Phần thứ ba Bộ luật Dân sự 2015: Nghĩa vụ và hợp đồng

PART THREE

OBLIGATIONS AND CONTRACTS

Chapter XV.

GENERAL PROVISIONS

Section 1. Bases for giving rise to and subject matter of obligations

Article 274. Obligations

Obligations means acts whereby one or more entities (hereinafter referred to as obligors) must transfer objects, transfer rights, pay money or provide valuable papers, perform other acts or refrain from performing certain acts in the interests of one or more other subjects (hereinafter referred to as obligees).

Article 275. Bases for giving rise to obligations

Obligations arise from the following bases:

1. Contracts;

2. Unilateral legal acts;

3. Unauthorized performance of acts;

4. Unlawful possession or use of or receipt of benefits from property;

5. Causing damage through unlawful acts;

6. Other bases as provided by law.

Article 276. Subject matter of obligations

1. The subject matter of an obligation may be property or acts which must be performed or acts which must not be performed.

2. The subject matter of an obligation must be defined precisely.

Section 2. Performance of obligations

Article 277. Places for performing obligations

1. The place for performing an obligation shall be agreed by the parties.

2. Where the parties do not have an agreement, the place for performance of the obligation shall be:

a) The location of the immoveable property, if the subject matter of the obligation is immoveable property;

b) The place of residence or head office of the obligee, if the subject matter of the obligation is not immoveable property.

Where the obligee changes its place of residence or head office, it must notify the obligor of the change and must bear any increase in expenses resulting from the change in residence or head office, unless otherwise agreed.

Article 278. Time limits for performing obligations

1. The time limit for performing an obligation shall be as agreed by the parties or as provided by law.

2. The obligor must perform the obligation strictly in accordance with the relevant time limit, unless otherwise prescribed by this Code or relevant laws.

If the obligor performs the obligation prior to the time limit and the obligee accepts such performance, the obligation shall be deemed to have been fulfilled on time.

3. Where the parties do not have an agreement and the time limit for the performance of a civil obligation is not identifiable prescribed in Clause 1 of this Article, a party may fulfill the obligation or demand the fulfillment of the obligation as the case may be at any time, but must give reasonable prior notice to the other party.

Article 279. Performance of obligations to deliver objects

1. A person having the obligation to deliver an object must take care of and preserve the object until the time of delivery.

2. Where an object to be delivered is a distinctive object, the obligor must deliver that particular object in the same condition as agreed. If the object is a fungible object, it must be delivered in accordance with the quality and quantity agreed. If there is no agreement as to the quality, the object delivered must be of average quality. If the object is an integrated object, the whole integrated object must be delivered.

3. An obligor must bear all expenses related to the delivery of an object, unless otherwise agreed.

Article 280. Performance of obligations to pay money

1. An obligation to pay money shall be performed in full, strictly on time, at the place and by the method as agreed.

2. The obligation to pay money shall include the payment of interest on principal, unless otherwise agreed.

Article 281. Performance of obligations to perform acts or not to perform acts

1. Obligation to perform an act means an obligation whereby the obligor must perform that particular act.

2. Obligation not to perform an act means an obligation whereby the obligor must not perform that particular act.

Article 282. Performance of obligations in stages

An obligation may be performed in stages if so agreed or so provided by law or pursuant to a decision of a competent authority.

The late performance of one stage of an obligation shall be deemed to be late performance of the obligation.

Article 283. Performance of obligations through third parties

With the consent of the obligee, an obligor may authorize a third person to perform an obligation on behalf of the obligor provided that the obligor shall be liable to the obligee if the third person fails to perform or performs incorrectly the obligation.

Article 284. Conditional performance of obligations

1. Where the parties have agreed on conditions for the performance of a civil obligation or where the law provides certain conditions for the performance of an obligation, the obligor must perform the obligation when such conditions are satisfied.

2. If the conditions do not occur or occur resulting from the influence of a party, Clause 2 Article 120 of this Code shall apply.

Article 285. Performance of obligations having optional subject matters

1. Obligation having an optional subject matter means an obligation the subject matter of which is one of several different items of property or acts from which the obligor may select at its discretion, except where it is agreed or provided by law that the right to select is reserved to the obligee.

2. The obligor must notify the obligee of the property or act selected in order to perform the obligation. In the case where the obligee has fixed a time limit for performance of the obligation with a selected subject matter, the obligor must fulfill the obligation on time.

3. Where there remains only one property or one act to select, the obligor must deliver that particular property or perform that particular act.

Article 286. Performance of substitutable civil obligations

Substitutable obligation means an obligation whereby if the obligor fails to perform the original obligation, it may perform a different obligation as agreed by the obligee as a substitute for the original obligation.

Article 287. Performance of severable obligations

Where more than one person jointly performs an obligation and each person has a clearly defined share of the obligation which is severable from that of the other person, each person must perform only its own share of the obligation.

Article 288. Performance of joint obligations

1. Joint obligation means an obligation which must be performed by more than one person and which the obligee may request any one of the obligors to perform in its entirety.

2. When one person has performed an obligation in its entirety, such person may require the other joint obligors to make payment for their respective shares of the joint obligation to such person.

3. Where an obligee designates one person from amongst the joint obligors to perform an entire obligation and later releases that person, the other obligors shall also be released from performing the obligation.

4. Where an obligee releases one of the joint obligors from its share of the joint obligation, the other obligors must, nevertheless, perform jointly their respective shares of the obligation.

Article 289. Performance of obligations for joint obligees

1. Civil obligation for joint obligees means an obligation whereby each joint obligee may require the obligor to perform the obligation in its entirety.

2. An obligor may perform its obligation with respect to any one of the joint obligees.

3. Where one of the joint obligees releases the obligor from performing the share of the obligation owed to such joint obligee, the obligor must, nevertheless, perform the remaining shares of the obligation owed to the other joint obligees.

Article 290. Performance of divisible obligations

1. Divisible obligation means an obligation the subject matter of which is a divisible object or an act which is able to be divided into portions for the purpose of performance.

2. An obligor may perform the obligation in stages, unless otherwise agreed.

Article 291. Performance of indivisible obligations

1. Indivisible obligation means an obligation the subject matter of which is an indivisible object or an act which must be performed in its entirety at the one time.

2. Where several persons must perform an indivisible obligation, they must perform the obligation in its entirety at the same time.

Section 3. SECURITY FOR PERFORMANCE OF OBLIGATIONS

Sub-section 1. GENERAL PROVISIONS

Article 292. Types of security for performance of obligations

Types of security for the performance of obligations comprise the following:

1. Pledge of property;

2. Mortgage of property;

3. Deposit;

4. Security collateral;

5. Escrow deposit;

6. Title retention;

7. Guarantee;

8. Fidelity guarantees;

9. Lien on property.

Article 293. Scope of security for performance of obligations

1. An obligation may be fully or partly secured, as agreed or as provided by law. If there is no agreement on or if the law does not provide, the scope of the security, the obligation, including the obligation to pay interest and to compensate for any damage, shall be deemed to be fully secured.

2. Secured obligations may comprise current obligations, future obligations and conditional obligations.

3. With respect to a future obligation which is going to arise within a guaranteed time limit, it shall be the secured obligation, unless otherwise agreed.

Article 294. Security for performance of future obligations

1. With respect to a future obligation, the parties may agree on the scope of the secured obligation and the deadline by which the secured obligation must be performed, unless otherwise prescribed by law.

2. When the future obligation arises, the parties are not required to re-establish the security for such obligation.

Article 295. Collateral

1. Collateral must be under the ownership rights of the securing party, except for the cases of lien on property or title retention.

2. Collateral may be described generally but must be identified.

3. Collateral may be existing property or off-plan property.

4. The value of collateral may be greater, equal or smaller than the value of the secured obligation.

Article 296. Single item of property used as security for performance of several obligations

1. A single item of property may be used as security for performance of several obligations if, at the time of establishment of the security transaction, the value of such property is greater than the total aggregate value of the secured obligations, unless otherwise agreed or otherwise provided by law.

2. Where a single item of property is used as security for performance of several obligations, the securing party must notify the later secured party that the security property is being used as security for performance of other obligations. The provision of security on each occasion must be made in writing.

3. Where the security property must be realized in order to satisfy one obligation which has fallen due, the other obligations which have not yet fallen due shall also be deemed due and all secured parties shall be entitled to take part in the realization. The secured party which provided notice of realization of the property shall be responsible for realizing the property, unless otherwise agreed by the secured parties.

If the parties wish to continue to fulfill the obligations which have not yet fallen due, they may agree that the securing party will use other property as security for performance of the obligation which has fallen due.

Article 297. Effectiveness against third parties

1. Security shall take effect against a third party from the time of registration of such security or the secured party keeps or possess the collateral.

2. When the security takes effect against a third party, the secured party is entitled to reclaim the collateral and the payment prescribed in Article 308 of this Code and relevant laws.

Article 298. Registration of security

1. Security shall be registered as agreed by the parties or provided by law.

The registration shall be the condition for a secured transaction become valid only the case as prescribed by law.

2. A registered security shall take effect against third party from the time of registration.

3. The registration of security shall comply within regulations of law on registration of security.

Article 299. Cases of realization of collateral

1. An obligator fails to perform or perform not as agreed an obligation when it falls due.

2. An obligator must perform the secured obligation before time limit due to his/her violation against the obligation as agreed or prescribed by law.

3. Other cases as agreed by the parties or prescribed by law.

Article 300. Notification of realization of collateral

1. Before a collateral is realized, a secured party must notify the securing party and other secured parties of the realization of the collateral within a reasonable time limit.

If the collateral at risk of being damaged resulting in diminished value or lose the entire value, a secured party may realize it immediately and notify the securing party and other secured parties of the realization of such asset.

2. If the secured party does not notify the realization of collateral as prescribed in Clause 1 of this Article that cause damage to the securing party and/or other secured parties, compensation must be made.

Article 301. Giving collateral for realization

The holder of collateral is obliged to give it to the secured party for realization in any of the cases prescribed in Article 299 of this Code.

If the holder of collateral fails to give the asset, the secured party is entitled to request a court for settlement, unless otherwise prescribed by relevant laws.

Article 302. Right to reclaim collateral

The securing party may reclaim the collateral if, before the realization of the collateral, it completely performs its obligations and pay all expenses incurred for the late performance of obligations, unless otherwise prescribed by law.

Article 303. Methods of realizing collateral

1. The securing party and the secured party may agree any of the following methods of realizing collateral:

a) Put collateral up for an auction;

b) The secured party sells collateral itself;

c) The secured party accepts the collateral as substitutions for the performance of obligations of the securing party;

d) Other methods.

2. If there is no agreement on methods of realizing collateral as prescribed in Clause 1 of this Article, the collateral shall be put up for auction, unless otherwise prescribed by law.

Article 304. Selling collateral

1. The collateral shall be put up for auction as prescribed by law on property auction.

2. The collateral sold by the secured party must comply with the regulations on property sale in this Code and the regulations below:

a) The payment amount derived from the realization of collateral shall comply with Article 307 of this Code;

b) The owner of collateral and the person competent to realize the collateral, upon the completion of the sale, shall comply with procedures for transfer of ownership rights to the buyer.

Article 305. Acceptance of the collateral as substitution for the performance of obligations of the securing party

1. The secured party may accept the collateral as substitution for the performance of obligations of the securing party if agreed by the parties.

2. If there is no agreement prescribed in Clause 1 of this Article, the secured party may only accept the collateral as substitution for the performance of obligations of the securing party with the written consent of the securing party.

3. Where the value of the collateral is greater than the value of the secured obligation, the secured party must pay the difference amount to the securing party; where the value of the collateral is less than the value of the secured obligations then the unpaid obligations become unsecured obligations.

4. The securing party is obliged to follow the procedures for transfer of ownership rights to the secured party as prescribed by law.

Article 306. Valuation of collateral

1. The securing party and the secured party may agree on collateral prices or have the collateral valuated by an asset valuation organization upon the realization of the collateral.

If there is no agreement mentioned above, the collateral shall be valuated by an asset valuation organization.

2. The valuation of the collateral must be objective and in conformity with market price.

3. The asset valuation organization must compensate for any damage to the securing party and/or the secured party during the process of valuation due to its legal violations.

Article 307. Payment of the sum of money obtained from the realization of collateral

1. The sum of money obtained from the realization of the collateral after deducting from the cost of preservation, capture and realization of the collateral shall be paid in order of priority specified in Article 308 of this Code.

2. Where the sum of money obtained from the realization of the collateral, after deducting from the cost of preservation, seizure and realization of the collateral is greater than the value of secured obligations, the difference amount must be paid to the securing party.

3. Where the sum of money obtained from the realization of the collateral, after deducting from the cost of preservation, seizure and realization of the collateral is less than the value of secured obligations, part of the unpaid obligations are defined as unsecured obligations, unless the parties otherwise agree additional collateral. The secured party may request the obligor to perform the unpaid secured obligations.

Article 308. Order of priority for payment between joint secured parties

1. When an asset is used to secure the performance of many obligations, payment priority order between the joint secured parties shall be determined as follows:

a) If all types of security take effect against a third party, the order of priority for payment shall be determined according to the order of effect against the third party;

b) If there are some types of security take effect against a third party while some types of security do not take effect against the third party, the payment of obligations with security taking effect against the third party shall be given priority;

c) If all types of security do not take effect against a third party, the order of priority for payment shall be determined according to the order of establishment of types of security.

2. The order of priority for payment prescribed in Clause 1 of this Article may be changed as agreed by the parties. The subrogating party of the right to priority of payment shall only be given priority within the secured extent of the subrogated party.

Sub-section 2. PLEDGE OF PROPERTY

Article 309. Pledge of property

Pledge of property means the delivery by one party (hereinafter referred to as the pledgor) of property under its ownership to another party (hereinafter referred to as the pledgee) as security for the performance of an obligation.

Article 310. Effectiveness of pledge of property

1. Agreement on pledge of property shall take effect from the time of concluding, unless otherwise agreed or prescribed by law.

2. Pledge of property shall take effect against third party from the time at which the pledgee keeps the pledged property.

If an immovable property is the subject of pledge as prescribed in law, the pledge on immovable property shall take effect against third party from the time of registration.

Article 311. Obligations of pledgors

1. Deliver the pledged property to the pledgee as agreed.

2. Notify the pledgee of any third person rights with respect to the pledged property. In the case of failure to provide such notice, the obligee shall have the right to cancel the contract of pledge of property and demand compensation for damage or the right to maintain the contract and agree on the rights of the third person with respect to the pledged property.

3. Pay the pledgee reasonable expenses for taking care of and preserving the pledged property, unless otherwise agreed.

Article 312. Rights of pledgors

1. Require the pledgee to suspend use of the pledged property in cases provided in Clause 3 of Article 314 of this Code if the pledged property is in danger of losing its value or depreciating in value as a result of such use.

2. Require the pledgee to hold the pledged property to return the pledged property and related documents after the obligation secured by the pledge has been fulfilled.

3. Require the pledgee to compensate for any damage caused to the pledged property.

4. Sell, substitute, exchange, or give the pledged property to other property if so agreed by the pledgee or prescribed by law.

Article 313. Obligations of pledgees

1. Take care of and preserve the pledged property; if the pledgee loses or damages the pledged property, the pledgee must compensate the pledgor for the damage.

2. Do not sell, exchange, give or use the pledged property as security for the performance of another obligation.

3. Do not lease, lend, exploit the yield or income derived from, the pledged property, unless otherwise agreed.

4. Return the pledged property and related documents upon fulfillment of the secured obligation or where the pledge is substituted with another security.

Article 314. Rights of pledgees

1. Require a person unlawfully possessing or using the pledged property to return the property.

2. Demand the realization of the pledged property in accordance with the methods as agreed or as provided by law.

3. Lease, lend, exploit, and to enjoy the yield and income derived from, the pledged property if so agreed.

4. Receive reimbursement of reasonable expenses incurred in taking care of the pledged property upon returning the pledged property to the pledgor.

Article 315. Termination of pledges on property

A pledge of property shall terminate in any of the following cases:

1. The obligation secured by the pledge has terminated;

2. The pledge has been cancelled or substituted with another security;

3. The pledged property has been realized;

4. As agreed by the parties.

Article 316. Return of pledged property

Where a pledge of property is terminated in accordance with Clause 1 or Clause 2 of Article 315 of this Code or as agreed by parties, the pledged property and documents evidencing the ownership rights with respect to the property shall be returned to the pledgor. Any yield and income derived from the pledged property shall also be returned to the pledgor, unless otherwise agreed.

Sub-section 3. MORTGAGES ON PROPERTY

Article 317. Mortgage of property

1. Mortgage of property means the use by one party (hereinafter referred to as the mortgagor) of property under the ownership of the obligor as security for the performance of an obligation to the other party (hereinafter referred to as the mortgagee) without transferring such property to the mortgagee.

2. The mortgaged property shall be held by the mortgagor. The parties may agree to deliver the mortgaged property to a third person to hold.

Article 318. Mortgaged property

1. Where entire immoveable property or moveable property having auxiliary objects is mortgaged, such auxiliary objects shall also form part of the mortgaged property, unless otherwise agreed.

2. Where a portion of immoveable property or moveable property having auxiliary objects is mortgaged, such auxiliary objects shall also form part of the mortgaged property, unless otherwise agreed by the parties.

3. With respect to mortgage on land use rights that property on land is owned by the mortgagor, such property shall also part of the mortgaged property, unless otherwise agreed.

