Phần thứ ba Bộ luật Dân sự 2005: Nghĩa vụ dân sự và hợp đồng dân sự

PART THREE

CIVIL OBLIGATIONS AND CIVIL CONTRACTS

Chapter XVII

GENERAL PROVISIONS

Section 1. CIVIL OBLIGATIONS

Article 280.- Civil obligations

A civil obligation is a task under which a subject or more than one subject (hereinafter referred collectively to as the obligors) must transfer an object, transfer rights, pay money or return valuable papers, perform other tasks or refrain from doing certain tasks in the interest of one or a number of other subjects (hereinafter referred collectively to as the obligees).

Article 281.- Bases upon which civil obligations arise

A civil obligation shall arise on the following bases:

1. A civil contract;

2. A unilateral legal act;

3. Performance of a task without authorization;

4. Possession and use of property or enjoyment of benefits from property without a legal basis;

5. Causing damage by performing an illegal act;

5. Performance of a task without authorization;

6. Other bases specified by law.

Article 282.- Objects of civil obligations

1. An object of a civil obligation may be a property or a task which must or must not be performed.

2. An object of a civil obligation must be specifically determined.

3. Only those property which are be alienable and tasks which can be performed but are not prohibited by law and not contrary to social ethics may be objects of civil obligations.

Section 2. PERFORMANCE OF CIVIL OBLIGATIONS

Article 283.- The principle for performance of civil obligations

An obligor must perform his/her obligation in an honest manner, in the spirit of cooperation, in a manner faithful to his/her commitment and not contrary to law and social ethics.

Article 284.- Places for performance of civil obligations

1. The place for the performance of a civil obligation shall be agreed upon by the parties.

2. In cases where there is no agreement, the place for performance of a civil obligation shall be determined as follows:

a/ It is the location of the immovable property, if the object of the civil obligation is an immovable property;

b/ It is the place of residence or head office of the obligee, if the object of the civil obligation is not an immovable property.

When the obligee changes his/her place of residence or head office, he/she must notify the obligor of the change and must bear extra expenses resulting from the change of the place of residence or head office, unless otherwise agreed upon.

Article 285.- Time limit for performance of civil obligations

1. The time limit for performing a civil obligation shall be agreed upon by the parties or provided for by law.

The obligor must perform his/her civil obligation on time; may perform the civil obligation before the specified time limit only if the obligee so consents; if the obligor has performed the obligation before the specified time limit at his/her own will and the obligee has accepted such performance, the obligation shall be considered to have been performed on time.

2. In cases where the time limit for the performance of a civil obligation has not been agreed upon by the parties or specified by the law, the parties may perform the obligation or request the performance of the obligation at any time, but must notify each other in advance within a reasonable period of time.

Article 286.- Delay in performance of civil obligations

1. The delay in performance of a civil obligation means the obligation has not been performed yet or has been partially performed upon the expiration of the time limit for performance of the obligation.

2. The party that delays the performance of a civil obligation must immediately notify the obligee of the non-performance of the obligation on time.

Article 287.- Postponement of performance of civil obligations

1. When it is impossible to fulfill a civil obligation on time, the obligor must immediately inform the obligee thereof and propose the postponement of the performance of the obligation.

In case of failure to inform the obligee, the obligor must compensate for the arising damage, except in cases where it is otherwise agreed upon or the notification cannot be made due to objective causes.

2. The obligor may postpone the performance of an obligation if the obligee so agrees. The postponed performance of a civil obligation shall still be considered a timely performance.

Article 288.- Delay in acceptance of performance of civil obligations

1. The delay in acceptance of the performance of a civil obligation means that, upon the expiration of the time limit for the fulfillment of the civil obligation, the obligor has already fulfilled the civil obligation as agreed upon, but the obligee does not accept the performance of such obligation.

2. In case of delay in accepting the civil obligation's object being a property, the obligor must take necessary measures to preserve the property and shall be entitled to request the reimbursement of reasonable expenses.

3. With respect to a property which is in imminent danger of decay, the obligor shall have the right to sell such property and return the proceeds from the sale of such property to the obligee after deducting necessary expenses for the preservation and sale of such property.

Article 289.- Performance of the obligation to hand over objects

1. The person obliged to hand over an object must preserve and maintain the object until the hand-over thereof.

2. When the object to be handed over is a distinctive object, the obligor must hand over the exact object in the exact conditions as committed; if the object to be handed over is a fungible object, it must be handed over in the exact quality and quantity as agreed upon. If there is no agreement regarding the quality, the object to be handed over must be of average quality; if it is an integrative object, it must be handed over in sets.

3. The obligor must bear all expenses related to the hand-over of the object, unless otherwise agreed upon.

Article 290.- Performance of the obligation to pay money

1. The obligation to pay money must be performed in full amount, on time, at the right place and by the right mode agreed upon.

2. The obligation to pay money shall cover the payment of interests on principals, except otherwise agreed upon.

Article 291.- The obligation to perform or not to perform a task

1. The obligation to perform a task is the obligation under which the obligor is obliged to perform that very task.

2. The obligation not to perform a task is the obligation under which the obligor is obliged not to perform that very task.

Article 292.- Periodic performance of a civil obligation

A civil obligation can be performed periodically, if so agreed upon or provided for by law.

The delay in periodic performance of a civil obligation shall also be considered the delay in performance of the civil obligation.

Article 293.- Performance of a civil obligation through a third party

With the obligee's consent, the obligor may delegate a third party to perform the civil obligation on his/her/its behalf but shall still be accountable to the obligee if the third party does not perform or performs the civil obligation improperly.

Article 294.- Conditional performance of a civil obligation

In cases where the conditions for the performance of a civil obligation are agreed upon by the parties or provided for by law, the obligor must perform the obligation when such conditions arise.

Article 295.- Performance of a civil obligation with optional objects

1. A civil obligation with an optional object means an obligation with an object being one of many different properties or tasks, which the obligor may choose at his/her/its free will, unless where it is agreed upon or it is provided for by law that the right of choice is reserved for the obligee.

2. The obligor must notify the obligee of the property or task selected for the performance of the obligation. Where the obligee has determined the time limit for performance of the selected obliga-tion, the obligor must fulfill it on time.

3. In cases where only one property or one task is left, the obligor must hand over such property or perform such task.

Article 296.- Performance of a substitutable civil obligation

A substitutable civil obligation is an obligation whereby if the obligor cannot perform the original obligation, he/she/it may perform another obligation accepted by the obligee as a substitute for such civil obligation.

Article 297.- Separate performance of a civil obligation

When many obligors jointly perform a civil obligation but each obligor has a certain part of the obligation separate from each other's, each obligor shall only have to perform his/her/its own part of the obligation.

Article 298.- Performance of a joint civil obligation

1. A joint civil obligation is an obligation which must be performed by many obligors and the obligee may request any one of the obligors to perform the entire obligation.

2. In cases where an obligor has fulfilled the entire obligation, he/she/it shall have the right to request the other joint obligors to fulfill their respective parts of the joint obligation towards him/her/it.

3. In cases where the obligee has already designated one of the joint obligors to perform the entire obligation, but later exempts that obligor from performing that obligation, the remaining obligors shall also be exempted from performing the obligation.

4. In cases where the obligee exempts only one of the joint civil obligors from performing his/her/its own part of the obligation, the remaining obligors shall still have to fulfill their own parts of the obligation.

Article 299.- Performance of a civil obligation for joint obligees

1. A civil obligation for many joint obligees is an obligation whereby each obligee may request the obligor to perform the entire obligation.

2. The obligor may perform his/her/its own obligation toward any of the joint obligees.

3. In cases where one of the joint obligees exempts the obligor from performing the part of the obligation toward him/her/it, the obligor must still perform the remainder of the obligation toward the other joint obligees.

Article 300.- Performance of divisible civil obligations

1. A divisible civil obligation is an obligation whereby the object of the obligation is a divisible thing or a task which can be divided into parts for performance.

2. The obligor may perform the obligation part by part, unless otherwise agreed upon.

Article 301.- Performance of indivisible civil obligations

1. An indivisible civil obligation is an obligation whereby the object of the obligation is an indivisible thing or a task which must be performed simultaneously.

2. In cases where many obligors must jointly perform an indivisible obligation, they must perform the obligation simultaneously.

Section 3. CIVIL LIABILITY

Article 302.- Civil liability for breach of civil obligations

1. An obligor that fails to perform or performs improperly his/her/its obliga-tion must bear civil liability to the obligee.

2. In cases where an obligor cannot perform a civil obligation due a force majeure event, he/she/it shall not have to bear any civil liability, unless otherwise agreed upon or provided for by law.

3. The obligor shall not have to bear civil liability if he/she/it can prove that the failure to perform the obligation is due entirely to the fault of the obligee.

Article 303.- Civil liability for failure to perform the obligation to hand over objects

1. When the obligor fails to perform the obligation to hand over a distinctive object, the obligee is entitled to demand the obligor to hand over that exact object; if the object no longer exists or is damaged, the obligor must pay for the value of the object.

2. When the obligor fails to perform the obligation to deliver a fungible object, he/she/it must pay for the value of the object.

3. Where the obligor cannot perform the obligation as provided for in Clauses 1 and 2 of this Article and cause damage to the obligee, apart from paying for the value of the object, he/she/it must also pay compensation for damage to the obligee.

Article 304.- Civil liability for failure to perform an obligation to perform or not to perform a task

1. In cases where the obligor fails to perform a task he/she/it must perform, the obligee may request the obligor to keep performing it or perform the task him/her/itself or assign another person to perform such task and demand the obligor to pay for the reasonable expenses incurred and to pay compensation for damage.

2. When the obligor is not allowed to perform a task but still performs such task, the obligee is entitled to demand the obligor to terminate such performance, restore the initial condition and pay compensation for damage.

Article 305.- Civil liability for delayed performance of civil obligations

1. When the performance of a civil obligation is delayed, the obligee may extend the time limit so that the obligor can fulfill the obligation; if this time limit has expired and the obligation remains unfulfilled, the obligor must, at the request of the obligee, still perform the obligation and pay compensation for damage; if the performance of the obligation is no longer necessary to the obligee, the obligee shall have the right to refuse to accept the performance of the obligation and demand compen-sation for damage.

2. In cases where the obligor delays making payments, such obligor must pay the interests on the unpaid amount at the basic interest rate announced by the State Bank at the time of payment corresponding to the period of delayed payment, unless otherwise agreed upon or provided for by law.

Article 306.- Civil liability for delayed acceptance of the performance of civil obligations

The obligee that delays accepting the performance of a civil obligation, thus causing damage to the obligor, must compensate the obligor for the damage and bear all the risks arising as from the time of delaying the acceptance, unless otherwise agreed upon or provided for by law.

Article 307.- Liability to compen-sate for damage

1. The liability to compensate for damage includes the liability to compen-sate for material damage and the liability to compensate for mental damage.

2. The liability to compensate for material damage is the liability to make up for the actual material losses caused by the breaching party, which can be calculated in money and include the loss of property, reasonable expenses incurred in preventing, mitigating and/or redressing the damage and the actual loss or reduction of income.

3. A person causing mental damage to another person by infringing upon the life, health, honor, dignity or prestige of such person shall have to pay pecuniary compensation to the victim in addition to stopping the infringement, offering an apology and making public rectification.

Article 308.- Fault in civil liability

1. A person who does not perform or performs improperly a civil obligation must bear civil liability if he/she is at fault either intentionally or unintentionally, unless otherwise agreed upon or provided for by law.

2. Intentionally causing damage means a situation in which a person is fully aware that his/her act will cause damage to another person and still performs the act, thereby allowing the damage to occur whether intentionally or unintentionally.

Unintentionally causing damage means a situation in which a person does not foresee that his/her act may cause damage, though he/she must have known or can know in advance that such damage will occur, or foresees that his/her act may act cause damage but believes that the damage would not occur or can be prevented.

Section 4. TRANSFER OF THE RIGHT TO DEMAND AND TRANSFER OF CIVIL OBLIGATIONS

Article 309.- Transfer of the right to demand

1. An obligee having the right to demand the improperly of a civil obligation may transfer that right to a transferee under agreement, except for the following cases:

a/ The right to demand support payment and to demand compensation for damage caused by infringement upon his/her life, health, honor, dignity or prestige;

b/ The obligee and the obligor have agreed not to transfer the right to demand;

c/ Other cases provided for by law.

2. When an obligee transfers the right to demand to a transferee, the later shall become the obligee holding the right to demand.

The transferor of the right to demand must notify the obligor in writing of the transfer of the right to demand. The transfer of the right to demand does not require the consent of the obligor, unless otherwise agreed upon or provided for by law.

Article 310.- Forms of transfer of the right to demand

1. The transfer of the right to demand shall be expressed in writing or orally.

2. In cases where it is provided for by law that the transfer of the right to demand must be expressed in writing, notarized, or authenticated, registered or permitted, such provisions must be complied with.

Article 311.- The obligation to provide information and transfer papers

1. The transferor of the right to demand must provide necessary information and transfer the relevant papers to the transferee.

2. The transferor of the right to demand who breaches the obligation provided for in Clause 1 of this Article and causes damage shall have to compensate for the damage.

Article 312.- Non-liability after transferring the right to demand

The transferor of the right to demand shall not have to bear liability for the obligor's capability to perform the obliga-tion, unless otherwise agreed upon.

Article 313.- Transfer of the right to demand with measures to secure the performance of civil obligations

In cases where the right to demand the performance of civil obligations involves security measures, the transfer of the right to demand shall also include such security measures.

Article 314.- The obligor's right of refusal

1. In cases where the obligor is not notified of the transfer of the right to demand or the transferee cannot prove the authenticity of the transfer of the right to demand, the obligor shall have the right to refuse the performance of obligation toward the transferee.

2. In cases where the obligor is not notified of the transfer of the right to demand and has already performed the obligation toward the transferor of the right to demand, the transferee must not demand the obligor to perform the obligation toward him/her/it.

Article 315.- Transfer of civil obligations

1. The obligor may transfer a civil obligation to a substitute obligor, if it is so consented by the obligee, except in cases where the obligation is connected with the personal identity of the obligor or where it is provided for by law that such obligation must not be transferred.

2. When being transferred an obligation, the substitute obligor shall become the obligor.

Article 316.- Forms of transfer of civil obligations

1. The transfer of a civil obligation shall be expressed either in writing or orally.

2. Where it is provided for by law that the transfer of obligation must be expressed in writing, notarized or authenticated, registered or permitted, such provisions must be complied with.

Article 317.- Transfer of civil obligations with security measures

In cases where a secured civil obligation is transferred, the security measures shall terminate, unless otherwise agreed upon.

Section 5. SECURITY FOR THE PERFORMANCE OF CIVIL OBLIGATIONS

I. GENERAL PROVISIONS

Article 318.- Measures to secure the performance of civil obligations

1. The measures to secure the performance of civil obligations include:

a/ Pledge of property;

b/ Mortgage of property;

c/ Deposit;

d/ Security collateral;

e/ Escrow account;

f/ Guaranty;

g/ Pledge of trust.

2. In cases where the security measures are agreed upon by the parties or provided for by law, the obligor must implement those security measures.

Article 319.- Scope of security for the performance of a civil obligation

1. A civil obligation may be partially or fully secured as agreed upon or as provided for by law; if the scope of security is not agreed upon or provided for by law, the obligation shall be regarded as fully secured, including the obligation to pay interests and compensation for damage.

2. The parties may agree on measures to secure the performance of civil obligations in order to secure the performance of assorted obligations, including current obligations, future obligations or conditional obligations.

Article 320.- Objects used to secure the performance of civil obligations

1. Objects used to secure the performance of civil obligations must be under the ownership rights of the securing party and be permitted for transaction.

2. Objects used to secure the performance of civil obligations are the existing objects or objects to be formed in the future. Objects to be formed in the future are movable property or immovable property under the ownership of the securing party after the time the obligations are established or the security transactions are entered into.

Article 321.- Monies, valuable papers used to secure the performance of civil obligations

Monies, bonds, shares, promissory notes and other valuable papers can be used to secure the performance of civil obligations.

Article 322.- Property rights used to secure the performance of civil obligations

1. Property rights owned by the securing party, including property rights arising from copyrights, industrial property rights, rights to plant varieties, the right to claim debts, the right to receive insurance indemnities for secured objects, property rights to capital amounts contributed to enterprises, property rights arising from contracts and other property rights of the securing party, may all be used to secure the performance of civil obligations.

2. Land use rights may be used to secure the performance of civil obligations in accordance with the provisions of this Code and the law on land.

3. The right to exploit natural resources shall be used to secure the performance of civil obligations in accordance with the provisions of this Code and the law on natural resources.

Article 323.- Registration of secured transactions

1. Secured transactions are civil transactions for which, as agreed upon by the parties or provided for by law, the application of security measures defined in Clause 1, Article 318 of this Code, is required.

2. The registration of secured transactions shall be carried out in accordance with the provisions of law on registration of secured transactions. The registration shall constitute a condition for secured transactions to be effective only in cases where it is so provided for by law.

3. Where secured transactions are registered under the provisions of law, such secured transactions shall be legally valid for a third party as from the time of registration.

Article 324.- Property used to secure the performance of many civil obligations

1. A property can be used to secure the performance of many civil obligations, if its value at the time of establishment of the secured transaction is greater than the total value of all secured obligations, unless otherwise agreed upon or provided for by law.

2. In cases where a property is used to secure the performance of many obligations, the securing party must notify the subsequent secure that the security property is being used to secure the performance of another obligation. Each time of security must be made in writing.

3. In cases where property must be disposed of to secure the performance of a due obligation, the other obligations, though being undue, shall be considered being due and all the secures are entitled to participate in the disposal of the property. The secure that has notified the disposal of the property shall have to dispose of the property, unless otherwise agreed upon by the secures.

In cases where the parties wish to continue performing the undue obligations, they may reach agreement on the use of other property by the securing party to secure the performance of undue obligations.

