chapter

Extinguishment of Obligations

Section . General Provisions

Article . Cause of extinguishment The obligatory relationship shall be extinguished, under any ofthe following circumstances: a. the debt obligation has been performed according to agreement; b. a contract is terminated; c. an obligation is setoff; d. the subject matter is withdrawn by the obligor according to the law; e. the obligee remits the obligation; f. there is a merger between the obligee and obligor; or g. other circumstances provided by the law or agreed by parties.

Article . Extinguishment of an accessory right When the obligatory relationship extinguishes, the guarantee of the obligatory right and other accessory rights shall be extinguished at the same time.

Article . Return and strike out of debt incurrence When the entire obligation extinguishes, the obligor can demand the obligee to return or strike out the debt incurrence. If only part of the obligation extinguishes or if there are other rights of obligee on the incurrence, the obligor can demand recordation of the cause of extinction.

Section . Liquidation

Article . Effect of liquidation . If according to the purpose of the obligation, the obligation is liquidated to the obligee or the other persons who have the right  chapter

to receive, the obligatory relationship shall be extinguished upon acceptance. . The person shall be deemed to have the right to receive if he pos- sesses the receipt signed by the obligee or other valid obligatory proof, unless the obligee already knew or does not know the obligor does not have the right of acceptance due to the negligence.

Article . Liquidation offset If one person is responsible for several debts with the same kind of performance and the performance for the liquidation is not enough to pay off the entire obligation, the person who is paying off shall specify the debt offset.

Article . Legal offset If the person who is liquidating the obligation does not specify accord- ing to the preceding article, the debt offset shall be determined accord- ing to the following paragraph: a. first offset the obligation for which the duration has expired; b. if the duration of obligations are all already expired or if none of them have expired, first offset the obligations without guarantees or with the smallest possible guarantee. If the guarantees are the same, first offset the obligation for which the obligor can get most profit after liquidating the obligation. If the profit isthe same, first offset the obligation for which the duration expires first; c.iftheobligorcangetthesameprofitafterclearingtheobligation and the durations are the same, offset partial obligations on a pro rata basis.

Article . Expense, interest and the original debts The performance for liquidating an obligation shall first offset the expense, and second offset the interest and the original obligation. It shall also apply for the offset regulated in the preceding two articles.

Article . Right to demand for acceptance certificate The person who is liquidating the obligation can demand that the person who accepts the liquidation provide an acceptance certificate.