4. Where mortgaged property is insured, the mortgagee must notify the insurer that the insured property is being mortgaged. The insurer shall pay the insured sum directly to the mortgagee upon occurrence of an insured event.

If the mortgagee failed to notify the insurer that the insured property was mortgaged, the insurer shall pay the insured sum in accordance with the insurance contract and the mortgagor shall be obliged to make payment to the mortgagee.

Article 319. Effectiveness of mortgage of property

1. Agreement on mortgage of property shall take effect from the time of concluding, unless otherwise agreed or prescribed by law.

2. The mortgage of property shall take effect against third party from the time of registration.

Article 320. Obligations of mortgagor

1. Transfer documents related to the mortgaged property, unless otherwise agreed or prescribed by law.

2. Take care of and preserve the mortgaged property.

3. If the mortgaged property is in danger of losing its value or depreciating in value due to its exploitation, to take necessary remedial measures, including ceasing the exploitation of the mortgaged property.

4. When the mortgaged property is damaged, the mortgagor is obligated to, within a reasonable period, repair or substitute another property with equivalent value, unless otherwise agreed.

5. Provide information about the actual condition of the mortgaged property to for the mortgagee.

6. Deliver the mortgaged property to the mortgagee for realization in one of the cases prescribed in Article 299 of this Code.

7. Notify the mortgagee of any third person rights with respect to the mortgaged property (if any). In the case of failure to provide such notice, the mortgagee shall have the right to cancel the contract of mortgage of property and demand compensation for damage or the right to maintain the contract and agree on the rights of the third person with respect to the mortgaged property.

8. Do not sell, exchange or give the mortgaged property, except in the cases provided in Clauses 4 and 5 of Article 321 of this Code.

Article 321. Rights of mortgagor

1. Exploit, and to enjoy the yield and income derived from, the property, except where the yield and income also form part of the mortgaged property as agreed.

2. Invest in order to increase the value of the mortgaged property.

3. Recover the mortgaged property and related documents held by a third person when the obligation secured by the mortgage is terminated or is substituted by other security.

4. Sell or replace mortgaged property being goods rotating during the production and business process. In the case of a sale of mortgaged property being goods rotating during the production and business process, the right to require the purchaser to pay money, the proceeds received or the assets formed from the proceeds received shall form the mortgaged property in substitution for the property which was sold.

When a warehouse is mortgaged, the mortgagor may substitute goods in the warehouse but must ensure the value of the goods in the warehouse remains the value agreed.

5. Sell, exchange or give mortgaged property not being goods rotating during the production and business process with the consent of the mortgagee or as prescribed by law.

6. Lease or lend the mortgaged property provided that notice must be provided to the lessee and the borrower that the property is being mortgaged and that the mortgagee must also be notified that such notice has been provided.

Article 322. Obligations of mortgagees

1. Where the parties agree that the mortgagee will hold the documents relating to the mortgaged property, to return to the mortgagor such documents upon termination of the mortgage.

2. Follow procedures for realization of mortgaged property in accordance with regulations of law.

Article 323. Rights of mortgagees

1. Examine and inspect directly the mortgaged property provided that such examination and inspection does not hinder or cause difficulty to the use and exploitation of the mortgaged property.

2. Require the mortgagor to provide information on the current status of the mortgaged property.

3. Require the mortgagor to apply necessary measures to preserve the property and the value of the property if there is a danger that use and exploitation of the mortgaged property will cause loss of value or depreciation in value of the property.

4. Conduct the registration of mortgage as prescribed by law.

5. Require the mortgagor or a third person holding the mortgaged property to deliver it to the mortgagee for realization if, upon expiry of the term for fulfillment of the obligation, the obligor has failed to perform or performed incorrectly the obligation.

6. Hold documents related to mortgaged property as agreed by parties, unless otherwise prescribed by law

7. Follow procedures for realization of mortgaged property as prescribed in Article 299 of this Code.

Article 324. Rights and obligations of third parties holding mortgaged property

1. A third person holding mortgaged property has the following rights:

a) Exploit the property if so agreed;

b) Receive remuneration and be reimbursed for expenses incurred in taking care of and preserving the mortgaged property, unless otherwise agreed.

2. A third person holding mortgaged property has the following obligations:

a) Take care of and preserve the mortgaged property, and to compensate for any damage if the third person loses the mortgaged property or causes the mortgaged property to lose its value or depreciate in value;

b) Cease the exploitation of the property if it is in danger of losing its value or depreciating in value;

c) Return the mortgaged property to the mortgagee or mortgagor as agreed or prescribed by law.

Article 325. Mortgage on land use rights without mortgage of property on land

1. With respect to mortgage on land use rights without mortgage property on that land but the land user is also the owner of the property on land; such property shall also part of the realized property, unless otherwise agreed.

2. With respect to mortgage on land use rights that the land user is not also the owner of the property on land, such owner may keep using such land within his/her rights and obligations during the realization of the land use rights. The rights and obligations of the mortgagor in relation with the owner of the property on land shall be transferred to the transferee of the land use rights, unless otherwise agreed.

Article 326. Mortgage of property on land without mortgage on land use rights

1. With respect to mortgage of property on land without mortgage on land use rights but the owner of the property on land is also the land user, such land use rights shall also part of the realized property, unless otherwise agreed.

2. With respect to mortgage of property on land without mortgage on land use rights that the owner of the property on land is not also the land user, the transferee of property on land may keep using such property within the transferred rights and obligations from the owner of the property on land during the realization of the land use rights, unless otherwise agreed.

Article 327. Termination of property mortgages

A mortgage of property shall terminate in any of the following cases:

1. The obligation which is secured by the mortgage has terminated;

2. The mortgage of the property has been cancelled or substituted with another security;

3. The mortgaged property has been realized;

4. As agreed by the parties.

Sub-section 4. DEPOSIT, SECURITY COLLATERAL, ESCROW DEPOSIT

Article 328. Deposit

1. Deposit is an act whereby one party (hereinafter referred to as the depositor) transfers to another party (hereinafter referred to as the depositary) a sum of money or precious metals, gemstones or other valuable things (hereinafter referred to as the deposited property) for a period of time as security for the entering into or performance of a contract.

2. Upon a contract being entered into or performed, any deposited property shall be returned to the depositor, or deducted from the amount of an obligation to pay money. If the depositor refuses to enter into or perform the contract, the deposited property shall belong to the depositary. If the depositary refuses to enter into or perform the contract, it must return the deposited property and pay an amount equivalent to the value of the deposited property to the depositor, unless otherwise agreed.

Article 329. 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 pay 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.

Article 330. Escrow deposit

1. Escrow deposit is an act whereby an obligor deposits a sum of money, precious metals, gems or valuable papers into an escrow account at a credit institution to secure the performance of an 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 deposit is affected, after deducting the bank service charges.

3. The procedures for making deposits and making payments shall be as provided by the law.

Sub-section 5. TITLE RETENTION

Article 331. Title retention

1. In a sale contract, the ownership of property of the seller may remain until the buyer pays the purchase price in full.

2. Title retention must be made in a separate document or included in the sale contract.

3. The title retention shall take effect against third party from the time of registration.

Article 332. Right to reclaim property

If the buyer fails to fulfill the payment obligation for the seller as agreed, the seller is entitled to reclaim the property. The seller shall refund the paid amount by the buyer deducted from the depreciated value due to use. Where the buyer lost or damaged property, the seller has the right to claim damages.

Article 333. Rights and obligations of the buyer

1. Using the property and enjoying the yield and income derived therefrom within the effective term of title retention.

2. Facing the risks of the property within the effective term of the title retention, unless otherwise agreed.

Article 334. Termination of title retention

The title retention shall terminate in any of the following cases:

1. Payment obligation fulfilled completely by the buyer;

2. The seller receives the property under title retention back;

3. As agreed by the parties.

Sub-section 6. GUARANTEES

Article 335. Guarantees

1. Guarantee means an undertaking made by a third person (hereinafter referred to as the guarantor) to an obligee (hereinafter referred to as the creditor) to perform an obligation on behalf of an obligor (hereinafter referred to as the principal debtor) if the obligation falls due and the principal fails to perform or performs incorrectly the obligation.

2. The parties may agree that the guarantor shall only be obliged to perform the obligation if the principal debtor is incapable of performing it.

Article 336. Scope of guarantees

1. A guarantor may guarantee an obligation in whole or in part on behalf of a principal debtor.

2. A guaranteed obligation includes interest on the principal, penalties and compensation for any damage and interest on late payment, unless otherwise agreed.

3. The parties may agree on using security as property to secure the performance of guaranteed obligation.

4. If the obligation to guarantee is an obligation arising in the future, the scope of guarantee is exclusive of any obligations arising after the guarantor being natural person dies or the guarantor being juridical person ceases to exist.

Article 337. Remuneration

The guarantor shall be entitled to receive remuneration if so agreed by the guarantor with the principal debtor.

Article 338. Joint guarantors

When more than one person guarantee an obligation, those persons must perform jointly the guarantee, except where it is agreed or provided by law that the guarantee comprises separate portions. The obligee may require any of the joint guarantors to perform the obligation in its entirety.

Where one of the joint guarantors has performed the entire obligation on behalf of the principal debtor, the guarantor may require the other guarantors to perform their respective portions of the obligation with respect to that guarantor.

Article 339. Relationship between guarantors and creditors

1. If the principal fails to perform or performs incorrectly the obligation, the creditor is entitled to request the guarantor to fulfill the guaranteed obligation , unless contracting parties has agreed that the guarantor only be required to perform the obligation on behalf of the principal debtor in case of the failure to perform obligation by the principal debtor.

2. A creditor may not require a guarantor to perform an obligation on behalf of the principal debtor until the obligation falls due.

3. Where a guarantor is able to offset an obligation with a principal debtor, a guarantor does not have to perform the guaranteed obligation.

Article 340. Rights to require of guarantors

Each guarantor may require the principal debtor to indemnify the guarantor to the extent of the guarantee, unless otherwise agreed.

Article 341. Discharge from guaranteed obligations

1. Where the guarantor must perform the guaranteed obligation but the creditor discharges the guarantor from an obligation, the principal debtor is discharged from performance of the obligation with respect to the creditor, except where it is agreed or provided by law.

2. Where one person from amongst the joint guarantors is discharged from the performance of its portion of the guaranteed obligation, the other joint guarantors must, nevertheless, perform their portion of the guaranteed obligation.

3. Where one person from amongst the joint creditors discharge the guarantor from the performance of its portion of the guaranteed obligation, the guarantor must, nevertheless, perform their portion of the guaranteed obligation with respect to remaining joint creditors.

Article 342. Civil liability of guarantor

1. If the principal debtor fails to perform or perform incorrectly the obligation, the guarantor is obligated to perform such obligation.

2. If the guarantor performs incorrectly the guaranteed obligation, the creditor is entitled to request the guarantor to pay the value of the breached obligation and compensate for any damage.

Article 343. Termination of guarantees

A guarantee shall terminate in any of the following cases:

1. The obligation secured by the guarantee terminates;

2. The guarantee is cancelled or is substituted by another security;

3. The guarantor has satisfied the guaranteed obligation;

4. As agreed by the parties.

Sub-section 7. FIDELITY GUARANTEES

Article 344. Fidelity guarantees provided by socio-political organizations

A socio-political organization at the grassroots level may provide a fidelity guarantee in order that poor individuals and households are able to borrow sums from banks or other credit institutions for purposes of production, business or provision of services in accordance with the regulations of law.

Article 345. Formalities and contents of fidelity guarantees

A loan guaranteed by a fidelity guarantee must be made in writing with certification of a socio-political organization in terms of conditions and circumstances of the borrower.

The agreement on fidelity guarantee must specify the loan amount, the purpose of loan, the term of loan, the interest rate, and the rights, obligations and responsibilities of the borrower, the lending bank or credit institution and the guarantor organization.

Sub-section 8. LIEN ON PROPERTY

Article 346. Lien on property

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.

Article 347. Establishment of lien on property

1. Lien on property shall arise from the due time for performance of obligation that the obligor failed to perform or perform incorrectly the obligation.

2. Lien on property shall take effect against third party from the time of possession of the possessor.

Article 348. Rights of lienors

1. Request the obligor to fulfill completely the obligations arising from a bilateral contract.

2. Require the obligor to pay expenses necessary for taking care of and keeping such property.

3. Exploit the property to obtain yield and income therefrom with the consent of the obligor.

The value of benefits from the exploitation of the property shall be offset against the value of the obligation of the obligor.

Article 349. Obligations of lienors

1. Take care and preserve the property

2. Do not change the status of the property.

3. Do not transfer or use the property without the consent of the obligor.

4. Return the property upon the complete performance of the obligation.

5. Compensate for lost or damaged property.

Article 350. Termination of lien on property

A lien on property shall terminate in any of the following cases:

1. The lienor actually no longer retains the property;

2. Contracting parties shall agree on another security instead of retain on property;

3. upon the complete performance of the obligation;

4. The property ceases to exist;

5. As agreed by the parties.

Section 4. CIVIL LIABILITY

Article 351. Civil liability arising from breach of civil obligations

1. An obligor which fails to perform or performs incorrectly an obligation has civil liability to the obligee.

Breach of obligations means that the obligor fails to perform the obligations on time, perform the obligations incompletely or incorrectly.

2. Where an obligor is not able to perform a civil obligation due to an event of force majeure, it shall not have civil liability, unless otherwise agreed or otherwise provided by law.

3. An obligor shall not have civil liability if it is able to prove that failure to perform an obligation is due entirely to the fault of the obligee.

Article 352. Responsibility for continuing performing obligations

When an obligor perform its obligations improperly, the obligee is entitled to request the obligor to continue perform such obligations.

Article 353. Late performance of civil obligations

1. Late performance of a civil obligation is the failure to have performed the civil obligation in whole or in part as at the expiry of the time limit for the performance of such obligation.

2. The party being late in performance of a civil obligation must notify immediately the obligee about the failure to have performed the civil obligation in a timely manner.

Article 354. Postponement of performance of civil obligations

1. When it is not possible to perform a civil obligation on time, the obligor must inform immediately the obligee and may suggest postponement of performance of the civil obligation.

In the case of failure to notify the obligee, the obligor must compensate for any damage arising, unless otherwise agreed or unless it was impossible to provide notification due to objective reasons.

2. The obligor may postpone the performance of the obligation only if the obligee consents. The performance of the civil obligation in this case of postponement shall be deemed to be performance in a timely manner.

Article 355. Late acceptance of performance of civil obligations

1. The late acceptance of the performance of a civil obligation is where the time limit for the fulfillment of the civil obligation has expired and the obligor has already fulfilled the civil obligation as agreed but the obligee does not accept the performance of such obligation.

2. When the subject matter of late acceptance of performance of a civil obligation is property, the obligor may hand over the property to a bailee must or take the necessary measures to take care of the property and is entitled to demand reimbursement of reasonable expenses. If the property is kept by a bailee, the obligor must notify the obligee.

3. The obligor has the right to sell property which is in danger of being damaged or of deteriorating, and shall pay the proceeds of sale of such property to the obligee after deducting necessary expenses for the preservation and sale of the property.

Article 356. Civil liability for failure to perform obligations to deliver objects

1. Where an obligor fails to deliver a distinctive object, the obligee has the right to require the obligor to deliver that particular object. If the object no longer exists or is damaged, the obligor must pay the value of the object.

2. Where an obligor fails to deliver a fungible object, the obligee has the right to require the obligor to deliver another fungible object. If there is no fungible object, the obligor must pay the value of the object.

3. Where an obligor fails to perform an obligation as provided in clauses 1 and 2 of this article and causes damage to the obligee, the obligor must compensate for any damage.

Article 357. Liability for late performance of the obligation to pay

1. Where the obligor makes late payment, then it must pay interest on the unpaid amount corresponding to the late period.

2. Interest arising from late payments shall be determined by agreement of the parties, but may not exceed the interest rate specified in paragraph 1 of Article 468 of this Code; if there no agreement mentioned above, the Clause 2 of Article 468 of this Code shall apply.

Article 358. Civil liability for failure to perform obligations to perform acts or not to perform acts

1. Where an obligor fails to perform an act which it must perform, the obligee has the right to request the obligor to perform the act, or the obligee may perform the act or assign the performance of the act to another person and to require the obligor pay reasonable expenses incurred and compensate for any damage.

2. Where a person has an obligation not to perform an act but, nevertheless, performs such act, the obligee has the right to require the obligor to cease performing the act, make restitution and compensate for any damage.

Article 359. Liability for late acceptance of performance of civil obligations

An obligee which is late in accepting the performance of a civil obligation, and thereby causes damage to the obligor, must compensate the obligor for any damage and shall accept all risks arising from the time when acceptance fell due, unless otherwise agreed or otherwise provided by law.

Article 360. Liability for compensation due to breach of obligations

With respect to damage caused by breach of an obligation, the obligor must compensate for the whole damage, unless otherwise agreed or prescribed by law.

Article 361. Damage caused by breach of obligations

1. Damage caused by breach of obligations comprises physical damage and spiritual damage.

2. The physical damage means those actual physical losses, comprising loss of property, reasonable expenses to prevent, mitigate or restore damage, and the actual loss or reduction of income.

3. Spiritual damage means losses related to life, health, honor, dignity or reputation and other personal benefits of an entity.

Article 362. The obligation to prevent or limit damage

The obligee must adopt the necessary and reasonable measures to prevent or limit its damage.

