causes injury to another.7 The classification of delicts is a question which generally raises some difficulty. In the next sections we will attempt to examine the main principles of Thai delict law imposing liability for damage caused by unlawful acts and illustrate some special subsidiary principles dealing with particular instances of wrongful behavior. 7 P. Poonyapun, op. cit., p. 88.

118 2

chapter 6

General Rules of Liability

Any wrongful act, committed willfully or negligently, which infringes an absolute right and causes injury or damage to another may result in liability. Such absolute rights, which are not protected by specific statutory provisions, include the right to life, the right to bodily integrity, the right to health, the right to liberty, the right to property, and any other right similar to the right to property. By contrast, relative rights do not fall under this category. For instance, suppose A enters into a contract with B for rental of a house. If, subsequently, C forces A to break his contract with B, this does not entitle B to file a lawsuit against C for damages. A violation against an absolute right gives rise to a civil suit against the wrongdoer unless an act is committed in pursuance of an authorization by a competent public authority (e.g., direct expropriation, nationalization, confiscation by public authority or limitation of liberty for public order), is based on a right of private defense expressly provided by law (e.g., the right of selfredress, the right of self-protection, or the right of self-defense) or takes place with the consent of the victim (e.g., a surgical operation with the consent of the patient). The consent of the victim, however, does not exculpate the defendant if the action is against public policy or public morals. The main categories of delicts are expressly listed under Section 420 of the Civil and Commercial Code, which states that “a person who, willfully or negligently, unlawfully injures the life, body, health, liberty, property or any right of another person is said to commit a wrongful act and is bound to make compensation.” The highest degree of legal protection is provided by the law to the right to life and the right to health. Such protection includes those wrongs to the individual grounded on a no-fault liability regime for harm caused from the distribution of defective products, abnormally dangerous activities, and damage done by the representatives of an artificial person or the person empowered to act on behalf of it.8 Under Thai delict law, the right to bodily integrity and the right to liberty are of paramount importance. Willful or negligent violation of these rights is generally considered as unlawful in the absence of a valid justification. To this category may be assigned all those wrongful acts which are generically called malicious arrest, assault, false imprisonment, and battery. Independently from the willfulness or negligence of the wrongdoers, the party injured may recover damages as determined by the court, in its discretion, depending on the nature of the case. 8 J. Setabutr, op. cit., 1980, p. 92.

Delictual Obligations

119

It must be pointed out that an action to recover damages for fatal injuries may also include those injuries which the plaintiff has sustained as a consequence of the wrongful act. This is the case, for example, of a claim for deprivation of maintenance of the decedent’s dependents. A wife may file a legal lawsuit against the wrongdoer for the loss of the services of her husband to which she was entitled by law. A daughter has a claim against the wrongdoer if she has been deprived of her right to maintenance as a result of the parents’ death. In all these situations it must be proved that the victim was under a legal obligation to provide maintenance and it is essential for the plaintiff to show in his pleading the inability to support himself without assistance from the person wrongfully harmed or killed. With respect to the claims for damages based on loss of services or maintenance, Section  445 of the Civil and Commercial Code states that “In the case of causing death, or of causing injury to the body or health of another, or in the case of deprivation of liberty, if the injured person was bound by law to perform service in favor of a third person in his household or industry, the person bound to make compensation shall compensate the third person for the loss of such service.” The quantum of damages is the estimated loss directly and naturally resulting from the wrongful act having regard to the support the plaintiff was deprived of as a consequence of the injury or the death. If the claim relates to the loss of the victim’s services, the measure of the loss must be determined on the cost of replacing the services that would have been rendered to the plaintiff. As regards wrongful acts against property, courts recognize this category of delictual responsibility in the case of damage which causes deterioration in the value of the property and award monetary compensation for all actual and necessary expenses incurred by reason of the wrongful act. When a person unlawfully infringes another’s right of ownership or otherwise harm the owner’s right to exclusive possession, use and enjoyment of that property, then the innocent party may have a claim against the wrongdoer. Examples of delicts infringing these interests include damage to property, trespass, detinue, and conversion. With respect to trespass on land, the interference will be actionable only if it results in actual harm or interference with the owner’s use of the land. It must be direct and immediate, and it must be committed in denial of the rights of the owner. In other words, only positive acts can constitute trespass; a mere omission does not usually amount to trespass and does not give rise to delictual liability under this heading. This provides another clear illustration of the principle that real damage is necessary to support a delictual action and entitles the innocent party to recover damages from the other party.

120

chapter 6

It must be observed that there are a number of rules regulating ownership  which already provide liabilities and remedies for violations against ­property. For example, where harm is caused to adjacent property through branches of trees which overhang the neighbor’s field (Section 1346, Civil and Commercial Code) or through roots of trees which grow into the neighbor’s land (Section 1347, Civil and Commercial Code) or through excavation work (Section 1335, Civil and Commercial Code). Similarly the Civil and Commercial Code provides that a plot of land may not be excavated or overloaded so as to take away the support of the neighboring plot of land unless some other method of support is provided (Section 1343). The courts are reluctant to extend delictual liability for pure economic loss caused by acts of negligence, as effective and adequate remedy may be found under the law of contracts. However, unlawful interference with economic interests may give rise to liability for pure economic loss under particular circumstances. Examples of economic harm include lost profits, unfair competition, nondisclosure, conversion, nuisance, trespass, misrepresentation, and interference with economic opportunity. 3

Special Rules of Liability

So far we have considered the general rules of delictual liability which are provided under Section 420 of the Civil and Commercial Code. They are based upon willful misconduct and negligence and cover nearly the whole range of delict law. There is a second category of delictual liability which may give rise to a claim for damages. It includes any wrongful act done willfully or negligently that is contrary to an express provision of law and causes damage to another person. In this regard, Section 422 of the Civil and Commercial Code states that if damage results from an infringement of a statutory provision intended for the protection of others, the person who so infringes it is presumed to be at fault. The injurious conduct underlying the claim for damages for breach of a statutory obligation must be of the nature and character which the statutory provision was designed to prevent and must be the direct consequence of the violation of the statute. In cases where a statutory provision creates a special duty and prescribes a special remedy for the breach of the statutory duty, such remedy is exclusive. Therefore, no other remedy can be resorted to for the enforcement of the duty than that pointed out by the statute.

Delictual Obligations

121

3.1 Defamation An important rule of delictual liability is laid down for the protection of a person’s reputation and the integrity of his name. The overall category for these delicts is defamation. Pursuant to Section  423 of the Civil and Commercial Code, a person who untruthfully asserts or circulates a fact that is qualified to endanger the reputation or the name of another or his earnings or prosperity in any other manner, is bound to make compensation for any damage which is occasioned by such acts. In principle, there are two specific causes of action within defamation: slander and libel. Slander is the use of an oral statement to injure the reputation of another person while libel is the use of written communication or other permanent form (such as painting, printed word, photograph, effigy, or digital recording) to cause the same type of damage to another person. As a practical matter, however, there is no significant difference between slander and libel, and Thai delict law does not distinguish written defamation from spoken defamation; both cases are regarded as wrongful acts which injure the reputation of a person.9 The actual intention to injure is not required for liability.10 The Civil and Commercial Code provides that the defendant may be held civilly liable if he knew or should have known by the exercise of reasonable care that the statement was false and of a defamatory nature. In order to bring a successful action, the plaintiff has to prove that the statement complained of is made in a manner that will reasonably and clearly be perceived to be of defamatory character. In other words, if the communication would be considered defamatory by a reasonable person, then the intent to injure is presumed and it is no defense to an action for defamation that the defendant did not intend to defame the plaintiff. Courts do not inquire about the subjective meaning the use of the words was intended to convey, but instead focus on whether a reasonable person would find the statement offensive. It is no defense to an action for defamation to declare that the communication was not in fact understood in a defamatory sense or that the defendant did not know that the communication was false. The essential element is assertion, publication, distribution, or circulation of defamatory matter regarding the plaintiff without any justification or excuse. For example, the injury of defamation is committed when an employer falsely accuses his employee of selling drugs or a student maliciously states that his teacher is guilty of dishonesty in office. Also a message which is scrawled in graffiti on a wall may ground an action for defamation. 9 10

J. Thingsapati, op. cit., 1983, p. 201. P. Poonyapun, op. cit., p. 63.

122

chapter 6

In the case that a statement is defamatory, it is prima facie actionable without proof of special damage. The main defenses to an action for defamation other than consent of the party defamed include privilege, fair comment, and justification. It is generally held by the courts that privilege constitutes an absolute defense against defamation. Thus statements in parliament, documents published under the authority of the parliament or its committees, as well as the publication of a document issued for the information of the public by or on behalf of the government are covered by absolute privilege. Another defense to avoid liability is fair comment. Fair comment entitles a person to express an opinion or otherwise comment on matters of public interest. The meaning of the expression “matter of public interest” varies depending on the circumstances and has been interpreted widely by the courts as applying to works of art, books, songs, poems, paintings, and movies. Here, the defendant’s communication must be a comment or a statement of opinion to be deemed fair and in good faith. As regards truth (technically referred to as justification), it consists in demonstrating that the imputation conveyed in the communication complained of is in fact true, even if some details may be untrue. In other words, if the defendant can demonstrate that the allegedly defamatory communication is substantially true, then the plaintiff cannot have suffered any damage to his reputation or to the integrity of his name.11 The remedy that a person could seek in case of defamation would be not only damages but also public rehabilitation. With regard to this, Section 447 of the Civil and Commercial Code provides that against a person who has injured the reputation of another, the court may, on the application of the injured person, “order proper measures to be taken for the rehabilitation of the latter’s reputation, instead of, or together with, compensation damages.” 3.2 Unfair Competition Unfair competition is a commercial delict which has gained prominence in recent years. It refers to the misappropriation of a competitor’s commercial advantage in violation of the provisions of the law. The Trade Competition Act, B.E. 2542 (1999) is the most important source of legislation regulating competitive interactions between business operators and establishing a regime of liability for damage suffered by misleading and deceptive practices in Thailand.12 11 12

Ibid., p. 123. There is no official English version of the Trade Competition Act B.E. 2542 (1999) at present. English translations can be found in various sources, where the translations differ. A recommended English translation is available at: http://www.apeccp.org.tw/doc/ Thailand/Competition/thcom2.htm.

Delictual Obligations

123

The Trade Competition Act provides remedies in the case where a business operator enjoying market domination unreasonably fixes prices of goods or services or, more generally, intervenes in the operation of another person’s business without justifiable reasons. Under Section 27 of the Act, a business operator is forbidden from entering into an agreement with another operator to commit any act leading to a situation of monopoly, reduction of competition, or restriction of competition in the market of any particular goods or any particular service. This may be done, for example, by fixing selling prices, restricting the sale volume, fixing geographical areas in which each business operator may purchase goods or services, or by entering into an agreement in order to have market domination or market control. Furthermore, Section 26 of the Trade Competition Act states that business operators are forbidden to carry out business mergers which may result in monopoly or unfair competition. This rule may apply to a claim for damages for wrongful act in case of a merger made by a producer with another producer, by a distributor with another distributor, or by a service provider with another service provider. In the event of violation of these rules, a competitor who sustains damage from unfair competition practices may obtain an order requiring the suspension, termination, or rectification of the unlawful act without regard to the wrongdoer’s negligence or willfulness. In such cases, the competitor may also decide to claim compensation for damages caused by the infringement of competition law (Section 31, Trade Competition Act). If the business operator fails to comply with the order requiring the suspension, termination, or rectification of the unlawful act, he is liable for imprisonment for a term of one to three years or to a fine of two to six million baht, and to a daily fine not exceeding fifty thousand baht throughout the occurrence of such violation. Any person or association for consumer protection suffering damage in consequence of unfair competition is also entitled under the law to initiate an action for claiming compensation on behalf of consumers or members of the association, as the case may be. 3.3 Liability for Damage done by Animals A person’s liability for damage done by his animals is also governed by special rules. If an animal causes any harm to persons or property through its own volition or movement, the owner, possessor or keeper of the animal is liable for any damage caused by it. For example, if A’s dog bites B, A is liable for any damage which may result from his dog’s bite. To take another example, A avoids running over B’s cat that lies in the middle of the road and steers to the right. A’s car is pulled off the road, rolls and hits a power line pole. The owner, possessor, or keeper of the cat is liable for the mischief done by his own animal to A.

124

chapter 6

Liability may be mitigated or excluded by proving that the actor has exercised due care under the circumstances to prevent damage. In this regard, Section 433 of the Civil and Commercial Code states that if damage is caused by an animal, the owner, or the person who undertakes to keep the animal on behalf of the owner, is bound to compensate the injured party for any damage “unless he can prove that he has exercised proper care in keeping it according to its species and nature or other circumstances, or that the damage would have been occasioned notwithstanding the exercise of such care.” Besides, it must be noted that the person responsible for the wrongful act may exercise a right of recourse against the person who has wrongfully excited or provoked the animal or against the owner of another animal which has caused the excitement or provocation.13 3.4 Liability of Supervisors The Civil and Commercial Code expressly imposes a presumption of liability upon persons who are under a legal duty to supervise others due to their minority or their mental or physical condition (Section 429). This is to say that parents of minors, as well as guardians of incapacitated persons or persons of unsound mind, are jointly liable with them for all damage unlawfully inflicted upon any third party. For example, if a father forgets a loaded shotgun on the table and the son uses it, the father may be held liable with his son for the harm inflicted to a third party. The supervisor’s liability for the wrongful acts committed by the person requiring supervision is not strict. To rebut this presumption the supervisor has to show that he has exercised proper care as to the duty of supervision. Proper care is a standard of conduct which is imposed upon all individuals in the same circumstances. The purpose is to apply the standard objectively, instead of attempting to assess the degree of fault according the individual capabilities of the parties involved. If a supervisor is held liable for failing to act according to the conduct determined by the duty of care standard, then he will be answerable for the damage caused under his supervision.14 The same regime of liability applies to teachers, employers, and other persons who undertake the supervision of an incapacitated person, either permanently or temporarily (Section  430, Civil and Commercial Code). Thus the supervisor is jointly liable with the person requiring supervision for any wrongful act committed by the latter while under his supervision, provided that it can be proved that he has not exercised proper care. If it cannot be proved that 13 14

J. Thingsapati, op. cit., 1983, p. 224. J. Setabutr, op. cit., 1980, p. 126.

Delictual Obligations

125

the supervisor did not comply with his supervisory duty, then he will be relieved of any liability. Classic examples include liability of classroom teachers, school administrators, and coaches for damages suffered by students engaging in sports activities, damages arising in schools when children play in a schoolyard during the break time, or injuries caused by a failure to adequately supervise a pool during hours that swimming is allowed. 3.5 Circulation of Vehicles An important area for civil liability relates to the circulation of vehicles. According to Section 437 of the Civil and Commercial Code, a person is responsible for injury caused by the vehicle which is in his possession or control, unless he proves that the injury results from force majeure or the fault of the injured person. The presumption of fault applies for the benefit of the victims of accidents and may serve a useful function in ensuring compensation to the injured parties for their damages. Thus if a person willfully or negligently creates a traffic accident and causes damage to third parties, a presumption of liability is applied in favor of the victim. It must be pointed out, however, that the system of compulsory insurance to cover liability arising out of motor vehicle accidents and protect third parties who are injured by the motor vehicle, has somewhat reduced the importance of the civil liability in this area. In the event of an accident, the victim may claim compensation for damage, loss or injury directly from the insurer. 4

Strict Liability

Several sections of the Civil and Commercial Code provide rules of risk-based liability in which neither willfulness nor negligence is required in order to constitute a civil wrong. Strict liability is a particular regime of civil liability for reasons other than fault. The law may impose an absolute duty not to cause injury to protect a particular class of persons. 4.1 Defective Products In most cases, an entrepreneur is liable for its defective products regardless of whether he intended to cause a damage to third parties or the damage was caused negligently. Under the Liability for Damages Arising from Unsafe Products Act, B.E. 2551, every producer is liable to the injured person for the damage arising from unsafe products that have been sold to the consumer, whether or not such damage is caused by a willful act or negligence of the producer (Section 5).