Article 325.- Priority order of payment

The payment priority order under the disposal of security property shall be determined as follows:

1. In cases where the secured transactions are registered, the payment priority order upon the disposal of security property shall be determined according to the registration order;

2. In cases where one property is used to secure the performance of many civil obligations with registered secured transactions and unregistered secured transactions as well, priority shall be given to the payment of registered secured transactions;

3. In cases where one property is used to secure the performance of many civil obligations with all secured transactions being unregistered, the payment priority order shall be determined according to the order of establishment of secured transactions.

II. PLEDGE OF PROPERTY

Article 326.- Pledge of property

The pledge of a property is a transaction in which a party (hereinafter referred to as the pledgor) hands over a property to the other party (hereinafter referred to as the pledgee) to secure the performance of a civil obligation(s).

Article 327.- Forms of pledge of property

The pledge of property must be established in writing, either in a separate document or incorporated in a principal contract.

Article 328.- Effect of pledge of property

A pledge of property shall take effect as from the time of handing over the property to the pledgee.

Article 329.- Duration of pledge of property

The duration of a pledge of property shall be agreed upon by the parties. In the absence of such agreement, the pledge duration shall be counted till the termination of the obligation secured by the pledge.

Article 330.- Obligations of the property pledgor

The property pledgor shall have the following obligations:

1. To hand over the pledged property to the pledgee as agreed upon;

2. To notify the pledgee of the right of a third party to the pledged property, if any; in the absence of such notification, the pledgee shall have the right to cancel the property pledge contract and demand compensation for damage, or to maintain the contract and accept the rights of the third party to the pledged property;

3. To pay the pledgee reasonable expenses incurred for maintaining and preserving the pledged property, unless otherwise agreed upon.

Article 331.- Rights of the property pledgor

The property pledgor shall have the following rights:

1. To demand that the pledgee suspend the use of the pledged property in the cases specified in Clause 3, Article 333 of this Code, if such use puts the pledged property in danger of loss or depreciation of its value;

2. To sell the pledged property, if so agreed by the pledgee;

3. To replace the pledged property with another property, if so agreed upon;

4. To demand that the pledgee that keeps the pledged property return the pledged property when the obligation secured by the pledge has terminated;

5. To demand that the pledgee compensate for damage caused to the pledged property.

Article 332.- Obligations of the property pledgee

The property pledgee shall have the following obligations:

1. To maintain and preserve the pledged property; if causing loss of, or damage to, the pledged property, to pay compensation for damage to the pledgor;

2. Not to sell, exchange, donate, lease, or lend the pledged property; not to use the pledged property to secure the performance of another obligation;

3. Not to exploit the utility of, or enjoy the yields and/or profits from, the pledged property, if not so consented by the pledgor;

4. To return the pledged property upon the termination of the obligation which is secured by the pledge or when it is replaced by another security measure.

Article 333.- Rights of the property pledgee

The property pledgee shall have the following rights:

1. To demand that the person unlawfully possessing or using the pledged property return the property;

2. To demand that the pledged property be disposed of in the manner as agreed upon or provided for by law for the performance of an obligation;

3. To exploit the utility of, and enjoy the yields and/or profits from, the pledged property, if so agreed upon;

4. To be paid reasonable expenses for the preservation of the pledged property when returning the pledged property to the pledgor.

Article 334.- Pledge of many properties

In cases where many properties are pledged to secure the performance of one civil obligation, each property shall be determined as securing the performance of the entire obligation. The parties may also agree that each property secures the performance of a part of the obligation.

Article 335.- Cancellation of pledge of property

The pledge of a property may be cancelled, if so consented by the pledgee.

Article 336.- Disposal of pledged property

In cases where the time for performing the civil obligation becomes due and the pledgor has failed to perform or has performed the obligation not in accordance with the agreement, the pledged property shall be disposed of by the mode agreed upon by the parties or be auctioned under the provisions of law for the performance of the obligation. The pledgee shall be given priority to receive payment from the proceeds of the sale of the pledged property.

Article 337.- Disposal of pledged property involving many objects

In cases where a pledged property comprises many objects, the pledgee may choose specific property for disposal, unless otherwise agreed upon. The pledgee may only handle a number of necessary property corresponding to the value of the secured obligation; in case of disposal in excess of the number of necessary property, causing damage to the pledgor, the pledgee must pay compensation therefor to the pledgor.

Article 338.- Payment of proceeds from the sale of pledged property

The proceeds from the sale of the pledged property shall be used for fulfillment of obligations toward the pledgee after deducting the expenses for preservation and sale of the property and other necessary expenses related to the disposal of the pledged property; in cases where the secured obligation is a loan, the payment shall be made to the pledgee in the order of principal, interest, fine and pecuniary compensation for damage, if any; the remaining proceeds, if any, must be returned to the pledgor; if the sale proceeds are insufficient, the pledgor must pay the deficit.

Article 339.- Termination of pledge of property

The pledge of property shall terminate in the following cases:

1. The obligation secured by the pledge has terminated;

2. The pledge of property has been cancelled or substituted by another security measure;

3. The pledged property has been disposed of;

4. It is so agreed by the parties.

Article 340.- Return of pledged property

When the pledge of property is terminated as provided for in Clauses 1 and 2 of Article 339 of this Code, the pledged property and ownership right certificates shall be returned to the pledgor. Yields and profits received from the pledged property shall also be returned to the pledgor, unless otherwise agreed upon.

Article 341.- Pledge of property at pawn shops

The pledge of property at pawn shops shall comply with the provisions of Articles 326 thru 340 of this Code and other legal documents regarding activities of pawn shops.

III. MORTGAGE OF PROPERTY

Article 342.- Mortgage of property

1. The mortgage of property means the use by a party (hereinafter referred to as the mortgagor) of his/her/its own property to secure the performance of a civil obligation toward the other party (hereinafter referred to as the mortgagee) without transferring such property to the mortgagee.

In cases where an entire immovable or movable property containing an auxiliary object is mortgaged, the auxiliary object of such immovable or immovable property shall also belong to the mortgaged property.

In cases where only part of the immovable or movable property containing an auxiliary object is mortgaged, the auxiliary object shall belong to the mortgaged property, unless otherwise agreed upon by the parties.

The mortgaged property can also be the property to be formed in the future.

2. The mortgaged property shall be held by the mortgagor. The parties may agree to let a third party keep the mortgaged property.

3. The mortgage of land use rights shall comply with the provisions of Articles 715 thru 721 of this Code and other relevant provisions of law.

Article 343.- Forms of property mortgage

The mortgage of property must be made in writing, either in a separate document or incorporated in a principal contract. Mortgage documents must be notarized, authenticated or registered, if so provided for by law.

Article 344.- Duration of mortgage

The parties shall agree on the duration of a mortgage of property; in the absence of such agreement, the mortgage shall last until the termination of the obligation secured by the mortgage.

Article 345.- Mortgage of property currently being leased

A property that is being leased may also be mortgaged. Yields and profits received from the lease of property shall belong to the mortgaged property, if it is so agreed upon or provided for by law.

Article 346.- Mortgage of insured property

1. In cases where a mortgaged property is insured, the insurance coverage shall also belong to the mortgaged property.

2. The mortgagee must notify the insurance organization that the insured property is being used as mortgage. The insurance organization shall pay the insurance indemnities directly to the mortgagee upon the occurrence of an insured incident. In cases where the mortgagee fails to notify the insurance organization that the insured property is being used as mortgage, the insurance organization shall pay indemnities under the insurance contract and the mortgagor is obliged to make payment to the mortgagee.

Article 347.- Mortgage of many properties to secure the performance of one civil obligation

In cases where many properties are mortgaged to secure the performance of one civil obligation, each property shall be determined as securing the performance of the entire obligation. The parties may also agree that each property secures the performance of part of the obligation.

Article 348.- Obligations of the property mortgagor

The property mortgagor shall have the following obligations:

1. To preserve and maintain the mortgaged property;

2. To apply necessary remedial measures, including the cessation of the exploitation of the utility of the mortgaged property, if due to such exploitation the mortgaged property is in the danger of loss or depreciation of its value;

3. To notify the mortgagee of a third party's rights to the mortgaged property, if any; in case of non-notification, the mortgagee may cancel the property mortgage contract and demand compensation for damage or maintain the contract and accept the third party's rights to the mortgaged property;

4. Not to sell, exchange or donate the mortgaged property, except for the cases specified in Clauses 3 and 4, Article 349 of this Code.

Article 349.- Rights of the property mortgagor

The property mortgagor shall have the following rights:

1. To exploit the utility of, and enjoy the yields and profits from, the property, except in cases where the yields and profits also belong to the mortgaged property as agreed upon;

2. To invest so as to increase the value of the mortgaged property;

3. To sell, replace the mortgaged property if such property is a commodity circulated in the process of production and/or business;

In case of sale of the mortgaged property being a commodity circulated in the process of production and/or business, the right to demand the purchaser pay the money, the sale proceeds or the property formed from the sale proceeds shall become the mortgaged property in replacement of the sold property;

4. To sell, exchange or donate the mortgaged property other than a commodity circulated in the process of production and/or business, if so agreed by the mortgagee;

5. To lease, lend the mortgaged property but with the notification to the lessee or the borrower that the leased or lent property is being mortgaged, and to have to notify such to the mortgagee;

6. To reclaim the mortgaged property held by a third party, when the obligation secured by the mortgage is terminated or secured by another measure.

Article 350.- Obligations of the property mortgagee

The property mortgagee shall have the following obligations:

1. To return to the mortgagor the papers on the mortgaged property upon termination of the mortgage in cases where the parties agree that the mortgagee keeps the papers on the mortgaged property;

2. To request a state agency competent to register secured transactions to delete the registration in the cases specified in Articles 355, 356 and 357 of this Code.

Article 351.- Rights of the property mortgagee

The property mortgagee shall have the following rights:

1. To demand that the lessee or the borrower of the mortgaged property in the case specified in Clause 5, Article 349 of this Code terminate the use of the mortgaged property, if such use causes the loss or decrease of the value of such property;

2. To directly check and inspect the mortgaged property but not to hinder or cause difficulty to the use or exploitation of the mortgaged property;

3. To demand that the mortgagor supply information on the actual conditions of the mortgaged property;

4. To demand that the mortgagor apply necessary measures to preserve the property, the property value in cases where exists the danger of causing the loss or decrease of value of the property due to the exploitation and use thereof;

5. To demand that the mortgagor or a third party that keeps the mortgaged property return such property for disposal in cases where the time for fulfillment of the obligation becomes due while the obligagor fails to perform or improperly performs the obligation;

6. To supervise and inspect the process of property formation in case of mortgaging the property to be formed in the future;

7. To request the disposal of the mortgaged property in accordance with the provisions of Article 355 or Clause 3 of Article 324 of this Code and to be given priority in the settlement of payments.

Article 352.- Obligations of a third party holding mortgaged property

A third party holding the mortgaged property shall have the following obligations:

1. To maintain and preserve the mortgaged property; if causing loss of the mortgaged property, the loss or decrease of the value of the mortgaged property, to pay compensation therefor;

2. To discontinue the exploitation of the utility of the mortgaged property, in the case specified in Clause 1, Article 353 of this Code, if the continued exploitation thereof may put the mortgaged property in the danger of losing or decreasing its value;

3. To hand back the mortgaged property to the mortgagee or the mortgagor as agreed upon.

Article 353.- Rights of the third party holding mortgaged property

The third party holding the mortgaged property shall have the following rights:

1. To exploit the utility of, and enjoy the yields and profits from, the mort-gaged property, if it is so agreed upon;

2. To be paid the remuneration and the expenses for maintenance and preservation of the mortgaged property, unless otherwise agreed upon.

Article 354.- Replacement and repair of mortgaged property

1. The mortgagor may replace the mortgaged property only when it is so consented by the mortgagee, unless otherwise agreed upon, except for the case specified in Clause 3, Article 349 of this Code.

2. In case of mortgage of a warehouse, the mortgagor may replace commodities in the warehouse, but must strictly ensure the value of the ware-housed commodities as agreed upon.

3. When the mortgaged property is damaged, the mortgagor must repair the mortgaged property within a reasonable time or replace the mortgaged property with a similar value, unless otherwise agreed upon.

Article 355.- Disposal of mortgaged property

In cases where the time for performing a civil obligation becomes due and the obligor has failed to perform or has improperly performed the obligation, the mortgaged property shall be disposed of in accordance with the provisions of Articles 336 and 338 of this Code.

Article 356.- Cancellation of property mortgage

A property mortgage may be cancelled if the mortgagee so consents, unless otherwise provided for by law.

Article 357.- Termination of property mortgage

A property mortgage shall terminate in the following cases:

1. The obligation secured by the mortgage has been terminated;

2. The property mortgage is cancelled or replaced with another security measure;

3. The mortgaged property has been disposed of;

4. It is so agreed upon by the parties.

IV. DEPOSITS

Article 358.- Deposit

1. Deposit is an act whereby one party transfers a sum of money or precious metals, gems or other valuable things (hereinafter referred to as the deposited property) to another party for a specified time limit to secure the entry into, or the performance of, a civil contract.

Deposit must be established in writing.

2. In cases where a civil contract is entered into or performed, the deposited property shall be returned to the depositor or deducted for the performance of a payment obligation; if the depositor refuses to enter into or perform the civil contract, the deposited property shall belong to the depositary; if the depositary refuses to enter into or perform the civil contract, he/she/it must return the deposited property and pay a sum of money equivalent to the value of the deposited property to the deposi-tor, unless otherwise agreed upon.

V. SECURITY COLLATERAL

Article 359.- Security collateral

1. Security collateral is an act whereby a lessee of a movable property transfers a sum of money or precious metals, gems or other valuable things (hereinafter referred to as security collateral property) to the lessor for a specified time limit to secure the return of the leased property.

2. In cases where the leased property is returned, the lessee shall be entitled to reclaim the security collateral property after deducting the rental; if the lessee does not return the leased property, the lessor shall be entitled to reclaim the leased property; if the leased property is no longer available for the return, the security collateral property shall belong to the lessor.

VI. ESCROW ACCOUNT

Article 360.- Escrow account

1. Escrow account is an act whereby an obligor deposits a sum of money, precious metals, gems or valuable papers into a blocked bank account to secure the performance of a civil obligation.

2. In cases where the obligor has failed to perform or has improperly performed an obligation, the obligee shall be entitled to receive payment and compensation for damage caused by the obligor from the bank where the escrow account is effected, after deducting the bank service charges.

3. The procedures for deposit and payment shall be specified by the law on banking.

VII. GUARANTY

Article 361.- Guaranty

Guaranty is an act whereby a third party (hereinafter referred to as the guarantor) commits with the obligee (hereinafter referred to as the guarantee) to perform an obligation for the obligor (hereinafter referred to as the guaranteed), when the obligation becomes due and the guaranteed has failed to perform or has improperly performed the obligation. The parties may also agree that the guarantor shall only be liable to perform the obligation when the guaranteed is incapable of performing its obligation.

Article 362.- Forms of guaranty

The guaranty must be made in writing, either in a separate document or incorporated in the principal contract. Guarantee documents must be notarized or authenticated in cases where it is so provided for by law.

Article 363.- Scope of guaranty

A guarantor may undertake to guarantee a part or whole of the obligation for the guaranteed.

The guaranty obligation includes interest on the principal, fines and damages, unless otherwise agreed upon.

Article 364.- Remuneration

The guarantor shall be entitled to remuneration if so agreed upon between the guarantor and the guaranteed.

Article 365.- Joint guarantors

When more than one person undertake to guarantee an obligation, they must perform jointly the guaranty, except in cases where they agree or it is provided for by law that the guaranty shall be in independent shares; the obligee may demand that anyone of the joint guarantors perform the entire obligation.

When one of the joint guarantors has performed the entire obligation for the guaranteed, he/she/it shall have the right to demand that the other guarantors perform their shares of the obligation to him/her/it.

Article 366.- Relationship between the guarantor and the guarantee

1. The guarantee must not demand that the guarantor perform an obligation for the guaranteed when the obligation has not become due.

2. The guarantor shall not have to perform the guaranty obligation in cases where the guarantee can offset the obligation with the guaranteed.

Article 367.- The guarantor's right to demand

When the guarantor has fulfilled his/her/its obligation, he/she/it shall have the right to demand the guaranteed to perform his/her/its obligation towards guarantor within the scope of the guaranty, if not otherwise agreed upon.

Article 368.- Waiver of the performance of guaranty

1. In cases where the guarantee exempt the guarantor from the performance of obligation, the guaranteed shall still have to perform the obligation towards the guarantee, except in cases where it is agreed upon or provided for by law that the guaranty must be performed jointly.

2. In cases where one of the joint guarantors is exempted from performing his/her/its part of the guaranty, the other joint guarantors shall still have to perform their parts of the guaranty.

Article 369.- Disposal of the property of the guarantor

In cases when the time limit for performing the obligation for the guaranteed becomes due and the guarantor has failed to perform or has improperly performed the obligation, the guarantor must use his/her/its own property to make payments for the guarantee.

Article 370.- Cancellation of guaranty

A guaranty may be cancelled if the guarantee so consents, unless otherwise provided for by law.

Article 371.- Termination of guaranty

A guaranty shall be terminated in the following cases:

1. The obligation secured by the guaranty is terminated;

2. The guaranty is cancelled or is replaced by another security measure;

3. The guarantor has performed the guaranty obligation;

4. It is so agreed upon by the parties.

VIII. PLEDGE OF TRUST

Article 372.- Pledge of trust guaranty by socio-political organizations

Local socio-political organizations may guarantee by way of pledge of trust for poor individuals and households to borrow sums of money from banks or other credit institutions for production, business or provision of services in accordance with regulations of the Government.

Article 373.- Forms of pledge of trust guarantee

Loans involving the pledge of trust security must be made in writing, clearly stating the loan amounts, purpose of the loans, terms of the loans, interest rates, rights, obligations and responsibilities of the borrowers, the lending banks or credit institutions and the guaranteeing organizations.