Article 363. Compensation for damages in case of the aggrieved party at fault

Where the breach of the obligations and damage incurred due to part of the fault of the aggrieved party, the violating party only be required to pay damages corresponding to its degree of fault.

Article 364. Fault in civil liability

Fault in civil liability includes intentional fault and unintentional fault.

Intentional fault means that a person is fully aware that its act will cause damage to another person but, nevertheless, performs the act and, irrespective of whether or not it so wishes, allows the damage to occur.

Unintentional means that a person does not foresee that its act is capable of causing damage, even though it knows or should know that the damage will occur, or where it does foresee that such act is capable of causing damage but believes that the damage will not occur or will be able to be prevented.

Section 5. TRANSFER OF RIGHT TO DEMAND AND TRANSFER OF CIVIL OBLIGATIONS

Article 365. Transfer of right to demand

1. A party having the right to demand the performance of a civil obligation may transfer such right to demand to a subrogatee of the obligee as agreed, except in the following cases:

a) The right is the right to demand support or the right to demand compensation for any damage resulting from harm to life, health, honor, dignity or reputation;

b) The obligee and the obligor agree that the right to demand may not be transferred;

2. Where a person having a right to demand transfers such right to a subrogatee, the subrogatee of the obligee shall become the person having the right to demand. The transfer of right to demand does not require the consent of the obligor.

A person transferring a right must notify the obligor in writing of the transfer of the right to demand, unless otherwise agreed. If the person transferring the right fails to notify the obligor thereby the obligor incurs expenses, the person transferring the right must pay for those expenses.

Article 366. Obligation to provide information and documents

1. A person transferring a right to demand must provide the necessary information and the relevant documents to the subrogatee of the obligee.

2. A person transferring a right to demand and breaching the provisions in Clause 1 of this Article, thereby causing damage, must compensate for such damage.

Article 367. No liability after transfer of right to demand

A person transferring a right to demand shall not be liable for the capability of the obligor to perform the obligation, unless otherwise agreed.

Article 368. Transfer of right to demand performance of secured civil obligations

Where a right to demand the performance of a secured civil obligation is transferred, the transfer of the right to demand shall include the security.

Article 369. Right to refuse of obligors

1. Where the obligor is not notified of the transfer of the right to demand or where the subrogatee of the obligee does not prove the authenticity of the transfer of the right to demand, the obligor has the right to refuse to perform the obligation with respect to the subrogatee of the obligee.

2. Where the obligor is not notified of the transfer of the right to demand and has already fulfilled the obligation with respect to the person having transferred the right to demand, the subrogatee of the obligee may not demand the obligor to perform the obligation with respect to that subrogatee.

Article 370. Transfer of civil obligations

1. An obligor may transfer a civil obligation to a subrogatee of the obligor with the consent of the obligee, except where the obligation is personal to the obligor or where the law provides that the obligation may not be transferred.

2. Upon a transfer of the obligation, the subrogatee of the obligor shall become the obligor.

Article 371. Transfer of secured civil obligations

Where a secured civil obligation is transferred, the security shall terminate, unless otherwise agreed.

Section 6. TERMINATION OF CIVIL OBLIGATIONS

Section 372. Termination of civil obligations

A civil obligation shall terminate in any of the following cases:

1. The obligation is fulfilled;

2. The parties so agree;

3. The obligee waives performance of the obligation;

4. The obligation is substituted by another civil obligation;

5. The obligation is offset;

6. The obligee and the obligor merge;

7. The prescriptive period for a release from the civil obligation has expired;

8. The obligor being a natural person dies, or the obligor being a juridical person ceases to exist, and the obligation must be performed by that particular natural person or juridical person;

9. The obligee being a natural person dies and the right to demand does not form part of the bequeathed estate, or the obligee being a juridical person ceases to exist and the right to demand is not able to be transferred to another juridical person;

10. A distinctive object which is the subject matter of the civil obligation no longer exists and is substituted by another civil obligation.

11. Other cases as provided by law.

Article 373. Fulfillment of civil obligations

The civil obligation shall be deemed to be have been fulfilled when the obligor has performed the obligation in its entirety, or has performed a portion of the obligation and the obligee waives any further performance.

Article 374. Fulfillment of civil obligations where obligees are late in accepting subject matter of obligations

When an obligee is late in accepting the subject matter of an obligation which is an object, the obligation to deliver an object shall be fulfilled at the moment when the object is deposited for bailment as prescribed in Clause 2 Article 355 of this Code.

Article 375. Termination of civil obligations by agreement

Parties may agree to terminate a civil obligation at any time but must not cause damage to the interests of the State or the public or the legal rights or interests of other persons.

Article 376. Termination of civil obligations due to waiver

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

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

Article 377. Termination of civil obligations by substitution

1. Where parties agree to substitute an original civil obligation with another civil obligation, the original civil obligation shall terminate.

2. A civil obligation shall also terminate if the obligee has accepted another property or the performance of another act as a substitute for the property or act previously agreed.

3. Where a civil obligation is an obligation to support others or to compensate for any damage due to harm to life, health, honor, dignity or reputation, or another personal obligation which is not able to be transferred to other persons, such obligation may not be substituted with another obligation.

Article 378. Termination of civil obligations where obligations are offset

1. Where parties have reciprocal obligations with respect to fungible objects, when both obligations fall due, the parties shall not be required to perform their obligations to each other, and the obligations shall be deemed to have terminated, unless otherwise provided by law.

2. Where the values of properties or acts are not equivalent, the parties shall settle with each other the difference in value.

3. Objects having monetary value may be used to offset an obligation to pay money.

Article 379. Cases where civil obligations may not be offset

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

1. The civil obligation is in dispute;

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

3. The obligation is to support others;

4. Other obligations as provided by law.

Article 380. Termination of civil obligations upon merger of obligor and obligee

A civil obligation of an obligor shall terminate when the obligor becomes the obligee with respect to that particular obligation.

Article 381. Termination of civil obligations due to expiry of duration of waiver of civil obligation

Upon expiry of the duration of waiver of a civil obligation, the obligation shall terminate.

Article 382. Termination of civil obligations when obligor being natural person dies or when obligor being juridical person ceases to exist

Where parties have agreed or the law provides that an obligation must be performed by a particular obligor, when such natural person dies or such juridical person ceases to exist, the obligation shall terminate.

Article 383. Termination of civil obligations when distinctive objects no longer exist

An obligation to deliver a distinctive object shall terminate when such distinctive object no longer exists.

Parties may agree on the substitution of such object with another object or on compensation for any damage.

Article 384. Termination of civil obligations in cases of bankruptcy

In cases of bankruptcy, civil obligations shall terminate in accordance with the Law on bankruptcy.

Section 7. CONTRACTS

Sub-section 1. ENTERING INTO CIVIL CONTRACTS

Article 385. Definition of civil contract

Civil contract means an agreement between parties in relation to the establishment, modification or termination of civil rights and obligations.

Article 386. Offers to enter into civil contracts

1. Offer to enter into a contract means a clear expression by the offeror of its intention to enter into a contract and to be bound by such offer made to another specific party or the public (hereinafter referred to as the offeree).

2. Where an offer to enter into a contract has specified the time for reply and the offeror enters into a contract with a third person during the time limit for reply by the offeree, if the offeror fails to enter into the contract with the offeree and the offeree suffers damage, the offeror must compensate the offeree for such damage.

Article 387. Information in entering into contracts

1. Each party must notify the other party of any piece of information affecting the acceptance of offer to enter into the contract by the latter party.

2. When a party receives any secret information from the other party during the process of entering into the contract, it must protect that information and may not use it for its own purposes or other illegal purposes.

3. Any party violating Clause 1 or Clause 2 of this Article thereby causes damage must compensate for it.

Article 388. Time limit within which offer to enter into contract remains effective

1. The time limit within which an offer to enter into a contract remains effective shall be determined as follows:

a) Where an offeror has specified such time limit;

b) Where an offeror has not specified the time limit, the offer to enter into the contract is effective as from the time the offeree receives the offer.

2. The following cases shall be deemed to be receipt of an offer to enter into a contract:

a) The offer is delivered to the place of residence if the offeree is a natural person, or the offer is delivered to the head office if the offeree is a juridical person;

b) The offer is placed into the official information system of the offeree;

c) When the offeree knows about the offer to enter into a contract by way of other means.

Article 389. Modification or withdrawal of offers to enter into contracts

1. An offeror may modify or withdraw an offer to enter into a contract in the following cases:

a) If the offeree receives notice of modification or withdrawal of the offer prior to or at the same time as receipt of the offer;

b) The offeror clearly specified the circumstances in which the offer could be modified or withdrawn and such circumstances have in fact arisen.

2. When the offeror modifies the contents of the offer, that offer shall be deemed to be a new offer.

Article 390. Rescission of offers to enter into contracts

If the offeror exercises the right to rescind the offer to enter into a contract on the ground that such right was specified in the offer, the offeror must notify the offeree and such notice shall only be effective if the offeree receives the notice prior to the offeree providing its acceptance of the offer to enter into the contract.

Article 391. Termination of offers to enter into contracts

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

1. The offeree replies that the offer is accepted.

2. The offeree replies that the offer is not accepted;

3. The time limit for acceptance has expired;

4. When notice of modification or withdrawal of the offer becomes effective;

5. When notice of rescission of the offer becomes effective;

6. As agreed by the offeror and the offeree within the time limit within which the offer to enter into a contract remains effective.

Article 392. Amendment of offer proposed by offeree

When an offeree accepts the offer to enter into a contract but specifies conditions or amendments to the offer, the offeree shall be deemed to have made a new offer.

Article 393. Acceptance of offers to enter into contracts

1. Acceptance of an offer to enter into a contract means a reply by the offeree to the offeror accepting the entire contents of the offer.

2. The silence of the offeree shall not mean an acceptance of the offer to enter into the contract, unless it is agreed upon or habit established by the parties.

Article 394. Time limits for acceptance of offers to enter into civil contracts

1. Where an offeror has specified a time limit for reply, a reply accepting shall only be effective if it is made within that time limit. If the offeror receives an acceptance after the time limit has expired, such acceptance shall be deemed to be a new offer from the party which is late in replying.

When the offeror does not specify the time limit for reply, the reply accepting shall only be effective if it is made within reasonable period.

2. If a notice of acceptance of an offer to enter into a contract arrives late for objective reasons which the offeror knows or should know, such notice shall still be effective, unless the offeror immediately replies that it does not agree with such acceptance by the offeree.

3. Where the parties communicate directly, including conversations by telephone or other means of communication, the offeree must reply immediately as to whether or not it will accept, except where there is an agreement on the time limit for reply.

Article 395. Cases where offeror dies or lacks of legal capacity or has limited cognition and behavior control

Where the offeror dies or lacks of legal capacity or has limited cognition and behavior control after the offeree has replied accepting the offer, the offer to enter into a contract shall still be valid, unless the contents of contract is associated with the personal identity of the offeror.

Article 396. Cases where offeree dies or lacks of legal capacity or has limited cognition and behavior control

Where the offeree dies or lacks of legal capacity or has limited cognition and behavior control after the offeree has replied accepting the offer, the offer to enter into a contract shall still be valid, unless the contents of contract is associated with the personal identity of the offeror.

Article 397. Withdrawal of notice of acceptance to enter into contract

The offeree may withdraw notice of acceptance to enter into a contract if such notice arrives prior to or at the same time as the offeror receives the reply accepting the offer to enter into a contract.

Article 398. Contents of contracts

1. The contracting parties may agree on the contents of a contract.

2. A contract may have the following contents:

a) Subject matter of the contract;

b) Quantity and quality;

c) Price and method of payment;

d) Time limit, place and method of performing the contract;

dd) Rights and obligations of the parties;

e) Liability for breach of contract;

g) Methods of settlement of disputes.

Article 399. Places for entering into contracts

The place where a contract is entered into shall be as agreed by the parties; if there is no agreement, such place shall be the residence of the individual, or the head office of the legal entity, having made the offer to enter into the contract.

Article 400. Time when contracts are entered into

1. A contract is entered into at the time when the offeror receives the reply accepting to enter into the contract.

2. If the parties have agreed that silence shall constitute an acceptance within a time limit, the contract shall also be deemed to be entered into when such time limit has expired.

3. The time when an oral contract is entered into is the time when the parties have reached agreement on the contents of the contract.

4. The time when a written contract is entered into shall be the time when the last party signs the contract or by other forms of written acceptance.

If a contract is entered into orally and then it is made in writing, the time when the contract is entered into shall be determined as prescribed in Clause 3 of this Article.

Article 401. Effectiveness of contracts

1. A contract legally entered into shall take effect from the time when it is entered into, unless otherwise agreed or otherwise provided by law.

2. From the effective date of the contract, contracting parties must mutually exercise rights and perform obligations as agreed. A contract may be amended or terminated as agreed by the parties or prescribed by law.

Article 402. Principal types of contracts

Contracts comprise the following principal types:

1. A bilateral contract is a contract whereby each party has an obligation to the other;

2. A unilateral contract is a contract whereby only one party has an obligation;

3. A principal contract is a contract the effectiveness of which does not depend on another contract;

4. An ancillary contract is a contract the effectiveness of which depends on a principal contract;

5. A contract for the benefit of a third person is a contract whereby contracting parties must perform obligations for the benefit of a third person and the third person enjoys benefits from such performance;

6. A conditional contract is a contract the performance of which depends on the occurrence, modification or termination of a specified event.

Article 403. Appendices to contracts

1. Appendices providing details on certain terms and conditions of a contract may be attached to the contract. The appendices shall have the same effectiveness as the contract. The contents of the appendices shall not contradict the contents of the contract.

2. If the terms and conditions of the appendices contradict the terms and conditions of the contract, such terms and conditions of the appendices shall be ineffective, unless otherwise agreed. If the parties agree that the terms and conditions of the appendices contradict the terms and conditions of the contract, the terms and conditions of the contract which are contradicted shall be deemed to have been amended.

Article 404. Interpretation of contracts

1. Where a contract contains terms and conditions which are unclear, the interpretation of such terms and conditions shall be based not only on the wording of the contract but also on the mutual intentions of the parties during the process prior to and after the time of establishment and performance of the contract.

2. Where a term of a contract may be interpreted in different ways, it shall be interpreted in the way which, when effective, will best benefit the parties.

3. Where the wording of a contract may be interpreted in different ways, such wording shall be interpreted in the way most appropriate to the nature of the contract.

4. Where a contract contains a term or wording which is difficult to understand, such term or wording shall be interpreted in accordance with the customary practice of the place where the contract was entered into.

5. Where there is a conflict between the mutual intentions of the parties and the wording used in the contract, the mutual intentions of the parties shall be used in order to interpret the contract.

6. Where the party in a powerful position inserts into the contract contents which are disadvantageous to the party in a weak position, the contract shall be interpreted in a manner favoring the party in a weak position.

Article 405. Standard form contracts

1. Standard form contract means a contract containing terms and conditions which are prepared by a party based on a standard form requiring the other party to reply within a reasonable period of time. If the offeree accepts, it shall be deemed to have accepted the entire contract provided by the offeror.

The standard form contract must be public in order for the parties to know or should know the contents of the contract.

Procedures for announcement of standard form contract shall comply with regulations of law.

2. Where a standard form contract contains terms and conditions which are unclear, such terms and conditions shall be interpreted in a manner favoring the offeree.

3. Where a standard form contract contains provisions exempting the party providing such standard form contract from liability, or increasing the liability of or waiving legitimate interests of the other party, such provisions shall be ineffective, unless otherwise agreed.

Article 406. General trading conditions in concluding contracts

1. General trading conditions are stable terms announced by a party to apply to the offeree; if the offeree accepts the contract is then deemed to accept these terms.

2. General trading conditions shall be effective only with the parties as long as these conditions have been publicly in order for the parties to know or should know them.

The procedures for announcement of general trading conditions shall comply with regulations of law.

3. The general trading conditions must ensure equality between the parties. If the general trading conditions contain provisions on discharge of liability from the party giving the general trading conditions, increase of responsibility or removal of the legitimate interests of the other party, these provisions do not take effect, unless otherwise agreed.

Article 407. Invalid civil contracts

1. The provisions on invalid civil transactions in Articles 123 to 138 inclusive of this Code shall also govern invalid contracts.

2. Invalidity of a principal contract shall terminate an ancillary contract, unless the parties agree that the ancillary contract replaces the principal contract. This provision shall not apply with respect to security for the performance of civil obligations.

3. Invalidity of an ancillary contract shall not terminate the principal contract, unless the parties agree that the ancillary contract is an inseparable part of the principal contract.

Article 408. Invalidity of civil contracts due to impossibility of performing subject matter

1. If, immediately as from the time a contract is signed, it is impossible to perform the subject matter of the contract for objective reasons, the contract shall be invalid.

2. If, when entering into a contract, one party knew or should have known that it was impossible to perform the subject matter of the contract for objective reasons but failed to notify the other party which entered into the contract, the former party must compensate the latter party for damage, unless the latter party knew or should have known that it was impossible to perform the subject matter of the contract.

3. The provision in Clause 1 and Clause 2 of this Article shall also apply to a contract containing one or more parts with subject matter which is impossible to perform, but the remaining parts of the contract shall remain valid.

Sub-section 2. PERFORMANCE OF CONTRACTS

Article 409. Performance of unilateral contracts

With respect to a unilateral contract, the obligor must perform the obligation strictly as agreed. The obligor may only perform the obligation prior to or after the time limit with the consent of the obligee.