126

chapter 6

The notion of unsafe products is very broad and includes three main categories. First, all goods which cause damage because of a defect of production are considered as unsafe products under the law. This relates to manufacturing flaws, fabrication flaws, and other imperfections of the product which represent deviations from product regulations, standards, or specifications. Second, design inadequacies which occur when the product does not conform to its intended design, fails to perform as safely as the intended design would have performed, or presents unreasonable risks to the users. Third, the notion of unsafe goods applies to those products which may cause damage because of lack of instruction or insufficient instructions on safe use. If the packaging or labeling related to the goods is not available or is not clear about the dangers inherent in the use of the product, then the producer is liable for damage caused due to a defect of his product. It is important to note that in order to hold the producer liable for damage arising from unsafe products, the injured person must prove that he has suffered damage from the goods of the producer and that such goods were used or maintained in a regular manner (Section 6, Liability for Damages Arising from Unsafe Products Act). 4.2 Liability of Employers Another form of strict liability applies with regard to the acts of employees. Pursuant to Section  425 of the Civil and Commercial Code, an employer is jointly liable with his employee for the consequences of a wrongful act committed by such an employee in the course of his employment. These rules apply whether the employer is a natural person or an artificial person.15 The course of employment is a legal consideration of all acts committed by the employee while he is performing the usual duties of his employment. For instance, a waiter is expected to take orders and serve food and beverages to customers in dining establishments for the employer; this may be considered as the main job tasks which fall within the worker’s responsibilities. If a wrongful act is committed by the waiter while he is serving the meal, then employer and employee are held jointly liable. The result would be different if the waiter had robbed a customer’s wallet while he was eating inside the restaurant or if the waiter had lost his temper and willfully injured a customer. In fact, employers are not liable for the wrongful acts which are not considered as within the course of the employment. Conversely, an employer is not liable for damage done by an independent contractor to a third person in the course of the work unless the employer was 15

P. Poonyapun, op. cit., p. 89.

Delictual Obligations

127

at fault in regard to the work ordered or to his instructions or to the selection of the contractor (Section 428, Civil and Commercial Code). Ratification by the employer of acts committed by the contractor is equivalent to a prior command and retroactive to the date of the act done. The employer who makes compensation to a third person for a wrongful act committed by his employee is entitled to indemnity—full reimbursement— from said employee (Section  426, Civil and Commercial Code). Thus in the example above, if the employer pays the damages caused by the waiter, he may then exercise the right to obtain reimbursement from the waiter since the damage was directly caused by the waiter. 4.3 Liability of Artificial Persons The liability of an artificial person for the wrongful acts of its representatives is similar to the strict liability of an employer for an employee. Specifically, an artificial person may be held liable for any damage done to other persons by its representatives or the person empowered to act on behalf of the artificial person in the exercise of their functions (Section 76, Civil and Commercial Code). In other words, the artificial person is liable for the intra vires wrong of its organs by a fiction of the law. The representatives or the person empowered to act on behalf of the artificial person, however, may exercise the right of recourse against any or several or all of the causers of the damage. 4.4 Liability for Damage caused by Buildings Liability for damage caused by the collapse of a building or other structure can arise under special rules. According to Section 434 of the Civil and Commercial Code, if damage is caused by reason of the defective construction or insufficient maintenance of a building or other erection, the possessor or the owner of such immovable is bound to make compensation. The term “construction” has been given a broad meaning by the courts applying not only to residences, apartments, houses, flats and condominiums, but also to other types of buildings such as stadiums, department stores, theaters, and office buildings. It also includes parts of buildings such as floors, doors, stairs, roofs, ceilings, walls, balconies, basements, and other parts. Thus the possessor of a building may be held liable not only if the damage derives from the construction itself, but also from individual parts of it. In line with the general regime of liability for wrongful acts for objects under a person’s care, the liability imposed by Section 434 of the Code primarily rests on the possessor of the building. For example, the possessor of a house may be held liable for damages which result from defects of construction or from a lack of repairs. The regime of strict liability, however, only applies to the owner

128

chapter 6

of the building. In fact, Section 434 of the Civil and Commercial Code specifies that a possessor of a building can exonerate himself if he can prove that has used proper care to prevent the happening of the damage. In this case, the owner is legally bound to make compensation independently of any negligence on his part. It must be added that if a third party is responsible for the cause of the damage, the possessor or owner may exercise a right of recourse against such person. In addition to the above-mentioned rules, Thai delict law provides for a strict liability regime with respect to those cases where a person is killed, the body or health of a person is injured, or property is damaged by an object falling from a building. Specifically, Section 436 of the Civil and Commercial Code states that an occupier of a building is responsible for damage or injury occurring from things which fall from it or are thrown into an improper place without regard to its cause, whether caused intentionally or negligently. These rules apply to the occupiers of the building who have substantial power to control the building, irrespective of whether they are owners, usufructuaries, legitimate occupants, guardians, hirers, or trespassers in possession of the building.16 16

J. Setabutr, op. cit., 1980, p. 140.

chapter 7

Quasi-Contractual Obligations In addition to the obligations arising from contract and delict we have looked at so far, there is an important group of obligations which usually arise by mistake, accident, or other circumstances. It is customary to define these obligations as quasi-contractual. Quasi-contractual obligations between persons do not arise from an agreement or from a wrongful act but by operation of law. In a number of cases, the Civil and Commercial Code creates a legal relationship between persons who are passively connected between them in the absence of an agreement. A lawful and purely voluntary act of a person creates by force of law an obligation for another person. The rules governing management of affairs without mandate and undue enrichment provide full recognition to the principle that a person who benefits unjustly at the expense of another is obligated to pay for the benefit received or to make restitution in accordance with fair dealing and good faith. 1

Management of Affairs without Mandate1

Management of affairs without mandate constitutes an important source of obligations imposed by law. It occurs when one person (i.e., a voluntary agent) volunteers his services and conducts business on behalf of another (i.e., an involuntary principal) without previous mandate, as, for instance, where he protects another’s property in an emergency situation without his knowledge, files a complaint for a friend who is absent, feeds and looks after a neighbor’s pet that has strayed, or pays his debts. According to Section 395 of the Civil and Commercial Code a person who takes charge of an affair for another without having received mandate from him or being otherwise entitled to do so in respect of him, has the obligation to manage the affair in such a manner as the interest of the principal requires, having regard to his actual or presumptive wishes. This applies to all those situations where a person has conducted someone else’s affairs without authority to do so, or rendered him some other service without a precedent mandate. 1 For a more comprehensive analysis of the issues touched in this section, see T. Meenaganit, op. cit., p. 122 et seq.

© koninklijke brill nv, leiden, ���6 | doi 10.1163/9789004308923_008

130

chapter 7

If the act was not intended to be an act of kindness or benevolence but is an act apt to establish a legal relationship, the voluntary agent is entitled to demand reimbursement of outlay as an agent and the involuntary principal is bound to indemnify him for any expenses and liabilities necessarily incurred. In these cases, the voluntary agent has the obligation to manage the affairs of the involuntary principal as a reasonable person. The agent must notify the principal, as soon as practicable, the undertaking of the management of the affair, render an account of his administration and await an answer to such notice before executing new acts. However, if the management of the affair has as its object the averting of an imminent danger which threatens the person, reputation or property of the principal, the manager is responsible only for willful default and gross negligence (Section 398, Civil and Commercial Code).2 Furthermore, the voluntary agent has the obligation to conduct the principal’s business in accordance with his actual or presumed will. If the undertaking of the management of the affair is contrary to the actual or presumed will of the principal and the voluntary agent should have realized this, then he is liable for any accidental damages arising from his management of the affair (Section 396, Civil and Commercial Code). Nevertheless, the fact that the management of the affair is contrary to the wishes of the principal is not taken into consideration in any case in which failure to intervene would have prevented the fulfillment in due time of an obligation imposed upon the principal in the public interest or the performance by the principal of a legal duty to furnish maintenance to others. 2

Undue Enrichment

Another case in which an obligation is said to arise from sources other than contract or delict is undue enrichment or enrichment without cause, which is regulated under Book II—Title IV of the Civil and Commercial Code. Section 406 of the Civil and Commercial Code provides that “Any person who, through an act of performance made by another person or in any other manner, obtains something to the prejudice of such other person without legal grounds, must return it to the latter.” This category includes claims for repayment of amounts wrongly received and other situations where the law does not provide a specific remedy for the impoverishment of the actor. To illustrate, A intends to make a payment of 10,000 baht to B but, by his own mistake, transfers the money to C. In this case A has a claim against C for the reversal of 2 Ibid., p. 124.

Quasi-contractual Obligations

131

C’s undue enrichment. Similarly, A agrees to sell two hundred TV sets to merchant B. By mistake, A delivers an excess quantity of goods. B has the obligation to return to A the number of TV sets sent in excess of the order. This action only lies when three main requirements are met. Firstly, a person must obtain an advantage which can be valued in money, whether or not it is patrimonial. For example, an official at the revenue department reduces the taxpayer liability by more than 15,000 baht by mistake. The advantage which the taxpayer derives as a sum of money that he should have paid but did not pay is undue enrichment. The second requirement of undue enrichment is that one person must be injured. The claim for restitution of undue enrichment is available only if one person obtains an advantage which he should not be permitted to retain. To illustrate, suppose farmer A collects the dung from B’s animals to use as fertilizer, or peasant X uses waste water from Y’s plant in order to irrigate his field. In both cases, although A and X obtain an advantage, B and Y are not injured. As third and last requirement of undue enrichment, the benefit must be acquired without legal grounds. This means that there must be no basis in law: the enriched party acquires an advantage without having a lawful right. In this context, the expression “undue” ought to be qualified to exclude cases where the enrichment is based on a valid legal act. For instance, the advantage received by the enriched party from the injury to the disadvantaged claimant resulting from the expiry of the period of limitation of actions is not considered undue enrichment. When all those requirements are fulfilled, the enriched party is bound to return what he has gained. If the property which was unduly received is a sum of money, restitution must be made in full. However, if the enriched party is in good faith, he is only bound to return such part of his enrichment as still exists at the time when restitution is demanded. For example, creditor A is unjustly enriched because he receives by mistake 200,000 baht instead of 100,000 baht from debtor B. If creditor A is in good faith and is not aware of the unlawful basis of the acquisition, then he is obliged to return only the money that still remains at the time when restitution is demanded. In contrast, if the property which must be returned is not a sum of money and the enriched party was in good faith, said person is only bound to return it in such condition as it is in and is not responsible for loss or damage. For example, A is commissioned to transport the goods from manufacturer B to vendor C but mistakenly delivers the goods to vendor D. In this case, if D receives the goods in good faith and uses part of them because he did not notice the mistake, he is not liable. The only obligation he has is to restore the portion of the advantage that is still in existence, which means that D must return the remaining goods in his possession to C. It must be noted, however, that if the enriched

132

chapter 7

party was in bad faith, he is fully responsible for the loss or damage even if caused by force majeure (i.e., an irresistible force or an unforeseen event that is unavoidable and unpredictable), unless he proves that the loss or damage would have happened in any case. In the example above, if D knows that he is acquiring an advantage without a valid legal ground, he is liable to return the advantage. If the goods (or part of them) no longer exist for any reason, D must pay compensation to C unless he can prove that the loss or damage would have occurred even had there been no mistake on the part of A. The remedy provided by Section 406 of the Code is subsidiary and cannot be invoked if the law gives another remedy to the disadvantaged claimant to reverse the unjustified enrichment. This is to say that an action for undue enrichment lies only in those cases when a person receives a benefit without a sufficient legal ground. It may happen, for example, that the period of prescription has expired or the property has been lost. The Civil and Commercial Code also provides in a number of cases an indemnity for the disadvantaged party which is regulated under the provisions of undue enrichment. For example, Section 1313 of the Code provides that if the conditional owner of a piece land has constructed a building on it and the land later becomes the property of another person by effect of the condition, the provisions concerning undue enrichment apply. Similarly, the return of property arising from a void act or from a gift that has been revoked is governed by the provisions on undue enrichment. This obligation to return the advantage also exists if the benefit was received on the basis of a valid juristic act whose objective has subsequently not been fulfilled or the prestation was justified on a valid legal ground which subsequently lapses. The person to whose detriment the undue enrichment has occurred has the right to demand that the enriched party reverse the unjust enrichment. However, a claim for return for the non-occurrence of a result intended by an act of performance is excluded if the person who rendered the performance knew from the beginning that the accomplishment of the result was impossible or if he prevented the accomplishment of said result in bad faith. An example will clarify this point. Suppose A offers B the sum of 10,000 baht to watch a marriage of a famous couple from B’s balcony on 1 July but the intended spouses do not pass under B’s balcony as the couple decides to postpone the marriage because of business commitments. In this case, A may recover the sum of 10,000 baht because the object of the rental contract was not fulfilled; if A was aware of the fact that the couple had decided to postpone the marriage, he is not entitled to recover the amount paid to B. The general provisions regulating undue enrichment described above are completed by some special provisions which apply to particular circumstances.

Quasi-contractual Obligations

133

The Civil and Commercial Code explicitly excludes restitution in case of performance of certain non-existent obligations. The fact that the delivery or payment obligation is not due at the time when the obligation was discharged does not allow the person performing the obligation to claim return of the money or property or reimbursement of the interim interest. In this regard, Section 408 of the Civil and Commercial Code specifically lists some cases where the performance of an obligation does not constitute an unjustified enrichment and, in particular, obligations subject to a time clause which are performed before the time has arrived, performance of obligations which have been barred by prescription, and obligations which are performed in compliance with a moral duty or with the requirements of social propriety (Section 408). For example, A decides to help his aunt because she desperately needs an operation and gives her 200,000 baht. If the prestation is made for the execution of a moral obligation, the provisions on unjustified enrichment do not apply and A is not entitled to restitution. The same provisions apply when a person freely effects a juristic act in the performance of an obligation, knowing that he is not bound to do so. In other words, the right to claim the reimbursement for money or assets is barred if the performance was rendered with the objective of discharging an obligation which did not exist and the actor was aware of the fact that the obligation was non-existent. For example, A decides to buy a new car and accepts to pay for the car on an installment plan with monthly payments for five years. After a few months, A is fired and runs out of money. His girlfriend, B, decides to pay two installments on the car in order to help without asking anything in return. If the relationship between the two ends, B is not entitled to recover the sums of money she generously gave to A in the absence of a legal duty. Another case in which a claim for the return of the advantage is prohibited is regulated under Section 411 of the Civil and Commercial Code. Specifically, a claim for the reversal of the undue enrichment is barred if the purpose of the act under which the enrichment is obtained is contrary to the law or good morals. In these cases, the party performing the act cannot claim restitution and the enriched party is entitled to keep the advantage he has obtained. To illustrate, suppose A borrows B 10,000 baht for gambling in the form of a contract of loan. This contract is void because it is against public order and A cannot claim the return of the money loaned for undue enrichment because the purpose of the contract is contrary to the law. As a practical matter, it is important to carefully analyze the circumstances of undue enrichment and its differences from other categories of obligations in order to establish the scope and the extent of the parties’ rights and obligations.

chapter 8

The Regulation of Property Many of the needs which confront people in their everyday lives may be met in an appropriate manner by the use of contractual agreements concluded with the owner of particular property. This may be the case, for example, of a hire of property contract which is concluded to confer the use or benefit of a property for a limited period of time, or a loan of money contract which is entered into to provide local or foreign currency resources to the contracting party. It must be added, however, that rights acquired through contracts lack effective protection. They are merely obligatory rights, meaning that they can only be directed against a determinate person, i.e., the person of the debtor. It follows that the rights which can be acquired through contracts on the property of other individuals are incomplete because they are attached to the person of the obligor. In order to fulfill this necessity, civilian systems have created real rights as opposed to personal rights. Real rights are attached to a property and follow the property in case of transfer. They assert a relationship between a person and a thing which is enforceable against the whole world. As they are exercised directly over property, they are perceived as being stronger than personal rights. Let us consider an example to illustrate the concept. Suppose A agrees to sell his book to B for 2,000 baht. In this case, A has the right to receive the price set forth in the contract while B has the right to receive the delivery of the book. These are personal rights: A has the right to claim the payment of the price from B and from nobody else. Similarly, B has the right to claim delivery of the property according to the terms of the contract only from A. More generally, it is possible to say that the contract only creates obligations on the contracting parties and can only be enforced between them. Burdens cannot be imposed on third parties. Now let us consider the protection that the law provides to the holder of a real right. If A owns a house, A’s right is directly exercised on a thing and must be respected by all. A holds a real right over his property and can obtain judicial relief against anyone who violates it. In other words, A has a remedy for the violation of his right against the whole world. Having discussed in previous chapters the law of obligations, or personal rights, we will now deal with the law of property, or norms governing real rights. Property is commonly understood as the legitimate possession of a good. The rules about property represent the main concerns of civil law in every

© koninklijke brill nv, leiden, ���6 | doi 10.1163/9789004308923_009

The Regulation Of Property

135

jurisdiction. In Thai law, property is regulated under Book IV of the Civil and Commercial Code. The subject of this book is property law, which includes the right of ownership and property interests related to or derived from the right of ownership. It will therefore be necessary to analyze (1) the right of ownership, (2) the acquisition of ownership, (3) the extent and exercise of ownership, (4) possession, and (5) servitudes. 1

The Right of Ownership

The most complete real right is the right of ownership. As is the case with other legal principles the right of ownership is not defined under the Thai Civil and Commercial Code. However, by implication from the ways in which such term is used in the Code, it is possible to say that ownership is the right to exercise control upon property fully and freely within the limits and conditions determined by the law. This includes the right to possess, use, and enjoy the property. The right to possess refers to the right to hold a thing and implies the right to recover possession of the thing from a person who has no title to it. In order to create the right of ownership, it is necessary for the above-­mentioned property rights to be exclusive, enforceable, and transferable. Property can be owned in several ways. When all the rights of ownership (i.e., the rights to possess, use, and enjoy property) reside in one person, the owner is said to be the sole owner. When the rights of ownership reside in two or more persons, the owners are said to be co-owners. In a case where some rights are established in one person and other rights in another, the right of ownership is considered to be limited for each person. An example will help clarify this point. Suppose X and Y were to enter a rental agreement regarding a store: Y would acquire the right to use X’s property and, as a consequence, X’s right of ownership would become limited. In other words, X would be considered the landlord of the store and would have a limited right in it, while Y would be regarded as the renter of the store and would have the right of use over the property. If Y’s piece of land was surrounded by X’s land and had no access to public right of ways, Y would have the right to pass over the surrounding land to reach a public way. This means that Y’s right of way would be limited while X’s right over his own land would be residuary. Similarly, if X’s house was subject to Y’s right of usufruct, Y would be entitled to the possession, use, and enjoyment of the property, but X would be considered the house owner (bare owner). In all these cases the right of ownership would remain vested in X even if such a right were considerably limited.