Section 6. TERMINATION OF CIVIL OBLIGATIONS

Article 374.- Bases for termination of a civil obligation

A civil obligation shall terminate in the following cases:

1. The obligation is fulfilled;

2. It is so agreed upon by the parties;

3. The obligee waives the performance of the obligation;

4. The obligation is replaced by another civil obligation;

5. The obligation is offset;

6. The obligee and the obligor merge;

7. The statute of limitations for exemption from the civil obligation has expired;

8. The obligor being an individual dies or the obligor being a legal person or other subject ceases to exist while that obligation must be performed by that very individual or legal person;

9. The obligee being an individual dies and whose right to demand does not belong to the inheritance or the obligee being a legal person ceases to exist and the right to demand must not be transferred to another legal person or subject;

10. A distinctive object, as the object of the obligation, ceases to exist and is replaced by another civil obligation.

11. Other cases provided for by law.

Article 375.- Fulfillment of civil obligations

A civil obligation shall be deemed completed when the obligor has performed the entire obligation or part of the obligation but the remaining parts are exempted by the obligee from the performance.

Article 376.- Fulfillment of a civil obligation in cases where the obligee delays accepting the object of the obligation

1. When the obligee delays accepting the object of an obligation, which is an object, the obligor must preserve the object or may deposit it for safekeeping at a place of bailment and must immediately notify the obligee thereof. The party delaying the acceptance must bear all risks and expenses relating to its bailment.

The obligation to deliver an object shall be completed at the time it is bailed in accordance with the quantity, quality and other conditions agreed upon by the parties.

2. In cases where the object of an obligation is money or valuable papers and the obligee delays accepting the object of the obligation, the obligor may also deposit such object at a place of bailment and must immediately notify the obligee thereof; the obligation shall be considered having been completed at the time of bailment.

Article 377.- Termination of civil obligations by agreement

The parties may agree to terminate a civil obligation at any time, provided that such does not harm State interests, public interests or legitimate rights and interests of other persons.

Article 378.- Termination of civil obligations due to waiver of the performance of obligations

1. A civil obligation shall terminate when the obligee waives the performance of obligation for the obligor, unless otherwise provided for by law.

2. When a secured obligation is waived, the security arrangement shall also terminate.

Article 379.- Termination of a civil obligation by substitution with another civil obligation

1. In cases where the parties agree to substitute the original civil obligation with another civil obligation, the original civil obligation shall terminate.

2. The civil obligation shall also terminate if the obligee has accepted another property or another task as a substitute for the property or the task previously agreed upon.

3. In cases where the civil obligation is an obligation to provide support payment, to pay compensation for damage due to infringement on the life, health, honor, dignity and reputation, or other personal obligation which cannot be transferred to other person, then it shall not be substituted with another obligation.

Article 380.- Termination of civil obligations by offsetting obligations

1. In cases where two parties have reciprocal obligations with respect to properties of the same type and both of which are due, they shall not have to perform obligations to each other and the obligations shall be deemed terminated, except otherwise provided for by law.

2. In cases where the values of the properties or the tasks are different, the parties shall pay the difference in value to each other.

3. Objects which can be valued in money may be used to offset the payment obligation.

Article 381.- Cases where civil obligations must not be offset

A civil obligation must not be offset in the following cases:

1. The civil obligation is in dispute;

2. The obligation is to compensate for damage to life, health, dignity, honor or reputation;

3. The obligation is to provide support payment;

4. Other obligations provided for by law.

Article 382.- Termination of civil obligations when the obligor and the obligee merge

When the obligor becomes the obligee with respect to that particular obligation, the civil obligation shall terminate.

Article 383.- Termination of civil obligations due to expiration of the statute of limitations for exemption from civil obligations

When the statute of limitations for exemption from civil obligations expires, the obligations shall terminate.

Article 384.- Termination of civil obligations when the obligor being an individual dies or being a legal person, or another subject ceases to exist

When it is agreed upon by the parties or provided for by law that the obligation must be performed by the obligor him/her/itself, but such individual has died or the legal person or other subject has ceased to exist, then that obligation shall terminate.

Article 385.- Termination of civil obligations when the obligee being an individual dies or being a legal person or other subject ceases to exist

When it is agreed upon by the parties or provided for by law that the obligation shall be performed only for the individual, the legal person or the other subject, that is the obligee, but such individual has died or such legal person or other subject has ceased to exist, then that obligation shall also terminate.

Article 386.- Termination of civil obligation when distinctive objects no longer exist

The obligation to hand over an object shall terminate in cases where the object to be handed over is a distinctive object which no longer exists.

The parties may agree on the substitution with another object or compensation for damage.

Article 387.- Termination of civil obligations in case of bankruptcy

In case of bankruptcy, civil obligations shall terminate in accordance with the provisions of law on bankruptcy.

Section 7. CIVIL CONTRACTS

I. ENTRY INTO CIVIL CONTRACTS

Article 388.- Definition of civil contracts

A civil contract is an agreement between the parties to establish, change or terminate civil rights and/or obligations.

Article 389.- Principles for entering into civil contracts

The entry into a civil contract must adhere to the following principles:

1. Freedom to enter into the contract, provided that it is not contrary to law and social ethics;

2. Voluntariness, equality, goodwill, cooperation, honesty and good faith.

Article 390.- Offering to enter into civil contracts

1. Offering to enter into a contract means the expression of the intention to enter into the contract and to be bound on this offer of the offering party to the other specified party.

2. In cases where the offer to enter into a contract clearly state the time limit for reply and the offer or enters into the contract with a third party within such time limit, he/she/it must pay compensation for damage to the offeree and must not enter into the contract if damage is caused.

Article 391.- Time when an offer to enter into a civil contract takes effect

1. The time when an offer to enter into a civil contract takes effect shall be determined as follows:

a/ It is fixed by the offeror;

b/ If the offeror does not fix such time, the offer to enter into a civil contract shall take effect from the time the offeree receives such offer.

2. An offer to enter into a contract shall be considered having already been received in the following cases:

a/ The offer is transferred to the place of residence, if the offeree is an individual; to the headquarters, if the offeree is a legal person;

b/ The offer is introduced into the official information system of the offeree;

c/ When the offeree knew the offer to enter into the contract by another mode.

Article 392.- Modification, revocation of offers to enter into civil contracts

1. The offeror may modify or revoke his/her offer to enter into a contract in the following cases:

a/ If the offeree receives the notice on modification or revocation of offer before or simultaneously with the time of receiving the offer;

b/ The conditions for modification or revocation of the offer arise in cases where the offeror has clearly stated the eligibility for modification or revocation of the offer when such conditions arise.

2. When the offeror changes the contents of the offer, such offer shall be considered a new offer.

Article 393.- Cancellation of offers to enter into contracts

Where the offeror exercises the right to cancel the offer as such right has been clearly stated in the offer, he/she/it must notify the offeree thereof and such notification shall take effect only when it is received by the offeree before the offeree replies to accept the offer to enter into the contract.

Article 394.- Termination of offers to enter into contracts

An offer to enter into a contract shall terminate in the following cases:

1. The offeree replies not to accept the offer;

2. The time limit for reply of acceptance has expired.

3. When the notice on modication or revocation of the offer takes effect;

4. When the notice on cancellation of the offer takes effect;

5. It is so agreed upon by the offeror and the offeree within the time limit for reply by the offeree

Article 395.- Offer modification proposed by the offeree

When the offeree accepts to enter into a contract but states the conditions therefore or modifies the offer, he/she/it shall be considered having made a new offer.

Article 396.- Acceptance of offers to enter into contracts

The acceptance of an offer to enter into a contract is the offeree’s reply to the offeror on the acceptance of the whole contents of the offer.

Article 397.- Time limit for reply of acceptance of an offer to enter into a contract

1. When the offeror fixes a time limit for reply, the reply of acceptance shall be effective only when it is made within that time limit; if the offeror receives the reply when the time limit for reply has expired, the acceptance shall be considered a new offer of the party late in replying.

In cases where the notice on acceptance of an offer to enter into a contract arrives late for objective reasons which the offeror knew or would have known, such notice on acceptance of the offer to enter into the contract remains effective, except for cases where the offeror immediately replies not to agree with such acceptance of the offeree.

2. When the parties are in direct contact, including contacts via telephone or other means, the offeree must immediately reply whether to accept the offer or not, except for cases where there in an agreement on the time limit for reply.

Article 398.- Cases where offerors die or lose their civil act capacity

In cases where the offeror dies or loses his/her civil act capacity after the offeree accepts to enter into the contract, the offer to enter into the contract remains valid.

Article 399.- Cases where offerees die or lose their civil act capacity

In cases where the offeree dies or loses his/her civil act capacity after making his/her reply to accept the offer to enter into the contract, the reply of acceptance to enter into the contract remains valid.

Article 400.- Revocation of notice on acceptance to enter into contracts

The offeree may revoke his/her notice on acceptance to enter into a contract if such notice arrives before or simultaneously with the time the offeror receives the reply of acceptance.

Article 401.- Forms of civil contract

1. A civil contract can be made orally, in writing or by specific acts, unless a specific form for such type of contract is provided for by law.

2. In cases where it is provided for by law that a contract must be expressed in writing with notarization or authentication, must be registered or permitted, such provisions shall be complied with.

Contracts shall not be invalidated in case of form-related breaches, unless otherwise provided for by law.

Article 402.- Contents of civil contracts

Depending on each type of contract, the parties may agree on the following contents:

1. Object of the contract, which is a property to be handed over, or a task to be performed or not to be performed;

2. Quantity and quality;

3. Price and mode of payment;

4. Time limit, place and mode of performing the contract;

5. Rights and obligations of the parties;

6. Liability for breach of contract;

7. Sanction against breach of contract;

8. Other contents.

Article 403.- Places of entry into civil contracts

The place where a civil contract is entered into shall be agreed upon by the parties; in the absence of such agreement, the place of entry into a civil contract shall be the place of residence of the individual or the head-office of the legal person that has made the offer to enter into the contract.

Article 404.- Time of entry into civil contracts

1. A civil contract shall be entered into at the time when the offeror receives the reply of acceptance to enter into the contract.

2. A civil contract shall also be considered having been entered into when the time limit for reply has expired and the offeree remains silent, if it is agreed upon by the parties that silence means the reply of acceptance.

3. The time of entry into an oral contract shall be the time at which the parties have agreed on the contents of the contract.

4. The time of entry into a written contract shall be the time at which the last party signs the contract.

Article 405.- Effect of civil contracts

Contracts that are legally entered into shall take effect from the time they are entered into, unless otherwise agreed upon or provided for by law.

Article 406.- Main types of civil contract

Contracts shall have the following main types:

1. Bilateral contract, which is a contract under which a party has the obligation to the other;

2. Unilateral contract, which is a contract under which only one party has the obligation;

3. Principal contract, which is a contract the effect of which does not depend on the auxiliary contract;

4. Auxiliary contract, which is a contract the effect of which depends on the principal contract;

5. Contract for the benefit of a third party, which is a contract under which the contracting parties must perform their obligations and the third party shall enjoy benefits from the performance of such obligations;

6. Conditional contract, which is a contract the performance of which depends on the occurrence, change or termination of a certain event.

Article 407.- Standardized contracts

1. A standardized contract is a contract which contains provisions prepared by one party according to a standard contract and given to the other party for reply within a reasonable period of time; if the offeree gives its reply of acceptance, he/she/it shall be considered having accepted the entire content of the standardized contract offered by the offeror.

2. In cases where a standardized contract contains ambiguous provisions, the offeror of the standardized contract shall bear adverse consequences of the interpretation of such provisions.

3. In cases where a standardized contract contains provisions exempting the liability of the offeror of the standardized contract, while increasing the responsibility or abolishing legitimate interests of the other party, such provisions shall not be valid, unless otherwise agreed upon.

Article 408.- Appendices to contracts

1. Appendices may be attached to a contract to detail some provisions of the contract. Appendices shall be as effective as the contract. The contents of appendices shall not be contrary to the contents of the contract.

2. In cases where appendices contain provisions contrary to the contractual provisions, such provisions shall not be valid, unless otherwise agreed upon. In cases where the parties accept appendices with provisions contrary to contractual provisions, such contractual provisions shall be considered having been amended.

Article 409.- Interpretation of civil contracts

1. When a contract contains ambiguous provisions, the interpretation of such provisions shall be based not only on the wording of the contract but also on the mutual intentions of the parties.

2. When a contractual provision may be construed in several meanings, the meaning which makes the implementation of such provision most beneficial to the parties shall be selected.

3. When a contract contains wordings that may be construed in different meanings, such wordings must be interpreted according to the meaning which is most appropriate to the nature of the contract.

4. When a contract contains a provision or wording that is difficult to understand, such provision or wording must be interpreted according to practices at the place where the contract is entered into.

5. When a contract lacks some provisions, such provisions may be supplemented according to practices at the place where the contract is entered into.

6. The provisions of a contract must be interpreted in relation to each other, so that the meanings of such provisions conform to the whole contents of the contract.

7. In case of contradiction between the mutual intentions of the parties and the contractual wordings, the mutual intentions of the parties shall be used for interpretation of the contract.

8. In cases where the advantageous party includes in the contract the contents unfavorable for the disadvantageous party, the interpretation of the contract must be made along the direction of benefiting the disadvantageous party.

Article 410.- Invalid civil contracts

1. The provisions on invalid civil transactions in Articles 127 thru 138 of this Code shall also apply to invalid contracts.

2. The invalidation of principal contracts shall terminate the auxiliary contracts, except in cases where the parties agree that the auxiliary contracts can replace the principal contracts. This provision shall not apply to the security measures for performance of civil obligations.

3. The invalidation of the auxiliary contracts shall not terminate the principal contracts, except for cases where the parties agree that the auxiliary contracts constitute inseparable parts of the principal contracts.

Article 411.- Civil contracts invalidated due to the existence of objects which cannot be realized

1. In cases where a contract, right at the time it is entered into, contains an object which cannot be realized for objective reasons, such contract shall be invalidated.

2. In cases where a contract is entered into and a party knew or would have known that the contract contains an object which cannot be realized but fails to notify such to the other party that has, therefore, entered into the contract, the former must pay damages to the other party, except for cases where the other party knew or would have known the object which cannot be realized.

3. The provisions of Clause 2 of this Article shall also apply to cases where a contract contains one or many parts of an unrealizable object, while the remaining part of the contract remains legally valid.

II. PERFORMANCE OF CIVIL CONTRACTS

Article 412.- Principles for the performance of civil contracts

The performance of a civil contract must conform to the following principles:

1. It must be performed in accordance with the agreement on the object, quality, quantity, category, time limit, methods and other agreements;

2. It must be performed honestly and in the spirit of cooperation and in a manner that best benefits the parties and ensures mutual trust;

3. It must not infringe upon State interests, public interests or legitimate rights and interests of other persons.

Article 413.- Performance of unilateral contracts

With respect to unilateral contracts, the obligor must perform the obligation strictly as agreed upon and may only perform the obligation prior to or after the time limit, if the obligee so consents.

Article 414.- Performance of bilateral contracts

1. With respect to bilateral contracts where the parties have agreed upon the time limit for performing the obligations, each party must perform its obligations when they become due; must not delay the performance for the reason that the other party has not yet performed its obligations to the former, except for cases provided for in Article 415 and Article 417 of this Code.

2. In cases where the parties have no agreement on which party should perform his/her/its obligation first, the parties must concurrently perform their obligations to each other; if the obligations cannot be performed concurrently, the obligation the performance of which takes more time than others shall be performed first.

Article 415.- The right to post-pone the performance of civil obligations in bilateral contracts

1. The party that must perform its obligations first shall have the right to postpone the performance of such obligations, if the other party’s property has seriously depreciated to the extent that the obligations cannot be performed as committed until the other party has the capability to perform its obligations or has a guarantor.

2. The party that must perform its obligations later shall have the right to postpone the performance of due obligations if the party that must perform its obligations first has not yet performed its obligations when they are due.

Article 416.- Lien on property in bilateral contracts

1. Lien on property means that the obligee (hereinafter referred to as the lienor) who is legally possessing the property being an object of a bilateral contract is entitled to retain the property when the obligor fails to perform the obligations or has performed the obligations not strictly as agreed upon.

2. The lienor shall have the following rights and obligations:

a/ To retain the whole or part of the property in the cases defined in Clause 1 of this Article;

b/ To enjoy yields from the property subject to a lien and use them to offset the obligations;

c/ To keep and preserve the property subject to a lien;

d/ To request the owner of the property subject to a lien to pay necessary expenses for the keeping and preservation of such property.

3. A lien shall terminate in the following cases:

a/ It is so agreed upon by the parties;

b/ The lienor violates the obligation to keep and preserve the property subject to a lien;

c/ The owner of the property subject to a lien has fulfilled their obligations.

Article 417.- Non-performance of obligations due to the obligee’s fault

When a party to a bilateral contract is unable to perform its obligations due to the fault of the other party, the former shall have the right to demand that the other party still perform its obligations toward the former or to cancel the contract and demand compensation for damage.

Article 418.- Non-performance of obligations but not due to the faults of the parties

When a party to a bilateral contract is unable to perform its obligations but the parties are not at fault, the non-performer of the obligations shall have no right to demand that the other party perform its obligations toward him/her/it. In cases where a party has performed part of the obligations, it shall have the right to demand the other party perform the corresponding part of the obligations toward it.

Article 419.- Performance of a contract for the benefit of a third party

When a contract is performed for the benefit of a third party, the third party shall have the right to directly request the obligor to perform the obligation toward it; if there appears a dispute between the parties over the performance of the contract, the third party shall not have the right to demand the performance of the obligation until the dispute is settled.

The obligee may also demand that the obligor perform the contract for the benefit of the third party.

