The Law of Obligations

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 con- tracts 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 com- pel 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 compli- ance 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.

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 obli- gor 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