136

chapter 8

In light of these considerations, it ought to be clear that the right to possess, use, and enjoy a determinate thing is a property right available against the entire world, and a duty is incumbent on all persons to abstain from acts injurious to this right. Nevertheless, it must be added that although the residual right of property still has full validity, it is in part alienated and different from a full right of unhindered ownership. For the sake of convenience, we will use the term “ownership” in this chapter to refer both to the exclusive right of ownership and to the residuary rights which are vested in the owner. 2

Acquisition of Ownership

Chapter I of the Second Title of the Fourth Book of the Civil and Commercial Code deals with the acquisition and extinction of ownership in corporeal things and with the legal modes of acquisition of ownership, i.e., the processes which, by law, make a thing “owned.” Apart from contract and succession, the modes of acquiring and losing ownership of corporeal things are principally the following: (1) accession, (2) specification, (3) occupation, and (4) prescription. As opposed to the transfer of title by agreement of the parties, these modes of acquisition of ownership are defined as “original,” meaning that the acquisition operates independently and creates an entirely new right of ownership. The original modes of acquisition of ownership will be analyzed in order. 2.1 Accession “Accession” is defined as the incorporation of one item of property into another; that is to say, accession is an original mode of acquisition of ownership according to which a thing is considered to be property once it becomes physically or intellectually associated with something the person already owns.1 It does not matter whether the thing was owned or not owned before accession; it could apply to an object that has separate legal status prior to accession such as in the case of a seed planted in a plot of land. After the seed is planted, it begins to germinate and eventually emerges above the soil surface, whereby it is deemed an accession to the land. Accession includes the following categories of acquisition: alluvium, construction of buildings, and connection. 1 B. Suchiwa, op. cit., p. 100.

The Regulation Of Property

137

Alluvium is a legal term taken from Roman law, which describes a particular type of accession. It can be defined as an imperceptibly gradual increment in the area of land due to sediment, which is deposited on a shore or bank of a river, or to the shore of the sea, by the force of the water, as by waves or a current. This changes the size of a piece of land without any specific action on the part of the landowner. In this regard, Section 1308 of the Civil and Commercial Code states that where land is formed by alluvium, it becomes the property of the riparian owner. In this case, the owner of the land increased by alluvium is entitled to the addition. Another case of alluvium is that of an island rising in a public lake and beds of waterways left dry (Section 1309, Civil and Commercial Code). In this second case, the Code provides that the ownership of the island created by alluvium belongs to the state.2 Another original mode of acquiring property is regulated under Sections 1311 and 1312 of the Civil and Commercial Code. More precisely, Section 1311 of the Code provides that if a person has, in bad faith, constructed a building upon another person’s land, he must return the land after having returned it to its former condition, unless the owner of the land chooses to have it returned in its current condition, in which case the owner of the land must pay according to his own choice the price of the building or a sum representing the increased value of the land. On the other hand, if a person has, in good faith, constructed a building encroaching on another person’s land, the constructor is the owner of the building, subject to his paying the owner of the land for the use of such land and having his rights on the encroached land registered as servitude (Section 1312, Civil and Commercial Code). Connection is categorized as an original mode of acquisition of property. It covers cases where a number of movable things belonging to different persons are joined in such a way that they cease to be independent things and become component parts or indivisible. With regard to such cases, the Civil and Commercial Code provides that the different persons become co-owners of the composite thing, each person’s share being proportionate to the value of his thing at the time of its being joined with the other things (Section  1316, paragraph 1). Section 1316, paragraph 2, however, specifies that if one of the objects can be regarded as the principal thing, the owner becomes the sole owner of the composite object, but he must pay the value of the other objects to their respective owners.

2 See in particular M. Jumpa, Kam atibai pramuan got mai paeng lae panit wa duay sup sin [Elements of Civil and Commercial law: Property Law], Bangkok, Chulalongkorn University, 2003, p. 114.

138

chapter 8

Whenever two or more things become connected, the question may arise as to which one is subordinate to the other or, in other words, which one is to be considered as principal and which one as to be considered as accessory. When several things are joined together by connection, it is necessary to determine which one can be described as an ornament of the other. This is the case of valuable jewels which are set in a gold plate. In these situations, it can be stated that the principal object is the object which keeps its independent existence regardless of whether or not the other objects are connected to it. 2.2 Specification In law, specification consists of the conversion of materials into a new product not held to be the property of the original owner of the material. In other words, it refers to the making of a new “species” or substance out of another person’s materials. This is the case, for instance, of a person who makes a suit out of another person’s cloth, or makes a vase out of another person’s clay, or makes an article of furniture out of another person’s wood, or makes wine out of another person’s grapes. The Civil and Commercial Code assigns the right of ownership to the person who supplies the labor when the value of the work has a higher economic value than the material. More precisely, Section  1317 provides that if a person uses materials belonging to another person to make a new thing, the latter person becomes the owner of such thing, irrespective of the question of whether the materials can or cannot assume their former condition, but he must pay for the work. However, if the value of the work greatly exceeds the value of the materials used, the worker shall become the owner of the thing which is the result of his work, but he must pay the value of the materials. This may be the case where a person makes jewels out of another person’s unrefined or uncut precious stones, or an artist creates a painting from another person’s canvas. 2.3 Occupation Occupation is another mode of acquisition in civil law. It is referred to as the lawful possession of an object which belongs to nobody with the intention of becoming the owner. More precisely, Section 1318 of the Civil and Commercial Code states that a person may acquire the right of ownership of an ownerless movable through occupation, that is to say, by taking and retaining possession of the property. Occupation is considered lawful unless it is expressly forbidden by law or is in violation of another person’s right to occupation of such movable. This category of acquisition of ownership applies to all things susceptible to ownership which do not belong to anyone, either because they have never been owned or because they are not owned anymore such as products of

The Regulation Of Property

139

the sea, stones, relicts, and the like. In accordance to Section 1319 of the Civil and Commercial Code, a movable becomes ownerless if the owner gives up its possession with the intention of renouncing its ownership. Occupation applies to two main categories of objects: First, to things susceptible to ownership but which have never been owned, such as wild animals, birds, fishes, and so forth. In this regard, Section  1320 of the Civil and Commercial Code specifically says that wild animals are ownerless so long as they have their freedom. However, if captured wild animals regain their freedom and the owners do not pursue them, they become ownerless again. Furthermore, Section  1321 of the Civil and Commercial Code states that a person who catches a wild animal on waste ground or in public waters, or, without the opposition of the owner, on private land or in private waters, becomes its owner. By the same token, and this is the second category, acquisition of ownership may occur in the case of occupation of abandoned things. To understand the notion of abandonment, it is necessary to refer to Section 1377 of the Civil and Commercial Code which states that possession terminates if the possessor abandons the intention to possess or no longer holds the property. In cases, however, where the possessor is prevented from holding the property by some cause which is temporary in its nature, possession is not considered as terminated. In this context, it must be observed that objects which have accidentally been lost by their owner cannot be acquired through occupation. In accordance with Section 1323 of the Civil and Commercial Code, a person who finds lost property is bound to inform the loser and, if the loser is unknown, to deliver it within three days to the police. If after proper inquiry the owner is not found, the finder of a thing may retain it, but the full prescriptive period of one year must elapse before he can claim to remain in possession as owner (Section 1325, Civil and Commercial Code). Treasure is separately treated. Under Section  1328 of the Civil and Commercial Code, it is defined as a movable of value which has been hidden or buried. As a general rule, the treasure belongs to the state. However, the finder of treasure who delivers it to the police or other competent official is entitled to receive a reward of one-third of its value. 2.4 Acquisitive Prescription In some cases, title to property may be acquired by acquisitive prescription— that is, acquisition by long and continued possession. Section  1382 of the Civil  and Commercial Code states that a person acquires ownership of a ­property when he has peacefully and openly possessed without opposition a

140

chapter 8

property belonging to another, with the manifest intention of becoming its legitimate owner. The term of prescription varies depending on the nature of the property and in particular the Code requires possession for an uninterrupted period of ten years for acquisition of immovables and five years for acquisition of movables. It is interesting to note that under the Civil and Commercial Code just title and good faith are not necessary elements of acquisitive prescription. The only elements which are necessary in order to claim acquisition through prescription are those listed under Section  1382 of the Civil and Commercial Code, namely peaceful, open, and uninterrupted possession for a period of time. Interruption may either be civil or natural. Civil interruption occurs whenever the possessor loses possession of an object because legal proceedings have been initiated against him. This interrupts the running of prescription against the party who starts the legal proceedings. Natural interruption refers to the physical interruption of the prescription which may occur when the possessor loses possession of an object voluntarily (e.g., restitution, acknowledgement of title, among others) or involuntarily (e.g., theft, robbery, or force majeure like fire, earthquake, and tsunami). In this regard, Section 1384 of the Civil and Commercial Code specifies that possession is not deemed interrupted if the possessor involuntarily loses the holding of the property, and recovers it within one year from the date of the loss or by means of an action instituted within that time. In the calculation of the prescription term, the current possessor can complete the time required for the prescription by adding his time to that of his predecessor in title regardless of whether it was in good or bad faith. In fact, Section 1385 of the Civil and Commercial Code states that the transferee has the right to add the period of the transferor’s possession to that of his own, in case of transfer of possession. In such case, any defect in the possession of the transferor may be set up against the transferee. Thus, the possession of the precedent possessor in title may be counted provided that it was adverse to the original owner’s interest. As a consequence of the prescription, the possessor of the movable or immovable property, as the case may be, becomes the legal owner of the property in question. This means that in the event that he subsequently loses possession of the said property, he has the right to claim ownership against third parties.3 It is necessary to distinguish from the acquisitive prescription as discussed above, the extinctive prescription, i.e., the extinction of a right of action or claim due to a time lapse. It encourages an owner to submit claims in due time in a way that does not unduly disadvantage or prejudice a possessor in its 3 B. Suchiwa, op. cit., p. 131 et seq.

The Regulation Of Property

141

defense. In this regard, Section 193/9 of the Civil and Commercial Code provides that a claim is barred by prescription if it has not been enforced within the period of time fixed by law. The grounds of termination of ownership correspond to those of its acquisition; thus they do not need specific discussion here. In general, the causes which terminate the right of ownership include, among others, accession, renunciation of property, loss of possession, abandonment of possession, and expropriation of land from the landowner for a purpose deemed to be in the public interest. 3

Extent and Exercise of Ownership

Under the Thai legal system, ownership is commonly defined in terms of rights of possession, use, and alienation of the property. In this regard, Section 1336 of the Civil and Commercial Code provides that the owner of property has the right to use and dispose of it, and acquires its fruits within the limits of law. The owner has the right to follow and recover the property from any person not entitled to detain it, and to prevent unlawful interference with it. The extent of the right of ownership of property depends, among other things, on the nature of the property involved. With reference to immovable property, the Civil and Commercial Code provides that the ownership of land extends above and below the surface (Section 1335). Although the landowner may do with his land whatever he pleases, he still has the obligation to exercise his right with due and reasonable care and diligence in order to avoid harmful consequences to third parties resulting from the use of the right. It is necessary to stress, however, that it is not always simple to determine what is considered as a harmful consequence to third parties. The essence of these rules is that the landowner has the right to do what he wants with his own land within the boundaries of the law. Take the case, for instance, of two owners, A and B, whose parcels of land are geographically adjacent. Suppose that landowner A builds a house on his own land with windows or other openings looking towards B’s land. In such a case, landowner B is without legal redress even though this may be very inconvenient to him. By the same token, if landowner X digs a depression into the ground and builds a cistern to collect rainwater, this may have an adverse impact on watercourses of adjacent parcels of land. Even if the cistern of landowner Y goes dry, landowner Y has no relevant grounds for complaint or grievance against landowner X. The case, of course, would be different if landowner X interfered with the flow of a specific underground stream.

142

chapter 8

As a consequence of the remarks above, it is necessary to analyze in which case a landowner may get redress against an adjoining landowner and, specifically, what the obligations that a landowner owes to his neighbor are. Under the Civil and Commercial Code, they are essentially two: the obligations not to disturb the neighbor’s quiet possession and enjoyment of the land. 3.1 Limits upon the Owner’s Right of Possession With regard to the first point, the landowner must not disturb his neighbor’s possession. This would happen if, for instance, P erected a building on his plot of land which encroached upon an adjoining plot. The construction of said building would be in conflict with R’s right to raise a fence or other structure as high as he likes. Similarly, should landlord P allow the branches of his trees to extend over a neighboring plot, yard, garden, or tenement, landlord P would be in violation of his obligations to R. In order to ensure the full possession of the landowner, the Civil and Commercial Code states that the owner of a piece of land has the right to cut off and keep roots of a tree or bush which have penetrated from the adjoining piece of land (Section 1347). He may also cut off and keep overhanging branches after giving the possessor of the adjoining piece of land reasonable notice to remove them. In the event that the landowner does not cut off the overhanging branches of trees from the adjoining piece of land, he is presumed to be the owner of the fruits which naturally fall upon his land (Section 1348). Further, Section 1349 of the Civil and Commercial Code, provides that the landowner has the right to pass over the surrounding land to reach a public way in the case that his land is so surrounded by other people’s land that it has no access to the public ways. By the same token, the Code states that when a hedge, or ditch which is not used as a drain, belongs to the owners of two adjoining pieces of land in common, each of the owners is entitled to cut down the hedge or fill up the ditch to the boundary line provided he builds a wall or erects a fence along the boundary line (Section 1345). 3.2 Limits upon the Owner’s Right of Enjoyment With regard to the second point, the landowner has the obligation not to impair his neighbor’s enjoyment of his land. Hence, the Civil and Commercial Code forbids any disturbance which conflicts with the landowner’s peaceful use and quiet enjoyment of the land. The extent of such limitation may vary depending on the context and circumstances of the particular case. It can be stated, however, that any interference with the right of enjoyment of the landowner can potentially represent a nuisance.

The Regulation Of Property

143

In order to ensure the full enjoyment of the landowner, Section 1341 of the Civil and Commercial Code provides that the owner of an immovable property must not construct roofs or other structures which cause rain water to fall upon the adjoining property. Also, the landowner must take reasonable precautions to minimize the risk of causing physiographical alteration of the adjacent land surface or interruption to streams which pass from adjacent plots, whether under or above the soil. With respect to the physiographical alteration of the land, Thai civil law allows the landowner to excavate on his own land, if he can do so without letting down his neighbor’s land. This means that the owner of a land is entitled to the lateral support of his soil by the soil of adjoining plots of land. For this reason, Section 1343 of the Civil and Commercial Code provides that land may not be excavated or overloaded in such manner as to endanger the stability of the soil of an adjoining piece of land unless adequate measures are provided for preventing an injury. This right is created by force of law and does not require any servitude. It extends to constructions which have been added to the land or constructed upon it. As regards the obligation not to impair his neighbor’s enjoyment of his land, the lower riparian proprietor has the right to the general use of the water as it flows through or over his property, subject to the upper landlord’s right of appropriating the water to the quantity needed for the reasonable use of his land. Under the riparian principle, water that flows naturally on to lower land and is necessary to said land may be retained by the owner of the higher land only to such extent as is indispensable to his land (Section 1339, paragraph 2, Civil and Commercial Code). The purpose of these rules, however, is to guarantee that landowners have a share of the normal flow of the water in the public stream. They do not apply to private streams. In fact, the riparian rights of an owner of land situated upon a private stream include the right to access to the stream water as well as the right to the full and exclusive use of that water. The riparian landlord may decide, for example, to obstruct the water or to divert or arrest its flow or reduce its volume at his discretion. The same principle applies to rainwater.4 One last relevant point related to the limits upon the owner’s right of enjoyment regards the lost possession. The lost possession of movable property will be discussed first. Then we will analyze the remedies to protect immovable property. With regard to movable property, the Civil and Commercial Code states that the right of a person who has acquired property for value and in good faith is not affected even if the act under which his transferor acquired the property was voidable and has been subsequently avoided (Section 1329). 4 M. Jumpa, op. cit., p. 160.