Article 410. Performance of bilateral contracts

1. With respect to a bilateral contract, where the parties have agreed on a time limit for the performance of an obligation, each party must perform its obligation when the obligation falls due. One party may not postpone performance by reason of the other party not having performed the obligations owed to the former party, except in the cases provided in Articles 411 and 413 of this Code.

2. Where the parties have no agreement on which party will perform its obligation first, the parties must perform their obligations concurrently; where obligations are not able to be performed concurrently, the obligation the performance of which will take longer shall be performed first.

Article 411. Right to postpone performance of civil obligations in bilateral contracts

1. The party which is required to perform its obligation first has the right to postpone the performance of such obligation, if the property of the other party has substantially decreased in value such that its obligation is not able to be performed as undertaken, until the other party is able to perform its obligation or has a guarantor.

2. The party which is required to perform its obligation last has the right to postpone the performance of such obligation when it falls due if the party which was required to perform its obligation first failed to do so when such obligation fell due.

Article 412. Lien on property in bilateral contracts

If the obligor fails to perform his/her obligations, the obligee shall establish the right to lien on property of the obligor as prescribed in Article 346 to Article 350 of this Code.

Article 413. Obligations not able to be performed due to fault of obligee

With respect to a bilateral contract, when one party is not able to perform its obligations due to the fault of the other party, the former party has the right to demand the latter party to continue to perform its obligation with respect to the former party or has the right to cancel the contract and demand compensation for damage.

Article 414. Failure to perform obligations not due to fault of parties

With respect to a bilateral contract, when one party is not able to perform its obligations but there is no fault of any party, the party not being able to perform does not have the right to demand the other party to perform its obligation with respect to the former party. When one party has performed part of its obligations, such party has the right to demand the other party to perform its corresponding obligation with respect to the former party.

Article 415. Performance of contracts for benefit of third parties

Where a contract is performed for the benefit of a third person, the third person has the right to demand personally the obligor to perform the obligations with respect to such third person. If there is a dispute between the parties over the performance of the contract, the third person does not have the right to demand performance until the dispute is resolved.

An obligee also has the right to demand the obligor perform a contract for the benefit of a third person.

Article 416. Right to waive of third persons

1. Where a third person waives its right to benefits prior to the performance of an obligation by an obligor, the obligor shall not be required to perform the obligation but must notify the obligee, the contract shall be deemed to be cancelled, and each party shall return anything it has received from the other party.

2. If a third person waives its [right to] benefits after the obligor has performed the obligation, the obligation shall be deemed to have been fulfilled and the obligee must perform its undertakings with respect to the obligor. In this case, benefits derived from the contract shall be enjoyed by a party that should have been the beneficiary if the contract is performed for the interests of a third party, unless otherwise agreed.

Article 417. No amendment or cancellation of contracts for benefit of third persons

Where a third person has agreed to receive a benefit, the parties to the contract may not amend or cancel the contract, even where the contract is yet to be performed, except with the consent of the third person.

Article 418. Agreements on fines against violations

1. Agreements on fines for violations are reached by the parties to a contract which requires the violating party to pay a fine to the aggrieved party.

2. The fine levels shall be agreed among the parties, unless otherwise prescribed by relevant laws.

3. The parties may reach an agreement that the violating party has to pay only a fine for violations and is not liable to any compensation for damage, or has to pay both a fine for violations and a compensation for damage.

In case the parties have an agreement on fines against violation which does not specify that the violating party has to pay both a find for violations and a compensation for damage, then the violating party has to pay only the fine for violations.

Article 419. The damage to be compensated for breach of contract

1. The damage to be compensated for breach of contractual obligations is determined in accordance with Clause 2 of this Article, Article 13 and Article 360 ​​of this Code.

2. The obligee may demand compensation for damage to its supposed benefits that will be enjoyed by the contract offer. The obligee also may request the obligor to pay the costs incurred due to its non-fulfillment of contractual obligations which do not overlap with the compensation for damages for contractual benefits.

3. At the request of the obligee, a court may compel the obligor to pay spiritual damages to the obligee. The damages shall be decided by the court according to contents of case.

Article 420. Performance of contract upon the basic change of circumstances

1. The change of circumstances shall be deemed basic when it meets all following conditions:

a) The circumstances change due to objective reasons occurred after the conclusion of the contract;

b) At the time of concluding the contract, the parties could not foresee a change in circumstances;

c) The circumstances change such greatly that if the parties know in advance, the contract has not been concluded or are concluded, but with completely different content;

d) The continuation of the contract without the change in the contract would cause serious damage to one party;

dd) The party having interests adversely affected has adopted all the necessary measures in its ability, in accordance with the nature of the contract, cannot prevent or minimize the extent of effect.

2. In the case of basic circumstances change, the affected party may request the other party to the re-negotiate the contract in a reasonable period of time.

3. If the parties cannot reach an agreement on amending the contract within a reasonable period of time, any of the parties may request a court to:

a) Terminate the contract at a specific time;

b) Amend the contract to balance the lawful rights and interests of the parties due to basic change of circumstances.

The court may only decide to amend the contract in the event that the termination of the contract would cause greater damage than the cost to perform the contract if it is modified.

4. In the process of negotiating amendments and termination of the contract and the court handling the case, the parties must continue to perform its obligations under the contract, unless otherwise agreed.

Sub-section 3. AMENDMENT AND TERMINATION OF CONTRACTS

Article 421. Amendment to contracts

1. Parties may agree to amend a contract.

2. Each contract may be amended as prescribed in Article 420 of this Code.

3. Each amended contract must also comply which the formalities of the initial contract.

Article 422. Termination of contracts

A civil contract shall terminate in any of the following cases:

1. The contract has been completed;

2. The parties so agree;

3. Where a contract is only able to be performed by a particular natural person or juridical person having entered into the contract, and that particular natural person dies or that juridical person ceases to exist.

4. The contract is cancelled or unilaterally terminated;

5. The contract is not able to be performed because the subject matter of the contract no longer exists;

6. The contract terminates as prescribed in Article 420 of this Code;

7. Others circumstances as provided by law.

Article 423. Cancellation of contracts

1. A party has the right to cancel a contract and shall not be liable to compensate for damage in any of the following cases:

a) A violation of contract by the other party gives rise to cancellation as agreed by the parties;

b) The other party seriously violates the obligations in the contract;

c) Others circumstances as provided by law.

2. Serious violation means the failure to fulfill obligations properly by a party leading the failure to achieve the purposes of entering into contract by the other party.

3. A party cancelling a contract must notify the other party immediately of the cancellation [and] must compensate if the failure to notify causes damage.

Article 424. Cancellation of the contract due to late performance of obligations

1. Where the obligor fails to perform the obligations that the obligee requests in a reasonable period of time but the obligor still fails to perform, the obligee may cancel the contract.

2. If, due to the nature of the contract or by the will of the parties, the contract will not achieve the objective if it is not performed within a certain time limit, but the obligor fails to perform that contract upon the expiry date of such time limit, the obligee has the right to cancel the contract without adherence to Clause 1 of this Article.

Article 425. Cancellation of the contract due to inability to perform

Where the obligor cannot perform part or all of its obligations to make the purpose of the obligee may not be reached, the obligee party can cancel the contract and claim damages.

Article 426. Cancellation of the contract in the case of lost or damaged property

Where a party losses or causes damage to property being the subject of a contract that cannot be refunded or compensated by other property or cannot be repaired or replaced with the same type of property, the other party may cancel contract.

The violating party shall compensate in cash equal to the value of lost or damaged property, unless otherwise agreed or stipulated in Clause 2, Clause 3, Article 351 and Article 363 of this Code.

Article 427. Consequences of cancellation of contracts

1. When a contract is canceled, the contract is void from the time of signing; the parties do not have to fulfill the obligations agreed upon, except for agreement on fines against violations, compensation and settlement of disputes.

2. The parties must return to each other what they have received after deducting from the reasonable costs of contract performance and cost of preservation and development of property.

The refund is made in kind. In case it cannot be returned in kind, it is worth the money to repay.

Where the parties are jointly obliged to refund, the refund must be made at the same time, unless otherwise agreed or otherwise provided by law.

3. The aggrieved party shall be compensated due to breach of obligations of the other party.

4. The settlement of the consequences of the cancellation of the contract relating to personal rights shall comply with this Code and other relevant law provisions.

5. In case of canceling the contract without grounds specified in Articles 423, 424, 425 and 426 of this Code, the cancellation of the contract is determined as the violating party to perform its obligations and responsibilities to comply with its obligations under the provisions of this Code, other relevant laws.

Article 428. Unilateral termination of performance of contracts

1. A party has the right to terminate unilaterally the performance of a contract without any compensation for damage when a party violates its obligations seriously if so agreed by the parties or so provided by law.

2. A party terminating unilaterally the performance of a contract must notify the other party immediately of its termination of the contract and must compensate if the failure to notify causes damage.

3. Where the performance of a contract is terminated unilaterally, it shall terminate from the time when the other party is notified of the termination. In such case, the parties are not required to continue to perform their obligations, except for agreement on fines for violations, compensation for damage and settlement of disputes. A party which has already performed its obligation may demand the other party to make payment for the performed obligation.

4. The aggrieved party shall receive a compensation for damage caused by the improper performance of obligation by the violating party.

5. If a contract is terminated unilaterally without any basis prescribed in Clause 1 of this Article, the party terminating unilaterally the performance of the contract shall be deemed to be the violating party and must perform civil liability as prescribed in this Code and relevant laws.

Article 429. Prescriptive period for initiating legal action with respect to contracts

The prescriptive period for initiating legal action to request a court to resolve a dispute relating to a contract is three years from the date on which the party entitled to request knows or should know that their lawful rights and interests are infringed.

Chapter XVI

COMMON CONTRACTS

Section 1. SALE CONTRACTS OF PROPERTY

Article 430. Sale contract of property

Sale contract means an agreement between parties whereby a seller is obligated to transfer the ownership rights of property to the purchaser and the purchaser is obligated to make a payment to the seller.

Sale contracts of houses or sale contracts of houses for other purposes shall comply with this Code, the Law on Housing and relevant laws.

Article 431. Subject matter of sale contracts

1. Each property prescribed in this Code may be the subject matter of a sale contract. If a property is banned or restricted from transfer as prescribed by laws, it shall become a subject matter of a sale contract if it complies with the regulations of such laws.

2. The property is under ownership of the seller and the seller has the right to sell it.

Article 432. Quality of objects for sale

1. The quality of an object for sale and purchase shall be as agreed by the parties.

2. Where the quality of an object has been proclaimed or is provided by a competent authority, the quality of the object agreed by the parties shall not be lower than the quality proclaimed standard or the stipulations of the competent authority.

3. Where parties have not agreed on or agree unclearly on the quality of the object for sale, its quality shall conform to requirements pertaining to quality of the object proclaimed or prescribed by a competent authority or by industry standards.

If there is no quality standard, regulations of a competent authority and industry standard in terms of an object for sale, its quality shall be determined according to normal standards or separate standards in conformity with the purposes of entering into contract and as prescribed in the Law on consumers’ right protection.

Article 433. Price and method of payment

1. Price shall be as agreed by the parties or as determined by a third person at the request of the parties. With respect to property in a transaction for which a competent authority has provided price and method of payment, the parties shall reach an agreement in accordance with such regulations.

2. Where parties reach no agreement or reach an agreement with unclear terms about price and method of payment, the price shall be determined according to the market price and the method of payment shall be determined according to the customary practice at the time and place of entering into the contract.

Article 434. Time limits for performance of sale contracts

1. The time limit for performance of a sale contract shall be as agreed by the parties. The seller must deliver the property to the purchaser at the agreed time. The seller may only deliver the property prior to the time limit with the consent of the purchaser.

2. Where the parties have not agreed on a time limit for delivery of the property, the purchaser has the right to demand, at any time, the seller to deliver the property and the seller also has the right to demand, at any time, the purchaser to accept the property, but the parties must give an advanced reasonable notice to each other.

3. The purchaser shall make the payment according to the agreed time. Where the parties have no agreement or have an unclear agreement on the time limit for payment, the purchaser must pay immediately upon receipt of the property or documents proving the ownership of the property.

Article 435. Place for delivery of property

The place for delivery of the property shall be as agreed by the parties. If there is no agreement, Clause 2 of Article 277 of this Code shall apply.

Article 436. Method for delivery of property

1. Property shall be delivered by the method as agreed by the parties. If there is no agreement on the method for delivery of the property, the property shall be delivered at one time directly to the purchaser.

2. If the parties agreed that the seller shall deliver property to the purchaser many times, but the seller violates obligation of delivery in a certain time, the purchaser may cancel the part of contract related to such violation and claim compensation.

Article 437. Liability in respect of delivery of objects in incorrect quantities

1. Where a seller delivers objects in a quantity which is more than that agreed, the purchaser has the right to accept or not to accept the excess. If it accepts the excess, payment shall be made in accordance with the agreement on the excess.

2. Where a seller delivers objects in a quantity which is less than that agreed, the purchaser has one of the following rights:

a) Accept the amount delivered and set a time limit for the seller to deliver the amount outstanding;

b) Accept the amount delivered and demand compensation for damage;

c) Cancel the contract and demand compensation for damage if the violation prevents the purchaser from achieving the purposes of enter into the contract.

Article 438. Liability in respect of delivery of incomplete integrated objects

1. Where an integrated object is delivered incomplete, thereby rendering the object unusable, the purchaser has one of the following rights:

a) Accept the object and demand the seller to deliver the remaining parts, demand compensation for damage, and postpone payment in respect of the parts received until the missing parts are delivered;

b) Cancel the contract and demand compensation for damage.

2. Where a purchaser has paid for, but not yet accepted, the delivery of an incomplete integrated object, the purchaser shall be paid interest on the amount pre-paid as agreed by the parties provided it does not exceed the interest rate prescribed in Clause 1 Article 468 of this Code. If the parties do not agree the interest rate, Clause 2 Article 468 of this Code shall apply and the purchaser may demand the seller to compensate for damage due to the delivery of the incomplete integrated object from the time when the contract is required to be performed to the time when the complete integrated object is delivered.

Article 439. Liability in respect of delivery of objects of incorrect type

Where an object delivered is of an incorrect type, the purchaser has one of the following rights:

1. Accept the object and pay the agreed price;

2. Demand delivery of an object of the correct type and compensation for damage;

3. c) Cancel the contract and demand compensation for damage if the delivery of incorrect type prevents the purchaser from achieving the purposes of enter into the contract.

With regard to an object including many types, if the seller fails to deliver it in conformity with the agreement, the purchaser may cancel the part of contract related to such object and claim compensation.

Article 440. Obligation to make payment

1. A purchaser must pay the full price at the agreed place and time.

2. If the parties only agree on time limit for delivery of object, the time limit for payment shall be determined equivalent to the time limit for delivery of object. If the parties do not agree on time limit for delivery of object and payment, the purchaser must make payment upon the receipt of the object.

3. If the purchaser fails to make payment, he/she/it must pay interest on the late payment as prescribed in Article 357 of this Code.

Article 441. Transfer of risks

1. The seller shall bear all risks of the property until the property is delivered to the purchaser, the purchaser shall bear all risks of the property from the time of acceptance of the property, unless otherwise agreed or prescribed by law.

2. Where the law requires that ownership rights with respect to property which is the subject matter of a contract for sale and purchase must be registered, the seller bear all risks until the completion of the registration procedures and the purchaser bear all risks from the completion of the registration procedures, unless otherwise agreed.

Article 442. Transport costs and costs related to transfer of ownership rights

1. Transport costs and costs related to transfer of ownership rights shall be agreed by the parties, unless otherwise prescribed by law.

2. Where the parties do not reach an agreement or reach an unclear agreement on transport costs and costs related to transfer of ownership rights, those costs shall be determined according to the costs proclaimed or prescribed by a competent authority or industry standards.

3. If there is no basis prescribed in Clause 1 and Clause 2 of this Article, the transport costs and costs related to transfer of ownership rights shall be determined according to normal standards or separate standards in conformity with the purposes of entering into contract.

4. Where the parties have not agreed on and the law does not provide transport costs and costs related to transfer of ownership rights, the seller shall be liable for the costs of transportation to the place of delivery of the property and the costs related to the transfer of the ownership rights.

Article 443. Obligation to provide information and instructions for use

A seller has the obligation to provide a purchaser with necessary information on the property for sale and instructions on the use of the property. If the seller fails to perform this obligation, the purchaser has the right to require the seller to perform such obligation within a reasonable time limit and, if the seller still fails to perform such obligation that prevents the purchaser from achieving the purposes of entering into the contract, the purchaser has the right to cancel the contract and demand compensation for damage.

Article 444. Assurances as to ownership rights of purchasers with respect to purchased property

1. A seller has the obligation to assure that the ownership rights with respect to the property sold to a purchaser are not disputed by a third person.

2. Where ownership rights with respect to property are disputed by a third person, the seller must support the purchaser in protecting the interests of the purchaser. If a third person has the ownership rights with respect to all or part of the property for sale and purchase, the purchaser has the right to cancel the contract and require the seller to compensate for damage.

3. Where a purchaser knows or should know that property for sale and purchase is under the ownership of a third person but, nevertheless, purchases the property, the purchaser must return the property to the owner and does not have the right to demand compensation for damage.

Article 445. Assurances as to quality of objects for sale

1. A seller must assure the utility value or the characteristics of the object for sale and purchase. If, after having purchased an object, a purchaser discovers defects which cause the object to lose its value or diminish its utility value, the purchaser must notify the seller immediately of such defects and has the right to require the seller to repair or replace the defective object with another object, to reduce its price and to compensate for damage, unless otherwise agreed.