Article 420.- A third party's right to refuse

In cases where a third party refuses to enjoy its benefits before the obligor performs his/her/its obligations, the obligor shall not have to perform his/her/its obligations, but must notify the obligee thereof, and the contract shall be considered having been rescinded; the parties shall have to return to each other what they have received; if the third party refuses to enjoy its benefits after the obligor has performed his/her/its obligations, the obligations shall be considered having been fulfilled and the obligee must still fulfill his/her/its commitments toward the obligor.

Article 421.- No amendment or rescission of contracts for the benefits of a third party

Once the third party has agreed to enjoy the benefits, the parties to the contract must not amend or rescind the contract, even though the contract has not yet been performed, unless the third party so consents.

Article 422.- Performance of contracts with agreement on sanction against violations

1. Sanction against violation means an agreement between the contractual parties that the party violating the obligation must pay a sum of money to the violated party.

2. The sanctioning level shall be agreed upon by the parties.

3. The parties may agree that the violating party shall only pay a fine for the violation but not have to pay compensation for damage or shall have to pay both the fine for the violation and compensation for damage; in the absence of prior agreement on the level of compensation for damage, the compensation for the whole damage must be paid.

In cases where the parties have no agreement on compensation for damage, the violating party shall have to pay only the fine for the violation.

III. AMENDMENT AND TERMINATION OF CIVIL CONTRACTS

Article 423.- Amendment of civil contracts

1. The parties may agree to amend their contracts and resolve the consequences of such amendment, unless otherwise provided for by law.

2. In cases where a contract has been made in writing, notarized or authenticated, registered or permitted, the amendment of the contract must also conform to such form.

Article 424.- Termination of civil contracts

A contract shall terminate in the following cases:

1. The contract has been fulfilled;

2. It is so agreed upon by the parties;

3. The individual entering into the contract dies, or the legal person or other subjects entering into the contract cease to exist while the contract must be performed by that very individual, legal person or subjects;

4. The contract is rescinded or unilaterally suspended from performance;

5. The contract cannot be performed because its object no longer exists, and the parties may agree to substitute such object with another object or compensate for damage;

6. Other cases provided for by law.

Article 425.- Rescission of civil contracts

1. A party shall have the right to rescind a contract without having to compensate for damage if the breach of the contract by the other party is a condition for rescission, as agreed by the parties or provided for by law.

2. The party rescinding the contract must immediately notify the other party of the rescission; if failing to give notification, thereby causing damage, it shall have to pay compensation therefore;

3. When a contract is rescinded, it shall cease to be valid ad initio and the parties must return to each other the property they have received; if the property cannot be returned in kind, then it shall be paid for in money.

4. The party at fault in the rescission of the contract shall have to compensate for damage.

Article 426.- Unilateral termination of performance of civil contracts

1. A party shall have the right to unilaterally terminate the performance of a contract if so agreed upon by the parties or provided for by law.

2. The party that unilaterally terminates the performance of the contract must immediately notify the other party of the termination; if failing to give notification, thereby causing damage, it shall have to pay compensation therefore.

3. When the performance of a contract is unilaterally terminated, the contract shall terminate as from the time the other party receives the termination notice. The parties shall not have to continue to perform their obligations. The party that has already performed its obligations shall have the right to demand payment from the other party.

4. The party at fault in the unilateral termination of a contract must compensate for damage.

Article 427.- Statute of limitations for initiating lawsuits related to civil contracts

The statute of limitations for initiating lawsuits to request the courts to settle disputes over civil contracts shall be two years counting from the date legitimate rights and interests of individuals, legal persons or other subjects are infringed upon.

Chapter XVIII

COMMON CIVIL CONTRACTS

Section 1. CONTRACTS FOR PROPERTY SALE AND PURCHASE

I. GENERAL PROVISIONS ON CONTRACTS FOR PROPERTY SALE AND PURCHASE

Article 428.- Contracts for property sale and purchase

A contract for property sale and purchase is an agreement between the parties whereby the seller has the obligation to hand over the property to the purchaser and receive payment, while the purchaser has the obligation to accept the property and make payment to the seller.

Article 429.- Objects of sale and purchase contracts

1. The object of a sale and purchase contract shall be a property permitted for transaction.

2. In cases where the object of a sale and purchase contract is an object, that object must be clearly defined.

3. In cases where the object of a sale and purchase contract is a property right, there must be documents of title or other evidence proving such right of the seller.

Article 430.- Quality of objects for sale and purchase

1. The quality of the objects for sale and purchase shall be agreed upon by the parties.

2. In cases where the quality of objects has been announced or provided for by competent state agencies, the quality of the objects shall be determined in accordance with the announced standards or the regulations of the competent state agencies.

3. When the quality of objects is not agreed upon between the parties or not provided for by law, then the quality of the objects for sale and purchase shall be determined according to the use purposes and the average quality of objects of the same kind.

Article 431.- Price and mode of payment

1. The price shall be agreed upon by the parties or determined by a third party at the parties' request.

In cases where the parties agree to make payments at market prices, the price shall be determined at the place and time of payment.

With respect to the property in civil transactions, for which the State has set a price frame, the price shall be agreed upon by the parties in accordance with that price frame.

2. The parties may agree to apply inflation coefficients upon the fluctuation of prices.

3. The agreed price may be a specific price level or a method of determining the price. In cases where the agreement on the price level or the price-determining method is not clear, the price of the property shall be determined, based on the market price at the place and time the contract is entered into.

4. The mode of payment shall be agreed upon by the parties.

Article 432.- Time limit for performance of sale and purchase contracts

1. The time limit for the performance of a sale and purchase contract shall be agreed upon by the parties. The seller shall have to hand over the property to the purchaser at the time agreed upon; the seller may hand over the property before or after the time limit, only if the purchaser so agrees.

2. When there is no agreement between the parties on the time limit for handing over the property, the buyer shall have the right to demand that the seller hand over the property and the seller shall also have the right to demand that the purchaser receive the property at any time, but the parties must notify each other thereof in advance within a reasonable period of time.

3. When there is no agreement between the parties on the time limit for payment, the buyer must make payment upon receipt of the property.

Article 433.- Places for handing over property

The place for handing over the property shall be agreed upon by the parties; in the absence of such agreement, the provisions of Clause 2, Article 284 of this Code shall apply.

Article 434.- Modes of handing over property

The property shall be handed over by the mode agreed upon by the parties; in the absence of such agreement, the property shall be handed over in one installment by the seller directly to the purchaser.

Article 435.- Liability for handing over objects in an incorrect quantity

1. In cases where the seller hands over the object in a quantity greater than that agreed upon, the purchaser shall have the right to receive or not to receive the excess portion. In case of receipt, the payment for the excess portion shall be made as agreed upon.

2. In cases where the seller hands over the object in a quantity smaller than that agreed upon, the purchaser shall have one of the following rights:

a/ To receive the portion already handed over and demand compensation for damage;

b/ To receive the portion already handed over and set a time limit for the seller to hand over the deficit portion;

c/ To cancel the contract and demand compensation for damage.

Article 436.- Liability for handing over objects in incomplete sets

1. In cases where the object is handed over in an incomplete set, thereby making the use purpose of the object unachievable, the purchaser shall have one of the following rights:

a/ To receive the object and demand that the seller hand over the remaining part, demand compensation for damage and postpone the payment for the part received until the complete set is handed over;

b/ To cancel the contract and demand compensation for damage.

2. In cases where the purchaser has made payment but not yet received the object due to the hand-over of an incomplete set, he/she/it shall be paid interests on the paid amount at the basic interest rate set by the State Bank and demand that the seller compensate for damage due to the hand-over of the incomplete set, starting from the time the contract must be performed to the time the complete set is handed over.

Article 437.- Liability for handing over objects of a wrong kind

In cases where the object handed over is of a wrong kind, the purchaser shall have one of the following rights:

1. To receive the object and make the payment at the price agreed upon by the parties;

2. To demand the hand-over of object of the right kind and compensation for damage;

3. To cancel the contract and demand compensation for damage.

Article 438.- The duty to pay

1. The purchaser must pay in full at the time and place agreed upon; in the absence of such agreement, he/she/it must make full payment at the time and place of handing over the property.

2. The purchaser must pay interests starting from the date of late payment as specified in Clause 2, Article 305 of this Code, unless otherwise agreed upon or provided for by law.

Article 439.- Time for transfer of ownership rights

1. The rights to ownership over a property for purchase and sale shall be transferred to the purchaser as from the time the property is handed over, unless otherwise agreed upon by the parties or provided for by law.

2. With respect to a property for sale and purchase to which the ownership rights must, as provided for by law, be registered, the ownership rights shall be transferred to the purchaser as from the time the procedures for registering the ownership rights to such property have been completed.

3. In cases where the property for sale and purchase has not yet been handed over while yields and/or incomes are generated, such yields and/or incomes shall belong to the seller.

Article 440.- Time for bearing risks

1. The seller shall bear the risks to the property for purchase and sale until the property is handed over to the purchaser; while the purchaser shall bear risks to such property from the time of receiving it, unless otherwise agreed upon.

2. With respect to a contract for purchase and sale of property to which the ownership rights must, as provided for by law, be registered, the seller shall bear risks to such property until the registration procedures are completed, and the purchaser shall bear the risks from the time the registration procedures have been completed even when it has not yet received the property, unless otherwise agreed upon.

Article 441.- Transportation costs and costs related to the transfer of ownership rights

In cases where there is no agreement between the parties or no legal provision on transportation costs and costs relating to the transfer of ownership rights, the seller must bear the costs of transportation to the place of handing over the property and the costs related to the transfer of ownership rights.

Article 442.- The obligation to provide information and use instructions

The seller is obliged to provide necessary information on the property for purchase and sale, and instructions on the use of such property; if the seller fails to perform this obligation, the purchaser shall be entitled to request the seller to perform it; if the seller still declines to perform it, the purchaser shall be entitled to cancel the contract and demand compensation for damage.

Article 443.- Security of the purchaser's ownership rights to the property for purchase and sale

1. The seller is obliged to secure that the ownership rights to a property sold to the purchaser are not disputed by a third party.

2. In cases where the property is disputed by a third party, the seller must take side with the purchaser in order to protect the latter's interests; if the third party is entitled to own part or the whole of the property for purchase and sale, the purchaser shall be entitled to cancel the contract and demand that the seller compensate for damage.

3. In cases where the purchaser knew or must have known that the property for purchase and sale is under the ownership of a third party, but still purchases it, he/she/it must return the property to its owner and shall not be entitled to demand compensation for damage.

Article 444.- Security of the quality of objects for purchase and sale

1. The seller must secure the use value or properties of an object for purchase and sale; if after the purchase, the purchaser discovers a defect that devaluates or reduces the use value of the object already purchased, he/she/it must promptly notify the seller of the defect upon the detection thereof and is entitled to request the seller to repair or change the defective or devalued object and compensate for damage, unless otherwise agreed upon.

2. The seller must secure that the object for sale conforms to the descriptions on its pack, trademark or to the sample that has been selected by the purchaser.

3. The seller shall not be liable for defects of the object in the following cases:

a/ Defect that the purchaser knew or must have known when purchasing the object;

b/ The object auctioned or object sold at a second-hand shop;

c/ The purchaser is at fault in causing the defects of the object.

Article 445.- The obligation to provide warranty

The seller shall have the obligation to provide warranty for a sold object for a period of time called warranty time limit, if the warranty is agreed upon by the parties or provided for by law.

The warranty time limit shall be counted from the time the purchaser has the obligation to receive the object.

Article 446.- The right to demand warranty

Within the warranty time limit, if the purchaser discovers a defect in the purchased object, he/she/it shall be entitled to request the seller to repair it free of charge, reduce its price, exchange the defective object for another one, or return the object and get back the money.

Article 447.- Repair of objects within the warranty time limit

1. The seller must repair the object and secure that the object meets all the quality standards or has all the properties as committed.

2. The seller shall bear the expenses for repair and transportation of the object to the place of repair and from the place of repair to the place of residence or the head- office of the purchaser.

3. The purchaser shall be entitled to request the seller to complete the repair within the time limit agreed upon by the parties or within a reasonable period of time; if the seller cannot repair or complete the repair within such time limit, the purchaser shall be entitled to demand a price reduction, an exchange of the defective object for another one, or return the object and get back the money.

Article 448.- Compensation for damage within the warranty time limit

1. In addition to the demand for the application of warranty measures, the purchaser shall be entitled to request the seller to compensate for damage caused by technical defects of the object within the warranty time limit.

2. The seller shall not have to compensate for damage if he/she/it can prove that the damage was caused due to the purchaser's fault. The seller shall be entitled to a reduction of damages if the purchaser has not applied the necessary measures within his/her/its capacity to prevent or limit the damage.

Article 449.- Purchase and sale of property rights

1. In case of purchase and sale of property rights, the seller must transfer all documents of title and carry out the procedures for transfer of ownership rights to the purchaser, whereas the purchaser must pay money to the seller.

2. In cases where the property rights are rights to claim debts and the seller warrants the debtor's solvency, the seller shall be jointly liable for the payment if the debtor fails to pay the debt when it is due.

3. The time for transferring the ownership of property rights shall be the time at which the purchaser receives the papers certifying the ownership of such property rights or from the time of registration of the transfer of ownership rights, if so provided for by law.

II. CONTRACTS FOR PURCHASE AND SALE OF HOUSES

Article 450.- Forms of contracts for purchase and sale of residential houses

A contract for the purchase and sale of a residential house shall be made in writing, with notarization or authentication, unless otherwise provided for by law.

Article 451.- Obligations of the residential house seller

The residential house seller shall have the following obligations:

1. To notify the purchaser of any restrictions on ownership rights to the house, if any;

2. To maintain the residential house already sold pending its transfer to the purchaser;

3. To transfer to the purchaser the residential house in the same conditions as described in the contract and all the documents on the house;

4. To strictly carry out all procedures for purchase and sale of a residential house in accordance with the provisions of law.

Article 452.- Rights of the residential house seller

The residential hose seller shall have the following rights:

1. To request the purchaser to receive the house within the agreed time limit;

2. To request the purchaser to make payment within the agreed time limit and by the agreed mode of payment;

3. To request the purchaser to complete all the procedures for purchase and sale of residential houses within the agreed time limit;

4. Not to transfer the house when he/she/it has not yet received the full payment as agreed upon.

Article 453.- Obligations of the residential house purchaser

The residential house purchaser shall have the following obligations:

1. To pay the purchase money in full, on time and by the agreed mode; if there is no agreement on the time limit and place of payment, the purchaser must make the payment at the time when the seller hands over the house and at the place where the house is located;

2. To receive the house and the documents on the house within the agreed time limit;

3. In case of purchasing the house currently on lease, the purchaser must secure the rights and interests of the lessee as agreed upon in the lease contract when the lease remains in effect.

Article 454.- Rights of the residential house purchaser

The residential house purchaser shall have the following rights:

1. To receive the house in the same conditions as agreed upon together with all the documents on the house;

2. To request the seller to complete all the procedures for the purchase and sale of residential house within the agreed time limit;

3. To request the seller to hand over the house on time; if the seller fails to hand over or delays the hand-over, to request the seller to pay compensation for damage.

Article 455.- Purchase of houses to be used for other purposes

Unless it is otherwise provided for by law, the provisions of Articles 450 thru 454 of this Code shall also apply to the purchase of houses to be used for other purposes other than the purchase of residential houses.

III. SPECIFIC REGULATIONS ON PROPERTY PURCHASE AND SALE

Article 456.- Auction

A property may be sold by auction at the will of its owner or as provided for by law.

When a common property is to be sold by auction, the consent of all co-owners must be obtained, unless otherwise agreed upon or provided for by law.

Article 457.- Auction notices

1. The auctioneer must make a public announcement at the place of auction and on the mass media regarding the time, place, quantity and quality and the list of property to be auctioned, at least seven days for movables and thirty days for immovables before the date of auction.

2. Persons related to the property to be auctioned must be notified of the auction for their participation in determining the reserve price, unless otherwise agreed upon.

Article 458.- Conduct of an auction

1. At an auction, the auctioneer shall announce the reserve price.

2. The person who offers the highest bid, which is at least equal to the reserve price shall be the person entitled to purchase the auctioned property and be considered having accepted to enter into a contract.

3. The auction shall be recorded in writing with the signatures of the purchaser, the seller and two witnesses.

4. The time limit for handing over the auctioned property, the mode and time limit of payment shall comply with the regulations on auction.

5. The auctioneer shall not be liable for the value and quality of the auctioned property.

6. In cases where the announced highest bid is lower than the reserve price, the auction shall be considered having failed.

The Government shall specify the organization of, and the procedures for, property auction.

Article 459.- Auction of immovable property

1. The auction of an immovable property shall be held at the locality where the immovable property is located or at a place determined by the auctioneer.

2. After the issuance of a notice on the auction of an immovable property, persons who wish to purchase it must register to purchase and make an advance cash deposit. The list of purchase registrants shall be publicized at the place of auction.

3. In case of success in the purchase of the auctioned property, the advance deposit shall be deducted from the purchase price; if the successful bidder refuses to purchase, he/she shall not be refunded with such money.

4. The auctioneer must refund the advance deposits to other persons who have registered to purchase but could not purchase the auctioned property.

5. The purchase and sale of an auctioned immovable property must be recorded in writing with notarization or authentication or must be registered, if so provided for by law.

Article 460.- Purchase after trial use

1. The parties may agree on a trial use by the purchaser of the purchased objects for a period of time called the trial use period. During the trial use period, the purchaser may reply to purchase or not to purchase them; if the purchaser does not reply after the trial use period expires, he/she shall be considered as having accepted the purchase on the terms agreed upon prior to the receipt of the objects for trial use.

2. During the trial use period, the objects still belong to the seller. The seller must bear all risks that may occur to the objects, unless otherwise agreed upon. Within the trial use period, the seller must not sell, donate, lease, exchange, mortgage or pledge the property, pending the purchaser's reply.

3. In cases where the trial user gives the reply of non-purchase, he/she must return the objects to the seller and compensate the seller if he/she has caused the loss of, or damage to, the objects in trial use. The trial user shall not be liable for ordinary wear caused by trial use, and shall not have to return any yields gained from the trial use.