144

chapter 8

In the case that several persons claim to have acquired the same movable property under different titles, the person who is in possession of the property is preferred as long as he has acquired it for value and has obtained the possession in good faith (Section 1303, Civil and Commercial Code). With reference to immovable property, Section  1300 of the Civil and Commercial Code states that where a transfer of immovable property or other real right has been registered to the prejudice of a person who was previously in a position to have his right registered, he may claim cancellation of such registration, provided that in no case cancellation can be claimed against a transferee in good faith who has acquired the property for value. 4 Possession Although the terms “possession” and “ownership” are often used interchangeably in lay conversations, these terms are very different and should thus be distinguished. For instance, a person may have the right of possession without being the owner and, contrarily, a person may legally own property without being in possession of it. Possession is considered under Thai civil law as an independent real right over a property and is defined as the control a person intentionally exercises toward a thing.5 Possession as a right consists exactly in the right to hold a thing with the intention to do so. Under Section  1367 of the Civil and Commercial Code a person acquires possessory right by holding a property with the intention of holding it for himself. The Code also provides that a person who holds a property is presumed to hold it for himself (Section 1369) and is presumed to possess such property in good faith, peacefully, and openly (Section 1370). Based upon a reading of these sections, it can be stated that possession comprises two main elements: the physical control over a property (i.e., detention) and the intention to hold the property as his own exclusively.6 The factual power of control is the material element of the right of possession. It can be exercised either personally or through someone else appointed for that purpose, like, for instance, when an employee has physical custody of his employer’s property. This is called indirect possession. In this regard, it is interesting to note that according to Section 1368 of the Civil and Commercial Code, a person may also acquire possessory rights through another person holding the property for him. 5 B. Suchiwa, op. cit., p. 174. 6 M. Jumpa, op. cit., p. 214.

The Regulation Of Property

145

In the case that a person who holds property as representative of the possessor decides to change the nature of his holding, this must be done by a notice to the possessor stating that he no longer intends to hold the property for such possessor or by becoming in good faith, through the act of a third person, possessor under a new title (Section 1381, Civil and Commercial Code). The second essential element of possession is the mental element. This means that the possessor must have the objective intention to assert rights over the property and exclude others from possession. Unless all of these elements are present, the right of possession does not exist. For instance, take the case of a contract of pledge. In a contract of pledge, the pledgor delivers to the pledgee a movable property as a security for the performance of an obligation. In this case, the pledgee is considered to be the possessor of the movable property because both elements of possession are met. The pledgee, in fact, has the intention to hold the property for himself—excluding the owner as well as everyone else from it—and, at the same time, he has the physical detention of the property. The right of possession can also be transferred. Transfer of possession is effected by delivery of the property possessed (Section 1378, Civil and Commercial Code). Transfer of possession becomes effective when the transferor, while continuing to hold the property, declares an intention to hold it on behalf of the transferee. However, in the case that the property is already held by the transferee or his representative, the transfer of possession must be accompanied by a declaration of intention (Section 1379, Civil and Commercial Code). With regard to the protection of possession, the Civil and Commercial Code provides specific remedies which apply equally to immovable and movable property. More precisely, the right of possession gives rise to specific remedies which are accorded for the purpose of protecting the possessor against interferences or to recover possession of property in the case that the possessor is unlawfully deprived of possession. These remedies are listed under Sections 1374 and 1375 of the Civil and Commercial Code and aim at protecting lawful possessors by providing effective actions to terminate unlawful interferences or to recover possession. In both sections the nature of the dispossession or interference must be unlawful. Unlawfulness by the third party against whom the remedies are claimed, then, is a common condition that must be met. Specifically, Section 1374, paragraph 1, of the Code applies to all those cases where a possessor is disturbed in his possession by unlawful interference. In these situations, the possessor is entitled to have the disturbance removed and an action must be entered within one year from the time of the disturbance. Unlawful interference can be defined as an interference which is not permitted by law; but it does not necessarily require violence. To give rise to possessory action, disturbance must be an actual disturbance of some duration. This may be the case of an act which affects

146

chapter 8

c­ ontinuously the right of possession, like, for example, when possessor A builds a construction on his land interfering with the enjoyment of the mansion by the possessor B. This remedy would certainly not apply in the case that a person merely disturbed the possessor of an apartment by pushing the button of his intercom during the night and running away.7 Further, Section 1375 of the Civil and Commercial Code protects a possessor against unlawful dispossession caused by another person. It states that “Where a possessor is unlawfully deprived of possession, he is entitled to have it returned, unless the other party has over the property a better right which would entitle him to claim it back from the possessor.” This means that a person who is in possession of property has the right not to be dispossessed and, if dispossession does happen without his consent, he has the right to bring an action to recover possession. Also, it must be noted that the action to recover possession is considered to be an action for recent dispossession. Such action for recovery of possession, in fact, must be entered within one year from the time of dispossession.8 Dispossession is constituted of two elements, one being described as the subjective and the other as the objective element. The subjective element is the intention to commit an act of spoliation or, in other words, the awareness of the unlawfulness of the behavior. The objective element consists in a deprivation of possession through a positive act (i.e., doing something) or a negative act (i.e., not doing something). This may be the case, for example, of a lessee who refuses to return the movable property at the end of the lease period or a finder of movable property who decides to appropriate that property for himself without giving it back to the owner. Termination of possession is regulated under Section  1377 of the Civil and Commercial Code which states that possession comes to an end if the possessor no longer holds the property or abandons the intention to possess. However, it must be added that possession does not terminate if the possessor is prevented from holding the property by some cause which is temporary in its nature. 5

Other Real Rights

Alongside the right of ownership, there are other property interests (i.e., real rights less than ownership) which secure over a thing a direct power and may be enforced against anybody, including the owner of the property. The rights 7 Ibid., p. 224. 8 B. Suchiwa, op. cit., p. 176.

The Regulation Of Property

147

that they guarantee with regard to the property are absolute. This is to say that they are rights which are directly exercised on a thing and must be respected by all. The common element of these property interests, and that which separates them from the right of ownership, is that they confer rights over the property which are limited in their scope and duration. Hence, the distinction between ownership and property interests is that ownership, although it may be subject to many conditions and restrictions contained in the law, it is not restricted by any chronological term, it lasts forever. In contrast, property interests can only exist for a period of time over property belonging to others. Whenever property interests are extinguished (e.g., by destruction of the land which is the object of a servitude or by death of the grantee of a right of habitation), the right of ownership is restored to its original extent. According to the numerus clausus principle, real rights can only be created by the virtue of the law (Section 1298). The real rights over immovables other than ownership which are enumerated under the Civil and Commercial Code are relatively few and can be easily summarized. Specifically, they include the right of servitudes, habitation, superficies, and usufruct. 5.1 The Right of Servitudes A servitude can be defined as a real right which gives the holder a limited right to use the property of another. The duty it casts upon the owner is either to suffer some things to be done to his property or to abstain from exercising a right on such property. Following the civil law tradition, the Thai Civil and Commercial Code distinguishes two main kinds of servitudes: personal servitudes and real servitudes. Personal servitudes are those by which the immovable property of the landowner is burdened in favor of a specific individual. Thus they confer rights to the use of a property for the benefit and enjoyment of a designated person. Real servitudes, also called predial or landed servitudes, refer to those relations where the landlord acquires the right to use the land of another to improve the use of their own land. More precisely, it is a right enjoyed by the owner of a dominant property over a servient property. Accordingly, the right is not constituted in favor of a person but for the use of a piece of land. This means that the servient property serves the dominant property, follows the dominant property in case of transfer of ownership and exists irrespectively of the identity of its owner.9

9 See P. Waayupap, Kam atibaai kotmaai laksana sap [Fundamentals of property law], Bangkok, Institute of Legal Education Thai Bar Association, 2012, p. 188.

148

chapter 8

It must be added, however, that both kinds of servitudes are exclusively attached to immovable property and are valid against all others. They can be created by operation of law or by agreement of the parties. 5.1.1 Real Servitude Under Section 1387 of the Civil and Commercial Code, an immovable property may be subjected to a servitude by virtue of which the owner of such property is bound, for the benefit of another immovable property, to suffer certain acts affecting his property, or to refrain from exercising certain rights inherent in his ownership. This may include positive actions such as, for example, the right to walk and ride over the land of another, or the right to lead, discharge, and draw water out of another’s land. This may also include negative actions, such as the right to require a landowner not to raise the height of his buildings or not to obstruct lights by trees.10 It must be distinguished from the right of way which is granted to the owner of a piece of land when he is so surrounded by other pieces of land pertaining to other persons that it has no adequate access to the public ways. In these cases, Section 1349 of the Civil and Commercial Code provides that the land owner has the right to pass over the neighboring land to reach a public way. The grant of a servitude implies a grant of everything which is necessary for its reasonable exercise. Specifically, Section 1391 of the Civil and Commercial Code states that the owner of the dominant property is entitled, at his own expense, to do all that is necessary to preserve and make use of the servitude. However, it adds that the dominant property “must, in doing so, cause as little damage as possible to the servient property.” This means that the dominant property’s rights must be exercised in a reasonable way and according to the uses for which it was intended in order not to increase substantially the burden upon the servient land. Further, Section 1388 of the Civil and Commercial Code provides that the owner of the dominant property is not entitled to make any change, either on the servient or on the dominant property, which increases the burden of the servient property. Regarding the modes of acquiring servitudes, a person may become entitled to a servitude by juristic act or by prescription. Thus, a servitude, like any other real right, may be acquired, for example, directly by will, contract or by means of a stipulation for the benefit of a third party. These juristic acts, however, do not automatically confer the legal title of servitude to the beneficiary unless the juristic act is made in writing and the acquisition is registered by the competent official (Section 1299, Civil and Commercial Code). Take, for example, 10

B. Suchiwa, op. cit., p. 305.

The Regulation Of Property

149

the case of an agreement granting right of access over the servient property. Although such contract is binding on the contracting parties, it does not automatically vest the title to the servitude in the grantee. The right of the grantee is to request performance of the agreement in all aspects. The delivery of the servitude will be deemed to have occurred after proper registration made at the Land Office and endorsement against the title deed of the servient land. Similarly, in the case of creation of a right of servitude under a last will, the will does not constitute the right. It only confers upon the grantee the right to require the grantor to create a servitude in his name.11 By a combined reading of Sections 1382 and 1401 of the Civil and Commercial Code, a servitude may also be created by possession which is open, peaceful, and adverse to the owner for an uninterrupted period of time provided by the law. Here, several elements must be defined. First, the acquisition must be peaceful. This means without using intimidation, force, or threat of force against the owner or custodian of the property to gain control of it. Second, the acquisition must be open. In this context, open does not mean that the owner knows that the right of servitude is exercised against him. It means that the acquisition must not be secret and the owner has the means of knowing it. The third element required by the Civil and Commercial Code is the adverse nature of possession. Adverse possession means not only that the enjoyment must be done without the consent of the owner, but also that it is adverse by nature. Obviously, the possession would not be adverse if authorized by the true owner or by a person with legal authority to so do. Assume, for example, that A has abstained from erecting buildings or other structures on his plot of land in Koh Lipe for a number of years, and as a consequence B has enjoyed a perfect view of the ocean. In this case, B has no right to require A not build. B’s enjoyment of the view on the ocean is regarded as a matter of fact. It does not constitute any legal ground or basis for a right of servitude and A is entitled to erect new constructions if he desires to do so. Similar considerations can be drawn for an upper riparian landowner who, having the right to divert the flow of a stream under the conditions and limits permitted by law, has for several years refrained from using the flow of water through his land and let the lower riparian landowner to enjoy a constant volume of water. In this case, the lower riparian landowner has not acquired any right of servitude with regard to the flow of water. The outcome would not be the same in the examples above if one landowner had prevented the other from exercising his proprietary rights on his own land during the course of the period of prescription. It must be pointed out that these considerations 11

Ibid., p. 317.

150

chapter 8

apply exclusively to negative servitudes. Affirmative servitudes, on the other hand, are by their nature hostile to the interests of the true owner. Fourth, the possession must be exercised for an uninterrupted period of time. This means that the enjoyment of the servitude must be continuous. With respect to a right of access to a spring, for example, possession would be regarded as incomplete if the landowner was prevented by force majeure from effecting an interruption. The effect of an interruption of prescription is essentially that the period of time which has elapsed before interruption does not count for the acquisitive prescription. The causes of interruptions of the right of servitude, however, vary depending on the object of the servitude. With regard to the fifth and last element, a period of prescription is required in order to acquire a right of servitude. Such period is ten years. Section 1384 of the Civil and Commercial Code specifies that possession shall not be deemed interrupted if the possessor involuntarily loses the holding of the property, and recovers it within one year from the date of the loss or by means of an action instituted within that time. It is interesting to point out that good faith is not required to make valid a claim to a right of servitude by acquisitive prescription. However, Section 1383 of the Civil and Commercial Code states that the ownership of property obtained through an offense “may be acquired by the offender or a transferee in bad faith by prescription only after the expiration of the period provided for prescription of the offense or of the period fixed by the foregoing section, whichever is longer.”12 According to the Civil and Commercial Code, servitudes may be terminated by several modes. The termination of the right of servitude can occur, under general terms of law, by agreement between the owner of the servient land and the owner of the dominant land. In instances where land encumbered by a servitude has ceased to benefit the dominant property, the right of servitude is extinguished (Section  1400, Civil and Commercial Code). The right of servitude may also be extinguished in case of merger when ownership of the servient and the dominant land come into the hands of one person. More precisely, if servient and dominant properties are vested in one and the same owner, said owner may have the registration of servitude cancelled (Section  1398, Civil and Commercial Code). Non-usage for ten years (Section 1399, Civil and Commercial Code) and total destruction of the servient or dominant property (Section  1397, Civil and Commercial Code) are other modes of termination of the right of servitude.13

12 13

For a discussion on this point, see P. Waayupap, op. cit., p. 191 et seq. M. Jumpa, op. cit. , p. 301.

The Regulation Of Property

151

5.1.2 Personal Servitudes The principal personal servitudes in Thai civil law are habitation, superficies, and usufruct. Habitation is a servitude that allows the occupation of a building (or part of it) which is the property of someone else. Section  1402 of the Civil and Commercial Code provides that “A person who has been granted a right of habitation in a building is entitled to occupy such building as a dwelling place without paying rent.” Unless this is expressly forbidden by the grantor, the habitator also has the right to take the natural fruits or products of the land as are necessary for his personal needs.14 The object of the habitation is to fulfill the personal needs of the grantee. For this reason, it cannot exist beyond the death of the grantee. The Civil and Commercial Code expressly provides that the right of habitation is not transferable to third parties even by way of inheritance (Section 1404). By the same token, the grantee has the right to live in the property with the members of his family only if the habitation is not expressly limited to be for the benefit of the grantee personally (Section 1405, Civil and Commercial Code). As regards the duration of the habitation, a right of habitation may be created either for a period of time or for the life of the grantee (Section 1403, paragraph 1, Civil and Commercial Code). If it is granted for a period of time, the period cannot exceed thirty years, renewable by mutual agreement for an additional period of thirty years from the time of renewal.15 In the event that a longer period is stipulated by the parties, the right of habitation is reduced to the duration of thirty years. It has further been laid down under Section 1403, paragraph 2 of the Civil and Commercial Code that where no time period has been fixed, the grantor may terminate the right of habitation at any time by giving reasonable notice to the grantee. Another type of institution which involves a real right on another person’s property is superficies. Superficies can be defined as a limited real right on land giving its holder the right to erect a building or any other kind of construction upon or under the land owned by another. According to Section 1410 of the Civil and Commercial Code, the owner of a piece of land may create a right of superficies in favor of another person by giving him the right to own buildings, structures, or plantations in, on, or above the land owned by someone else. Unless otherwise provided in the act creating it, the right of superficies encumbers a land in such way that the superficiary has a transferable and inheritable

14 15

B. Suchiwa, op. cit., p. 335. Ibid., p. 343.

152

chapter 8

right to own a construction permanently attached to land (Section 1411, Civil and Commercial Code). The Civil and Commercial Code does not provide a minimum period for this right, but limits its maximum period to thirty years renewable by mutual agreement for an additional period of thirty years from the time of renewal (Section 1412). As may be known from the above-mentioned provision of the Code, a right of superficies may also be created for the life of the owner of the land or the superficiary. If no period of time has been fixed, the right of superficies may be terminated at any time by any partner giving reasonable notice to the other. But when rent is to be paid, either one year’s previous notice must be given or rent for one year paid (Section 1413, Civil and Commercial Code). When the right of superficies is extinguished, the superficiary may take away his buildings, structures, or plantations, provided he restores the land to its former condition. If instead of permitting the removal of the buildings, structures, or plantations, the owner of the land notifies his intention to buy them at a market value, the superficiary may not refuse the offer except on reasonable grounds (Section 1416, Civil and Commercial Code). Usufruct confers a personal limited real right to use and enjoy another’s property and take its fruits without impairing the substance. Section 1417 of the Civil and Commercial Code states that an immovable property may be subjected to usufruct by virtue of which the usufructuary is entitled to the possession, use, and enjoyment of the property. As it emerges from this definition, the right of usufruct may be constituted exclusively over immovable property. The usufructuary has the right to enjoy the property to the full but he cannot destroy it or impair its substance. Some examples will help to clarify this notion. Suppose a person desires to provide an income after death for his surviving wife but wishes to transfer the ownership of the property to his children. In this case, the wife may be granted a right of usufruct. Similarly, a landowner may confer to another person the right to live in a house which is family property and collect fruits from the garden. Since the usufruct operates a dismemberment of ownership into usufruct and naked ownership, it cannot be perpetual. According to the Civil and Commercial Code, it may be created either for a period of time or for the life of the usufructuary. If no time period has been fixed, it is presumed that the usufruct is for the life of the usufructuary (Section 1418, Civil and Commercial Code). The rights and powers of a usufructuary are listed under the Civil and Commercial Code. As the term itself indicates, usufruct confers the right to use the immovable property and enjoy its fruits without impairing its form or substance (Section 1417, Civil and Commercial Code). Also, the usufructuary has the right to possess the property and to bring an action to recover the usufruct