2. A seller must assure that an object for sale corresponds to descriptions on any package, to any trademark or to any sample selected by the purchaser.

3. A seller shall not be liable for any defect of an object in the following cases:

a) Where the purchaser knew or should have known of the defect at the time of purchase;

b) Where the object was sold at an auction or a second-hand shop;

c) Where the purchaser was at fault for causing the defect.

Article 446. Warranty obligation

If agreed by parties or provided by law, a seller has the obligation to provide a warranty for the object for sale and purchase for a certain period, hereinafter referred to as the warranty period.

The warranty period shall be calculated from the time when the purchaser has the obligation to accept the object.

Article 447. Right to claim on warranty

If a purchaser discovers a defect in a purchased object during the warranty period, it has the right to require the seller to repair the object free of charge, or reduce its price or replace it with another object, or it has the right to return the object in exchange for a refund.

Article 448. Repairs of objects during warranty periods

1. A seller must repair a defective object and assure that it satisfies the quality standards or characteristics as undertaken.

2. A seller shall pay the costs for repairing a defective object and for transporting it from the place of residence or head office of the purchaser to the place of repair and vice versa.

3. A purchaser has the right to require the seller to complete the repairs within a time limit agreed by the parties or within a reasonable time. If the seller is not able to make or complete the repairs within such time, the purchaser has the right to demand a price reduction or replacement of the defective object with another object, or it has the right to return the object in exchange for a refund.

Article 449. Compensation for damage during warranty periods

1. In addition to demanding the performance of warranty obligations, a purchaser has the right to require the seller to compensate for damage caused during the warranty period due to technical defects of the object.

2. A seller shall not be liable to compensate for damage if it is able to prove that the damage was caused due to the fault of the purchaser. The seller shall be entitled to a reduction in the amount of compensation for the damage where the purchaser has failed to take all necessary measures available to it to mitigate the damage.

Article 450. Sale of property rights

1. Where property rights are sold, a seller must deliver the relevant documents and complete the procedures for transferring the ownership rights to the purchaser and the purchaser must pay the seller.

2. Where property rights are the right to demand payment of a debt and the seller has guaranteed the ability to pay of the debtor, the seller must be jointly liable for payment if the debt falls due and the debtor fails to pay.

3. The time when ownership rights with respect to property rights are transferred is the time when a purchaser receives documents evidencing the ownership rights with respect to the property rights, or the time when the transfer of the ownership rights is registered if so provided by law.

Article 451. Auctions

Property may be sold at an auction as required by the owner or as provided by law. A sale by auction of multiple ownership property must have the consent of all owners, unless otherwise agreed or otherwise provided by law.

The auction must be conducted in conformity of principles of objective, public and transparent, assurance of lawful rights and interests of the participants and in accordance with law on auction.

Article 452. Purchases after trial use

1. Parties may agree on the trial use of purchased property by the purchaser for a period, hereinafter referred to as the trial use period. During the trial use period, the purchaser may inform the seller whether or not the purchaser wishes to make the purchase. If the purchaser fails to inform the seller prior to the expiry of the trial use period, the purchaser shall be deemed to have accepted the purchase on the terms agreed prior to the property being received for trial use.

If the parties do not reach an agreement and reach an unclear agreement on the trial use period, such period shall be determined according to the customary practice of the transactions with the same subject matter.

2. During the trial use period, property shall remain under the ownership of the seller. The seller shall bear all risks of the property, unless otherwise agreed. During the trial use period, the seller may not sell, give, lease, exchange, mortgage or pledge the property until the purchaser informs the seller whether or not it wishes to make the purchase.

3. Where a prospective purchaser informs the seller that it does not wish to make the purchase, the prospective purchaser must return the property to the seller and must compensate the seller if the prospective purchaser loses or damages the trial property. The prospective purchaser shall not be liable for normal wear and tear caused by the trial use and shall not have to return any yield derived from the trial use.

Article 453. Purchases by deferred payment or payment in instalments

1. Parties may agree that the purchaser may purchase by deferred payment or payment in instalments of the purchase price within a time limit after delivery of the purchased property. The seller has title retention of the property sold until the purchaser has paid the purchase price in full, unless otherwise agreed.

2. Contracts for purchase by deferred payment or payment in instalments shall be made in writing. The purchaser may use the property purchased by deferred payment or payment in instalments and bear all risks during the period of use, unless otherwise agreed.

Article 454. Buy-back of property sold

1. A seller and purchaser of property may agree that the seller has the right to buy-back the property within a period of time following the sale (hereinafter referred to as the buy-back period).

The buy-back period for property shall be as agreed by the parties but shall not exceed one year in respect of moveable property, and five years in respect of immoveable property, from the time of delivery of the property, unless otherwise prescribed by law. During this period, the seller may buy back the property at any time provided that reasonable prior notice is given to the purchaser. The buy-back price shall be the market price at the time when and place where the buy-back occurs, unless otherwise agreed.

2. During the buy-back period, a purchaser may not sell, exchange, give, lease, mortgage or pledge the property, and shall bear all risks with respect to the property, unless otherwise agreed.

Section 2. CONTRACTS FOR EXCHANGE OF PROPERTY

Article 455. Contracts for exchange of property

1. Contract for the exchange of property means an agreement between parties whereby they deliver property, and transfer the ownership rights thereto, to each other.

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

3. Where one party exchanges with another party property which it does not own or property in respect of which it has no authorization from the owner, the other party may cancel the contract and demand compensation for damage.

4. Each party shall be deemed to be the seller of the property delivered to the other party and the purchaser of the property delivered to it. The provisions on contracts for sale and purchase in articles 430 to 439 inclusive and articles 449 to 454 inclusive of this Code shall also apply to contracts for the exchange of property.

Article 456. Settlement of differences in value

Where exchanged property differs in value, the parties must settle that difference between themselves, unless otherwise agreed or otherwise provided by law.

Section 3. CONTRACTS FOR GIFTS OF PROPERTY

Article 457. Contracts for gifts of property

Contract for a gift of property means an agreement between parties whereby the giver delivers its property and transfers its ownership rights to the recipient without requiring compensation and the recipient agrees to accept the gift.

Article 458. Gifts of moveable property

1. A contract for a gift of moveable property shall take effect when the recipient accepts the property, unless otherwise agreed.

2. Where the law requires the ownership rights with respect to such moveable property to be registered, the contract shall take effect from the time of registration.

Article 459. Gifts of immoveable property

1. A gift of immoveable property must be recorded in writing and notarized or certified, and must be registered if the law on immoveable property requires registration of ownership.

2. A contract for a gift of immoveable property shall take effect from the time of registration. In the case of immoveable property for which no registration of ownership rights is required, the gift contract shall take effect from the time when the property is delivered.

Article 460. Liability in respect of intentional gift of property not under one's ownership

Where a giver intentionally gives property which is not under its ownership and the recipient does not know or is not able to know, such giver must reimburse the recipient for expenses incurred by the recipient in increasing the value of the property at such time as it is reclaimed by the owner.

Article 461. Disclosure of defects in gifts

A giver has the obligation to notify the recipient of any defects in a gift. If the giver knows about defects in a gift but fails to provide notice thereof, the giver must be liable to compensate for damage caused to the recipient; but if the giver does not know about defects in a gift, the giver shall not be liable to compensate for damage.

Article 462. Conditional gifts of property

1. A giver may require a recipient to perform one or several civil obligations prior to or after the giving of a gift. The conditions for giving a gift must not contravene the law or social morals.

2. Where a recipient performs an obligation required to be performed as a condition to the giving of a gift and the giver fails to deliver the gift, the giver must pay for the obligation already performed by the recipient.

3. Where a recipient fails to perform an obligation required to be performed after the giving of a gift, the giver may reclaim the gift and demand compensation for damage.

Section 4. CONTRACTS FOR LOAN OF PROPERTY

Section 463. Contracts for loan of property

Contract for the loan of property means an agreement between parties whereby a lender delivers property to a borrower. When the loan falls due, the borrower must repay the lender property of the same type in accordance with the correct quantity and quality, and must pay interest if so agreed or so provided by law.

Article 464. Ownership rights with respect to property lent

A borrower shall become the owner of borrowed property from the time of delivery of the property.

Article 465. Obligations of lenders

1. Deliver the property to the borrower in full, strictly in accordance with the quality and quantity, and at the time and place, agreed.

2. Compensate the borrower for any damage where the lender knows that the property is not of the agreed quality but fails to notify the borrower, unless the borrower accepts the property with knowledge that the property is not of the agreed quality.

3. Do not demand the borrower to return the property prior to the due date, except in the cases provided in article 470 of this Code or relevant laws.

Article 466. Obligations of borrowers to repay loans

1. Where the property lent is a sum of money, the borrower must repay the lender the loan in full when due. If the property is an object, the borrower must deliver to the lender an object of the same type, quantity and quality, unless otherwise agreed.

2. Where a borrower is not able to deliver an object, it may, with the consent of the lender, repay the value of the borrowed object, in cash, as at the time and place of delivery.

3. The place for repayment of a loan shall be the place of residence or head office of the lender, unless otherwise agreed.

4. If a borrower fails to repay all or any instalment of an interest-free loan, in whole or in part, when payment falls due, the borrower must, if the parties so agree, pay interest on the overdue amount from the due date until the date on which payment is made, at the basic interest rate prescribed in Clause 2 Article 468 of this Code, unless otherwise agreed or otherwise prescribed by law.

5. If a borrower fails to repay, in whole or in part, a loan with interest, the borrower must pay:

a) Interest on the principal as agreed in proportion to the overdue loan term and interest at the rate prescribed in Clause 2 Article 468 in case of late payment;

b) Overdue interest on the principal equals one hundred and fifty (150) per cent of the interest rate in proportion to the late payment period, unless otherwise agreed.

Article 467. Use of borrowed property

Parties may agree that borrowed property may only be used for the agreed purpose of the loan. The lender may check the use of the property and may demand its early return if, despite warning, the borrower continues to use the property contrary to the agreed purpose.

Article 468. Interest rates

1. The rate of interest for a loan shall be as agreed by the parties.

The rate of interest for a loan agreed by the parties may not exceed 20% per year, unless otherwise prescribed by law. According to actual conditions and at the proposal of the Government, the Standing Committee of National Assembly shall adjust the above interest and send report to the National Assembly at the latest session.

If the agreed interest exceeds the maximum interest prescribed in this Clause, the agreed interest shall become invalid.

2. Where parties agree that interest will be payable but fail to specify the interest rate, or where there is a dispute as to the interest rate, the interest rate for the duration of the loan shall equal 50% of the maximum interest prescribed in Clause 1 of this Article at the repayment time.

Article 469. Performance of contracts for loans without fixed term

1. With respect to a contract for an interest-free loan without a fixed term, the lender may reclaim the property, and the borrower may repay the debt, at any time provided that each party gives reasonable prior notice to the other party, unless otherwise agreed.

2. With respect to a contract for a loan with interest without a fixed term, the lender may reclaim the property at any time, subject to giving reasonable prior notice to the borrower, and shall be paid interest until the time when the property is returned. The borrower may also return the property at any time, subject to giving reasonable prior notice to the lender, in which case the borrower shall pay interest only up to the date on which repayment is made.

Article 470. Performance of contracts for fixed term loans

1. With respect to a contract for a fixed term interest-free loan, the borrower may return the property at any time, subject to giving reasonable prior notice to the lender. The lender may reclaim the property prior to the due date, subject to the consent of the borrower.

2. With respect to a contract for a fixed term loan with interest, the borrower may return the property prior to the due date, but must pay interest for the entire term, unless otherwise agreed or otherwise prescribed by law.

Article 471. "Họ, hụi, biêu, phường"

1. "Họ, hụi, biêu, phường" (hereinafter referred to as "ho") means a form of transaction regarding property in accordance with customary practice on the basis of an agreement reached by a group of people who assemble together and jointly determine the number of people, the term, the amount of money or other property, the form of contribution and payment of "ho", and the rights and obligations of the members of the group.

2. "Ho" is aimed at mutual assistance of citizens and shall be implemented in accordance with law.

3. If "ho" is organized with interest, it shall comply with this Code.

4. It shall be strictly prohibited to organize "ho" in the form of lending at high interest rates.

Section 5. CONTRACTS FOR LEASE OF PROPERTY

Sub-section 1. GENERAL PROVISIONS ON CONTRACTS FOR LEASE OF PROPERTY

Article 472. Contracts for lease of property

Contract for lease of property means an agreement between parties whereby a lessor delivers property to a lessee for use during a fixed term and the lessee is required to pay rent.

Lease contracts of houses or lease contracts of houses for other purposes shall comply with this Code, the Law on Housing and relevant laws.

Article 473. Rent

1. Rent for a lease of property shall be as agreed by the parties or determined by a third party at the request of the parties, unless otherwise prescribed by law.

2. Where parties reach no agreement or reach an agreement with unclear terms about the rent, it shall be determined according to the market price at the time and place of entering into the contract.

Article 474. Lease term

1. The term of a lease shall be as agreed by the parties. If there is no agreement, the term of the lease shall be determined according to the purpose of the lease.

2. Where parties have not agreed on the term of a lease or where the term of a lease is not able to be determined according to the purpose of the lease, the lease shall terminate when the lessee has achieved the purpose of the lease.

Article 475. Sub-leases

A lessee may sub-lease leased property with the consent of the lessor.

Article 476. Delivery of leased property

1. A lessor must deliver property to the lessee strictly in accordance with the agreed quantity, quality, type and condition and at the agreed place and time, and must provide information necessary for use of the property.

2. Where a lessor is late in delivering property, the lessee may extend the time for the delivery of the property or may cancel the contract and demand compensation for damage. If the leased property is not of the quality agreed, the lessee has the right to require the lessor to repair the property or reduce the rent, or to cancel the contract and demand compensation for damage.

Article 477. Obligation to assure utility value of leased property

1. A lessor must assure that leased property is in the condition agreed and is suitable for the purpose of the lease contract for the entire term of the lease. The lessor must repair any damage to or defect in the leased property, with the exception of minor damage which the lessee must repair in accordance with customary practice.

2. Where the utility value of leased property decreases otherwise than due to the fault of the lessor, the lessee has the right to demand the lessor:

a) Repair the property;

b) Reduce the rent;

c) Replace the property or, if the leased property is beyond repair and the purpose of the lease is not able to be achieved as a result or if the property has defects which the lessee did not know of, the lessee may terminate unilaterally the performance of the contract and demand compensation for damage.

3. Where a lessee demands repair but the lessor fails to repair in time or at all, provided that the lessee informs the lessor, the lessee has the right to repair personally the leased property and has the right to require the lessor to reimburse the costs of repair.

Article 478. Obligation to assure right of lessees to use property

1. A lessor must assure the right of a lessee to uninterfered use of the property.

2. In the event of a dispute as to the ownership rights with respect to leased property, which interferes with use of that property by the lessee, the lessee has the right to terminate unilaterally the performance of the contract and demand compensation for damage.

Article 479. Obligation to take care of leased property

1. A lessee shall take care of leased property as if it were its own and shall carry out minor repairs and maintenance. If the lessee causes any loss of or damage to the property, it must compensate the lessor.

The lessee shall not be liable for normal wear and tear due to the use of the leased property.

2. A lessee may, with the consent of the lessor, carry out repairs and improvements to leased property which increase its value and may require reimbursement from the lessor for reasonable costs incurred.

Article 480. Obligation to use leased property strictly in accordance with utility and purpose

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

2. Where a lessee fails to use leased property strictly in accordance with its utility and purpose, the lessor has the right to terminate unilaterally the performance of the contract and to demand compensation for damage.

Article 481. Payment of rent

1. A lessee must pay rent in full and on time as agreed. If there is no agreement on the time for payment of rent, the time shall be determined in accordance with the customary practice at the place of payment. If it is not possible to determine the time of payment in accordance with such customary practice, the lessee must make payment when the lessee returns the leased property.

2. Where the parties have agreed on payment of rent in instalments, if the lessee fails to make payment for three consecutive instalments, the lessor has the right to terminate unilaterally the performance of the lease contract, unless otherwise agreed or otherwise provided by law.

Article 482. Return of leased property

1. A lessee must return leased property in the same condition in which it was received, normal wear and tear excepted, or in the condition agreed. If the value of the leased property has decreased in comparison with its condition at the time it was received, the lessor has the right to demand compensation for any damage, normal wear and tear excepted.

2. Where leased property is moveable property, the place for returning the leased property shall be the place of residence or head office of the lessor, unless otherwise agreed.

3. Where leased property is livestock, the lessee must return both the leased livestock and any offspring born during the term of the lease, unless otherwise agreed. The lessor must reimburse the lessee for expenses incurred in caring for the offspring.

4. Where a lessee is late in returning leased property, the lessor has the right to require the lessee to return the leased property and to pay rent for the period of delay and the lessee must compensate for damage. The lessee must pay a penalty for the late return of the leased property if so agreed.

5. The lessee must bear the risk in relation to the leased property during the period of delay.

Sub-section 2. CONTRACTS FOR "THUE KHOAN" OF PROPERTY

Article 483. Contracts for "thue khoan" of property

Contract for "thue khoan" of property means an agreement between parties whereby a "thue khoan" lessor delivers the property to a "thue khoan" lessee for the exploitation of its utility and for the enjoyment of the yield and income derived from such property and the lessee has the obligation to pay rent.