Article 461.- Purchase by deferred payment or installment payment

1. The parties may agree on the deferred payment or installment payment by the purchaser within a time limit after receiving the purchased objects; the seller shall have the right to reserve his/her ownership rights to the sold objects until the purchaser has paid in full, unless otherwise agreed upon.

2. The contract for purchase by deferred payment or installment payment must be made in writing. The purchaser shall be entitled to use the objects purchased by deferred payment or installment payment and must bear risks during the use period, unless otherwise agreed upon.

Article 462.- Redemption of property already sold

1. The seller may agree with the purchaser on the right to redeem the sold property within a time limit called the redemption period.

The redemption period shall be agreed upon by the parties, but shall not exceed one year for movables, and five years for immovables, as from the time of handing over the property. Within this period, the seller shall be entitled to redeem the property at any time, but must notify the purchaser in advance within a reasonable period of time. The redemption price shall be the market price at the time and place of redemption, unless otherwise agreed upon.

2. Within the redemption period, the purchaser must not sell, exchange, donate, lease, mortgage or pledge the property and must bear risks to the property.

Section 2. CONTRACTS FOR PROPERTY EXCHANGE

Article 463.- Contracts for property exchange

1. A contract for property exchange is an agreement between the parties whereby the parties shall transfer their property and ownership rights to such property to each other.

2. A contract for property exchange must be made in writing, notarized or authenticated or registered, if so provided for by law.

3. In cases where one party exchanges with the other party a property not under its ownership rights or without authorization of the owner, the other party shall be entitled to cancel the contract and demand compensation for damage.

4. Each party shall be considered the seller of the property transferred to the other party and the buyer of the property received. The provisions on purchase and sale contracts in Articles 428 thru 437 and Articles 439 thru 448 of this Code shall also apply to contracts for property exchange.

Article 464.- Payment for differences in value

In cases where the exchanged property has differences in value, the parties must pay each other for such differences, unless otherwise agreed upon or provided for by law.

Section 3. CONTRACTS FOR DONATION OF PROPERTY

Article 465.- Contracts for donation of property

A contract for donation of property is an agreement between the parties whereby the donor shall transfer his/her property and ownership rights to the donee without demanding any compensation while the donee agrees to receive it.

Article 466.- Donation of movables

A contract for donation of a movable property shall take effect when the donee receives the property; with regard to a movable property to which the ownership rights must be registered as provided for by law, the contract for donation of such property shall take effect from the time of registration.

Article 467.- Donation of immovables

1. The donation of an immovable property must be made in writing, with notarization or authentication or must be registered, if the ownership rights to such immovable must be registered as provided for by law.

2. A contract for donation of an immovable property shall take effect from the time of registration; if the registration of the ownership rights to the immovable property is not required, the donation contract shall take effect from the time of transferring the property.

Article 468.- Liability for intentional donation of property not under one's ownership

In cases where the donor intentionally donates a property not under his/her ownership while the donee does not know or cannot know such, the donor must pay the donee the expenses for increasing the value of the property when the owner recovers the property.

Article 469.- Notification of defects of donated property

The donor shall have the obligation to notify the donee of the defects of the donated property. In cases where the donor knows the defects of the donated property but fails to give notification thereof, he/she must pay compensation for damage caused to the donee; if the donor does not know the defects of the donated property, he/she shall not have to pay compensation for damage.

Article 470.- Conditional donation of property

1. The donor may request the donee to perform one or more than one civil obligation before or after the donation. The conditions for the donation must not be contrary to law and social ethics.

2. In cases where the obligations must be performed before the donation, if the donee has fulfilled his/her obligations and the donor still has not handed over the property, the donor must pay for the obligations already performed by the donee.

3. In cases where the obligations must be performed after the donation and the donee has failed to perform them, the donor shall be entitled to reclaim the property and demand compensation for damage.

Section 4. CONTRACTS FOR PROPERTY LOAN

Article 471.- Contracts for property loan

A contract for property loan is an agreement between the parties whereby the lender transfers the property to the borrower; when the loan is due, the borrower must return to the lender the property of the same type in the same quantity and of the same quality, and shall have to pay the interest only if so agreed upon or provided for by law.

Article 472.- Ownership rights to loaned property

The borrower shall become owner of the loaned property from the time of receiving such property.

Article 473.- Obligations of the lender

The lender shall have the following obligations:

1. To hand over to the borrower the property in full, of the right quality and in the right quantity at the time and place agreed upon.

2. To compensate for damage to the borrower if the lender is aware that the property is not of the required quality but fails to notify the borrower thereof, except in cases where the borrower is aware thereof but still receives such property;

3. Not to request the borrower to return the property ahead of time, except for the cases specified in Article 478 of this Code.

Article 474.- Borrowers' obligation to repay debts

1. Where the loaned property is money, the borrower must repay in full when it becomes due; if the loaned property is an object, the borrower must return an object of the same type, in the same quantity and of the same quality, unless otherwise agreed upon.

2. In cases where the borrower cannot return the object, he/she may repay a sum of money equivalent to the value of the loaned object at the place and time of repaying the debt, if so agreed by the lender.

3. The place for repayment of debts shall be the place of residence or the head- office of the lender, unless otherwise agreed upon.

4. In case of an interest-free loan, if the borrower fails to repay or has not repaid fully the debt when it becomes due, he/she must pay the interest on the amount of overdue debt at the basic interest rate announced by the State Bank corresponding to the duration of late payment at the time of repayment of the debt, if so agreed upon.

5. In case of a loan with interest, if the borrower fails to repay or has not repaid fully the debt, he/she must pay the interest on the principal and the interest thereon at the basic interest rate announced by the State Bank corresponding to the borrowing term at the time of repayment of the debt.

Article 475.- Use of loaned property

The parties may agree that the loaned property must be used for the right borrowing purpose; the lender shall be entitled to inspect the use of the property and reclaim the loaned property ahead of time, if the borrower still uses the property for other than the agreed purpose even though he/she has been warned not to.

Article 476.- Interest rate

1. The lending interest rate shall be agreed upon by the parties, but must not exceed 150% of the basic interest rate announced by the State Bank for loans of the corresponding type.

2. In cases where the parties have agreed on the payment of interest for a loan but have not clearly determined an interest rate or have a dispute over an interest rate, the basic interest rate announced by the State Bank corresponding to the borrowing term at the time of repayment of the debt shall be applied.

Article 477.- Performance of contracts on loans without fixed term

1. With respect to a contract for an interest-free loan without a fixed term, the lender shall be entitled to reclaim the property and the borrower shall be entitled to repay the debt at any time, provided that they must notify each other thereof in advance within a reasonable period of time, unless otherwise agreed upon.

2. With respect to a contract for a loan without a fixed term and with interest, the lender shall be entitled to reclaim the property at any time but must notify the borrower thereof in advance within a reasonable period of time and be paid the interest up to the time of receiving back his/her property, while the borrower shall also be entitled to return the property at any time and pay only the interest up to the time of repaying the debt but also must notify the lender thereof in advance within a reasonable period of time.

Article 478.- Performance of fixed-term loan contracts

1. With respect to a contract for an interest-free fixed-term loan, the borrower shall be entitled to return the property at any time but must notify the lender thereof in advance within a reasonable period of time, and the lender shall only be entitled to reclaim the property ahead of time, if the borrower so agrees.

2. With respect to a contract for a fixed-term loan with interest, the borrower shall be entitled to return the property ahead of time, but must pay the interest for the whole term, unless otherwise agreed upon.

Article 479.- Tontine

1. Tontine is a form of property transaction, which is carried out according to practices and on the basis of agreement of a group of people rallying together to determine the number of people, time, money amounts or other property, mode of contributing and receiving annuities and the rights and obligations of members.

2. The form of tontine for the purpose of mutual assistance among people shall comply with the provisions of law.

3. It is strictly prohibited to organize tontines in the form of usury.

Section 5. CONTRACTS FOR PROPERTY LEASE

I. GENERAL PROVISIONS ON CONTRACTS FOR PROPERTY LEASE

Article 480.- Contracts for property lease

A contract for property lease is an agreement between the parties whereby the lessor shall hand over the property to the lessee for use for a specified period of time, and the lessee must pay a rent.

Article 481.- Leasing prices

The property-leasing prices shall be agreed upon by the parties.

In cases where the leasing price frames are provided for by law, the parties may only agree on leasing prices within such price frames.

Article 482.- Leasing terms

1. Leasing terms shall be agreed upon by the parties; in the absence of such agreement, they shall be determined according to the leasing purposes.

2. In cases where the parties have not agreed on a leasing term or where the leasing term cannot be determined according to the leasing purpose, the leasing contract shall expire when the lessee has achieved the leasing purpose.

Article 483.- Sublease

The lessee shall be entitled to sublease the property he/she/it has leased, if the lessor so agrees.

Article 484.- Hand-over of leased property

1. The lessor must hand over the property to the lessee in the right quantity, quality, type, condition and at the time and place agreed upon, and provide information necessary for the use of the property.

2. In cases where the lessor delays the hand-over of the property, the lessee may extend the time limit for the hand-over or rescind the contract and demand compensation for damage; if the quality of the leased property does not conform to the agreement, the lessee shall be entitled to request the lessor to repair the property, reduce the leasing price or to rescind the contract and demand compensation for damage.

Article 485.- The obligation to ensure the use value of leased property

1. The lessor must ensure that the leased property is in the condition as agreed upon, in accordance with the leasing purpose throughout the leasing term; and must repair all damage and defects of the leased property, except for minor damage which must, according to practices, be fixed by the lessee himself/herself/itself.

2. In cases where the leased property is decreased in use value but not due to the lessee's fault, the lessee shall be entitled to request the lessor to:

a/ Repair the property;

b/ Reduce the leasing price;

c/ Replace the property with another property or to be entitled to unilaterally terminate the performance of the contract and demand compensation for damage, if the leased property is irreparable and therefore the leasing purpose cannot be achieved, or if the leased property has defects that the lessee is not aware of.

3. In cases where the lessor has been given a notice but does not repair or make untimely repair, the lessee shall be entitled to repair the leased property by himself/herself/itself, but must notify the lessor thereof and shall be entitled to request the lessor to pay the repair expenses.

Article 486.- The obligation to ensure the lessee's right to use the property

1. The lessor must ensure the lessee's right to a stable use of the property.

2. In case of a dispute over the ownership rights to the leased property, which disallows the stable use of the property by the lessee, the lessee shall be entitled to unilaterally terminate the performance of the contract and demand compensation for damage.

Article 487.- The obligation to preserve leased property

1. The lessee must preserve the leased property as if it were his/her/its own, maintain it and make minor repairs; if causing loss or damage, he/she/it must pay compensation therefor.

The lessee shall not be liable for natural wear resulting from the use of the leased property.

2. The lessee may repair and add value to the leased property, if the lessor so agrees, and shall be entitled to request the lessor to pay the reasonable expenses.

Article 488.- The obligation to use leased property according to its utility and for the right purpose

1. The lessee must use the leased property in accordance with its utility and for the agreed purpose.

2. In cases where the lessee has used the leased property not for the right purpose and not in accordance with its utility, the lessor shall be entitled to unilaterally terminate the performance of the contract and demand compensation for damage.

Article 489.- Payment of rent

1. The lessee must pay in full the rent within the time limit as agreed upon; where there is no agreement on the time limit for rent payment, the time limit for rent payment shall be determined according to practices at the place of payment; if the time limit for payment cannot be determined according to practices, the lessee must pay the money when he/she/it returns the leased property.

2. In cases where the parties have agreed on periodic payments of the rent, the lessor shall be entitled to unilaterally terminate the performance of the contract if the lessee does not pay the rent for three consecutive periods, unless otherwise agreed upon or provided for by law.

Article 490.- Return of leased property

1. The lessee must return the leased property in the same condition as when received, except for natural wear, or in the condition agreed upon in the contract; if the value of the leased property has decreased as compared with its condition upon receipt, the lessor shall be entitled to demand compensation for damage, except for natural wear.

2. In cases where the leased property is a movable, the place for returning the leased property shall be the place of residence or the head office of the lessor, unless otherwise agreed upon.

3. In cases where the leased property is a domestic animal, the lessee must return both the leased domestic animal and its offsprings born in the leasing term, unless otherwise agreed upon. The lessor must pay the expenses for caring for the offsprings to the lessee.

4. In cases where the lessee delays the return of the leased property, the lessor shall be entitled to request the lessee to return the leased property and pay the rent for the property for the delayed period and compensate for damage; the lessee must also pay a fine for violation by delaying the return of the leased property, if so agreed upon.

5. The lessee must bear risks to the leased property during the period of delayed return.

Article 491.- Termination of property lease contracts

A contract for property lease shall terminate in the following cases:

1. The leasing term has expired;

2. The parties agree to terminate the contract ahead of time; for a leasing contract without a definite term, if the lessor wishes to terminate the contract, he/she/it must notify the lessee thereof in advance within a reasonable period of time, if there is no agreement on an advance notice period;

3. The contract is rescinded or the performance of the contract is unilaterally terminated;

4. The leased property no longer exists.

II. CONTRACTS FOR RENTING HOUSES

Article 492.- Form of contracts for renting residential houses

A contract for renting a residential house must be made in writing; if the renting term is six months or longer, the contract must be notarized or authenticated and registered, unless otherwise provided for by law.

Article 493.- Obligations of the residential house lessor

The residential house lessor shall have the following obligations:

1. To hand over the house to the lessee in accordance with the contract;

2. To ensure the stable use of the house by the lessee in the renting term;

3. To maintain and repair the house periodically or as agreed upon; if the lessor does not maintain and repair the house, thus causing damage to the lessee, he/she/it must pay compensation therefore.

Article 494.- Rights of the residential house lessor

The residential house lessor shall have the following rights:

1. To receive the rent in full and on schedule as agreed upon;

2. To unilaterally terminate the performance of the house-renting contract under the provisions in Clause 1 and Clause 3, Article 498 of this Code;

3. To renovate and upgrade the leased house when so consented by the lessee, but not to cause inconveniences to the lessee in using the accommodation;

4. To take back the leased house upon expiration of the contract; if the renting term is not specified in the contract, the lessor wishing to take back the house must notify the lessee thereof six months in advance.

Article 495.- Obligations of the residential house lessee

The residential house lessee shall have the following obligations:

1. To use the house for the right agreed purpose;

2. To pay rent in full and on schedule as agreed upon;

3. To preserve the house and repair damage caused by himself/herself/itself;

4. To observe the regulations on public life;

5. To return the house to the lessor as agreed upon.

Article 496.- Rights of the residential house lessee

A residential house lessee shall have the following rights:

1. To receive the rented house as agreed upon;

2. To be entitled to exchange the house being rented to another lessee, if it is so consented in writing by the lessor;

3. To sublease the rented house, if it is so consented in writing by the lessor;

4. To continue the rent under the conditions agreed upon with the lessor in case of changing the house owner;

5. To request the lessor to repair the currently leased house in cases where the house is heavily damaged;

6. To unilaterally terminate the performance of the house-renting contract as provided for in Clause 2 and Clause 3, Article 498 of this Code.

Article 497.- Rights and obligations of all the lessee's persons named in the contracts for renting residential houses

All persons of the lessee who are named in the house-renting contracts shall have equal rights and obligations toward the lessor and must jointly perform the obligations of the lessee toward the lessor.

Article 498.- Unilateral termination of performance of contracts for renting residential houses

1. The lessor shall be entitled to unilaterally terminate the performance of a house-renting contract when the lessee commits one of the following acts:

a/ Failing to pay rent for three consecutive months or more without a plausible reason;

b/ Using the house not in accordance with the renting purpose;

c/ Intentionally causing serious damage to the house;

d/ Repairing, exchanging or subleasing the house wholly or partially to another person without the written consent of the lessor;

e/ Repeatedly disturbing public order and seriously affecting the normal life of the people in the neighborhood;

f/ Causing serious impacts on environmental sanitation.

2. The lessee shall be entitled to unilaterally terminate the performance of a house-renting contract when the lessor commits one of the following acts:

a/ Failing to repair the house when its quality deteriorates seriously;

b/ Increasing the renting price unreasonably.

c/ Restricting the lessee's right to use the house for the interests of a third party.

3. The party unilaterally terminating the performance of a house-renting contract must notify the other party thereof one month in advance, unless otherwise agreed upon.

Article 499.- Termination of contracts for renting residential houses

A residential house-renting contract shall terminate in the following cases:

1. The renting term has expired; if the contract does not specify the renting term, it shall terminate after six months from the date the lessor notifies the lessee of the need of retaking the house;

2. The rented house no longer exists;

3. The lessee dies without leaving any co-habitant;

4. The rented house must be demolished due to severe damage that may cause the house to collapse or due to the implementation of the State construction planning.

Article 500.- Renting of houses for other purposes

Unless it is otherwise provided for by law, the provisions of Articles 492 thru 499 of this Code shall also apply to the renting of houses for non-residential purposes.

III. CONTRACTS FOR PACKAGE LEASES OF PROPERTY

Article 501.- Contracts for package leases of property

A contract for a package lease of property is an agreement between the partie whereby the package lessor hands over the property to the lessee for the exploitation of its utility and the enjoyment of the yields and profits gained from such property and the lessee has the obligation to pay the rent.

Article 502.- Objects of package lease contracts

Objects of a contract for a package lease of property may be land, forest, unexploited water surface, animals, production and/or business establishments, other means of production as well as necessary equipment and facilities for exploiting the utility, enjoying the yields or profits, unless otherwise provided for by law.

Article 503.- Package lease term

The package lease term shall be agreed upon by the parties according to the production and/or business cycle consistent with the characteristics of the object of the package lease.

Article 504.- Package lease price

The package lease price shall be agreed upon by the parties; if a package lease is made through bidding, the package lease price shall be determined by bidding.