The Regulation Of Property

153

against the owner or third parties. Such action, however, must be entered within one year from the day the usufruct comes to an end (Section 1428, Civil and Commercial Code). Further, the usufructuary has the right to transfer the use and enjoyment of the land to third parties, but only for the term of the usufruct. More precisely, Section 1422 of the Civil and Commercial Code states that the usufructuary may transfer the exercise of his right to a third person unless otherwise provided in the act creating the usufruct. In such a case, the owner of the property has the right to sue the transferee directly. Regarding the duties of the usufructuary, the Civil and Commercial Code provides that the usufructuary is bound to keep the substance of the property unaltered, and is responsible for ordinary maintenance and petty repairs (Section 1424). If major repairs or measures are necessary for the preservation of the property, the usufructuary must promptly inform the owner. In the case of default by the owner, the usufructuary may have the work carried out at the owner’s expense. Also, the usufructuary must bear expenses for the management of the property, pay taxes and duties, and be responsible for interests payable on debts charged upon it (Section 1426, Civil and Commercial Code). Generally, the usufructuary must take as much care of the property as a person of ordinary prudence would take of his own property (Section 1421, Civil and Commercial Code).16 The rights and obligations of the owner of the bare property rights can be considered as the counterpart of the obligations and rights of the usufructuary. Accordingly, the owner is entitled to exercise all those rights which are inherent to ownership including the right to sell the property (or any part of it) and object to any unlawful or unreasonable use of the property. Moreover, if the owner proves that his rights are in peril, he may also demand security from the usufructuary. In this regard, Section  1423 of the Civil and Commercial Code provides that if the usufructuary fails to give such security within a reasonable period of time or continues to make use of the property unlawfully or unreasonably in spite of the owner’s objection, the court may appoint a receiver to manage the property in his stead. Concerning the obligations, the owner of the bare property rights is responsible for unusual maintenance and the payment of extraordinary expenses. Also, the owner is not to prevent, impair, or interfere with the right of the usufructuary to use the property and enjoy its fruits. This means, for instance, that the owner has no right to impose a servitude on the land without the agreement of the usufructuary. When the usufruct is terminated, it falls back into the property and the right of ownership is restored to its original extent. The right of usufruct may be 16

P. Waayupap, op. cit., p. 200.

154

chapter 8

terminated with the death of the usufructuary unless the parties agreed otherwise. In fact, the parties may stipulate a resolutive condition or set a specific date on which the right of usufruct ends. In the case that the usufructuary is an artificial person, the usufruct right will be considered lawfully terminated by the dissolution of the artificial person. The usufruct can also terminate in certain specific circumstances, including by mutual agreement, force majeure, and when the usufructuary acquires the ownership of the immovable property. When the usufruct comes to an end, the usufructuary must return the property to the owner and is deemed liable for the destruction or depreciation in value of the property, unless he proves that the damage caused was not his fault. It must be added that total destruction of the property and expropriation may also constitute cases where the usufruct terminates. In particular, Section 1419 of the Civil and Commercial Code states that if the property is destroyed or expropriated without compensation being paid, the owner is not bound to restore it. However, if any compensation is paid, the owner or the usufructuary must restore the property so far as it is possible to do so, having regard to the amount of the compensation received. In this case, the right of usufruct revives accordingly. If restoration is impossible, the usufruct comes to an end and the compensation must be divided between the owner and the usufructuary in proportion to the damages suffered by them respectively.17 17

B. Suchiwa, op. cit., p. 350.

chapter 9

Family Law The concept of family in a legal sense can be defined in different ways according to different legal systems. The family is not a single, unchanging entity. What is considered to be or not to be a family depends upon the time period and evolution of the society. Under the Thai legal system, the term “family” indicates all the persons who qualify either as spouses or blood relatives. The rights of the family as a natural community founded upon marriage are regulated under Book V of the Civil and Commercial Code. The various strands of family law include the law of engagement, matrimonial law, matrimonial property law, the law of divorce, parentage, guardianship, adoption, and maintenance. 1 Marriage The traditional concept of “legal family” is based on the institution of marriage. Marriage is a legal union between a man and a woman that creates rights and duties between the spouses according to the provisions of the law. The Thai rules regarding the celebration of marriages apply to all marriages celebrated within the kingdom of Thailand, independent of the nationality of the spouses.1 Under Section 1452 of the Civil and Commercial Code, a marriage cannot take place if the man or woman is already the spouse of another person. Until the enactment of Book V of the Civil and Commercial Code on October 1, 1935, however, polygamy was legal and widely practiced. There were three categories of wives depending on the type of marriage in which the couple was engaging: the major wife, or mia klang muang, whose parents consented to her marriage and who brought property into the marriage; the minor wife, or mia klang nok, who did not bring any property to the marriage but accepted the marital request; and the slave wife, or mia glang thasi, who was acquired in connection with a debt of bondage. The institution of polygamy has been abolished.

1 For more detailed discussion on this topic, see C. Akraviboon, Kam atibai pramuan got mhai paeng lae panit banpa ha wa duay krob krua [Principles of Civil and Commercial Law: Family Law], Bangkok, Thammasat University, 1979, pp. 89 and 121.

© koninklijke brill nv, leiden, ���6 | doi 10.1163/9789004308923_010

156

chapter 9

1.1 Capacity to Marry Under the Civil and Commercial Code marriage is defined as a voluntary act which may not be limited by any conditions or terms whatsoever. Therefore, a free declaration of intention of the parties is considered to be a necessary element for creating a legal status between the spouses. A marriage can take place only when the man and woman have reached their seventeenth year of age. In certain circumstances, however, they may receive permission from the court to marry before attaining such age (Section 1448, Civil and Commercial Code). This may be the case, for example, of women who experience premarital pregnancy or premarital birth. Parties to a marriage must understand the nature of the marital relationship and be able to appreciate properly the rights, duties, and obligations it creates.2 Therefore, marriage cannot take place if either the man or the woman is insane or adjudged incompetent (Section 1449, Civil and Commercial Code). Furthermore, marriage is forbidden between persons who are related within the prohibited degree of consanguinity or affinity. This is to say that a marriage cannot take place if the man and woman are blood relations in the direct ascendant or descendant line, or brother or sister of full or half blood, e.g., sister and brother, nephew and grandmother, grandfather and niece, grandfather and great-niece (Section  1450, Civil and Commercial Code). For example, a woman is not entitled to marry her brother or brother’s son, neither may she marry her brother-in-law or brother-in-law’s son. It must be noted, however, that this rule does not apply when several marriages intervene between the intending couples. Therefore, a woman is not entitled to marry her deceased husband’s brother, but there is no reason why she should not marry her deceased husband’s sister’s widower. By the same token, a marriage cannot take place if the man or woman is already the spouse of another person or the parties are related by adoption. If the marriage takes place between an adopter and the adoptee it will result in dissolution of the adoption (Section 1598/32, Civil and Commercial Code). 1.2 Consent of Parents A person below the age of twenty years lacks the capacity to marry without permission. With respect to minors who have parents, the law requires the written approval of both parents or, in special circumstances, a verbal declaration before at least two witnesses. In cases where both parents are still alive, the consent of both is required, but if only one parent is alive his or her consent 2 See C. Jarujinda, Kam banyai got mai paeng lae panit wa duay krob krua [General Principles of Civil and Commercial Law: Family Law], Bangkok, Arun, 1992, pp. 32–44.

Family Law

157

is necessary and sufficient. If both parents are dead or unable to give consent, the guardian of the minor must provide the requisite approval. Pursuant to Section 1456 of the Civil and Commercial Code, if the parents refuse to give their consent to the marriage of a minor, the court has the power to authorize the marriage, overriding the parental authority. The court will grant its consent to the marriage depending on several elements such as the education of the parties, their financial resources, employment skills, emotional maturity, and other substantial factors. 1.3 Celebration of Marriage Thai civil law only recognizes civil marriage, though in the majority of cases a religious ceremony follows. Under Section 1458 of the Civil and Commercial Code, a marriage takes place only if the man and woman agree to take each other as husband and wife, and such agreement is declared publicly before a registration officer. The intended spouses must declare their decision to assume a matrimonial bond in person through a voluntary act free of any condition or time limitation. The public officer may refuse to accept the declaration of intention of the parties for a fixed-term or conditional marriage. After the civil marriage has been officiated, any clause or limitation shall be deemed to be null and void and shall be given no force or effect.3 1.4 Promise to Marry Marriage may be preceded by a mutual promise to marry. According to Sections 1435 and following of the Civil and Commercial Code, mutual promises of marriage between a man and woman constitute a legal agreement described by the expression “betrothal” (i.e., engagement to be married). Betrothal is treated by the law as a preliminary to a marriage contract. Although it does not give rise to a legal action aiming at a compulsory celebration of marriage, betrothal constitutes grounds for compensation if one of the parties commits a breach of the agreement. In these circumstances, the engaged person who breaks off the agreement of future marriage has the obligation to compensate the other party, his or her parents as well as any other person acting in the place of the parents, for appropriate expenses or debt incurred in good faith. Damages may be related, for example, to the cost of the honeymoon, wedding gown, or wedding jewelry. Compensation may also be claimed

3 See in particular P. Kampoosiri, Lak got mai paeng lae panit krob krua [General Principles of Civil and Commercial Law: Family], Bangkok, Nititham, 1998, p. 178.

158

chapter 9

for injury caused to the body or reputation of the betrothed and other damages suffered as a consequence of the breach of the contract.4 To be valid a betrothal must be effected when the man and woman have attained their seventeenth year of age. It follows that if one of the parties to the intended marriage is under the age of seventeen, the contract is void. In the case that the parties to the future marriage are minors, the consent of the parents, guardians, or adopters, as the case may be, is also a necessary requirement of the engagement contract. A betrothal concluded by the minor without the said consent is voidable (Section 1436, paragraph 2, Civil and Commercial Code). A mutual promise of two persons to marry requires both a declaration of intention to marry and the transfer of property from the man to the woman as evidence that the marriage will take place. Thus another condition of validity that must be verified concerns the transfer of property. Engagement property can be either movable or immovable and includes rings, gold, land, houses, or other gifts which are given as symbols of the engagement. If the marriage does not take place, the man is entitled to claim the engagement property from the woman according to the provisions concerning undue enrichment. However, the engagement property does not need to be returned if one of the betrothed parties dies before the marriage (Section  1441, Civil and Commercial Code) or the man becomes insane (Section 1449, Civil and Commercial Code). 2

Legal Effects of Marriage

The effects of marriage may be discussed, first, with regard to the personal status and capacity of the spouses, and secondly, with regard to the patrimonial regime of the spouses. 2.1 General Effects Marriage, as a legal cohabitation, is founded on the moral and legal equality of the spouses, in the mutual sentiment of love, respect, and understanding, as the basis of unity in the family. The obligations deriving from marriage are mutual: fidelity, moral, and material support, co-operation in the family’s interests, and cohabitation. Within marriage, men and women have the same rights and obligations. This is made plain by the fact that they have a reciprocal duty to contribute towards the needs of the family: “husband and wife must maintain and support 4 C. Akraviboon, op. cit., p. 72.

Family Law

159

each other according to his or her ability and condition in life” (Section 1461, paragraph 2, Civil and Commercial Code). The conjugal community prescribed by the Civil and Commercial Code implies the obligation for husband and wife to live together. This means that the spouses have a duty not only of physical cohabitation but also of joint responsibility in all the affairs of the family. Where the physical or mental health or happiness of either spouse is greatly imperiled by continuance of cohabitation, however, the spouse may apply to the court for authorization to live apart while the danger persists; and in such case, the court may order a certain amount of maintenance to be furnished by one of the spouses to the other as may be proper according to the circumstances (Section 1462, Civil and Commercial Code). 2.2 Patrimonial Effects Marriage has important implications with regard to the patrimonial relationship of the spouses. The patrimonial regime of the family governs the property ownership between husband and wife in marriage, the person who holds the rights to manage the property, and how property is split in case of divorce or court order. In Thai civil law, personal property that belongs solely to either husband or wife is known as sin suan tua (i.e., separate or personal property), while common property—owned jointly by husband and wife—is referred to as sin somros (i.e., common or marital property).5 Sin suan tua is property that belongs to only one of the spouses. The owner of such property is entitled to dispose of it without having to give preliminary notification to the other spouse. According to the Civil and Commercial Code, property comprising the personal property of a spouse includes betrothal gifts, property for personal use (e.g., clothes, ornaments, tools necessary for carrying on the profession of the spouse, and the like), property belonging to the spouse before marriage, as well as property acquired by the spouse during marriage through a will or gift (Section 1471). These items are to be held separate from common property and the spouse enjoys total rights to manage these assets. Sin somros includes assets acquired during marriage and property acquired by either spouse during marriage through a will or gift made in writing if it is explicitly declared to be common property (Section 1474, Civil and Commercial Code). In this regard, it is interesting to note that a marriage gift is considered to be marital property unless it is expressly designated by the donor as belonging to only one of the spouses. An exception regarding land ownership applies to foreigners who are married to a Thai spouse. In the event that a piece of land 5 C. Jarujinda, op. cit., p. 65.

160

chapter 9

is acquired during the marriage, the land will be considered as personal property of the Thai spouse. Fruits of sin suan tua are also marital property. This may be the case, for instance, of the rent derived from a piece of land under ownership of one of the spouses or the interests accrued from a fixed-term deposit. If personal ownership cannot be proved, the property is presumed to be common to both the spouses. The management of the common property can be carried out by only one of the spouses without the consent of the other except for some specific cases listed under the law. Section 1476 of the Civil and Commercial Code states that a joint decision by both spouses is required before entering into a number of contracts including sale, exchange, rent, mortgage, gift, among others. If either spouse enters into any these contracts independently or without the consent of the other, the latter may apply to a court to have the contract revoked. Throughout marriage, disagreements may arise regarding common assets of the spouses. In these cases, the law protects the economic interests of the spouses by allowing either of them to apply to the court and request an order granting the permission to dispose of the property. For example, if husband A has to give his consent to matters concerning the management of the property but unreasonably refuses to give such consent, wife B may apply for a judicial procedure in order to bypass the need for her spouse’s consent. A spouse may also apply to the court for an authorization to be the sole manager of the common assets or to divide the marital property in the case that the other spouse is causing a loss, does not provide marital support, becomes insolvent, incurs debts to an amount exceeding one half of the common property, or hinders the management of the marital property without reasonable ground.6 The manner in which personal debts are treated is the same as personal property. Debts incurred by one of the spouses before the marriage are satisfied using personal property which belongs to the debtor. If the personal property of the debtor spouse is not sufficient to satisfy the credits and obligations to third parties, then the creditor is entitled to recover the residual amount from marital property. In contrast, marital debts which are incurred by one or both spouses during the marriage must be satisfied out of the sin somros and sin suan tua of both spouses. Under Section 1490 of the Civil and Commercial Code, marital debts are jointly owed by the married couple and include debts incurred in connection with the management of household affairs and providing for the necessities of the family, or maintenance and medical expenses of the household, and for the proper education of the children; debts incurred in 6 P. Kampoosiri, op. cit., p. 239.

Family Law

161

connection with the sin somros; debts incurred in connection with a business carried on by the spouses in common; and debts incurred by either spouse only for his or her own benefit but ratified by the other. The distribution of marital property is regulated by the Civil and Commercial Code, though these rules may be superseded by contrary provisions of the parties in a prenuptial agreement. Generally speaking, a prenuptial agreement defines the rights each party has to property when future contingencies arise or in the event that the marriage ends. It may protect the premarital assets of the spouses as well as any other property traceable to those assets. For example, a prenuptial agreement may define the rights each party has to property or economic support in the case that the marriage ends in divorce. The party with more assets may try to limit the amount of alimony that is to be paid to a divorcing spouse.7 The conditions for the prenuptial to be binding are listed under Sections 1465 and following of the Civil and Commercial Code. Assuming the consent of the spouses to be a necessary element of the prenuptial agreement as of contracts in general, it is possible to state that the essentials of a valid prenuptial agreement mainly include formal requirements. More precisely, the prenuptial agreement must be registered at the time of marriage registration and must be made in writing with the signature of both spouses in the presence of at least two witnesses. Any clause in the prenuptial agreement contrary to public order or good morals, or providing that the relationship between the spouses is to be governed by a foreign law, is deemed to be void. 3

Dissolution of Marriage

Marriage may be terminated by death, judgment of the court, or divorce. 3.1 Nullity and Voidability The Civil and Commercial Code provides a series of cases where the marriage is deemed void or voidable. The grounds for nullity of marriage are explicitly defined in Section 1495 of the Code, which provides that it is only a judgment of the court that enables the avoidance of the marriage. An annulment action can only be brought by the other spouse, parents, descendants, or, if there are none of the said persons, by any interested person. First, a marriage is void if either the man or the woman is insane or adjudged incompetent. The court may, by a sentence of nullity, declare 7 T. Meenaganit, op. cit., p. 301 et seq.

