Part Ⅲ Rights In Rem
Chapter 9 Right Of Retention
The right of retention is the right of a creditor who is in possession of the personal property of another to retain that personal property if there is a nexus between the occurrence of the creditor's claim and that property and the creditor has not received payment upon maturity of the claim.
The provisions of the preceding paragraph do not apply if the creditor possesses the personal property as the result of a tort or other unlawful cause, or if at the time the creditor took possession the creditor knew, or due to gross negligence failed to know, that the personal property is not owned by the debtor.
The nexus specified in the preceding article is deemed to exist where the personal property is taken into possession due to a business relationship existing between traders and the claim arises from that business relationship.
Personal property may not be retained if retention is contrary to public order or good morals. The same shall be true if retention conflicts with a duty that shall be borne by the creditor or with a stipulation between creditor and debtor.
Upon the insolvency of the debtor, the creditor has the right of retention, even before the claim has matured.
If the debtor becomes insolvent after the delivery of the personal property or if his insolvency becomes known to the creditor only after such delivery, the creditor may exercise his right of retention, even if there exists a conflict referred to in the preceding article.
When a creditor has not yet received full payment of its claim, the creditor may exercise its right of retention against the whole of the thing retained, provided that if the thing retained is divisible, the creditor may exercise its right only pro rata by the ratio of its claim to the value of the thing retained.
When rights in rem other than ownership rights exist in a thing retained, the holder of those rights in rem may not assert them against a bona fide holder of the right of retention.
The provisions of Articles 888 to 890 and of Article 892 apply mutatis mutandis to the right of retention.
The creditor may demand reimbursement from the owner of the thing retained for any necessary outlays incurred for maintaining custody of the thing retained.
A creditor who has not received payment upon maturity of a claim may set an appropriate time limit of at least one month, notify the debtor, and declare that if the claim is not paid within the time limit, payment will be taken out of the thing retained. If the thing retained is owned by a third party or other rights in rem exist in the thing, and the creditor knows this, the creditor shall also notify the third party or rights holder at the same time.
If the debtor or the owner of the thing retained does not pay the claim within the time limit specified in the preceding paragraph, the creditor may apply mutatis mutandis the provisions regarding the enforcement of pledge rights and receive preferential payment out of the proceeds from the sale of the retained thing or obtain ownership of the thing.
If notification under paragraph one is impossible, the creditor may also exercise the rights specified in the preceding paragraph if it has not yet received payment of the claim six months after maturity of the claim.
If the debtor or the owner of the thing retained has furnished commensurate security for the payment of the claim, the creditor's right of retention is extinguished.
The provisions of Articles 897 to 899 apply mutatis mutandis to the right of retention.
The provisions of this Chapter regarding right of retention apply mutatis mutandis to any other rights of retention, provided that if there are separate provisions regarding such other rights of retention, those provisions shall govern.