Article 505.- Hand-over of package lease property

Upon the hand-over of the package lease property, the parties must make record, evaluating the conditions of the package lease property and determining the value of the package lease property.

In cases where the parties cannot determine the value, they shall invite a third party to determine the value in writing.

Article 506.- Payment of package rent and mode of payment

1. Rent may be paid in kind, in cash or by performing a task.

2. The package lessee must pay the package rent in full even though he/she/it does not exploit the utility of the package lease property.

3. When entering into a package lease contract, the parties may agree on the conditions for reduction of the rent; if the yields or profits are lost at least by one third due to a force majeure event, the package lessee shall be entitled to demand a rent reduction or exemption, unless otherwise agreed upon.

4. In cases where the package lessee has to pay the rent in kind according to the season or the cycle of exploitation of the utility of the package lease property, he/she/it must pay the rent at the end of the season or the cycle of exploitation, unless otherwise agreed upon.

5. In cases where the lessee has to perform a task, he/she/it must perform that very task.

Article 507.- Exploitation of package lease property

The package lessee must exploit the package lease property in accordance with the agreed purpose and must notify the lessor periodically of the conditions and exploitation of the property; if the package lessor requests or needs unexpected notification, the package lessee must give a notice in time. When the package lessee exploits the utility of the package lease property at variance with the agreed purpose, the package lessor shall have the right to unilaterally terminate the performance of the contract and demand compensation for damage.

Article 508.- Preservation, maintenance and disposition of package lease property

1. Within the period of exploiting the package lease property, the package lessee must preserve and maintain such property and accompanying equipment and facilities at his/her own expenses, unless otherwise agreed upon; if the package lessee causes the loss of, or damage to, the package lease property or causes the loss or reduction of its value, he/she/it shall have to compensate for damage. The package lessee shall not be liable for natural wear resulting from the use of the package lease property.

2. The package lessee may replace or improve the package lease property by himself/herself/itself, if so agreed upon, and must preserve its value.

The package lessor must reimburse to the lessee the reasonable expenses for replacing or improving the package lease property as agreed upon.

3. The package lessee shall not be allowed to sublease, unless so consented by the package lessor.

Article 509.- Enjoyment of yields and incurring of damage to package lease animals

During the term of a package lease of animals, the package lessee shall be entitled to enjoy half of the born offsprings and incur half of the damage to the leased animals due to a force majeure event, unless otherwise agreed upon.

Article 510.- Unilateral termination of performance of package lease contracts

1. In cases where a party unilaterally terminates the performance of a contract, it must notify the other party thereof in advance within a reasonable period of time; if the package lease is contracted according the season or cycle of exploitation, the period of advance notification must correspond to the season or cycle of exploitation.

2. In cases where the package lessee breaches his/her/its obligations while the exploitation of the leased object is the sole source of his/her/its livelihood and the continuation of the package lease does not seriously affect the interests of the package lessor, the package lessor must not unilaterally terminate the performance of the contract; the package lessee must commit with the package lessor not to further breach the contract.

Article 511.- Return of package lease property

Upon the termination of a package lease contract, the lessee must return the package lease property in the conditions corresponding to the agreed depreciation level; if the lessee causes loss or reduction of the value of the package lease property, he/she/it must compensate for the damage.

Section 6. CONTRACTS FOR PROPERTY BORROWING

Article 512.- Contracts for property borrowing

A contract for property borrowing is an agreement between the parties whereby the lender hands over the property to the borrower for use in a specified time limit free of charge, and the borrower must return such property when the borrowing term ends or the borrowing purpose has been achieved.

Article 513.- Objects of property-borrowing contracts

Everything that is non-expendable may be object of a contract for borrowing a property.

Article 514.- Obligations of the property borrower

The property borrower shall have the following obligations:

1. To preserve and maintain the borrowed property as if it were his/her/its own property; not to change the conditions of the borrowed property on his/her/its own will; if the property suffers normal damage, it must be repaired;

2. Not to sub-lend the borrowed property without the lender's consent;

3. To return the borrowed property on time; if there is no agreement on the deadline for the return of the property, the borrower must return it immediately after the borrowing purpose has been achieved;

4. To compensate for damage if he/she/it causes any damage to, or loss of, the borrowed property.

Article 515.- Rights of the property borrower

The property borrower shall have the following rights:

1. To use the borrowed property in accordance with its utility and the agreed purpose;

2. To request the lender to reimburse the reasonable expenses for any repair or for increasing the value of the borrowed property, if so agreed upon.

3. Not to be liable for natural wear of the borrowed property.

Article 516.- Obligations of the property lender

The property lender shall have the following obligations:

1. To provide necessary information on the use of the property and defects of the property, if any;

2. To reimburse to the borrower expenses for repair, expenses for increasing the value of the borrowed property, if so agreed upon;

3. To compensate the borrower for any damage, if the lender knows about the defects of the property but does not inform the borrower thereof, thus causing damage to the borrower, except for the defects which the borrower knew or should have known.

Article 517.- Rights of the property lender

The property lender shall have the following rights:

1. To reclaim the property immediately after the borrower has achieved his/her purpose, if there is no agreement on the borrowing period; if the lender has urgent and unexpected needs to use the lent property, he/she/its shall be entitled to reclaim the property even if the borrower has not yet achieved his/her/its purpose, but must notify the borrower thereof in advance within a reasonable period of time;

2. To reclaim the property when the borrower does not use the property for the right purpose, in accordance with its utility or the agreed method or the borrower sublends the property without the lender's consent;

3. To demand compensation for damage caused to the property by the borrower.

Section 7. SERVICE CONTRACTS

Article 518.- Service contracts

A service contract is an agreement between the parties whereby the service provider shall perform a task for the service hirer, and the service hirer must pay service charges to the service provider.

Article 519.- Objects of service contracts

The object of a service contract must be a feasible task not prohibited by law and not contrary to social ethics.

Article 520.- Obligations of the service hirer

The service hirer shall have the following obligations:

1. To supply the service provider with necessary information, documents and means for the performance of the task, if so agreed upon or so required by the performance of the task;

2. To pay service charges to the service provider as agreed upon.

Article 521.- Rights of the service hirer

The service hirer shall have the following rights:

1. To request the service provider to perform the task in accordance with the agreed quality, quantity, time limit, location and other agreements;

2. In cases where the service provider violates its obligations, the service hirer shall have the right to unilaterally terminate the performance of the contract and demand compensation for damage.

Article 522.- Obligations of the service provider

The service provider shall have the following obligations:

1. To perform the task in accordance with the agreed quality, quantity, time limit, location and other agreements;

2. Not to assign other persons to perform the task without the service hirer's consent;

3. To preserve and return to the service hirer the supplied documents and means after fulfillment of the task;

4. To immediately notify the service hirer of any inadequacy of information and documents and poor quality of the means for fulfilling the task;

5. To keep secret the information which he/she/it has come to know during the time of providing the service, if so agreed upon or provided for by law;

6. To compensate the service hirer for damage, if he/she/it causes the loss of, or damage to, the supplied documents and/or means or discloses secret information.

Article 523.- Rights of the service provider

The service provider shall have the following rights:

1. To request the service hirer to supply necessary information, documents and means;

2. To change the service conditions in the interests of the service hirer without necessarily having to wait for the opinion of the service hirer, if such wait may cause damage to the service hirer, but the service provider must immediately notify the service hirer thereof;

3. To request the service hirer to pay the service charges.

Article 524.- Payment of service charges

1. The service hirer must pay the service charges as agreed upon.

2. When a contract is entered into without agreement on the service charges, the method of determining the service charges or without any other instructions on service charges, the service charges shall be determined based on the market price of the service of the same kind at the time and place the contract is entered into.

3. The service hirer must pay the service charges at the place where the task is performed and when the service is accomplished, unless otherwise agreed upon.

4. In cases where the service is provided below the agreed level or the task is not accomplished on time, the service hirer shall have the right to reduce the service charges and demand compensation for damage.

Article 525.- Unilateral termination of performance of service contracts

1. In cases where the continued performance of a task does not benefit the service hirer, the service hirer shall have the right to unilaterally terminate the performance of the contract, but must notify the service provider thereof in advance within a reasonable period of time; the service hirer must pay the service charges for the service portion performed by the service provider and compensate for damage.

2. In cases where the service hirer does not perform his/her/its obligation or has performed it at variance with the agreement, the service provider shall have the right to unilaterally terminate the performance of the contract and demand compensation for damage.

Article 526.- Continuation of service contracts

If after the expiry of the service period, the task has not yet been accomplished and the service provider continues to perform the task while the service hirer knows but does not object, the service contract shall automatically continue to be performed in accordance with the agreed contents until the task is accomplished.

Section 8. CONTRACTS FOR TRANSPORTATION

I. CONTRACTS FOR TRANSPORTATION OF PASSENGERS

Article 527.- Contracts for transportation of passengers

A contract for transportation of passengers is an agreement between the parties whereby the carrier shall transport the passenger and his/her luggage to the specified destination as agreed upon, and the passenger shall have to pay the transportation fare.

Article 528.- Forms of contract for transportation of passengers

1. A contract for transportation of passengers may be made in writing or orally.

2. Tickets shall be the evidence of the entry into a contract for transportation of passengers between the parties.

Article 529.- Obligations of the carrier

The carrier shall have the following obligations:

1. To transport the passengers from the place of departure to the place of destination on time, in a civilized and courteous manner and safely by the agreed means and prescribed route; provide sufficient seats for passengers and not transport in excess of the prescribed load;

2. To buy civil liability insurance for passengers as provided for by law;

3. To ensure the departure time as notified or agreed upon;

4. To transport luggage and return them to the passengers or to the persons entitled to receive such luggage at the agreed place and time along the route as agreed upon;

5. To reimburse the transportation fare to the passengers as agreed upon or provided for by law.

Article 530.- Rights of the carrier

The carrier shall have the following rights:

1. To request passengers to pay in full the transportation fares and charges for the transport of accompanied luggage in excess of the prescribed limit.

2. To refuse to transport a passenger in the following cases:

a/ Where the passenger fails to comply with the regulations of the carrier or commits acts of causing public disorder, hindering the work of the carrier, threatening the life, health or property of other persons or commits other acts threatening the safety of the journey; in this case. the passenger shall not be refunded the transportation fare and must be fined for violation, if so provided for by the transport regulations;

b/ Where the carrier clearly sees that due to the health condition of the passenger, the transportation may cause danger to the passenger him/herself or others during the journey;

c/ To prevent the spread of epidemics.

Article 531.- Obligations of the passenger

The passenger shall have the following obligations:

1. To pay fully the passenger transportation fare and the charge for the transport of luggage in excess of the prescribed limit, and take care of his/her luggage by him/herself;

2. To be present at the place of departure on the agreed time;

3. To respect and strictly observe the regulations of the carrier and other regulations on traffic safety.

Article 532.- Rights of the passenger

The passenger shall have the following rights:

1. To demand that he/she be transported by the agreed means of transport, in the class commensurate with the value of the ticket and along the agreed route;

2. To be exempt from the transport charges for unaccompanied luggage and hand luggage within the limits agreed upon or specified by law;

3. To demand the reimbursement of expenses incurred or compensation for damage, if the carrier is at fault in failing to conduct the transport according to the agreed time schedule and place;

4. To be entitled to the reimbursement of the whole or part of the transportation fare in cases specified at Points b and c, Clause 2, Article 530 of this Code and other cases specified by law or agreed upon;

5. To receive the luggage at the agreed place, on time and along the agreed route;

6. To request the temporary stop of the travel within the time limit and according to the procedures specified by law.

Article 533.- Liability to compensate for damage

1. In cases of loss of human life and/or damage to the health and luggage of passengers, the carrier must compensate therefore in accordance with the provisions of law.

2. The carrier shall not have to compensate for the loss of human life, and/or damage to the health and luggage of passengers if such loss and/or damage is entirely due to the fault of the passengers, unless otherwise provided for by law.

3. In cases where a passenger breaches the agreed transportation conditions or the provisions of the transport regulations, thus causing damage to the carrier or a third party, he/she shall have to compensate therefore.

Article 534.- Unilateral termination of performance of contracts for passenger transportation

1. The carrier shall be entitled to unilaterally terminate the performance of contracts in the cases specified in Clause 2, Article 530 of this Code.

2. The passengers shall be entitled to unilaterally terminate the performance of contracts in cases where the carrier breaches the obligations specified in Clauses 1, 3 and 4, Article 529 of this Code.

II. CONTRACTS FOR TRANSPORTATION OF PROPERTY

Article 535.- Contracts for transportation of property

A contract for transportation of property is an agreement between the parties whereby the carrier shall have the obligation to carry the property to the specified place as agreed upon and hand over such property to the person entitled to receive it and the transport hirer shall have the obligation to pay the freight.

Article 536.- Forms of contract for transportation of property

1. A contract for transportation of property shall be made orally or in writing.

2. The bill of lading or other equivalent transportation documents shall be the evidence of the entry into contracts between the parties.

Article 537.- Hand-over of property to the carrier

1. The transport hirer shall have the obligation to hand over the property to the carrier at the agreed time and place, to pack the property in accordance with the agreed packing specifications; and to bear the cost of loading/unloading his/her property onto/from the means of transport, unless otherwise agreed upon.

2. In cases where the transport hirer does not hand over the property at the agreed time and place, he/she must pay the carrier any expenses incurred for the time of waiting and the cost of transportation of the property to the place agreed in the contract or pay a fine for breach as agreed upon; if the carrier delays the receipt of the property at the agreed place, he/she/it must bear the cost incurred by the delay.

Article 538.- Freight rates

1. The freight rates shall be agreed upon by the parties; if the freight rates are provided for by law, such rates shall be applied.

2. The transport hirer must pay in full the freight once the property has been loaded onto the means of transport, unless otherwise agreed upon.

Article 539.- Obligations of the carrier

The carrier shall have the following obligations:

1. To ensure that the property is transported in full and safely to the designated place and on time;

2. To hand over the property to the person entitled to receive it;

3. To bear the costs related to the transportation of the property, unless otherwise agreed upon;

4. To buy civil liability insurance as provided for by law;

5. To compensate the transport hirer in cases where the carrier causes the loss of, or damage to, the property due to the carrier’s fault, unless otherwise agreed upon or provided for by law.

Article 540.- Rights of the carrier

The carrier shall have the following rights:

1. To check the authenticity of the property and the bill of lading or other equivalent transport documents;

2. To refuse to carry any property of types other than those agreed upon in the contracts;

3. To request the transport hirer to pay freight in full and on schedule;

4. To refuse to carry the property banned from transaction, dangerous and/or noxious property, if the carrier knows or should have known such;

5. To demand compensation for damage from the transport hirer.

Article 541.- Obligations of the transport hirer

The transport hirer shall have the following obligations:

1. To pay the carrier the freight in full, on schedule and by the agreed mode;

2. To take care of the property during the transportation, if so agreed upon. In cases where the transport hirer takes care of the property and the property is lost or damaged, the transport hirer shall not be compensated therefore.

Article 542.- Rights of the transport hirer

The transport hirer shall have the following rights:

1. To request the carrier to transport the property to the agreed place and at the agreed time;

2. To personally receive back or appoint a third party to receive back the property the transport of which is hired;

3. To demand compensation for damage from the carrier.

Article 543.- Delivery of property to the consignee

1. The party receiving the property may be the transport hirer or a third party appointed by the hirer for the receipt of the property.

2. The carrier must deliver the property to the consignee in full, on schedule, at the agreed place and by the agreed mode.

3. In cases where the property has been transported to the place of its delivery on time but there is no consignee, the carrier may entrust such property to the place of bailment and must immediately notify the transport hirer or the consignee thereof. The transport hirer or the consignee shall have to bear all reasonable expenses arising from the bailment.

The obligation to deliver the property shall be fulfilled when the bailed property satisfied the agreed conditions and the transport hirer or the consignee has been notified of the bailment.

Article 544.- Obligations of the consignee

The consignee shall have the following obligations:

1. To produce to the carrier a bill of lading or other equivalent transport documents and receive the property on time and at the agreed place;

2. To bear the costs of loading and/or unloading the transported property, unless otherwise agreed upon or provided for by law;

3. To pay reasonable expenses arising from the delay in receiving the property;

4. To notify the transport hirer of the receipt of the property and other necessary information at his/her/its request; if not, the consignee shall not have the right to request the transport hirer to protect his/her/its rights and interests related to the transported property.

Article 545.- Rights of the consignee

The consignee shall have the following rights:

1. To check the quantity and quality of the delivered property;

2. To receive the delivered property;

3. To request the carrier to pay reasonable expenses arising from the waiting for the receipt of the property if the carrier delays the delivery;

4. To personally request or ask the transport hirer to request the carrier to compensate for loss of, or damage to, the property.

Article 546.- Liability to compensate for damage

1. The carrier must compensate the transport hirer for damage, if causing loss of, or damage to, the property, except for cases specified in Clause 2, Article 541 of this Code.

2. The transport hirer must compensate the carrier and a third party for any damage caused by the dangerous or toxic nature of the transported property if he/she/it fails to apply measures to pack the property and/or to ensure safety during the transportation.

3. In case where a force majeure event results in a loss, damage or destruction of the property during the transportation, the carrier shall not be liable for compensating for any damage, unless otherwise agreed upon or provided for by law.

Section 9. PROCESSING CONTRACTS

Article 547.- Processing contracts

A processing contract is an agreement between the parties whereby the processor performs a task to make a product at the processee's request and the latter shall receive the product and pay remuneration therefore.

Article 548.- Objects of processing contracts

The objects of a processing contract shall be items which are pre-determined with the models and standards agreed upon by the parties or provided for by law.