Article 484. Subject matter of contracts for "thue khoan" of property

The subject matter of a contract for "thue khoan" may be land, forest, and water surfaces which have not been exploited, livestock, production and business facilities, and other means of production together with the equipment required to exploit the utility of such property and to enjoy the benefits and income derived therefrom, unless otherwise provided by law.

Article 485. Terms of "thue khoan"

The term of a "thue khoan" shall be agreed by parties. If the parties do not reach an agreement and reach an unclear agreement on the term of “thue khoan”, such period shall be determined according to the production or business cycle appropriate to the nature of the subject matter of the "thue khoan".

Article 486. Rent in respect of "thue khoan"

Rent in respect of a "thue khoan" shall be as agreed by the parties. If a "thue khoan" is awarded by tender, the rent in respect of such "thue khoan" shall be determined in the bidding process.

Article 487. Delivery of "thue khoan" property

Upon delivery of "thue khoan" property, parties must record their assessment of the condition and value of the property.

If the parties are not able to determine the value, a third person shall be invited to determine the value. Such determination shall be made in writing.

Article 488. Payment of "thue khoan" rent and method of payment

1. "Thue khoan" rent may be paid in kind or money, or by performance of acts.

2. A "thue khoan" lessee must pay "thue khoan" rent in full even where the lessee does not exploit the utility of the "thue khoan" property.

3. When entering into a contract for "thue khoan", parties may agree on conditions for a reduction in rent. If at least one third of the benefits or income is lost due to an event of force majeure, a "thue khoan" lessee may demand a reduction of or exemption from rent, unless otherwise agreed.

4. Where a "thue khoan" lessee must pay in kind according to the season or cycle in the exploitation of the utility of the "thue khoan" property, payment must be made at the end of such season or cycle, unless otherwise agreed.

5. Where a "thue khoan" lessee is required to perform an act, the "thue khoan" lessee must perform that particular act.

6. Repayment term of “thue khoan” shall be agreed by the parties. If the parties have no agreement, the lessee has to pay on the last day of each month; in case the “thue khoan” follows the business cycle, the payment must be made at the end of the business cycle at the latest.

Article 489. Exploitation of "thue khoan" property

A "thue khoan" lessee must exploit "thue khoan" property strictly in accordance with the agreed purpose and must inform the "thue khoan" lessor periodically of its condition and its exploitation. If the "thue khoan" lessor demands or requires information at any other time, the "thue khoan" lessee must provide such information promptly. If the "thue khoan" lessee does not exploit the "thue khoan" property strictly in accordance with the agreed purpose, the "thue khoan" lessor has the right to terminate unilaterally the performance of the contract and demand compensation for damage.

Article 490. Taking care, maintenance and disposal of "thue khoan" property

1. During the period of exploitation of the "thue khoan" property, the "thue khoan" lessee must take care of and preserve the "thue khoan" property and any related equipment at its own expense, unless otherwise agreed. If the "thue khoan" lessee loses or damages the "thue khoan" property or causes any loss or reduction in its value, the "thue khoan" lessee must compensate for damage. The "thue khoan" lessee shall not be liable for normal wear and tear due to the use of the "thue khoan" property.

2. A "thue khoan" lessee may replace or improve "thue khoan" property if the parties so agree, but must preserve its value.

A "thue khoan" lessor must reimburse a "thue khoan" lessee for the reasonable expenses incurred in replacing or improving the "thue khoan" property as agreed.

3. A "thue khoan" lessee may not sub-lease "thue khoan" property without the consent of the "thue khoan" lessor.

Article 491. Enjoyment of benefits and liability for damage with respect to "thue khoan" livestock

During the term of a "thue khoan" of livestock, the "thue khoan" lessee shall be entitled to enjoy half of the number of offspring born and shall be liable for half of any damage of the "thue khoan" livestock caused by an event of force majeure, unless otherwise agreed.

Article 492. Unilateral termination of performance of contracts for "thue khoan"

1. Where a party terminates unilaterally the performance of a "thue khoan" contract, that party must give reasonable prior notice to the other party. If the "thue khoan" is based on a season or cycle of exploitation, the period of prior notice must conform to such season or cycle.

2. Where a "thue khoan" lessee breaches an obligation and the exploitation of the "thue khoan" property is the sole means of livelihood of the lessee and continuation of the "thue khoan" would not seriously affect the interests of the "thue khoan" lessor, the "thue khoan" lessor may not terminate unilaterally the performance of the contract. In such case, the "thue khoan" lessee must undertake to the "thue khoan" lessor not to commit further breaches of the contract.

Article 493. Return of "thue khoan" property

Upon termination of a "thue khoan" contract, the "thue khoan" lessee must return the "thue khoan" property in a condition which takes into account the agreed depreciation. If the "thue khoan" lessee has caused any reduction in the value of the "thue khoan" property, the "thue khoan" lessee must compensate for damage.

Section 6. CONTRACTS FOR BORROWING PROPERTY

Article 494. Contracts for borrowing property

Contract for borrowing property means an agreement between parties whereby a lender delivers property to a borrower for use free of charge for a period of time and the borrower returns the property at the end of the period of time or when the purpose of the borrowing has been achieved.

Article 495. Subject matter of contracts for borrowing property

Any non-consumable object may be the subject matter of a contract for borrowing property.

Article 496. Obligation of borrowers of property

1. Take care of and preserve the borrowed property and not to change the condition thereof at the volition of the borrower. The borrower must repair any normal damage to the property.

2. Do not on-lend the property to any other person without the consent of the lender.

3. Return the borrowed property on the due date. If there is no agreement on the time for returning the property, the borrower must return the property immediately after the purpose of the borrowing has been achieved.

4. Compensate for damage where the borrower causes damage to or loss of the borrowed property.

5. The borrower must bear the risk in relation to the borrowed property during the period of late return.

Article 497. Rights of borrowers of property

1. Use the borrowed property strictly in accordance with its utility and agreed purpose.

2. Require the lender to reimburse reasonable expenses incurred in carrying out repairs or improvements to the borrowed property which increase its value if so agreed.

3. Do not bear liability for normal wear and tear of the borrowed property.

Article 498. Obligations of lenders of property

1. Provide necessary information on the use of the property and its defects, if any.

2. Reimburse the borrower for expenses incurred in carrying out repairs or improvements to the borrowed property which increase its value if so agreed.

3. Where the lender knows but fails to notify the borrower of a defect in the property which results in damage to the borrower, to compensate the borrower for such damage, except where the borrower knows or should know of such defect.

Article 499. Rights of lenders of property

1. Reclaim the property immediately after the borrower has achieved its purpose where there is no agreement on the borrowing period. If the lender suddenly and urgently needs to use the borrowed property, the lender may reclaim it upon giving reasonable prior notice to the borrower, even if the borrower has not yet achieved its purpose.

2. Reclaim the property where the borrower fails to use it strictly in accordance with the agreed purpose, utility, or method or where the borrower on-lends the property without the consent of the lender.

3. Demand compensation for damage to the property caused by the borrower.

Section 7. CONTRACTS OF LAND USE RIGHTS

Article 500. Contract of land use rights

The contract of land use rights means the agreement between the parties that the land user convert, transfer, lease, sublease, donate, mortgage and contribute land use rights as capital or exercise other rights to the other party as prescribed in the Law on land; and the other party shall exercise rights and perform obligations according to the contract to the land user.

Article 501. Contents of contract of land use rights

1. General provisions on contracts and the content of common contracts related in this Code shall also apply to contracts on land use rights, unless otherwise provided by law.

2. Contents of the contract of land use rights are not contrary to the provisions of the purpose of use, the duration of land use, zoning, land use planning and the rights and obligations stipulated by law on land and other provisions of relevant laws.

Article 502. Forms and procedures for performing contract of land use rights

1. Contracts relating to land use rights must be made in writing in the form consistent with the provisions of this Code, the law on land and other provisions of relevant laws.

2. The performance of the contract for the land use rights must follow the procedures prescribed by the law of the land and other provisions of relevant laws.

Article 503. Effect of the transfer of land use rights

The transfer of land use rights shall be effect from the date of registration under the provisions of the law on land.

Section 8. COOPERATION CONTRACT

Article 504. Cooperation contract

1. A cooperation contract means an agreement between natural and/or juridical persons regarding the property contribution, effort to perform certain jobs, the same benefit and mutual responsibility.

2. Each cooperation contract must be made in writing.

Article 505. Contents of cooperation contract

Each cooperation contract shall contain the major contents below:

1. Purpose and duration of cooperation;

2. Full name and place of residence of natural person; name and headquarters of juridical person;

3. Contributed property (if any);

4. Contributed labor (if any);

5. Method of distributing the yield and/or income;

6. Rights and obligations of cooperative members;

7. Rights and obligations of representatives (if any);

8. Conditions for participation and withdrawal from the cooperation contract (if any);

9. Conditions for termination of cooperation.

Article 506. Common property of the cooperative members

1. Property contributed and created by the members and other property as prescribed by law shall be considered as common property part of the cooperative members.

Where there is agreement on the contribution that members fail to contribute money on schedule, they must pay interest on the unpaid portion of the money under the provisions of Article 357 of this Code and must pay damages.

2. The disposition of the property is land use rights, housing, factories, other production materials must have a written agreement of all the members; the disposal of other property shall be decided by the representatives of the members, unless otherwise agreed.

3. The common property may not be divided before the termination of the cooperation contract, unless otherwise agreed by all members.

The division of common property shall not change or terminate the rights and obligations established before the division time.

Article 507. Rights and obligations of cooperative members

1. Enjoy the yield and income gained from cooperation activities.

2. Participate in decisions involving issues of performance of cooperation contract and co-operation monitoring.

3. Compensate for damages to other cooperative members caused by their faults.

4. Perform other rights and obligations under the contract.

Article 508. Establishing and performing civil transactions

1. Where the cooperative members appoint representatives, they shall establish and perform civil transactions.

2. Where the cooperative members do not appoint any representative, they shall jointly establish and perform civil transactions, unless otherwise agreed.

3. Civil transactions that are be established and performed by entities specified in Clauses 1 and 2 of this Article shall give rise to rights and obligations of all cooperative members.

Article 509. Civil liability of cooperative members

The cooperative members are responsible for general civil liability by their common property; if the common property is insufficient to fulfill the obligation, the members shall be held responsible by their own property corresponding to its contribution, unless otherwise specified by the cooperation contract or otherwise prescribed by law.

Article 510. Withdrawal from the cooperation contract

1. A member has the right to withdraw from the cooperation contract in any of the following cases:

a) Satisfy the conditions specified in the cooperation contract;

b) There is a good reason and the consent of more than half the total cooperative members.

2. The member withdrawing from the cooperation contract has the right to reclaim contributed property, divided part of the property in the common property and must pay all obligations under the agreement. Where the division of property in kind affects the cooperation activities, the property are worth the money to divide.

The withdrawal of a member from the cooperation contract does not terminate his/her rights and obligations that are established or performed before the withdrawal time.

3. The withdrawal of a member from the contract in a case other than Clause 1 of this Article shall be defined as the breach of contract and should execute the civil liability as prescribed in this Code and other relevant laws.

Article 511. Joining cooperation contract

Unless the cooperation contract otherwise specifies, a natural or juridical person shall become a new member of the contract with the consent of more than half the total cooperative members.

Article 512. Termination of cooperation contract

1. A cooperation contract shall terminate in any of the following cases:

a) As agreed by cooperative members;

b) The time limit mentioned in the cooperation contract has expired;

c) The purpose of cooperation has been achieved;

d) Pursuant to a decision of a competent authority;

dd) Other cases prescribed in this Code or other relevant laws.

2. Upon the termination of the cooperation contract, the debts arising from the contract must be paid; if the common property is insufficient to repay it to private assets of cooperative members to pay under the provisions of Article 509 of this Code.

Where the debt was repaid and the common property still exists, it shall be divided by the cooperative members in proportion to the contribution of each person, unless otherwise agreed.

Section 9. CONTRACTS FOR SERVICES

Article 513. Contracts for services

Contract for services means an agreement between parties whereby a service provider performs an act for a client which pays a fee for that act.

Article 514. Subject matter of contracts for services

The subject matter of a contract for services must be an act which is capable of being performed, which is not prohibited by law and which does not contravene social morals.

Article 515. Obligations of clients

1. Supply the service provider with the information, documentation and facilities necessary for the performance of the act if so agreed or required for the performance of the act.

2. Pay a fee to the service provider as agreed.

Article 516. Rights of clients

1. Require the service provider to perform the act strictly in accordance with the agreement on quality, quantity, time, location and other matters.

2. Where a service provider commits a serious breach of its obligations, the client may terminate unilaterally performance of the contract and demand compensation for damage.

Article 517. Obligation of service providers

1. Perform the act strictly in accordance with the agreement on quality, quantity, time, location and other matters.

2. Do not assign the act to another person for performance on its behalf without the consent of the client.

3. Take care of, and to return to the client after completion of the act, the documents and facilities provided to it.

4. Notify the client promptly of any inadequacy in the information or documents and any failure of the facilities to satisfy the quality required for the completion of the act.

5. Keep confidential any information of which it has had knowledge during the period of providing the service as agreed or as provided by law.

6. Compensate the client for damage where the service provider causes any loss of or damage to the documents or facilities supplied or discloses confidential information.

Article 518. Rights of service providers

1. Require the client to provide information, documents and facilities.

2. Amend the terms of service in the interests of the client without necessarily asking for the opinion of the client where waiting for such opinion would cause damage to the client provided that the service provider promptly informs the client thereof.

3. Require the client to pay the fee.

Article 519. Payment of fees

1. A client must pay the agreed fee for services.

2. If, upon entering a contract, there is no agreement on the service fee rate or on the method for fixing the fee for services and there are no other instructions on fees, the service fee rate shall be fixed on the basis of market fees for services of the same type at the time when and place where the contract was entered into.

3. A client must pay the fee for services at the place where the service is provided and at the time of its completion, unless otherwise agreed.

4. Where the services provided fail to meet the terms of the agreement or the act is not completed in time, the client has the right to reduce the fee for services and demand compensation for damage.

Article 520. Unilateral termination of performance of contracts for services

1. Where the continued provision of services does not benefit the client, the client has the right to terminate unilaterally the performance of the contract but must provide reasonable prior notice to the service provider, in which case the client must pay a fee according to the portion of services already provided and [must] compensate for damage.

2. Where the client fails to perform its obligations or performs its obligations not as agreed, the service provider has the right to terminate unilaterally the performance of the contract and demand compensation for damage.

Article 521. Continuation of contracts for services

If, after the expiry of the agreed period for the provision of services, the act has not been completed and the service provider continues its performance and the client is aware of this but does not object, the performance of the contract for services shall automatically be deemed to continue in accordance with the agreed terms until the act is completed.

Section 10. TRANSPORT CONTRACTS

Sub-section 1. Transport contracts

Article 522. Contracts for transport of passengers

Contract for transport of passengers means an agreement between parties whereby a carrier transports passengers and luggage to an agreed destination and the passengers must pay transport fares.

Article 523. Formalities for contracts for transport of passengers

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

2. A ticket is evidence of the entry into a contract for transport of passengers by the parties.

Article 524. Obligations of carriers

1. Carry the passengers safely from the place of departure to the agreed destination on time, in a civilized and courteous manner, by the means agreed and on the agreed route; to ensure that there are sufficient seats for the passengers and that the transport capacity of the carrier is not exceeded.

2. Purchase civil liability insurance for the passengers, as provided by law.

3. Ensure that the departure time is adhered to as notified or agreed.

4. Carry and return the luggage to the passenger or person entitled to receive the luggage in accordance with the agreed destination, time and route.

5. Refund the transport fare to any passenger as agreed or as prescribed by law.

Article 525. Rights of carriers

1. Require the passengers to pay in full the passenger transport fares and fares for the transport of personal luggage in excess of the prescribed limit.

2. Refuse to carry a passenger in the following cases:

a) Where the passenger fails to follow the regulations of the carrier, where the acts of the passenger disturb public order, obstruct the work of the carrier, or pose a threat to life, health or property of other persons, or where a passenger commits other acts which make it impossible to ensure safety during the journey. In this case, the passenger shall not receive a refund of the passenger transport fare, and must pay a fine if so provided by the transport regulations;

b) Where the health of the passenger is such that it is obvious to the carrier that the transport [of such person] will endanger the passenger or other persons during the journey;

c) In order to prevent the spread of contagious diseases.

Article 526. Obligations of passengers

1. Pay in full the passenger transport fare and fares for the transport of luggage in excess of the prescribed limit, and to take care of his or her hand-luggage.

2. Present at the place of departure at the agreed time.

3. Respect and comply strictly with the regulations of the carrier and all other regulations ensuring traffic safety.

Article 527. Rights of passengers

1. Request to be transported by the agreed means of transport, in the class commensurate with the value of the ticket and in accordance with the agreed route.

2. Be exempt from transport fares for check-in luggage and hand-luggage within the limits as agreed or as provided by law.

3. Demand reimbursement of expenses incurred or compensation for any damage if the carrier is at fault in failing to transport according to the agreed time schedule and destination.

4. Receive a refund of all or part of the transport fare in the cases provided for in Points b and c Clauses 2 of Article 525 of this Code and in other cases as agreed or as provided by law.

5. Receive the luggage at the agreed destination in accordance with the agreed time and route.

6. Request temporary interruption of the journey for the duration and in accordance with the procedures provided by law.

Article 528. Liability to compensate for damage

1. In case of loss of life of or damage to the health or luggage of a passenger, the carrier must compensate for any damage in accordance with law.