162

chapter 9

the marriage void on any one of four circumstances, namely insanity or mental incompetency, prohibited degrees of consanguinity and affinity, bigamy, and the absolute absence of consent of the parties.8 In the case that the marriage is adjudged void, the property possessed or acquired by the individual spouses before or after the marriage, as well as its fruits, are considered to be personal property. As for the property jointly earned by the spouses, they must divide it equally unless the court orders otherwise by taking into consideration the obligation in the family and earnings of both parties, as well as their situation in life. A voidable marriage is terminated upon cancellation decided by judgment of the court either at the request of any interested party or ex officio. Under the Civil and Commercial Code, lack of parental consent is a ground to annul a marriage, as is lack of consent to marriage because of mistake, fraud, duress, or nonage (Section 1503). Nevertheless, if the minor spouse turns seventeen or gets pregnant before cancellation of the court, then the marriage is deemed to be valid (Section 1504, paragraph 2, Civil and Commercial Code). The marriage, which is cancelled by judgment of the court, is considered to be terminated on the day when the judgment becomes final; but it may not be set up to the prejudice of the rights of third persons acting in good faith unless the cancellation of the marriage has been registered. 3.2 Divorce Divorce may be effected only by mutual consent of the spouses or by decree of the court. If the divorce is jointly requested by the spouses, it does not require court approval. The divorcing couple can register a divorce in any district office in the country. According to the Civil and Commercial Code, consensual divorce must be made in writing and certified by the signatures of at least two witnesses (Section  1514, paragraph 2). The district office will issue a divorce certificate upon registration. In the case of divorce by mutual consent, the spouses must also decide on the exercise of parental responsibilities and child maintenance. In the absence of an agreement, the court is empowered to make an order with respect to the parental powers and responsibilities, as well as to the amount and duration of child maintenance, on the basis of all relevant circumstances. For example, the court may decide whether the parental responsibilities should be exercised jointly or separately by the former husband and wife. 8 C. Akraviboon, op. cit., p. 132.

Family Law

163

When the divorcing couples cannot agree on divorce, they may file a petition for judicial divorce. Judicial divorce is the legal dissolution of a lawful marriage by judgment of the court. Husband or wife can bring an action for divorce only in certain cases, exhaustively listed by the Code. Accepted grounds for judicial divorce include adultery, although the extent of the offense depends on whether the petitioner is the husband or the wife. The husband is permitted to sue for divorce if the spouse has committed adultery. On the contrary, a woman cannot enter a claim for divorce unless she can prove that her husband is financially maintaining and supporting another person as his wife.9 In the case of divorce by judgment of the court on the grounds of adultery, the divorcing spouse is entitled to claim compensation against the other spouse involved and against any third-party adulterer or adulteress, as the case may be. The Civil and Commercial Code further specifies that the husband is entitled to claim compensation from any person who has wrongfully taken liberties with his wife in an adulterous manner, and the wife is entitled to claim compensation from another woman who has openly shown her adulterous relations with the former’s husband. However, the divorcing party is not entitled to claim compensation if he or she has consented to or connived at the act done by other party (Section 1523). Other grounds include gross misconduct, cruelty of treatment, desertion for more than twelve months, imprisonment for a crime, disappearance, lack of maintenance or financial support, insanity, breach of a bond of good behavior, communicable and dangerous disease, or incompetence (Section  1516, Civil and Commercial Code). Divorce is also allowed when the husband and wife voluntarily live separately because of being unable to cohabit peacefully for more than three years, or live separately for more than three years by the order of the court. Upon termination of the marriage, the sin somros is divided equally between man and woman. Also, the divorced spouses are liable for common debts equally. 4 Filiation Under the Civil and Commercial Code, the relationship between parents and children may be established by virtue of the child’s birth (i.e., filiation) or in certain cases by law (i.e., adoption). In this section we will discuss filiation, while in next section we will deal with adoption. 9 C. Jarujinda, op. cit., p. 89.

164

chapter 9

Generally speaking, filiation refers to the relationship which exists between a child and the child’s parents, forming the basic social nucleus of the family. For this reason it is regulated by the law and cannot be subject to a private agreement between the parties or to a transaction.10 4.1 Paternity and Legitimacy A child is presumed to be the legitimate offspring of his parents if born of a woman during wedlock without regard to the precise period of time elapsing between the marriage and the birth. A child born after the termination of the marriage is presumed to be the legitimate offspring of his parents, if it is born within three hundred and ten days of the termination of the marriage (Section 1536, Civil and Commercial Code). In these cases, there is a relative presumption of paternity and the burden is on someone challenging legitimacy. According to the Civil and Commercial Code, an action to nullify the presumption of paternity must be entered by the supposed father within one year of the birth of the child (Section  1542). A paternity action, however, cannot be filed if the presumptive father previously acknowledged the birth of the child by agreeing to have his name on the birth certificate. In case of conception out of wedlock, a child is considered to be the legitimate child of the mother. In other words, the presumption is that the identity of the mother is always certain and the child’s mother is the woman who gave birth. Paternal filiation at law becomes effective by the subsequent marriage of the parents, by the registration made on application by the father, or by a judgment of the court. Registration is of great significance because it allows the father of an illegitimate child to confer upon said child the status of legitimacy in the absence of marriage. When the father applies for legitimation, however, the child and the mother must give their consent. In a case where the child or the mother raises the objection that the applicant is not the father, or does not give consent, then the registration for legitimation may only be effected by a judgment of the court.11 Under certain conditions, the court statement of paternity has the same effects as voluntary recognition. These conditions are exhaustively listed under Section  1555 of the Civil and Commercial Code and include cases of rape, abduction, or seduction of the mother during the period when conception could have taken place. Also, an action for legitimation may be entered 10 11

T. Meenaganit, op. cit., p. 303. Ibid., p. 201.

Family Law

165

when there is a statement from the father acknowledging the child as his own, or there has been open cohabitation of the presumptive father and the mother during the period where conception could have taken place. 4.2 Reciprocal Rights and Duties of Parents and Children Once filiation has been established, it creates rights and obligations for both the child and the parents, regardless of the circumstances of the child’s birth. The power of parents over their children is legally defined and protected. Generally speaking, it comprises custody, maintenance, and education of the children, as well as administration of their property. Both parents have the right to require from their children complete obedience and respect, and, in the case of disobedience, to threaten punishment and inflict it. With respect to this, Section  1567 of the Civil and Commercial Code provides that a person exercising parental power has the right to punish the child in a reasonable manner only for disciplinary purposes. Parents also have the right to determine the child’s place of residence, require the child to do such work as may be reasonable to his ability and condition in life, and demand the return of the child from any person who unlawfully detains him.12 With regard to the children’s property, parents have the right to manage their property by using the same degree of care as that of a person of ordinary prudence. If the child has an income, it must in the first place be used for his maintenance and education, and any remaining amount should be returned to the child. Nevertheless, Section 1573 of the Civil and Commercial Code states that if the parents’ income is insufficient to care for their needs, parents have the right to receive the income from their children’s property. In some specific circumstances, parents need the authorization of the court before entering into certain juristic acts concerning the management of the child’s assets. Such acts include selling, exchanging, letting out property on hire-purchase, mortgaging, releasing mortgage to mortgagor, or transferring the right of mortgage on immovable property or on mortgageable movable property, among others. These transactions do not produce binding legal effects unless they are performed with the court’s authorization. By the same token, a child cannot renounce an inheritance, refuse a legacy, or accept an inheritance or legacy encumbered with a charge or condition without the consent of his parents and with the approval of the court (Section 1611, Civil and Commercial Code). The Civil and Commercial Code further states that authorization of the court is also necessary in the case of conflict between the interest of the child and the interest of the parents. In this respect, Section 1575 of 12

C. Jarujinda, op. cit., pp. 132 and 139.

166

chapter 9

the Civil and Commercial Code states that for those acts where the interests of a person exercising parental power come into conflict with the interests of the minor, the former must obtain the permission of the court in order to perform such act otherwise the act is deemed to be void. As regards surname, the child has the right to use the name of the father. If the father is unknown, a child has the right to use the name of the mother. Parents are bound to maintain their children and to provide proper education for them during their minority. In other words, children have to be provided with a home, amenities, food, clothing, medical care, and educational support. In the event of divorce or judicial separation, both parents may be required to maintain the children depending on their income. Such obligation terminates when the children reach the age of majority or are able to support themselves, but may revive even after majority if children become infirm or unable to earn their living. The obligation of support is reciprocal. Children are bound to maintain their parents if their parents’ income is not sufficient to meet their basic needs. It is noteworthy that under the Civil and Commercial Code, Section 1562, no person can enter an action, either civil or criminal, against his ascendants without leave of the court. This means that parents may not be sued by their child, unless the case is taken up by the public prosecutor upon application of the child or other close relative. 5 Adoption A child may also become legitimate through adoption. According to the legal definition, adoption is a process which creates bonds of filiation between people who do not have a biological relationship. It is governed by a double group of rules: the Civil and Commercial Code and Child Adoption Act B.E. 2522 (1979).13 In principle, adoption may be effected by a sole applicant or by a married couple living together. In practice, however, it is rare that the Thai authorities approve adoption from a lone prospective adoptive parent. If a married person wishes to adopt a child, he or she must obtain the consent of the spouse.14 13

14

There is no official English version of the Child Adoption Act B.E. 2522 (1979) at present. English translations can be found in various sources, where the translations differ. A recommended English translation can be found at: http://www.ilo.org/dyn/natlex/ docs/ELECTRONIC/70624/102958/F-1572464182/THA70624.pdf. C. Akraviboon, op. cit., p. 171.

Family Law

167

Any natural person is eligible to apply for adoption, provided that certain criteria are met with regard to the best interests of the child. Specifically, the Civil and Commercial Code provides that the minimum age to be eligible for adoption is twenty-five years and the age difference between the adopter and the child to be adopted is fixed to a minimum of fifteen years (Section 1598/19). The person to be adopted can be a minor or an adult. Adoption of minors can take place only with the consent of both parents or, if one of his parents died, the consent of the surviving parent. If the adoptee’s parents are dead, cannot express their consent, or unreasonably refuse to give such consent, the prospective adoptive parents may apply to the court for an order allowing the adoption in lieu of consent. Any decision in this regard must be made with the health, progress, and welfare of the minor as the paramount consideration. Moreover, Section 1598/20 of the Civil and Commercial Code specifies that in the case that the adoptee is not less than fifteen years of age, the adoption can only take place with the consent of the adopted person. Once a permission of adoption is granted, the adopted child acquires the status of legitimate child of the adopter, but none of his rights and duties in the family to which he belongs by birth is prejudiced (Section 1598/28, Civil and Commercial Code). This means that although the natural parents lose parental power from the time when the child is adopted, the adoptee is still bound to maintain his biological family. Correspondingly, his family is also bound to provide maintenance to the adoptee in the event that the adopter is not able do so. It is interesting to note that according to Section 1598/29 of the Civil and Commercial Code, adoption does not create for the adopter any right of inheritance with regard to the child’s property. Thus, the adoptive parents do not qualify as statutory heirs for the inheritance of the adopted. The only exception to this rule occurs in cases where the adoptee dies without a spouse or descendant before the adopter. In these circumstances, the adopter is entitled to claim from the estate of the decedent the properties which were given to him and which still exist in kind after the liquidation of the estate. As regards the dissolution of the adoption, the Civil and Commercial Code makes specific provisions to ensure that dissolution is accompanied by the restoration of reciprocal rights between the adoptee and his natural parents. Precisely, if the adoptee is still a minor, the dissolution must take place only after the consent of the biological parents has been obtained (Section 1598/31, paragraph 2, Civil and Commercial Code). When the adoptee reaches the age of majority, the dissolution of adoption may be made at any time by mutual agreement between the adopter and the adoptee (Section 1598/31, paragraph 1, Civil and Commercial Code). Adoption is also dissolved ipso iure upon marriage between adopter and adoptee.

168

chapter 9

Under conditions exhaustively provided by law, one of the parties to an adoption may also bring an action to court requesting the dissolution of the adoptive relationship. The most frequent reasons for dissolution include serious insults of one of the parties, acts of violence, lack of maintenance or financial support, desertion for more than one year, imprisonment for a crime for more than three years, or disappearance. Courts may dissolve adoption if one party is guilty of serious misconduct, whether it be a criminal offense or not, “which causes the other to be very ashamed or hated, or to sustain excessive injury or trouble” (Section 1598/33, Civil and Commercial Code). Dissolution pronounced by the court takes effect on and from the time when the judgment becomes final. However, it may not be set up to the prejudice of the rights of third persons acting in good faith unless it has been registered. Upon dissolution of adoption, all rights and duties between the adopted child and the adoptive parents cease to exist and the original familial ties between adoptee and biological parents are restored.15 15

C. Jarujinda, op. cit., p. 151.

chapter 10

Law of Inheritance When a person dies, his estate (i.e., aggregate of rights and obligations) does not perish with him but devolves to his heirs. The title to the estate may be transferred to an heir designated by testament or by law. This fact is often expressed by stating that the right of the persons taking the estate may be acquired either by statutory right or by will of the deceased. 1

Basic Notions

The Thai legal system of inheritance is codified in the fifth book of the Civil and Commercial Code. It, among other things, regulates the transmission of the estate of a person after his death, the statutory rights of inheritance, the succession by will, and the administration and devolution of an estate. Subject to the provisions of the Code, the estate of the deceased includes his property of every kind, as well as his rights, duties, and liabilities as they existed at the point of death. This includes all property, whether movable or immovable, tangible or intangible, which was owned by the deceased or deemed to be his property at the time of the decease. According to Section 1600 of the Civil and Commercial Code, however, the estate does not comprise those rights and duties which by law or by their nature are purely personal to the deceased, such as the right to compensation for pain and suffering when injuries caused by accidents lead to the death of the victim (Section 446), the obligations arising under a contract of hire of work when the personal qualification of the contractor is of the essence of the contract (Section 606), or the obligations arising under a contract of hire of services when the personal qualification of the employer is of the essence of the contract (Section 584). The deceased’s rights and obligations under a contract of loan are likewise excluded from the estate (Section 648, Civil and Commercial Code), as well as the claims for children’s allowances. Succession may be statutory, testamentary, or mixed. These are the only legal titles of succession which are available under Thai civil law and it is not possible to succeed under a different title, such as a contract of inheritance. Succession is governed by law when there is no written declaration of the intentions of a person concerning descent of his property after death. In the  event of a person dying intestate, therefore, the property will pass by

© koninklijke brill nv, leiden, ���6 | doi 10.1163/9789004308923_011

170

chapter 10

s­ tatutory descent according to the provisions of Sections 1629 and following of the Civil and Commercial Code. Another mode of acquiring an estate of a deceased person is by will. A will is a legal declaration of the intention of a person concerning his property intended to become operative only after his death. Therefore, any person has the right to make a declaration of intention by will to dispose of his property or regulate matters related to the administration of the property which will take effect according to the law after his death. Testamentary succession enjoys priority over statutory succession. This means that persons are free to dispose of their property and the statutory heirs are named as the successors only in the absence of an express declaration of intention made by a deceased person. The estate of the decedent may also be acquired partly by operation of law and partly by will. More precisely, if a person dies having made a valid will which only disposes of a part of his estate, the remaining estate will be distributed among the statutory heirs according to the law. One title of succession does not exclude the other. Moreover, Section 1621 of the Civil and Commercial Code adds that statutory heirs are also entitled to avail themselves of their statutory right of inheritance up to the extent of their statutory share from the estate which has not been disposed of by the will, unless otherwise provided by the testator.1 If a will or a clause in a will regarding the testator’s property has no effect for any reason, such property devolves on the statutory heirs or, in the absence of statutory heirs, to the state (Section 1699, Civil and Commercial Code). 2 Heirship The person to whom heritage descends by statutory right or by will is called the heir. Heirs who are entitled to succeed to the property by law are called statutory heirs and the heirs who are entitled to succeed to the property by will are called legatees. According to the provisions of the Civil and Commercial Code, the heir who takes the place of the decedent is not liable in excess of the property devolving on him (Section 1601). This means that his liability does not exceed the amount which he receives. In principle, only a natural person who has been alive at the time of the deceased’s death holds a legitimate right to inheritance; however, a child yet unborn but already conceived at the time of the death may be an heir if he is born alive within three hundred and ten days 1 For more on this point, see P. Jitgaannateegit, Lak got mai paeng lae panit moradok [General Principles of Civil and Commercial Law: Inheritance], Bangkok, Nititham, 1993, p. 55 et seq.