Article 549.- Obligations of the processee

The processee shall have the following obligations:

1. To supply the processor with materials and/or raw materials in accordance with the quantity, quality, time limit and place as contracted, unless otherwise agreed upon; supply the necessary documents related to the processing work;

2. To instruct the processor in performing the contract;

3. To pay remuneration as agreed upon.

Article 550.- Rights of the processee

The processee shall have the following rights:

1. To receive the processed products in accordance with the agreed quantity, quality, mode, time limit and place;

2. To unilaterally terminate the performation of the contract and demand compensation for any damage when the processor seriously breaches the contract;

3. In cases where the products fail to meet the quality and the processee agrees to accept them and demand repairs but the processor cannot repair them within the agreed time limit, then the processee shall be entitled to rescind the contract and demand compensation for damage.

Article 551.- Obligations of the processor

The processor shall have the following obligations:

1. To preserve the materials and/or raw materials supplied by the processee;

2. To notify the processee to replace the materials and/or raw materials, if they fail to meet the quality; refuse to perform the processing if the use of such materials and/or raw materials may create products harmful to society; if the processor does not give such notification or refusal, he/she shall be liable for the products turned out;

3. To deliver the products to the processee in accordance with the agreed quantity, quality, mode, time limit and place;

4. To keep secret information on the processing process and the created products;

5. To take responsibility for the product quality, except for cases where the poor quality of the products is attributed to the materials and/or raw materials supplied by the processee or to unreasonable instructions of the processee;

6. To return to the processee the remaining materials and/or raw materials after the contract is completed.

Article 552.- Rights of the processor

The processor shall have the following rights:

1. To request the processee to supply materials and/or raw materials in accordance with the agreed quality, quantity, time limit and place;

2. To reject any unreasonable instruction by the processee if deeming that such instruction may reduce the product quality, but must immediately notify the processee thereof;

3. To request the processee to pay the remuneration in full, on schedule and by the agreed mode.

Article 553.- Liability to bear risks

Owners of materials and/or raw materials shall bear all risks to their materials and/or raw materials and/or products made therefrom until the products are delivered to the processee, unless otherwise agreed upon.

When the processee delays receiving the products, he/she/it shall bear the risks during such delay, even if such products are made from the processor's materials and/or raw materials, unless otherwise agreed upon.

When the processor delays delivering the products, thus causing risks to the processed products, he/she/it must compensate for damage to the processee.

Article 554.- Hand-over and receipt of processed products

The processor shall have to hand over the processed products and the processee shall have to receive them at the agreed time and place.

Article 555.- Delay in hand-over and receipt of processed products

1. In cases where the processor delays delivering the processed products, the processee may extend the time limit; if past this time limit the processor still has not accomplished the work, the processee shall be entitled to unilaterally terminate the performance of the contract and demand compensation for damage.

2. In cases where the processee delays receiving the products, the processor may entrust such product to a place of bailment and must immediately notify the processee thereof. The obligation to hand over products is fulfilled once all the agreed conditions have been met and the processee has been notified thereof. The processee shall bear all expenses arising from the bailment.

Article 556.- Unilateral termination of processing contracts

1. Either party shall be entitled to unilaterally terminate the performance of the processing contract if the continued performance thereof does not benefit him/her/it, unless otherwise agreed upon or provided for by law, but must notify the other party thereof in advance within a reasonable period of time; if the processee unilaterally terminates the performance of the contract, he/she/it must pay remunera-tion corresponding to the performed work; if the processor unilaterally terminates the performance of the contract, he/she/it shall not be paid any remuneration, unless otherwise agreed upon.

2. The party that unilaterally terminates the performance of the contract, thus causing damage to the other party must compensate therefor.

Article 557.- Payment of remuneration

1. The processee must fully pay the remuneration at the time of receipt of the processed products, unless otherwise agreed upon.

2. In cases where there is no agreement on the remuneration rate, the average rate for making products of the same type at the place of processing and at the time of payment shall apply.

3. The processee shall not be allowed to reduce the remuneration, if the products do not meet the agreed quality due to the materials and/or raw materials supplied by him/herself/itself or due to his/her/its unreasonable instructions.

Article 558.- Liquidation of materials and raw materials

When a processing contract is terminated, the processor must return the remaining materials and/or raw materials to the processee, unless otherwise agreed upon.

Section 10. CONTRACTS FOR BAILMENT OF PROPERTY

Article 559.- Contracts for bailment of property

A contract for bailment of property is an agreement between the parties whereby the bailee agrees to keep in custody the property entrusted to him/her/it by the bailor and shall return it to the bailor upon the expiration of the contractual term, while the bailor shall have to pay remuneration to the bailee, except for cases of free-of-charge bailment.

Article 560.- Obligations of the bailor

The bailor shall have the following obligations:

1. To immediately notify, upon the hand-over of property, the bailee of the conditions of the property and the appropriate measures to preserve the bailed property; if failing to do so and the bailed property is destroyed or damaged because of inappropriate preservation, the bailor shall bear the loss or damage by him/herself/itself; if damage is caused, he/she/it must compensate therefor.

2. To pay the remuneration in full, on schedule and by the agreed mode.

Article 561.- Rights of the bailor

The bailor shall have the following rights:

1. To reclaim his/her/its property at any time, if the contract for bailment does not specify the time limit, but must notify the bailee thereof in advance within a reasonable period of time;

2. To demand compensation for damage, if the bailee causes the loss of, or damage to, the bailed property, except for force majeurecases.

Article 562.- Obligations of the bailee

The bailee shall have the following obligations:

1. To preserve the property as agreed upon, and return it to the bailor in the same condition as at the time of receipt for bailment;

2. To change the method of preservation only if such change is necessary to better preserve the property, but must immediately notify the bailor of the change;

3. To immediately notify the bailor in writing of any risk of damage or destruction to his/her/its property due to the nature of such property and request the latter to find a remedy within a certain time limit; if such time limit has expired and the bailor does not reply, the bailee shall be entitled to take necessary measures for preservation of the property and demand the bailor to reimburse the expenses therefore;

4. To compensate for damage if causing the loss of, or damage to, the bailed property, except for force majeure cases.

Article 563.- Rights of the bailee

The bailee shall have the following rights:

1. To request the bailor to pay the remuneration as agreed upon;

2. To request the bailor to reimburse the reasonable expenses for preserving the property in case of free-of-charge bailment;

3. To request the bailor to take back his/her/its property at any time, but must notify the bailor thereof in advance within a reasonable period of time, in case of bailment for an indefinite period of time;

4. To sell the bailed property which is in danger of degeneration or destruction in order to ensure the bailor's interests, notify the bailor thereof, and return the sale proceeds to the bailor after deducting the reasonable expenses for the sale of property.

Article 564.- Return of bailed property

1. The bailee must return exactly the received property and the yields therefrom, if any, unless otherwise agreed upon;

The place for return of the bailed property is the place of bailment; if the bailor requests to have his/her/its property returned at a place other than the place of bailment, then he/she/it must bear the expenses for transporting the property to such place, unless otherwise agreed upon.

2. The bailee must return the property on schedule and shall be entitled to request the bailor to take back the property ahead of schedule only if there is a plausible reason.

Article 565.- Delay in hand-over, reception of bailed property

In cases where the bailee delays in the hand over of property, he/she/it shall not be entitled to request the bailor to pay remuneration and preservation expenses as from the time of hand-over delay and must bear risks to the property during the period of delay in hand-over of the property.

In cases where the bailor delays in the reception of property, he/she/it must pay the preservation expenses and remuneration to the bailee for the period of reception delay.

Article 566.- Payment of remuneration

1. The bailor must pay remuneration in full when taking back the bailed property, unless otherwise agreed upon.

2. In cases where the parties have no agreement on the remuneration level, the average remuneration level at the place and time of remuneration payment shall apply.

3. When the bailor takes back his/her/its property ahead of schedule, he/she/it still has to pay the remuneration in full and necessary expenses arising from the early return of the property by the bailee, unless otherwise agreed upon.

4. When the bailee requests the bailor to take back his/her/its property ahead of schedule, the bailee shall not be entitled to receive the remuneration and shall have to compensate for damage caused to the bailor, unless otherwise agreed upon.

Section 11. INSURANCE CONTRACTS

Article 567.- Insurance contracts

An insurance contract is an agreement between parties, whereby the insurance buyer must pay the insurance premium and the insurer must pay a sum of insurance indemnity to the insured upon the occurence of an insured event.

Article 568.- Types of insurance contract

The insurance contracts include contracts for human insurance, contracts for property insurance and contracts for civil liability insurance.

Article 569.- Objects of insurance

Objects of insurance include humans, property, civil liability and others as specified by law.

Article 570.- Forms of insurance contract

Insurance contracts must be made in writing. The written insurance requests signed by insurance buyers constitute inseparable parts of insurance contracts. The insurance certificates or applications shall be the evidence of the entry into insurance contracts.

Article 571.- Insured events

An insured event is an objective event agreed upon by the parties or specified by law, upon the occurrence of which the insurer must pay an insurance indemnity to the insured, except for the cases specified in Clause 2, Article 346 of this Code.

Article 572.- Insurance premium

1. The insurance premium is a sum of money paid by the insurance buyer to the insurer.

The time limit for payment of insurance premium shall be agreed upon or prescribed by law. The insurance premium may be paid in lump sum or periodically.

2. In cases where the insurance buyer delays in periodic payment of insurance premium, the insurer may set a time limit for the insurance buyer to pay such premium; if upon the expiration of such time limit the insurance buyer still fails to pay the insurance premium, the contract shall terminate.

Article 573.- The obligation of the insurance buyer to provide information

1. Upon entering into an insurance contract, the insurance buyer must provide the insurer at the latter's request with the full information concerning the objects of insurance, except for information which the insurer already knew or should have known.

2. In cases where the insurance buyer intentionally provides false information in order to enter into the contract for enjoying the insurance indemnity, the insurer shall be entitled to unilaterally terminate the performance of such contract and collect the insurance premium up to the time of termination of the contract.

Article 574.- The obligation to prevent damage

1. The insured shall have the obligation to comply with the contractual conditions as well as relevant provisions of law and to take measures to prevent damage.

2. In cases where the insured is at fault, failing to take measures to prevent damage as contracted, the insurer may set a time limit for the insured to take such measures; if such preventive measures are not taken upon the expiration of this time limit, the insurer shall be entitled to unilaterally terminate the performance of such contract or refuse to pay the insurance indemnity upon the occurence of the damage due to the insured's failure to take such preventive measures.

Article 575.- Obligations of the insurance buyer, the insured and the insurer when insured events occur

1. Upon the occurence of an insured event, the insurance buyer or the insured must immediately notify the insurer thereof and take all necessary measures within his/her/its capacity to prevent or limit the damage.

2. The insurer must pay all necessary and reasonable expenses incurred by a third party to prevent or limit the damage.

Article 576.- Payment of insurance indemnity

1. The insurer must pay the insurance indemnity to the insured within the agreed time limit; if there is no agreement on such time limit, the insurer must pay the insurance indemnity within fifteen days from the date of receipt of the complete and valid dossier requesting the payment of insurance indemnity.

2. In cases where the issurer delays the payment of insurance indemnity, he/she/it must also pay the interest on the late paid amount at the basic interest rate set by the State Bank at the time of payment of insurance indemnity corresponding to the duration of the delayed payment.

3. In cases where the insured intentionally lets the damage occur, the insurer shall not have to pay the insurance indemnity; if such damage occurs due to the insured's negligence, the insurer shall not have to pay the part of the insurance indemnity corresponding to the extent of the insured's negligence.

Article 577.- Transfer of claim for reimbursement of indemnity

1. In cases where the damage is caused to the insured due to the fault of a third party and the insurer has paid the insurance indemnity to the insured, the insurer shall have the right to demand such third party to reimburse the amount already paid. The insured shall have the obligation to provide the insurer with all necessary information, documents and evidence, which he/she/it is aware of so as to enable the insurer to exercise his/her/its right to demand with respect to the third party.

2. In cases where the insured has received from the third party the damages less than the amount of insurance indemnity payable by the insurer, the insurer shall have to pay the insured only the difference between the insurance indemnity and the amount paid by the third party, unless otherwise agreed upon; if the insured has received the insurance indemnity less than the damage caused to him/her/it by the third party, the insured shall still have the right to request the third party to pay the difference between the insurance indemnity and the damages.

The insurer shall have the right to demand the third party to reimburse the amount of money he/she/it has paid to the insured.

Article 578.- Life insurance

In case of life insurance, when the insured event occurs, the insurer must pay the insurance indemnity to the insured or his/her authorized representative; if the insured dies, the insurance indemnity shall be paid to his/her heir(s).

Article 579.- Property insurance

1. The insurer must compensate for any damage caused to the insured property in accordance with the agreed terms or the provisions of law.

2. In cases where the ownership rights to the insured property are transferred to another person, the new owner of such property shall automatically substitute the former owner in the insurance contract, as from the time such ownership rights are transferred. The former owner who is the insurance buyer shall have to notify the new owner that the property has been insured and notify the insurer in time that the ownership rights to the property have been transferred.

Article 580.- Civil liability insurance

1. In case of insurance of civil liability toward a third party as agreed upon or provided for by law, the insurer must pay indemnity to the insurance buyer or to the third party at the insurance buyer's request for the damage caused to the third party by the insurance buyer at the level of insurance as agreed upon or provided for by law.

2. In cases where the insurance buyer has already compensated for the damage to the third party, he/she/it shall be entitled to demand the insurer to reimburse the sum of money he/she/it has paid to the third party, which, however shall not exceed the level of insurance indemnity agreed upon by the parties or provided for by law.

Section 12. MANDATE CONTRACTS

Article 581.- Mandate contracts

A mandate contract is an agreement between the parties whereby the mandatary shall have the obligation to perform a task on behalf of the mandator, and the mandator shall only have to pay remuneration, if so agreed upon or provided for by law.

Article 582.- Time limit of mandate

The time limit of mandate shall be agreed upon by the parties or provided for by law; if there is no agreement or no legal provisions theron, the mandate contract shall be effective for one year as from the date the mandate is established.

Article 583.- Sub-mandate

The mandatary shall be entitled to submandate a third party only if so consented by the mandator or so provided for by law.

The form of a submandate contract must also conform to the form of the original mandate contract.

The submandate must not go beyond the scope of the original mandate.

Article 584.- Obligations of the mandatary

The mandatary shall have the following obligations:

1. To perform the task in accordance with the mandate and notify the mandator of the performance thereof;

2. To notify a third party concerned with the performance of the mandate of the mandate time limit and scope as well as any amendments or additions to the scope of mandate;

3. To preserve and maintain the documents and instruments entrusted to him/her for performing the mandate;

4. To keep secret the information which he/she knew while performing the mandate;

5. To return to the mandator the property received and benefits obtained in the process of performing the mandate as agreed upon or provided for by law;

6. To compensate for any damage arising from any breach of the obligations specified in Clauses 1, 2, 3, 4 and 5 of this Article.

Article 585.- Rights of the mandatary

The mandatary shall have the following rights:

1. To request the mandator to provide information, documents and means necessary for performing the mandated task;

2. To be entitled to remuneration and reimbursement of reasonable expenses he/she has paid for the performance of the mandated task.

Article 586.- Obligations of the mandator

The mandator shall have the following obligations:

1. To provide necessary information, documents and means for the mandatary to perform the task;

2. To take responsibility for the commitments performed by the mandatary within the scope of mandate;

3. To reimburse reasonable expenses paid by the mandatary for the performance of the mandated task and pay remuneration to the mandatary, if so agreed upon.

Article 587.- Rights of the mandator

The mandator shall have the following rights:

1. To request the mandatary to fully notify the performance of the mandated task;

2. To request the mandatary to return the property and benefits obtained from the performance of the mandated task, unless otherwise agreed upon;

3. To be compensated for damage, if the mandatary breaches the obligations specified in Article 584 of this Code.

Article 588.- Unilateral termination of performance of mandate contracts

1. In case of a mandate with remuneration, the mandator may unilaterally terminate the perfomance of the contract at any time, but must pay the mandatary a remuneration corresponding to the task already performed by the mandatary and compensate for damage; if it is a mandate without remuneration, the mandator may unilaterally terminate the performance of the contract at any time, but must notify the mandatary thereof in advance within a reasonable period of time.

The mandator must notify in writing a third party of his/her unilateral termination of the performance of the contract; if not, the contract with the third party shall remain in effect, except in cases where the third party knew or must have known about the termination of the mandate contract.

2. In case of a mandate without remuneration, the mandatary may unilaterally terminate the performance of the contract at any time, but must notify the mandator thereof in advance within a reasonable period of time; if it is a mandate with remuneration, the mandatary may unilaterally terminate the performance of the contract at any time, but must compensate for any damage to the mandator.

Article 589.- Termination of mandate contracts

A mandate contract shall terminate in the following cases:

1. The mandate contract has expired;

2. The mandated task has been fulfilled;

3. The mandator or the mandatary unilaterally terminates the performance of the contract as provided for in Article 588 of this Code;

4. The mandator or the mandatary dies, or is declared by the court as losing his/her civil act capacity, having his/her civil act capacity restricted, missing or dead.

Section 13. PROMISE OF REWARD AND COMPETITION FOR PRIZES

Article 590.- Promise of reward

1. A person who has publicly made a promise for a reward shall have to give the promised reward to the person who has performed the task at the request of the reward promisor.

2. The task for which the reward is promised must be specific and feasible, and is neither prohibited by law nor contrary to social ethics.

Article 591.- Withdrawal of the promise of reward

Before the time set for starting the performance of the task, the reward promisor shall be entitled to withdraw his/her promise of reward. The withdrawal of such promise of reward must be conducted in the manner and by the medium in which the promise of reward was announced.

Article 592.- Grant of reward

1. In cases where a task with a promise of reward is performed by a person, such person shall be entitled to receive the reward once the task is fulfilled.

2. When a task with a promise of reward is performed by several persons simultaneously but independently from one another, then the first to fulfill such task shall be entitled to receive the reward.

3. In cases where many persons fulfill a task with a promise of reward at the same time, the promised reward shall be equally shared among such persons.

4. In cases where many persons collaborate with one another in performing a task with a promise of reward at the reward promisor's request, then each person shall receive one part of the reward corresponding to his/her contribution.