2. Unless otherwise provided by law, a carrier shall not be liable to compensate for loss of life of or damage to the health and luggage of a passenger in the case where such loss or damage is entirely due to the fault of the passenger, unless otherwise prescribed by law.

3. A passenger which breaches the agreed terms for transport or the transport regulations, thereby causing damage to the carrier or a third person, must compensate.

Article 529. Unilateral termination of contracts for transport of passengers

1. A carrier has the right to terminate unilaterally the performance of a contract in the cases provided in Clause 2 of Article 525 of this Code.

2. A passenger has the right to terminate unilaterally the performance of a contract where the carrier breaches the obligations provided in Clauses 1, 3 and 4 of article 524 of this Code.

Sub-section 2. CONTRACTS FOR TRANSPORT OF PROPERTY

Article 530. Contracts for transport of property

Contract for transport of property means an agreement between parties whereby a carrier has the obligation to transport property to an agreed destination and to deliver it to the authorized recipient, and the customer has the obligation to pay the freight charges.

Article 531. Formalities for contracts for transport of property

1. A contract for transport of property may be entered into orally or in writing or a specific act.

2. A bill of lading or equivalent source document of transport shall be evidence of the entering into of a contract by the parties.

Article 532. Delivery of property to carriers

1. A customer has the obligation to deliver property to a carrier at the agreed time and place and pack the property in accordance with the agreed specifications. The customer must bear the costs f loading the property onto and unloading the property from the means of transport, unless otherwise agreed.

2. Where a customer is late in delivering property to the agreed place, the customer must reimburse the carrier for the costs associated with the delay and pay the freight charges for transporting the property to the place agreed in the contract, or must pay a penalty for breach of the contract.

If the carrier is late in accepting the property at the agreed at the agreed place, it shall be liable for the costs incurred due to such late acceptance.

Article 533. Freight charges

1. The rate of freight charges shall be as agreed by the parties. If the law regulates freight charges, charges shall apply as regulated.

2. A customer must pay freight charges in full after the property is loaded onto the means of transport, unless otherwise agreed.

Article 534. Obligations of carriers

1. Transport the property in its entirety and safely to the agreed destination at the agreed time.

2. Deliver the property to the person entitled to receive it.

3. Bear all costs related to the transport of the property, unless otherwise agreed.

4. Purchase civil liability insurance as required by law.

5. Compensate the customer for damage where the loss of or damage to the property is caused by the fault of the carrier, unless otherwise agreed or otherwise provided by law.

Article 535. Rights of carriers

1. Check the authenticity of the property and the bill of lading or equivalent source document of transport.

2. Refuse to transport property which is different from that agreed in the contract.

3. Demand the full and timely payment of the freight charges by the customer.

4. Refuse to transport property if the carrier knows or should know that the transacting of such property is prohibited or the property is of a dangerous or toxic nature.

Article 536. Obligations of customers

1. Pay in full the freight charges to the carrier, at the time and by the method of payment as agreed.

2. Provide necessary information about the transported property to ensure its safety.

3. Take care of the property during transport if so agreed. Where the customer takes care of the property and it is lost or damaged, the customer shall not be entitled to compensation.

Article 537. Rights of customers

1. Demand the carrier to transport the property to the agreed destination at the agreed time.

2. Receive directly the property which has been transported, or appoint a third person to receive it.

Article 538. Delivery of property to recipients

1. A recipient of property may be the customer or a third person appointed by the customer to receive the property.

2. A carrier must deliver the property to a recipient in full, at the time and place and by the method as agreed.

3. Where property has been delivered to the point of delivery on time but there is no recipient of the property, the carrier may deposit such property at a place of bailment and must notify immediately the customer or the recipient of the property. The customer or recipient of the property must bear the reasonable expenses incurred in relation to the bailment of the property.

The obligation to deliver property shall be completed upon bailment of the property in compliance with the agreed terms and when the customer or the recipient of the property has been notified about the bailment.

Article 539. Obligation of recipients of property

1. Produce to the carrier the bill of lading or other equivalent source document of transport, and to receive the property at the agreed time and place.

2. Bear the costs for loading and unloading the transported property, unless otherwise agreed or otherwise provided by law.

3. Reimburse the carrier for reasonable costs incurred due to late acceptance of the property.

4. Notify the customer of the acceptance of the property and provide other necessary information required by the customer if the recipient is a third party appointed by the customer.

Article 540. Rights of recipients of property

1. Verify the quantity and quality of the delivered property.

2. Accept the delivered property.

3. Require the carrier to reimburse reasonable costs incurred due to any delay by the carrier in delivering the property.

4. Require the carrier compensate for loss of or damage to the property.

Article 541. Liability to compensate for damage

1. Where a carrier is responsible for the loss of or damage to property, the carrier must compensate the customer for damage, except in the case provided in Clause 3 of Article 536 of this Code.

2. A customer must compensate a carrier and any third parties for damage caused by the transport of dangerous or toxic property which is not safely packaged or the safety of which is not otherwise ensured.

3. A carrier shall not be liable to compensate for damage in the event of force majeure causing loss or deterioration of or damage to the property during transport, unless otherwise agreed or otherwise provided by law.

Section 11. PROCESSING CONTRACTS

Article 542. Processing contracts

Processing contract means an agreement between parties whereby a processor carries out work to create products at the request of a supplier, and the supplier receives the products and pays fees.

Article 543. Subject matter of processing contracts

The subject matter of a processing contract shall be items which are specified by samples, the standard of which is agreed by the parties or provided by law.

Article 544. Obligation of suppliers

1. Supply raw materials to the processor strictly in accordance with the agreed quantity, quality, time and place, unless otherwise agreed by the parties; and to provide necessary documents relating to the processing.

2. Provide the processor with instructions as to how to perform the contract.

3. Pay agreed fees.

Article 545. Rights of suppliers

1. Accept the processed products in accordance with the agreed quantity, quality, manner, time and place.

2. Terminate unilaterally performance of the contract and demand compensation for damage if the processor commits a serious breach of the contract.

3. Where the products are not of the agreed quality and the supplier accepts the products but requests repairs, but the processor is not able to perform the repairs within the agreed time, the supplier has the right to cancel the contract and demand compensation for damage.

Article 546. Obligations of processors

1. Take care of the raw materials supplied by the supplier.

2. Notify the supplier to replace any raw materials supplied which are not of the agreed quality; to refuse to perform the processing if the use of the raw materials may create products which pose a danger to society.

3. Deliver the products to the supplier strictly in accordance with the agreed quantity, quality, method, time and place.

4. Keep confidential all information relating to the processing and the products.

5. Bear liability for the quality of the products, unless the lack of quality is due to the raw materials supplied by the supplier or due to the unreasonable instructions of the supplier.

6. Return any leftover raw materials to the supplier after completing performance of the contract.

Article 547. Rights of processors

1. Require the supplier to deliver the raw materials strictly in accordance with the agreed quality, quantity, time and place.

2. Refuse to comply with unreasonable instructions of the supplier where the processor is of the view that [compliance with] such instructions could decrease the quality of the products provided that the processor immediately informs the supplier.

3. Require the supplier to make payment of the fees in full, at the time and by the method as agreed.

Article 548. Liability for risk

Unless otherwise agreed, the owner of the raw materials shall bear all risks with respect to such materials and the products processed therefrom until the products are delivered to the supplier.

If the supplier is late in accepting the products, it shall bear all risks during the period of delayed acceptance, including where the products are processed from the raw materials of the processor, unless otherwise agreed.

If the processor delays delivery of the products and the delay damages the processed property, the processor must compensate for damage suffered by the supplier.

Article 549. Delivery and acceptance of processed products

A processor must deliver, and the supplier must accept, products at the agreed time and place.

Article 550. Late delivery and acceptance of processed products

1. Where the processor is late in delivering processed products, the supplier may extend the time of delivery. If, upon expiry of such extension, the processor still has not delivered the products, the supplier has the right to terminate unilaterally the performance of the contract and demand compensation for damage.

2. Where the supplier is late in accepting the products, the processor may deposit the products at a place of bailment and must notify the supplier immediately. The obligation to deliver the products shall be fulfilled when the agreed terms are satisfied and the supplier has been notified. The supplier must bear all costs incurred for bailment.

Article 551. Unilateral termination of performance of processing contracts

1. Unless otherwise agreed or otherwise provided by law, each party has the right to terminate unilaterally the performance of a processing contract if continued performance would not benefit that party but must give reasonable prior notice to the other party.

2. If the supplier terminates unilaterally the performance of the contract, the supplier must pay fees for the work already performed, unless otherwise agreed. If the processor terminates unilaterally the performance of the contract, it shall not be paid fees, unless otherwise agreed.

3. A party which unilaterally terminates the performance of a contract and thereby causes damage to the other party must compensate.

Article 552. Payment of fees

1. Unless otherwise agreed, the supplier must pay fees in full at the time of accepting the products.

2. If there is no agreement on the rate of fees, the applicable rate shall be the average rate charged for the production of products of the same type at the place of processing at the time of payment.

3. If the products fail to meet the agreed quality due to the raw materials supplied or the unreasonable instructions provided by the supplier, the supplier does not have the right to reduce the fees.

Article 553. Dealing with leftover raw materials

Unless otherwise agreed, the processor must return leftover raw materials to the supplier upon termination of the processing contract.

Section 12. CONTRACTS FOR BAILMENT OF PROPERTY

Article 554. Contracts for bailment of property

Contract for bailment of property means an agreement between parties whereby a bailee accepts the property of a bailor for safekeeping, for return to the bailor upon expiry of the duration of the contract, and the bailor must pay a fee to the bailee, except where the bailment is free of charge.

Article 555. Obligation of bailors of property

1. Inform the bailee of the condition of the property and the appropriate safekeeping measures upon delivery of the property; if the bailor fails to inform the bailee, and the property is destroyed or damaged as a result of inappropriate safekeeping, the bailor must be liable itself for such destruction of or damage to the bailed property and must compensate for other damage caused.

2. Pay the bailment fees in full, at the time and by the method as agreed.

Article 556. Rights of bailors of property

1. Reclaim the property at any time subject to giving reasonable prior notice to the bailee if the bailment contract does not specify a period of time.

2. Demand compensation for loss of or damage to the bailed property caused by the bailee, except in the case of an event of force majeure.

Article 557. Obligation of bailees of property

1. Take care of the property as agreed and return it to the bailor in the same condition in which the bailee received it.

2. Change the method for safekeeping of the property only where such change is necessary for better safekeeping of such property and provided that the bailor is notified immediately of the change.

3. Notify promptly the bailor in writing and request the bailor to advise, within a certain period of time, a solution where, due to its nature, the bailed property is in danger of being damaged or destroyed. If the bailor fails to reply within such period of time, the bailee has the right to take all necessary measures to take care of the property and to require the bailee to reimburse the costs incurred.

4. Compensate for damage where the bailee causes any loss of or damage to the bailed property, except in the case of an event of force majeure.

Article 558. Rights of bailees of property

1. Require the bailor to pay the agreed bailment fees.

2. Require the bailor to pay the reasonable costs of taking care of the property where the bailment is free of charge.

3. Request, at any time, the bailor to take back the property subject to giving reasonable prior notice to the bailor where the bailment is for an indefinite period of time.

4. Sell the property in the interests of the bailor where the bailed property is in danger of being damaged or destroyed, inform the bailor thereof and pay the proceeds of the sale to the bailor after deduction of reasonable expenses incurred for the sale of the property.

Article 559. Return of bailed property

1. A bailee must return the same property that was received, including any benefits derived therefrom, unless otherwise agreed.

The bailed property shall be returned to the bailor at the place where it was delivered. If the bailor wishes to have the property returned at another place, the bailor must bear the transport costs to such place, unless otherwise agreed.

2. A bailee must return property at the agreed time and only has the right to request the bailor take back the property prior to such time for a legitimate reason.

Article 560. Late taking back of bailed property

If a bailee is late in returning the property, the bailee may not require the bailor to pay bailment fees and costs for taking care of the property incurred from the agreed time for return of the property to the time it is actually returned and bears the risk with respect to the property during such period.

Where a bailor is late in taking back property, the bailor must pay all costs for taking care of the property and the bailment fees to the bailee during the period for which the bailor is late.

Article 561. Payment of fees

1. A bailor must pay bailment fees in full when taking back the bailed property, unless otherwise agreed.

2. Where the parties have no agreement on the rate of bailment fees, the applicable rate shall be the average rate of bailment fees at the time when and place where the bailment fee is paid.

3. Notwithstanding that the bailor takes back the property prior to the agreed time, the bailor must pay the bailment fees in full and must pay the necessary costs which the bailee incurs due to the return of the property by the bailee prior to the agreed time, unless otherwise agreed.

4. Where a bailee requests a bailor to take back the property prior to the agreed time, the bailee shall not be entitled to be paid bailment fees and must compensate for any damage to the bailor, unless otherwise agreed.

Section 13. AUTHORIZATION CONTRACTS

Article 562. Authorization contracts

Authorization contract means an agreement between parties whereby an attorney has the obligation to perform an act in the name of a principal. The principal shall only be required to pay remuneration if so agreed or so provided by law.

Article 563. Duration of authorization

The duration of the authorization shall be as agreed by the parties or as provided by law. If there is no agreement and the duration is not provided by law, the authorization contract shall be effective for one year from the date on which the authorization is made.

Article 564. Sub-authorization

1. An attorney may only sub-authorize its authorization to a third person in any of the following cases:

a) With the consent of the principal;

b) Due to force majeure events that if the sub-authorization does not apply, the purposes of entering into a civil transaction for the interests of the principal is unachievable.

2. A sub-authorization shall not exceed the scope of the original authorization.

3. The formalities of the sub-authorization contract must conform to the formalities of the original authorization contract.

Article 565. Obligation of attorneys

1. Perform the act in accordance with the authorization and inform the principal of such performance.

2. Notify any third parties involved in the performance of the authorized act of the duration and scope of the authorization and of any amendments of or additions to such scope.

3. Take care of and preserve documents and facilities provided for the performance of the authorized act.

4. Keep all information confidential which the attorney comes to know during the performance of the authorized act.

5. Return to the principal any property received and benefits derived during the performance of the authorized act as agreed or as provided by law.

6. Compensate for damage caused by a breach of any of the obligations provided in this Article.

Article 566. Rights of attorneys

1. Require the principal to provide the information, documentation and facilities necessary for performance of the authorized act.

2. Receive remuneration and be reimbursed for reasonable expenses incurred in the performance of the authorized act.

Article 567. Obligation of principals

1. Provide the information, documentation and facilities necessary for the attorney to perform the authorized act.

2. Be liable for undertakings given by the attorney within the scope of the authorization.

3. Reimburse the attorney for reasonable expenses incurred by the attorney in the performance of the authorized act and pay any agreed remuneration to the attorney.

Article 568. Rights of principals

1. Require the attorney to report fully on the performance of the authorized act.

2. Require the attorney to return any property and benefits derived from the performance of the authorized act, unless otherwise agreed.

3. Compensate for damage caused by a breach of any of the obligations provided in Article 565 of this Code.

Article 569. Unilateral termination of performance of authorization contracts

1. Where an authorization involves payment of remuneration, the principal has the right, at any time, to terminate unilaterally the performance of the contract but must remunerate the attorney in proportion to the acts performed and compensate for damage. If the authorization does not involve payment of remuneration, the principal has the right, at any time, to terminate the performance of the contract, subject to giving reasonable prior notice to the attorney.

A principal must notify any third person in writing of the termination of the performance of the contract by the principal. If the principal fails to do so, any contract with any such third person shall remain in effect, unless such third person knows or should know of the termination of the performance of the contract.

2. Where an authorization does not involve payment of remuneration, the attorney has the right, at any time, to terminate unilaterally the performance of the contract, subject to giving reasonable prior notice to the principal. If the authorization involves payment of remuneration, the attorney has the right, at any time, to terminate unilaterally the performance of the contract and must compensate for any damage caused to the principal.

Chapter XVII

PROMISES OF REWARDS AND PRIZE COMPETITIONS

Article 570. Promises of rewards

1. A person having made a public promise of a reward must pay that reward to a person having performed the act requested by the promissor.

2. An act for which a reward is promised must be specific and capable of being performed and must not be prohibited by law nor contravene social morals.

Article 571. Withdrawal of promises of rewards

A promissor may withdraw its promise of a reward at any time prior to the commencement of the performance of the act. A withdrawal of a promise of reward must be made in the same manner and by the same media in which the promise of reward was announced.

Article 572. Payment of rewards

1. Where a person performs an act for which a reward is promised, that person shall be given the reward upon completion of the act.

2. Where several persons perform an act for which a reward is promised, concurrently but independently, the person having first completed the act shall be given the reward.

3. Where more than one person complete, at the same time, an act for which a reward is promised, the reward shall be distributed in equal shares amongst such persons.

4. Where more than one person co-operate with each other to perform, at the request of the promissor, an act for which a reward is promised, each person shall receive a share of the reward in proportion to its contribution.

Article 573. Prize competitions

1. Organization of a cultural, artistic, sports, scientific, technical or other competition shall not violate prohibitions of law and contravene social morals.

2. A person organizing the competition must announce publicly the terms of participation, the scale of marks, the prizes and the value of each prize.

Any alteration of the terms of participation must be announced in the manner in which the competition was announced, within a reasonable period of time prior to the competition being conducted.