Law Of Inheritance

171

after the death of the person whose succession is in question (Section 1604, Civil and Commercial Code).2 An heir can be deprived of his right to inherit for reasons of unworthiness or disinheritance. A person who has behaved in a reprehensible manner may be judged unworthy, i.e., ethically unfit to be the deceased’s heir, and deprived of his succession right by a court decision. According to the Civil and Commercial Code, an heir who, fraudulently or with the knowledge that he prejudices any other heir, diverts or conceals property up to or in excess of his share in the succession is absolutely excluded from the succession (Section 1604). Further, a person is deprived of the right to succession by law if he has been sentenced by a final judgment for having intentionally and unlawfully killed or attempted to kill the deceased. Unworthiness may also be declared when the prospective heir, by fraud or duress, has caused the deceased to make, revoke or change partly or wholly a will concerning the estate, or has partly or wholly forged, destroyed, or concealed a will. Other categories of persons can be divested of their succession right for the same reason: the person who, having prosecuted the decedent for having committed an offense punishable with death, has himself been convicted by a final judgment for bringing a false charge or for fabricating false evidence; or the person who, having knowledge that the decedent was murdered, did not give information necessary to bring the offender to punishment (Section  1606, Civil and Commercial Code). The deceased, however, may remove the exclusion due to unworthiness by a pardon in writing. An heir may also be deprived of his right to inherit by a declaration of intention of the testator. According to Section  1608 of the Civil and Commercial Code, such declaration of intention must be expressed in the form of a will or a piece of writing deposited with the competent official and must clearly stating the identity of the disinherited heir. There are no other restrictions concerning this matter, and the decedent is not bound to provide any particular reason for his decision. A declaration of disinheritance, however, may be revoked by the decedent at any time. If the disinheritance has been made by will, the revocation may be made only by will; but if the disinheritance has been made in writing and deposited with the competent official, such revocation may be made either by will or in writing and deposited with the competent official.

2 For more detailed discussion on this topic, see P. Huthakoon, Kam atibai pramuan got mai paeng lae panit wa duay moradok [Civil and Commercial Law: Inheritance], Bangkok, Thammasat University, 2006.

172 3

chapter 10

Statutory Right of Inheritance

If a person dies without having made a will, the whole of his estate will be distributed among his statutory heirs according to the law (1620, Civil and Commercial Code). For this reason, the blood relatives of the decedent are classified into six categories. The first class of relatives consists of the descendants. In this regard, Section 1627 of the Civil and Commercial Code states that illegitimate children who have been legitimated by their father and adopted children are deemed to be descendants in the same way as legitimate children. It can be argued, a contrario, that illegitimate children who have not been duly acknowledged have no rights of inheritance. If the deceased does not have descendants, then in the second order of succession the parents of the deceased will inherit equally. Should neither the descendants nor the parents inherit, the other degrees of inheritance apply in the following order: brothers and sisters of full blood; brothers and sisters of half blood; grandparents; uncles and aunts. The following rules apply to the distribution of inheritance to the statutory heirs. First, as long as there is any heir surviving or represented in a class of relatives, the heir of the lower class has no right at all to the estate of the deceased. For instance, if the mother of the deceased is still alive, then the brothers or sisters of the deceased will receive nothing and the inheritance will be devolved directly upon the mother. However, in the particular case where there is a descendant surviving (or represented), and also the parents, or one of them, are still surviving, each parent is entitled to the same share as an heir in the degree of children (Section 1630, Civil and Commercial Code). An example will help illustrate this point. Suppose that the deceased person leaves his mother and one child. In this case, the parent and the descendant take an equal share. Second, the statutory heirs of the same class are entitled to equal shares. If there is only one statutory heir in such a class, he is entitled to the whole portion (Section  1633, Civil and Commercial Code). For example, if A dies intestate before his two children B and C, each will be considered as A’s exclusive heirs and will be entitled to one half of the estate. Third, among descendants of different degrees, only the children of the deceased person are entitled to inherit. The descendants of lower degree may receive the inheritance only by the right of representation. Thus, in the example above, if B dies before A, leaving two daughters, B’s share of the estate will go to his daughters, entitling each one to one-fourth of the whole. The surviving spouse is also a statutory heir and shares the estate with the relatives of the deceased. The share of the surviving spouse depends on whether the deceased has any other heirs and varies in relationship to the

Law Of Inheritance

173

closeness of the other heirs to the deceased. The closer the relationship of other heirs to the deceased, the smaller is the share of the surviving spouse. For instance, if the decedent leaves a spouse and children, the surviving spouse is entitled to the same share as an heir in the degree of children. In the case that the decedent leaves the spouse and parents, the surviving spouse inherits one half of the estate while the other half is allocated to the parents. The same rule applies if the decedent leaves the spouse and siblings of full blood. In such a situation, the surviving spouse inherits one half of the estate and the other half is distributed among brothers and sisters in equal portions. The surviving spouse receives two-thirds of the inheritance when the other heirs are siblings of half blood, grandparents, or uncles and aunts. In the absence of any statutory heir, the surviving spouse is entitled to the whole inheritance.3 As in the past men were allowed to have several wives in Thailand, the Civil and Commercial Code regulates the interaction between co-wives in the event of the decease of the husband. According to Section 1636 of the Code, if the deceased person has left several wives who acquired their legal status before the enforcement of the Civil and Commercial Code Book V, all the wives are jointly entitled to inherit from him. However, each secondary wife can only claim one half of the share to which the principal wife is entitled. It is interesting to note that the Civil and Commercial Code also contains special provisions relating to Buddhist monks. Specifically, although he can be a legatee, a Buddhist monk cannot claim inheritance as a statutory heir unless he leaves the monkhood and enforces his claim within one year from the death of the decedent (Section 1622). Furthermore, the Code states that any property acquired by a Buddhist monk during his monkhood becomes, upon his death, property of the monastery which is his domicile, unless he has disposed of it during his life or by will (Section 1623). 4

Testamentary Right of Inheritance

The Civil and Commercial Code explicitly defines the notion of a will as a disposition of one’s property to take effect after death. Specifically, Section 1646 of the Code provides that “a person may, in contemplation of death, make a declaration of intention by will concerning dispositions as to his property or other matters which shall take effect according to the law after his death.” It follows that a will does not necessarily dispose of property. It may, for example, appoint an administrator for the estate or a guardian for a minor. 3 P. Jitgaannateegit, op. cit., pp. 89 et seq.

174

chapter 10

4.1 The Capacity to Make a Will A will is a personal act which must be undertaken by the testator himself and cannot be performed by an agent. In order to make a will, the testator must have the capacity of testation at the time when the will is made. In other words, the testator must have the mental capability to understand the nature and extent of the property he owns and have the ability to freely choose his successors. A lack of capacity can either be based upon age or sanity. In this regard, Section 25 of the Civil and Commercial Code requires that a person must have reached the age of fifteen. This age requirement differs from the legal age at which a person is considered to attain full capacity. A will made by a person who has not attained his fifteenth year of age is void (Section 1703, Civil and Commercial Code). The testator must also have the requisite mental capacity to create a valid will. An insane person lacks sufficient capacity to execute a will. It follows that a will is void if it is made by a person adjudged incompetent (Section 1704, Civil and Commercial Code). The Code further provides that a will made by a person, who is alleged to be of unsound mind but not adjudged incompetent, may be annulled only if it is proved that at the time of making the will the testator was actually of unsound mind (Section 1705). A will, or part of it, is also invalid if it has been brought about by mistake, fraud, or duress. Generally, a person who contests a will must apply to the court after the death of the testator; however, if the testator continues to live for more than one year after he has ceased to be under the influence of the duress, such application cannot be made. When the validity of a will is challenged on the ground of mistake or fraud, the challenger must prove that without such mistake or fraud, the will would not have been made. However, a will made under the influence of mistake or fraud is operative if the testator fails to revoke it within one year after discovering the mistake or fraud. In the event that an entire will is deemed invalid, the estate passes by intestate succession. 4.2 Different Types of Wills A will must be made according to the forms provided by law. If the will does not comply with the necessary formal requirements, it is considered to be void. The Civil and Commercial Code provides for four types of ordinary will. The first and most common type of ordinary will in Thailand is the witnessed will. This type of will does not need to be signed or acknowledged by a notary or other public authority to be valid. According to Section 1656 of the Civil and Commercial Code, a will may be made in writing, dated at the time of

Law Of Inheritance

175

making and signed by the testator in the presence of at least two witnesses who sign their names to certify the signature of the testator. Erasures, additions, or other modifications of the will must be made in the same form otherwise the will is considered to be void.4 The second type of ordinary will is the olographic will. The requirements for making a valid olographic will are minimal: it must be entirely written, dated, and signed by the hand of the testator. A letter, for example, may fulfill all these conditions and clearly show the intention of the testator to dispose of his property after death. The presence of witnesses is not necessary. All changes and modifications must be made by the testator’s own hand and signed by him to be valid (Section 1657, Civil and Commercial Code). The official will represents the third type of ordinary will under the Civil and Commercial Code. This is a will which is created by a verbal declaration of intention of the testator at the local Amphur (district) in the presence of the relevant public officer and at least two other persons as witnesses. This form requires the capacity to speak and write Thai from the testator. The declaration of intention is noted down by the public officer and subsequently signed by the testator and two witnesses certifying the genuineness, reliability, and accuracy of the statement. Finally, the statement is dated and signed by the public officer at the local Amphur who certifies by his hand and seal that the will has been made in compliance with the law (Section 1658, Civil and Commercial Code). No erasure, addition, or other modification are valid unless signed by the testator and the witnesses, and certified by the public officer at the Amphur. The secret will constitutes the fourth and last type of ordinary will. Under the provisions of Section 1660 of the Civil and Commercial Code, a will can be made at the Amphur by a secret document. In this case, the testator must sign his name on the document and deliver it to the Amphur in a sealed envelope. Such delivery is duly attested by the public officer in the presence of two witnesses who sign the closed document. If the testator has not written the last will with his own hand, he must state the name and domicile of the writer. Under exceptional circumstances, the law may attach consequences to an oral declaration of intention (Sections 1661 and following, Civil and Commercial Code). For example, in the event of imminent danger of death, war, or during an epidemic, a person has the right to make an oral will. Here the testator must declare his intention regarding the dispositions of the will before at least two witnesses present at the same time. Such witnesses must in turn appear to the Amphur without delay and state before the public officer the dispositions which the testator has declared to them orally, as well as the date, place, and 4 P. Huthakoon, op. cit., p. 112.

176

chapter 10

exceptional circumstances under which the will was made. Such a will, however, loses its validity one month after the time when the exceptional circumstances cease to exist. Thai civil law also provides for a military will during a time when the country is engaged in armed conflict or is in a state of war. In these situations, a person serving in the armed forces may make a special will, and the military officer has the same powers and duties as those of the public officer at the Amphur. It must be added that if a Thai citizen makes his will in a foreign territory, such will may be made either according to the form prescribed by the law of the country where it is made or according to the form prescribed by Thai law (Section 1667, Civil and Commercial Code). 4.3 Effects and Interpretation of Wills As a general rule, rights and duties under a will take effect from the testator’s death. In some circumstances, however, the testator may decide to make the will subject to a condition or time clause. According to Section 1674 of the Civil and Commercial Code, if a testamentary disposition is subject to a condition precedent and the condition is fulfilled before the death of the testator, such disposition takes effect at the death of the testator. Conversely, if the condition precedent is fulfilled after the death of the testator, the testamentary disposition takes effect from the time of the fulfillment of such condition. Let us look at an example. Suppose testator A leaves his car to his son B subject to the condition that B obtains a driving license. If B obtains the driving license before A’s death, B will receive the car at his father’s death. Should B obtain the driving license after his father’s death, then the testamentary disposition will become vested on the fulfillment of such a condition. With regard to condition subsequent, similar rules apply. More precisely, if the condition is fulfilled before the testator’s death, the testamentary disposition has no effect; if the condition is fulfilled after the testator’s death, the testamentary dispositions take effect at the death of the testator but cease to have effect when the condition is fulfilled. Suppose, for example, that testator A owns a plot of uncultivated land which he intends to develop for farming. A has two children B and C. By his will A transfers the property to B on condition subsequent that the land will be used for farming. In this case, B will be entitled to the land only if and so far as he continues farming the land. Should the condition subsequent be fulfilled, the testamentary dispositions would be divested. According to the provisions of Sections 1700 and following of the Civil and Commercial Code, a person may also dispose of his property under a stipulation that such property is inalienable by the beneficiary. In these cases, the

Law Of Inheritance

177

testator must appoint some person, other than the beneficiary, who becomes absolutely entitled to the property in case of violation of the inalienability clause. If there is no such appointment, the inalienability clause is deemed non-existent.5 The inalienability clause may be stipulated either for a period of time or for the life of the beneficiary. In case no period has been fixed in the will, the inalienability clause is deemed to last for the life of the beneficiary if the beneficiary is a natural person, or thirty years if the beneficiary is an artificial person. When interpreting a clause in a will, one must refer to the special rules provided under the Civil and Commercial Code. The main rule in interpretation of a will is based on the ascertainment of the testator’s intention. Thus, if a clause can be interpreted in several senses, the sense which best assures the observance of the intention of the testator must be preferred. Also, when the testator makes a legacy by describing the legatee in such a manner that he can be identified but there are several persons corresponding to such description, all such persons are deemed to be entitled to equal shares (Section 1685, Civil and Commercial Code). In the absence of a special provision concerning the interpretation of testamentary dispositions, however, the general rules of the Civil and Commercial Code discussed in Chapter 1 apply. 4.4 Revocation Since the will is a unilateral juristic act made without the approval of other persons, the testator may at any time revoke his will in whole or in part. It may be done in several ways. When a will is embodied in a document, the testator can revoke it wholly or partly by intentional destruction, alteration, or cancellation, e.g., tearing off the signature, obliterating, or burning the document (Section 1695, Civil and Commercial Code). Such intention is presumed in the absence of any evidence to the contrary. This means that if the will is physically destroyed or lost without the intention of the testator, its provisions are still valid and can be proved by other evidence.6 Similarly, when the testator intentionally destroys the property which is the object of the will, the will is implicitly revoked. Thus, if testator A leaves his phone to someone in his will and then he destroys that phone, the will is automatically revoked (Section 1696, paragraph 2, Civil and Commercial Code).

5 T. Meenaganit, op. cit., p. 329. 6 Ibid., p. 334.

178

chapter 10

Unless the testator has otherwise made a declaration of intention, a will is also revoked by making a new will. To be valid, however, the latter will must be made in any of the forms prescribed by law and it alters only those provisions which are in conflict with it. For example, suppose that testator A has three children B, C, and D, and makes two different wills. In the first will he leaves all his assets to his son B while in the second will he bequeaths the house to C and all furniture to D. As a consequence, B will inherit all A’s assets except the house and its furniture. According to Section 1696, paragraph 1 of the Civil and Commercial Code, a testator may also effect revocation by a valid transfer of the property which is the subject of a will. It follows that if the ownership of the property is legally transferred before the testator’s death, the will becomes invalid. An example will help clarify this point. In his last will, A leaves to his son B a ring passed down from father to son for generations. Should A subsequently decide to sell the ring, the sale counts as the revocation of his will. 4.5 Lapse of a Will As a general rule, a testamentary disposition lapses if the legatee predeceases the testator. This means that the property subject of the will does not go to the legatee’s estate, but falls instead into the residue of the testator’s estate. Suppose, for example, that testator A leaves property X to his son B, property Y to his daughter C, and the rest of his estate to his wife D. If B dies before A, the testamentary disposition lapses and property X falls into the residue of A’s estate. If the testator, however, wants his property to go to other legatees, then he should so specify in the will. In the example above, if A wants property X to pass to C’s estate if B predeceases him, he should expressly provide so in the will. Among other methods whereby the validity of a will lapses, Section 1698 of the Civil and Commercial Code mentions the following: if the testamentary disposition is to take effect on a condition being fulfilled and the legatee dies before its fulfillment or it becomes certain that the condition cannot be fulfilled; the legatee refuses legacy; and if the whole property bequeathed is, without the intention of the testator, lost or destroyed during his lifetime and the testator has not acquired a substitute or a claim for compensation for the loss of such property. 5

Administration of an Estate

The testator has the right to nominate one or several administrators of his estate in a will. The main purpose of the administration of an estate is to settle

Law Of Inheritance

179

a deceased person’s liabilities and transfer the residue to the beneficiaries. The administrator is usually a person of trust of the testator who is in charge of the administration of the estate, the satisfaction of the decedent’s debts, the payment of the legacies, and the distribution of the estate in accordance with the prescription of law or the provisions of the testator. In the absence of an express clause in a disposition upon death, the administrator is appointed by order of the court. The administrator of an estate has the right and duty to perform all those acts as may be necessary for complying with the express or implied order in the will and for the general administration or distribution of the estate. His main task is the submission of a liquidation and distribution account of the property of the estate within one month from the time he was appointed. The inventory of the estate is an essential requirement because it sets out the deceased’s assets and liabilities. Depending on the balance of the liquidation account (assets minus liabilities), the heirs decide whether to accept the estate or renounce to it.7 An interested person may apply to the Thai court to seek the discharge of an administrator (Section 1727, Civil and Commercial Code). The administrator can be discharged by the court if he neglects his duties, or for any other reasonable cause. Under Section 1731 of the Civil and Commercial Code, the administrator of an estate can be removed by the court if he does not produce an inventory in the prescribed time and form due to gross negligence, dishonesty, or obvious inability to do so. This may be the case, for example, of an administrator who fails to complete the estate administration. Generally, the administrator must perform his duties and complete the account of management and distribution of the estate within one year from the date he was appointed unless a different date is fixed by the testator, by a majority of the heirs, or by the court. During this period, the creditors of the estate are entitled to be paid out of the property of the deceased person and the heirs are bound to disclose to the administrator the existence, amount, or location of any property or interest in the debtor’s estate, or any other information which he is legally required to furnish to said administrator. As long as all the creditors or legatees have not been satisfied by the distribution of the estate, the succession is deemed to be under management. This means that the administrator is entitled to perform all the necessary acts of management and handle the assets of the decedent as a reasonable person would handle his own assets. 7 P. Jitgaannateegit, op. cit., p. 174.