Article 593.- Competition for prizes

1. Organizers of cultural, artistic, sport, scientific, technical competitions and other competitions which are not contrary to law and/or social ethics shall have to announce the conditions for participation, the scale of evaluation points, the prizes and the value of each prize.

2. Any change to the conditions for participation in a competition must be made in accordance with the announced manner within a reasonable period of time before the competition begins.

3. A prize winner shall be entitled to demand the organizer of the competition to grant the prize exactly of the announced value.

Chapter XIX

PERFORMANCE OF TASKS WITHOUT MANDATE

Article 594.- Performance of tasks without mandate

The performance of a task without mandate means the voluntary performance of the task by a person, who is under no obligation to perform such task, solely in the interest of the person for whom the task is performed when such person does not know or knows but does not protest against such performance.

Article 595.- Obligations to perform tasks without mandate

1. The person who performs a task without mandate shall have the obligation to perform the task in accordance with to his/her capacity and conditions.

2. The person who performs a task without mandate shall have to perform such task as if it were his/her own; if he/she knows or can guess the intention of the person for whom the task is performed, he/she must perform the task in accordance with that intention.

3. The person who performs a task without mandate must notify the person for whom the task is performed of the progress and results of the performance of that task, if requested, except for cases where the latter already knew or the person who performs the task without mandate does not know the latter's place of residence.

4. In cases where the person for whom the task is performed dies, the person who performs the task without mandate shall have to continue the performance of that task until the heir or the representative of the person for whom the task is performed takes over it.

5. If for justifiable reasons, the person who performs the task without mandate is unable to continue the performance of the task, he/she must notify the person for whom the task is performed or his/her representative or next of kin thereof, or he/she may ask another person to assume the task in his/her place.

Article 596.- Payment obligation of the person for whom the task is performed

1. The person for whom a task is performed must take over the task from the person who performs the task without mandate and reimburse the reasonable expenses already paid by the latter for the performance of the task, even in cases where the performance of the task has not yielded the result desired by the former.

2. The person for whom a task is performed must pay remuneration to the person who performs the task if the latter has performed the task dutifully to the former's benefit, except in cases where the person who performs the task without mandate refuses to receive it.

Article 597.- The obligation to compensate for damage

1. When the person who performs a task without mandate intentionally causes damage while performing the task, he/she shall have to compensate the person for whom the task is performed.

2. If the person who performs a task without mandate unintentionally causes damage while performing the task, then based on the circumstances under which he/she assumed that task, such person may enjoy a reduction of compensation.

Article 598.- Termination of the performance of tasks without mandate

The performance of a task without mandate shall terminate in the following cases:

1. At the request of the person for whom the task is performed;

2. The person for whom the task is performed, his/her heir or representative takes over the task;

3. The person who performs a task without mandate is unable to continue the performance of the task according to the provisions in Clause 5, Article 595 of this Code;

4. The person who performs the task without mandate dies.

Chapter XX

THE OBLIGATION TO RETURN THE PROPERTY POSSESSED, USED OR BENEFITS ENJOYED THEREFROM WITHOUT A LEGAL BASIS

Article 599.- The obligation to return

1. The possessor or user of another person's property without a legal basis shall have to return such property to its lawful owner or possessor; if the lawful owner or possessor cannot be found, the property shall be handed over to a competent state authority, except for the cases specified in Clause 1, Article 247 of this Code.

2. The person who benefits from a property without a legal basis thus causing damage to another person shall have to return these benefits to the damage sufferer, except for the cases specified in Clause 1, Article 247 of this Code.

Article 600.- Property to be returned

1. A possessor or user of a property without a legal basis must return the entire property he/she has acquired;

2. In cases where the property to be returned is a distinctive object, he/she must return that exact object; if that distinctive object is lost or damaged, he/she must pay pecuniary compensation therefore, unless otherwise agreed upon;

3. In cases where the property to be returned is a fungible object which has been lost or damaged, he/she must return object of the same type or pay pecuniary compensation therefore, unless otherwise agreed upon.

4. The person who enjoys benefits from a property without a legal basis shall have to return these benefits in kind or in money to the person who has sustained the loss of benefits.

Article 601.- The obligation to return yields or profits

1. The person who possesses, uses or enjoys benefits from a property without a legal basis and not in good faith shall have to return the yields or profits gained as from the time of possessing or using the property or enjoying the benefits from the property without a legal basis.

2. The person who possesses, uses or enjoys benefits from a property without a legal basis but in good faith shall have to return the yields or profits gained as from the time he/she knew or should have known that such possession or use of the property, or such enjoyment of benefits from the property lacked a legal basis, except for the cases specified in Clause 1, Article 247 of this Code.

Article 602.- The right to demand return of property from a third person

In cases where the possessor or user of a property without a legal basis has transferred the property to a third person, when the lawful owner or possessor of the property demands the return of the property, the third person shall have to return such property, unless otherwise provided for by this Code; if the property has been paid for in money, or in compensation, the third party shall be entitled to demand the transferor to compensate for damage.

Article 603.- Payment obligation

If the lawful owner, possessor or the damage sufferer recovers the property, he/she shall have to reimburse the necessary expenses paid by the possessor, user or beneficiary of the property without a legal basis but in good faith for preserving or increasing the value of the property.

Chapter XXI

LIABILITY TO COMPENSATE FOR DAMAGE OUTSIDE CONTRACT

Section 1. GENERAL PROVISIONS

Article 604.- Grounds for liability to compensate for damage

1. Those who intentionally or unintentionally infringe upon the life, health, honor, dignity, prestige, property, rights, or other legitimate interests of individuals or infringe upon the honor, prestige and property of legal persons or other subjects and thereby cause damage shall have to compensate.

2. In cases where the law provides that the persons who cause damage must compensate even when they are not at fault, such provision shall apply.

Article 605.- Principles for damage compensation

1. Damage must be compensated in full and in time. The parties may agree on the compensation levels, the form of compensation either in cash, in kind, or by the performance of a task, and on the mode of compensation either in lump sum or in installment, unless otherwise provided for by law.

2. Persons who cause damage may be entitled to reduction of compensation levels, if they unintentionally cause the damage which is too great for their economic capabilities at present and in the future.

3. When the compensation levels are no longer suitable to reality, the persons who suffered from damage or the persons who caused the damage may request the Court or other competent state agencies to change the compensation levels.

Article 606.- Liability capacity of individuals to compensate for damage

1. Persons aged full eighteen years or older who cause damage shall have to compensate by themselves.

2. If a minor under fifteen years old, whose father and/or mother are/is still alive, causes damage, his/her father and/or mother shall have to compensate the whole damage; if the property of his/her parents is not enough for compen-sation while the minor who causes the damage has his/her own property, this property shall be used to make up for the deficit, except for the cases specified in Article 621 of this Code.

If persons aged between full fifteen years and under eighteen years cause damage, they must compensate for the damage with their own property; if their property is not enough for compensation, their parents shall have to make up for the deficit with their own property.

3. If persons who are minors or lose their civil act capacity cause damage but have their guardians, such guardians shall be entitled to use the property of their wards to pay the compensation; if the wards have no property or have not enough property for compensation, the guardians shall have to compensate with their own property; if the guardians can prove that they are not at fault in the guardianship, they shall not have to use their property for compensation.

Article 607.- Statute of limitations for initiating lawsuits to demand for damage compensation

The statute of limitations for initiating lawsuits to demand for damage compensation shall be two years counting from the date the legitimate rights and interests of individuals, legal persons or other subjects are infringed upon.

Section 2. DETERMINATION OF DAMAGE

Article 608.- Damage caused by infringement upon property

In case of infringement upon property, the damage to be compensated for shall cover:

1. The lost property;

2. The destroyed or damaged property;

3. The interests associated with the use or exploitation of such property;

4. The reasonable expenses for preventing, limiting and remedying the damage.

Article 609.- Damage caused by infringement upon health

1. Damage caused by infringement upon health shall cover:

a/ Reasonable expenses for treatment, nursing and the rehabilitation of health and/or lost or impaired functions of the victims;

b/ The loss or reduction of the victims' actual incomes; if the victims' actual incomes are not stable, thus being unable to be determined, the average income earned for the same type of work shall be applied;

c/ Reasonable expenses and the loss of actual incomes of the persons who take care of the victims during the time of treatment; if the victims lose their working capacity and need people to care for them permanently, the damage shall also cover the reasonable expenses for caring for the victims.

2. The persons who infringe upon the health of others must compensate for damage as provided for in Clause 1 of this Article and pay another sum of money as compensation for their mental sufferings, which shall be agreed upon by the parties; if there is no such agreement, the maximum level shall not exceed thirty months' minimum salary set by the State.

Article 610.- Damage caused by infringement upon life

1. Damage caused by infringement upon life shall cover:

a/ Reasonable expenses for the treatment, nursing and taking care of the victims before they die;

b/ Reasonable expenses for funeral;

c/ Support allowances for persons whom the victims have the obligation to support;

2. The persons who infringe upon the lives of others shall have to compensate for damage as provided for in Clause 1 of this Article and pay a sum of money as compensation for the mental sufferings to the victims's next of kin in the first rank of inheritance; if these persons are not available, the persons who the victims have directly nurtured or the persons who have directly nurtured the victims shall enjoy this sum of money. The levels of compensation for mental sufferings shall be agreed upon by the parties; in the absence of such agreement, the maximum compensation level shall not exceed sixty months' minimum salary set by the State.

Article 611.- Damage caused by infringement upon honor, dignity or prestige

1. Damage caused by infringement upon the honor, dignity or prestige of individuals or damage caused by infringement upon the honor or prestige of legal persons or other subjects shall cover:

a/ The reasonable expenses for limiting and/or remedying the damage;

b/ The actually lost or reduced income.

2. The persons who infringe upon the honor, dignity or prestige of others must compensate for damage as provided for in Clause 1 of this Article and pay a sum of money as compensation for mental sufferings caused to such persons. The levels of compensation for mental sufferings shall be agreed upon by the parties; if there is no such agreement, the maximum compensation level shall not exceed ten months' minimum salary set by the State.

Article 612.- Duration for enjoyment of compensation for damage caused by infringement on life or health

1. In cases where the victims have completely lost their working capacity, they shall be entitled to enjoy compensation until they die.

2. In cases where a victim dies, the persons who were supported by the victim during his/her lifetime shall be entitled to the support money for the following time limit:

a/ Minors or unborns who are the issue of the decedent and still alive after birth shall be entitled to support money until they reach full eighteen years of age, except for cases where the persons who are aged between full fifteen and under eighteen years have already participated in labor and earned incomes enough to support themselves;

b/ Adults who have no working capacity shall be entitled to the support money until they die.

Section 3. COMPENSATION FOR DAMAGE IN A NUMBER OF SPECIFIC CASES

Article 613.- Compensation for damage caused by acts beyond the limits of legitimate self-defense

1. Persons causing damage in case of legitimate self-defense shall not have to compensate the victims.

2. Persons acting beyond the limits of legitimate self-defense and causing damage must compensate the victims.

Article 614.- Compensation for damage caused by acts beyond the requirements of emergency circumstances

1. Persons causing damage in emergency circumstances shall not have to compensate the victims.

2. In cases where damage is caused by acts beyond the requirements of an emergency circumstance, the persons causing such damage must compensate the victims.

3. Persons causing emergency circumstances that resulted in damage must compensate the victims.

Article 615.- Compensation for damage caused by persons using stimulants

1. A person who, due to the consumption of alcohol or the use of other stimulants, falls into a state where he/she is unable to cognize and control his/her own acts and thereby causes damage to another person shall have to compensate.

2. When a person who intentionally uses alcohol or other stimulants to make another person fall into a state of being unable to cognize and control his/her own acts, and thereby causes damage, shall have to compensate the victim.

Article 616.- Compensation for damage caused by more than one person

In cases where many persons jointly cause damage, they shall have to jointly compensate the victim. The compen-sation liability of each of the persons who have jointly caused the damage shall be determined correspon-dingly to each person's fault; if the extent of fault cannot be determined, they shall have to equally pay compensation for the damage.

Article 617.- Compensation for damage in cases where victims are at fault

When a victim is also at fault in causing the damage, the person who causes the damage shall have to pay only the compensation corresponding to his/her fault; if the victim is totally at fault, the person who causes the damage shall not have to compensate.

Article 618.- Compensation for damage caused by personnel of a legal person

Legal persons must compensate for damage caused by their personnel while performing their assigned tasks; if the legal persons have already compensated for the damage, they shall have the right to request the persons who are at fault in causing the damage to refund the amounts of compensation they have already paid to the victims as provided for by law.

Article 619.- Compensation for damage caused by public servants

Agencies or organizations shall have to compensate for damage caused by public servants under their management while performing their public duties.

Agencies or organizations shall have the responsibility to request public servants under their management to refund the amount of money they have paid in compensation to the victims as provided for by law, if the public servants are at fault while performing their public duties.

Article 620.- Compensation for damage caused by competent personnel of agencies conducting legal proceedings

Agencies conducting legal proceedings must compensate for damage caused by their competent personnel while performing tasks in the process of conducting legal proceedings.

Agencies conducting legal proceedings shall have the responsibility to request their competent persons who have caused damage to refund the amounts of money they have paid in compensation to the victims as provided for by law, if that competent persons are at fault while performing their tasks.

Article 621.- Compensation for damage caused by persons under fifteen years old, or persons having lost their civil act capacity while under the direct management of schools, hospitals or other organizations

1. For persons aged under fifteen years who cause damage while at schools, the schools must compensate for the damage caused.

2. For persons having lost their civil act capacity who cause damage to others while being under the direct management of hospitals or other organizations, the hospitals or such organizations shall have to compensate for the damage caused.

3. In the cases specified in Clause 1 and Clause 2 of this Article, if the schools, hospitals or other organizations can prove that they are not at fault in the management thereof, the fathers, mothers or guardians of such under-fifteen persons or persons having lost their civil act capacity shall have to compensate.

Article 622.- Compensation for damage caused by employees or apprentices

Individuals, legal persons and other subjects shall have to compensate for damage caused by their employees or apprentices while performing the assigned tasks and be entitled to request the employees or apprentices at fault to reimburse the amounts of money they have paid in compensation to victims as provided for by law.

Article 623.- Compensation for damage caused by sources of extreme danger

1. Sources of extreme danger include motorized means of transport, power transmission systems, industrial factories in operation, weapons, explosives, inflammables, poisons, radioactive substances, wild beasts and other sources of extreme danger specified by law.

The owner of a source of extreme danger must comply with the regulations on maintenance, keeping, transportation and use of sources of extreme danger in accordance with the provisions of law.

2. The owner of a source of extreme danger shall have to compensate for damage caused by such source of extreme danger; if he/she has assigned the possession or use of such source of extreme danger to another person, such person shall have to compensate, unless otherwise agreed upon.

3. The owner of, or the person assigned by the owner to possess or use, a source of extreme danger shall have to compensate for damage even if he/she is not at fault, except for the following cases:

a/ Where the damage occurred totally due to the intentional fault of the victim;

b/ Where the damage occurred due to force majeure or emergency circumstance, unless otherwise provided for by law.

4. In cases where a source of extreme danger is illegally possessed or used, the illegal possessor or user shall have to compensate for the damage.

If the owner of, or person assigned by the owner to possess or use, a source of extreme danger is also at fault in letting the source of extreme danger be illegally possessed or used, he/she shall have to jointly compensate for the damage.

Article 624.- Compensation for damage caused by environmental pollution

Individuals, legal persons or other subjects who pollute the environment and thereby cause damage shall have to compensate as provided for by law, even in cases where the environment polluters are not at fault.

Article 625.- Compensation for damage caused by animals

1. The owner of an animal shall have to compensate for damage caused by the animal to another person; if the victim is completely at fault in letting the animal cause the damage to him/her, the owner of the animal shall not have to compensate.

2. In cases where a third party is completely at fault for the damage caused by an animal to another person, such third party shall have to compensate for damage; if the third party and the owner of the animal are both at fault, they shall have to jointly compensate for the damage.

3. In cases where an animal which is illegally possessed or used causes damage, the illegal possessor or user shall have to compensate.

4. In cases where the animal is allowed to range freely according to practices and causes damage, the owner of such animal shall have to compensate according to practices but not in contravention of law and/or social ethics.

Article 626.- Compensation for damage caused by trees

The owners of trees shall have to compensate for damage caused by their falling or broken trees, except in cases where the damage is caused completely by the victim's fault or a force majeure circumstance.

Article 627.- Compensation for damage caused by houses or other construction works

The owners of, or the persons assigned by the owners to manage and/or use, houses or other construction works, shall have to compensate for damage if they let such houses or other construction works collapse, deteriorate or sink and slide, thereby causing damage to other persons, except in cases where the damage is caused completely by the victim's fault or a force majeure circumstance.

Article 628.- Compensation for damage caused by infringement upon corpses

1. Individuals, legal persons or other subjects that infringe upon corpses shall have to compensate for circumstance.

2. The damage caused by infringement upon corpses shall cover reasonable expenses for limiting or remedying the damage.

3. Persons infringing upon corpses must pay a pecuniary compensation as provided for in Clause 2 of this Article and another sum of money to make up for the mental sufferings caused to the decedents' next of kin in the first rank of inheritance; if these people are not available, the persons who have directly nurturned the decedents shall be entitled to enjoy these sums of money. The levels of compensation for mental sufferings shall be agreed upon by the parties; if there is no such agreement, the maximum level shall not exceed thirty months' minimum salary set by the State.

Article 629.- Compensation for damage caused by infringement upon tombs

Individuals, legal persons or other subjects that cause damage to tombs of others shall have to compensate for the damage. The damage caused by infringement upon tombs shall cover reasonable expenses for limiting or remedying the damage.

Article 630.- Compensation for damage caused by infringement upon consumers' interests

Individuals, legal persons or other subjects that undertake production and business without ensuring the quality standards of goods, thus causing damage to any consumer, shall have to compensate.

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