3. A winner of a prize has the right to demand the organizer of a competition give a prize of the value announced.

Chapter XVIII

PERFORMANCE OF ACTS WITHOUT AUTHORIZATION

Article 574. Performance of acts without authorization

Performance of acts without authorization means the voluntary performance of acts by a person being under no obligation to perform the act, solely for the benefit of a beneficiary, without the knowledge of the beneficiary, or with its knowledge but without the beneficiary raising any objection.

Article 575. Obligation to perform acts without authorization

1. A person performing an act without authorization has the obligation to do so in accordance with its capabilities and conditions.

2. A person performing an act without authorization must do so as if such person were performing such act for its own benefit. If such person knows or is able to guess the wishes of the beneficiary, such person must perform the act in accordance with such wishes.

3. A person performing an act without authorization must, if requested, notify the beneficiary of the progress and results of the performance, unless the beneficiary already knows such information or the person performing the act without authorization does not know the place of residence of the beneficiary.

4. If a beneficiary being natural person dies or a beneficiary being juridical person ceases to exist, the person performing an act without authorization must continue to perform the act until the heir or representative of the beneficiary takes over the act.

5. Where a person performing an act without authorization has legitimate reasons for not being able to continue performance, such person must notify the beneficiary, or the representative or close relatives of the beneficiary, or may ask another person to perform the act on its behalf.

Article 576. Obligation of beneficiary to pay for acts performed without authorization

1. A beneficiary of an act performed without authorization must accept the results of the act when it is handed over to the beneficiary by the person having performed the act and [must] reimburse that person for reasonable expenses incurred in performing such act, even where the performance has failed to achieve the results desired by the beneficiary.

2. If a person has performed an act properly for the benefit of a beneficiary, the beneficiary must remunerate the person having performed the act, unless the person having performed the act refuses to accept the remuneration.

Article 577. Obligation to compensate for damage

1. If a person performing an act without authorization intentionally causes damage to the beneficiary while performing the act, such person must compensate for such damage.

2. If a person performing an act without authorization unintentionally causes damage to the beneficiary while performing the act, the compensation by such person may be reduced on the basis of the circumstances in which the act was performed.

Article 578. Termination of performance of acts without authorization

The performance of acts without authorization shall terminate in the following cases:

1. The beneficiary so requests;

2. The beneficiary, or its heir or representative, takes over the acts;

3. The person performing the acts without authorization becomes not able to continue performance in accordance with Clause 5 Article 575 of this Code;

4. The person performing the acts without authorization dies with regard to natural person or juridical person ceases to exist with regard to juridical person.

Chapter XIX

OBLIGATIONS TO RETURN PROPERTY DUE TO UNLAWFUL POSSESSION OR USE OF PROPERTY OR DERIVING OF BENEFITS FROM PROPERTY

Article 579. Obligation to return property

1. A person possessing or using property of another unlawfully must return the property to its owners and holders of other property-related rights. If the lawful owners and holders of other property-related rights of such property are not able to be found, the property must be delivered to a competent authority, except in the case provided in article 236 of this Code.

2. A person deriving benefits from property unlawfully, thereby causing damage to another person, must give such benefits to such other person, except in the case provided in Article 236 of this Code.

Article 580. Property to be returned

1. A person possessing or using property unlawfully must return the whole of such property.

2. Where the property to be returned is a distinctive object, that particular object must be returned and, if such distinctive object is lost or damaged, monetary compensation must be paid, unless otherwise agreed.

3. If the property to be returned is a fungible object which has been lost or damaged, an object of the same type must be returned or monetary compensation must be paid, unless otherwise agreed.

4. A person deriving benefits from property unlawfully must return, either in kind or in money, the benefits derived from the property to any person having suffered loss of such benefits.

Article 581. Obligation to return yield and income

1. A person possessing or using property, or a person deriving benefits from property, unlawfully and not in good faith, must return yield and income derived from the property during the time of unlawful possession or use of, or deriving benefits from, the property.

2. A person possessing or using property, or a person deriving benefits from property, unlawfully but in good faith, must return any yield and income derived from the property from the time when it knew or should have known that the possession or use of, or deriving benefits from, the property was unlawful, except in the case provided in Article 236 of this Code.

Article 582. Right to require third person to return property

Where a person unlawfully possessing or using property transfers the property to a third person, the third person must return the property if so demanded by the owner and holders of other property-related rights, unless this Code contains some other provision. If money or compensation has been paid for such property, the third person has the right to demand the party having transferred the property to the third person to compensate for damage.

Article 583. Obligation to pay

Upon taking back property, an owner or holders of other property-related rights or an aggrieved person must reimburse the person having taken possession of or used the property, or having derived benefits from the property, unlawfully but in good faith, for the necessary expenses such person has incurred for taking care of the property and increasing its value.

Chapter XX

LIABILITY FOR COMPENSATION FOR NON-CONTRACTUAL DAMAGES

Section 1. GENERAL PROVISIONS

Article 584. Grounds giving rise to liability to compensate for damage

1. A person intentionally or unintentionally harming the life, health, honor, dignity, reputation, property, or other legal rights or interests of a person, must compensate for such damage, unless otherwise prescribed in this Code or relevant laws.

2. The person who causes damage shall be discharged from liability for compensation in case where the damage incurs due to force majeure events or at entire fault of the aggrieved person, unless otherwise agreed or otherwise prescribed by law.

3. If a property causes damage, its owner or possessor must compensate for the damage, except for the damage prescribed in Clause 2 of this Article.

Article 585. Principles of compensation for damage

1. Actual damage must be compensated in full and promptly. Unless otherwise provided by law, parties may agree on the amount of compensation; on the form of compensation, which may be money, in kind or the performance of an act; lump sum payment or payment in instalments; and on the method of compensation.

2. The compensation payable by a person having caused damage may be reduced if such damage was caused unintentionally and is very large in comparison to the financial positions of such person.

3. If the amount of compensation determined becomes unrealistic, the aggrieved person, or the person having caused damage, has the right to request a court or another competent authority to change the amount of compensation.

4. If the aggrieved party is partly his/her fault for causing the damage, that part of damage shall not be compensated.

5. The party having rights and interests infringed shall not be compensated if such damage incurs due to his/her failure to adopt necessary measures to prevent the damage.

Article 586. Capacity of individuals for liability to compensate for damage

1. A person of eighteen years of age or older who causes damage shall be personally liable to compensate.

2. Where a minor under fifteen years of age causes damage, his or her parents, if any, must compensate for the total damage. If the parents have insufficient property to compensate and the minor who has caused the damage has property of his or her own, such property shall be used to satisfy the outstanding amount of compensation, except in the cases provided in Article 599 of this Code.

Where a person who is between fifteen and eighteen years of age causes damage, such person must compensate by recourse to his or her own property. If such person has insufficient property to compensate, the parents of such person must satisfy the outstanding amount by recourse to their own property.

3. Where a minor, legally incapacitated person, person with limited cognition and behavior control, causes damage but there is a guardian, such guardian shall use the property of the ward to compensate. If the ward has no or insufficient property to compensate, the guardian must do so by recourse to the property of the guardian. If the guardian is able to prove that he or she was not at fault with respect to guardianship, the guardian shall not be required to use its property to compensate.

Article 587. Compensation for damage caused jointly by several persons

Where several persons jointly cause damage, they must jointly compensate any aggrieved person. Liability for compensation of each person having jointly caused the damage shall be determined in proportion to the degree of fault of each person. If the degree of fault is not able to be determined, the persons causing damage must compensate in equal shares.

Article 588. Prescriptive period for initiating legal action claiming compensation for damage

The prescriptive period for initiating legal action claiming compensation for damage shall be 03 years from the date on which the legal rights or interests of an individual, legal entity or other subject were infringed.

Section 2. ASSESSMENT OF DAMAGE

Article 589. Damage caused by infringement of property

In the event of an infringement of property, the compensable damage shall comprise:

1. Property which was lost, destroyed or damaged;

2. Interests associated with the use and exploitation of the property was lost or declined;

3. Reasonable costs for the prevention, mitigation and remedy of the damage;

4. Other damage as prescribed by law.

Article 590. Damage caused by harm to health

1. Damage caused by harm to health shall comprise:

a) Reasonable costs for treating, nursing and rehabilitating health, and functional losses and impairment of the aggrieved person;

b) Loss of or reduction in the actual income of the aggrieved person. If the actual income of the aggrieved person is irregular and is not able to be determined, the average income level for the type of work performed by the aggrieved person shall be applied;

c) Reasonable costs and actual income losses of the carers of the aggrieved person during the period of treatment. If the aggrieved person loses his or her ability to work and requires a permanent carer, the damage shall also include reasonable costs for taking care of the aggrieved person.

d) Other damage as prescribed by law.

2. A person causing harm to the health of another person must pay the items provided in Clause 1 of this Article together with an amount of money as compensation for mental suffering of the aggrieved person. The amount of compensation for mental suffering shall be as agreed by the parties; if the parties are not able to agree, the maximum sum shall not exceed fifty-month base salary prescribed by the State.

Article 591. Damage caused by harm to life

1. Damage caused by harm to life shall comprise:

a) Damage caused by harm to life prescribed in Article 590 of this Code;

b) Reasonable funeral costs;

c) Support for the dependants of the aggrieved person;

d) Other damage as prescribed by law.

2. A person causing death to another person must pay compensation for damage as provided in Clause 1 of this Article together with an amount of money as compensation for mental suffering of the closest relatives in the first line of succession to the deceased. If there are no such relatives, this sum shall be paid to the persons who were directly reared by the deceased or to the persons who directly reared the deceased. The amount of compensation for mental suffering shall be as agreed by the parties; if the parties are not able to agree, the maximum sum shall not exceed one-hundred-month base salary prescribed in by the State.

Article 592. Damage caused by harm to honor, dignity or reputation

1. Damage caused by harm to the honor, dignity or reputation shall comprise:

a) Reasonable costs for mitigating and remedying the damage;

b) Loss of or reduction in actual income;

c) Other damage as prescribed by law.

2. A person causing harm to the honor, dignity or reputation of another person must pay compensation for damage as provided in Clause 1 of this Article together with another amount of money as compensation for mental suffering of the aggrieved person. The amount of compensation for mental suffering shall be as agreed by the parties; if the parties are not able to agree, the maximum sum shall not exceed ten-month base salary prescribed by the State.

Article 593. Period of entitlement to compensation for damage caused by harm to health or resulting from loss of life

1. Where an aggrieved person loses totally the ability to work, the aggrieved person shall receive compensation until the time of his or her death, unless otherwise agreed.

2. Where the aggrieved person dies, his or her dependants shall be entitled to receive support for the following durations:

a) A child of the deceased, whether living or conceived prior to his or her death, shall be entitled to compensation until the age of eighteen years, except a child between fifteen and eighteen years of age who is employed and earns sufficient income to look after himself or herself;

b) An adult who is not able to work shall be entitled to receive support until his or her death.

3. With regard to the conceived child of the deceased, the compensation shall be paid from the time he/she is born and alive.

Section 3. COMPENSATION FOR DAMAGE IN A NUMBER OF SPECIFIC CASES

Article 594. Compensation for damage by persons exceeding limits of reasonable self-defense

A person causing damage while acting in reasonable self-defense shall not be liable to compensate any aggrieved person.

A person causing damage while not acting in reasonable self-defense must compensate any aggrieved person.

Article 595. Compensation for damage by persons exceeding requirements of emergency situation

1. A person causing damage as a result of exceeding the requirements of an emergency situation must compensate any aggrieved person for that part of the damage which resulted from exceeding the requirements of an emergency situation.

2. A person creating an emergency situation which leads to damage being caused must compensate any aggrieved person.

Article 596. Compensation for damage caused by persons using stimulants

1. A person who, due to the consumption of alcohol or the use of other stimulants, becomes incapable of being aware of or controlling his or her acts, thereby causing damage to another person, must compensate such person.

2. A person who intentionally causes another person to take alcohol or stimulants, thereby causing such person to become incapable of being aware of or controlling his or her acts, must compensate any person aggrieved thereby.

Article 597. Compensation for damage caused by persons belonging to juridical persons

A juridical person must compensate for any damage caused by any person belonging to the juridical person during the performance of duties assigned by it to such person. If a juridical person has compensated for any damage, it has the right to demand the person at fault for causing the damage to reimburse it an amount of money in accordance with law.

Article 598. Compensation for damage caused by law enforcers

The State must compensate for damage caused by law enforcers as prescribed in the Law on compensation liability of the State.

Article 599. Compensation for damage caused by persons under fifteen years of age or persons having lost capacity for civil acts and under direct supervision of school, hospital or other organization

1. Where a person under fifteen years of age causes damage during school hours, the school must compensate for the damage.

2. If a legally incapacitated person causes damage to another person while under the direct supervision of a hospital or another juridical person, such hospital or the juridical person must compensate for the damage.

3. If, in the cases provided in Clauses 1 and 2 of this Article, the school, hospital or another juridical person proves that it was not at fault with respect to supervision, the parents or guardian of the person under fifteen years of age or of the legally incapacitated person must compensate.

Article 600. Compensation for damage caused workers and trainees

A natural person or juridical person must compensate for any damage caused by any worker or trainee belonging to it during the performance by the employee or trainee of his or her assigned duties. The natural person or juridical person has the right to demand such worker or trainee reimburse it an amount of money in accordance with law.

Article 601. Compensation for damage caused by sources of extreme danger

1. Sources of extreme danger comprise motorized means of transport, power transmission systems, operating industrial plants, weapons, explosives, inflammable substances, toxic substances, radioactive substances, dangerous animals and other sources of extreme danger as provided by law.

An owner of a source of extreme danger must comply strictly with the regulations on taking care of, preserving, transporting and using sources of extreme danger in accordance with law.

2. An owner of a source of extreme danger must compensate for damage caused by such source. If the owner has transferred possession or use of the source of extreme danger to another person, such other person must compensate [for the damage], unless otherwise agreed.

3. An owner, or person to which an owner has transferred the possession or use, of a source of extreme danger must compensate for damage caused by such source, even where such owner or person is not at fault, except in either of the following cases:

a) The aggrieved person is entirely at fault for intentionally causing the damage;

b) The damage occurred due to an event of force majeure or in an emergency situation, unless otherwise provided by law.

4. Where a source of extreme danger is taken into possession or used unlawfully, the person possessing or using [it] unlawfully must compensate for damage.

Where an owner, or a person to which an owner has transferred possession or use, of a source of extreme danger is at fault by allowing the unlawful possession or use of the source of extreme danger, the owner, or the person to which the owner has transferred possession or use, of the source of extreme danger as the case may be must compensate jointly for the damage.

Article 602. Compensation for damage caused by environmental pollution

Any entity polluting the environment, thereby causing damage, must compensate in accordance with the law, including when the entity polluting the environment was not at fault.

Article 603. Compensation for damage caused by livestock

1. An owner of livestock must compensate for damage caused to another person by such livestock. The possessor or user of livestock must compensate during the period of possession or using, unless otherwise agreed.

2. Where a third person is entirely at fault in causing livestock to cause damage to another person, the third person must compensate for the damage. If both the third person and the owner are at fault, both of them must compensate jointly for the damage.

3. Where livestock which is possessed or used unlawfully causes damage, the unlawful possessor or user must compensate for the damage. When the owner, possessor or user of livestock is at fault leading the livestock is possessed or used unlawfully thereby causes damage, they must jointly compensate for damage.

4. Where livestock which is allowed to roam according to customary practice causes damage, its owner must compensate according to customary practice provided that such compensation does not contravene the law or social morals.

Article 604. Compensation for damage caused by trees

An owner, a possessor or a person in charge of trees must compensate for damage caused by the trees.

Article 605. Compensation for damage caused by houses and other construction works or buildings

An owner or a possessor of a house or another construction work, or a person to which the owner has assigned the management or use thereof, must compensate for damage if such house or construction causes damage to another person.

If the executor of the house or construction work is partly fault that such house or construction work causes damage, he/she must jointly compensate for such damage.

Article 606. Compensation for damage caused by infringement of corpses

1. Each natural person or juridical causing damage to a corpse must compensate.

2. Damage caused by infringement of a corpse shall include reasonable costs for mitigating and remedying the damage.

3. A person causing damage to a corpse must pay an amount of money as provided in Clause 2 of this Article together with another amount of money as compensation for mental suffering of the closest relatives in the first line of succession to the deceased. If there are no such relatives, this sum shall be paid to the persons who directly reared the deceased. The amount of compensation for mental suffering shall be as agreed by the parties; if the parties are not able to agree, the maximum sum shall not exceed thirty-month base salary prescribed by the State.

Article 607. Compensation for damage caused by infringement of graves

1. Each natural person or juridical person causing damage to the grave of another must compensate.

2. Damage caused by infringement of a grave shall include reasonable costs for mitigating and remedying the damage.

3. A person causing damage to a grave must pay an amount of money as provided in Clause 2 of this Article together with another amount of money as compensation for mental suffering of the closest relatives in the first line of succession to the deceased. If there are no such relatives, this sum shall be paid to the persons who directly reared the deceased. The amount of compensation for mental suffering shall be as agreed by the parties; if the parties are not able to agree, the maximum sum for each damaged grave shall not exceed ten-month base salary prescribed by the State.

Article 608. Compensation for damage caused by infringement of consumer interests

A natural person or juridical person carrying out production or business and failing to ensure the quality of goods, thereby causing damage to consumers, must compensate for such damage.

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