180

chapter 10

The amount remaining after the liabilities of the deceased person are subtracted from the assets is distributed among the heirs. The provisions under Sections  1745 and following of the Civil and Commercial Code regulate the preparation of the partition of the estate among the heirs in accordance with the law or the last will of the testator. Until the partition of the estate is completed, there is a community of ownership between the co-heirs. All the assets belonging to the estate are under the joint control of all the co-heirs. This means that each co-heir is presumed to have an equal share in the undivided estate and cannot validly claim title to a specific portion of it unless otherwise provided by law or by express clause in the will.8 Joint ownership by the community of co-heirs may be terminated either extrajudicially or by court order. If the heirs cannot agree among themselves how the partition of the estate should be done, an action for partition of an estate may be entered in court. According to Section  1748 of the Civil and Commercial Code, any heir in possession of the undivided estate is entitled to claim partition. When an action for partition of an estate is entered in court, every person claiming to be an heir entitled to such estate may intervene in the action. In principle, partition of the estate is made by the heirs jointly taking possession of the property or by selling the estate and dividing the proceeds of the sale between the co-heirs. 8 Ibid., p. 182.

References Akraviboon, C., Kam atibai pramuan got mhai paeng lae panit banpa ha wa duay krob krua [Principles of Civil and Commercial Law: Family Law], Bangkok, Thammasat University, 1979. Auaychai, P., Charoenpanit, S., and P. Potawanich, Got mai paeng nueng: luk tua pai [Introduction to Civil Law], Bangkok, Sampanpanit, 1982. Boonyuen, K., Kam atibai pramuan got mhai paeng lae panit wa duay tua taen nai nah [General Principles of Civil and Commercial Law: Agency], Bangkok, Nittibanakan, 1993. Chantrathip, C., Kam atibai pramuan got mhai paeng lae panit laksana kum prakun jum nong jum num [General Principles of Civil and Commercial Law: Mortgage, Pledge, and Guarantee], Bangkok, Thammasat University, 2007. Chanwirat, T., Hoon suan borisat [Partnership and Company Law], Bangkok, Winuchon, 1992. Chumwisoot, S., Seuh khai rakplian hai [Sale, Exchange, and Gift], Bangkok, Winuchon, 1992. Ekchariyakorn, P., Kam atibai pramuan got mai paeng lae panit laksana chao sup [Principles of Civil and Commercial Law: Hire of Property], Bangkok, Winuchon, 2005. Haemaratchata, C., Nitigam [Juristic Acts], Bangkok, Nititham, 1992. Hutasingha, P., Got mai paeng lae panit wa duay nitigam lae sunya [Civil and Commercial Law: Juristic Acts and Contracts], Bangkok, Nittibanakan, 1977. Huthakoon, P., Kam atibai pramuan got mai paeng lae panit wa duay moradok [Civil and Commercial Law: Inheritance], Bangkok, Thammasat University, 2006. Jaisamoot, A., Kaam atibaai pramuang got mai paeng lae panit wa duay bookon [General Principles of Civil and Commercial Law: Legal Personality], Bangkok, Thai Samakom Sangkomsasat, 1971. Jarujinda, C., Kam banyai got mai paeng lae panit wa duay krob krua [General Principles of Civil and Commercial Law: Family Law], Bangkok, Arun, 1992. Jitgaannateegit, P., Lak got mai paeng lae panit moradok [General Principles of Civil and Commercial Law: Inheritance], Bangkok, Nititham, 1993. Jumpa, M., Kam atibai pramuan got mai paeng lae panit wa duay sup sin [Elements of Civil and Commercial Law: Property Law], Bangkok, Chulalongkorn University, 2003. Kampoosiri, P., Lak got mai paeng lae panit krob krua [General Principles of Civil and Commercial Law: Family], Bangkok, Nititham, 1998. Kasemsap, P., Got mai paeng: lak tua pai [General Principles of Thai Commercial Law], Bangkok, Thammasat University, 1981.

182

References

Khurusuwan, R., Kotmaai paeng lak tua bpai [General Principles of Civil Law], Bangkok, Nititham, 2012. Kriwichian, T., Pasa got mai thai [The Language of Thai Law], Bangkok, Thammasat University, 2007. Leksakulchai, C., Kam atibai pramuan got mhai witi pijarana kwam paeng pak tua pai lae pak ou-torn dee ga [General Principles of Civil Law: Introduction to the Thai Judicial System], Bangkok, Nititham, 1994. Maneesawat, S., Nee [The Law of Obligations], Bangkok, Winuchon, 1993. Meenaganit, T., Got mai beuang ton taang turakit [Principles of Thai Business Law], Bangkok, Thammasat University, 2012. Minakanit, T., Sungkom gub got mai [The Law and the Society], Bangkok, Thammasat University, 2009. Nipitikul, T., Got mai: kwam roo chabub pok pa [Introduction to Law], Bangkok, Openworlds, 2001. Panthulap, K., Kam atibai pramuan got mhai paeng lae panit wa duay nee [Elements of Civil and Commercial Law: The Law of Obligations], Bangkok, Ramkhamhaeng University, 1979. Pohtong, T., Kam banyai got mai paeng lae panit wa duay pragun book kon lae sup [General Principles of Civil and Commercial Law: Guarantee and Pledge], Bangkok, Thammasat University, 1984. Poonyapun, P., Kam atibai pramuan got mai paeng lae panit laksana lamerd [Elements of Civil and Commercial Law: Delict Law], Bangkok, Thammasat University, 1978. Poonyapun, P., and P. Sathaman, Kam atibai got mai paeng lae panit laksana sue kai [General Principles of Civil and Commercial Law: Sale], Bangkok, Sawaengsuttikan, 1981. Posataboot, N., Kam banyaai lak kotmaai ekachon [Principles of Thai Private Law], Bangkok, Ramkhamhaeng University Press, 2000. Pramod, S., Pramuan got mai paeng lae panit wa duay nitigam lae nee [The Civil and Commercial Code: Law of Obligations and Juristic Acts], Bangkok, Aksorn, 1965. Ratthanakorn, S., Nee [The Law of Obligations], Bangkok, Nittibanakan, 2007. Saengyouthai, Y., Kuamroo buangton kiao kup kodmai tua pai [General Principles of Law], Bangkok, Thammasat University, 2011. Setabutr, J., Lak got mai paeng laksana lamerd [Principles of Civil Law: The Law of Delict], Bangkok, Thammasat University, 1980. ———, Kwam roo bueng ton haeng got mai paeng lae panit wa duay yuem fak sap [Introduction to Civil and Commercial Law: Contract of Loan and Deposit], Bangkok, Thammasat University, 1985. ———, Kam banyai got mai paeng laksana tua pai haeng nee [Principles of Civil Law: General Provisions on Obligations], Bangkok, Thammasat University, 2006.

References

183

———, Lak got mai paeng laksana nitigam lae sanya [Principles of Civil Law: Juristic Acts and Contracts], Bangkok, Thammasat University, 2008. Sandhikshetrin, K., Pramuan got mai paeng lae panit [The Civil and Commercial Code – Books I–VI and Glossary], Bangkok, Nitibannagarn, 2008. Sodpipan, J., Kam atibai lak got mai nitigam sanya [Basic Principles of Law: Juristic Acts and Contracts], Bangkok, Winuchon, 2002. Suchiwa, B., Kam atibai pramuan got mai lakasasap [Elements of Thai Property Law], Bangkok, Institute of Legal Education Thai Bar Association, 2007. Sukatadsani, S., Jaeng raeng ngaan jaeng tam kong rup khon [Hire of Work, Hire of Services and Carriage], Bangkok, Winuchon, 1992. Sumawongse, P., Got mai paeng: luk tua pai [General Principles of Civil Law], Bangkok, Thammasat University, 1981. Thingsapati, J., Kam atibai pramuan got mai paeng lae panit banpa song wa duay moon haeng nee [General principles of civil and commercial law: Law of Obligations], Bangkok, Thammasat University, 1983. ———, Kam atibai pramuan got mai paeng lae panit wa duay bookon [General Principles of Civil and Commercial Law: Natural and Juristic Persons], Bangkok, Thammasat University. 1984. Waayupap, P. Kam atibaai kotmaai laksana sap [Fundamentals of property law], Bangkok, Institute of Legal Education Thai Bar Association, 2012. Wichianchom, W., Ruam got mai raeng ngaan [Thai Labor Law], Bangkok, Thammasat University, 2000.

Index abuse of a right 34–35 acceptance 62, 68–71 accession. See under acquisition of ownership acquisition of ownership 136 accession 136 acquisitive prescription 139–40 alluvium 137 connection 138 contract 136 occupation 138–39 specification 138 succession 136 Act for the Establishment of Labor Courts and Procedure for Labor Cases 19 Act for the Establishment of the Tax Courts and Procedure for Tax Cases 19 administrative courts 18 adoption 166–68 agency 31–33 alluvium. See under acquisition of ownership analogy 18 artificial persons 29–31 basic concepts 29 categories 30–31 liability 127 rights and obligations 29–30 assignment of claims 60 of contracts 96 association 31 auction 89, 107, 108 bad faith 76, 89, 132, 137, 140, 150 barter. See exchange beast of burden 37, 87 betting 41, 65 bilateral acts 23–24, 91, 100 borrower, obligations of 41–43, 80, 103–4 breach of contract 82 breach of duty 115 burden of proof 57, 116, 117 buyer, obligations of 81, 86–90 capacity 25 capacity for committing wrongful acts 111 incapacity 27–28

incompetents 28 minors 27 quasi-incompetent 28, 79, 111 to make a will 174 to marry 156 to perform juristic acts 26–28 case law 15, 37 Child Adoption Act 166 circulation of vehicles 125 civil law 11 civil law system 15 categorization of law in 10 distinction from common law 16 civil rights 34 absolute 34, 118 personal 41, 68, 134 real 41–42, 134 relative 34, 118 co-debtor 49 commercial law 11 common law systems 16 condition 45 connection. See under acquisition of ownership Constitutional Court 18 constitutional law 12 construction of buildings 136 contracts 62 discharge 80–84 essential elements 62–68 formation 68 free form 67 offer and acceptance 68 penalty 55 special form 67 contractual freedom 86 corporeal objects 36 counter-offer 70 courts of appeal 19 courts of first instance 19 courts of justice 18 damage 54, 110–13 caused by animals 124 caused by buildings 128 compensation of 110–14

185

Index damage (cont.) non-pecuniary 113 pecuniary 111 personal 118 property 119 defamation 121–22 default 81 defective products 118, 125 delicts 110–17 delictual liability 118–20 special rules 120–25 strict liability 125–28 See also delicts delivery of property 43, 51, 87, 145, 175 divisible things 36 divorce 163 dominant property 147–48, 150 donatio mortis causa 93 donation. See gift duress 77–78 economic loss 120 enforceability 80 enforceable 80 error. See mistake eviction 50, 88–89, 92, 95, 103 exchange 90–91 family 155 adoption 166 divorce 162 duties of parents and children 165 filiation 163 marriage 155 See also inheritance family law 12 filiation 163 floating house 37, 87, 107 force majeure 105, 110, 125, 132, 140, 150, 155 foreclosure 107 foundation 31 fraud 75–77 French Civil Code 15 fruits 39 legal 39 natural 38 gambling 41, 59, 65, 133 German Civil Code 15, 110

gift 91–93 good faith 35, 38, 63, 72, 122, 131, 137, 140, 143–45, 157, 162 good morals 34, 53, 65, 67, 79, 133 grantee 147, 149, 151 grantor 107, 149, 151 guarantee 105–6 habitation. See property interests heirship 170 hire 93–102 hire of property 94–97 hire of services 97–100 hire of work 100–2 hirer 94 hypothec. See mortgage immovable things 36 impossibility of performance 83 incompetents. See under capacity incorporeal objects 36 indivisible things 36 ineffective offer 70 inheritance 169 administration of an estate 180 basic notions 169–70 heirship 170 statutory right of 172–73 testamentary right of 178 innominate contract 86 interest, payment of 51 interpretation 16–18, 176–77 joint creditors 46, 84–85 joint debtor 84 joint debtors 46, 84–85 joint liability 84 juristic acts 22–28 classification 23 definition 22 juristic fact 21 juristic person. See artificial person land office 149 lapse of time 22 late acceptance 70 law of persons 11 law of succession 12 lawsuits 91, 112

186 lender 42, 103–4 Liability for Damages Arising from Unsafe Products Act 125 limited company 31 loan 103–5 loan for consumption 104–5 loan for use 103–4 lost property 139 management of affairs without mandate 129 marriage 155 capacity to marry 156 celebration of marriage 157 dissolution of marriage 161 divorce 162 legal effects of 158 patrimonial regime 159 promise to marry 157 merger 60 military courts 18 mistake 72–75 morality 2 mortgage 106–8 movable things 36 nasciturus 25–26 natural persons 26 birth 25 death 26 legal capacity 26 personality 25 negligence 110–29 nominate contracts 86 non-compete clause 44 non-liability clause 90 non-performance 56 novation 59–60 object characteristics 67 concepts 65 unlawful contracts 64 obligation 61 alternative obligation 45 basics 44 conditional obligation 45 conjunctive obligation 45 contingent obligation 45

Index default by the obligor 51 divisible versus indivisible obligations 46 fulfillment of 47 joint and several obligations 46 liquid versus non-liquid obligations 47 mortgaged obligation 46 natural obligations 41 non-performance 56 ordinary obligation 46 performance of 52 principal obligation 47 privileged obligation 46 secondary obligation 47 sources of 11 termination of 61 occupation. See under acquisition of ownership offer 68 formal offer 69 ordinary prudence 43, 89, 103, 108, 115–16, 153, 165 ownership 135 acquisition 136 extent 141 meaning of the term 136 parental authority 27, 157 parental power 162 partnership 31 paternity 164 penalty 56 performance of obligations 48–50, 133 manner of 47 modes of 49 object of 50 place of 51 time of 52 pledge 108–9 pledgee 108 pledgor 108–9, 145 plurality of creditors 85 possession 146 actions in defense of 545 dispossession 145 elements of 144 indirect possession 144 termination of 146 transfer of 145 prenuptial agreement 161

187

Index prescription 84 abbreviated prescription 83 acquisitive prescription 141 interruption 83 ordinary prescription 83 private and public law 13 private law 12 property 38 acquiring means 141 classification of 38 movable and immovable property 36 originating title 136 property interests 146 habitation 151 servitude 148 superficies 151 usufruct 152 property law 11 public order 34, 53, 65–67, 79, 133 quasi-contractual obligations 129 quasi-incompetents. See under capacity quorum 20 ratification 23 real contract 104, 108 real rights. See under civil rights reasonable expenses 95 reasonableness 55 release 56–57 religious association 31 rent habitation 151 hire of property contract 94 obligation to pay 95 prescription 83 right of servitudes. See property interests right of way 148 Roman law 15, 137 sale 86–90 servient property 147–49 set-off 57–59 several liability 44, 84 severe duress 77 silence 77 sources of Thai law 7 acts and emergency acts 8 Constitution 7

judicial precedent 10 royal decree 10 subordinate legislation 10 specific performance 54 specification. See under acquisition of ownership strict liability 125 sublease 97 subordinate legislation 7 substantive and procedural law 14 succession 12, 66–67, 136, 169–72, 179 superficies. See property interests suretyship. See guarantee tender 81 Thai legal system 10, 18, 25, 35 application of the law 17 history 15 organization of the judicial system 20 sources of law 7 Thai Penal Code 65 things 36 property and 35 See also property things outside of commerce 35 third party 33, 47, 59–61, 77, 88, 97, 128, 145, 148 time limitation 45 Trade Competition Act 122–23 transaction. See juristic acts treasure 139 undue enrichment 133 unfair competition 122 unilateral acts 23 Unsafe Products Act 114, 125–26 usufruct. See property interests usufructuary 152 void 78 voidable 79 voluntary act 69, 129, 156–57 wills 175 form of a will 176 interpretation 177 revocation 177 written evidence 80, 88, 94, 104–5 wrongdoer 110–14, 118–19, 123