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Chapter Law Content

Title: Civil Code CH
Category: Ministry of Justice(法務部)
Part Ⅱ Obligations
Chapter I General Provisions
Section 1 - Sources of Obligations
Sub-section 1 Contracts
Article 153
When the parties have reciprocally declared their concordant intent, either expressly or impliedly, a contract shall be constituted.
If the parties agree on all the essential elements of the contract but have expressed no intent as to the non-essential elements, the contract shall be presumed to be constituted. In the absence of an agreement on the above-mentioned non-essential elements, the court shall decide them according to the nature of the affair.
Article 154
A person who offers to make a contract shall be bound by his offer except at the time of offer he has excluded this obligation or except it may be presumed from the circumstances or from the nature of the affair that he did not intend to be bound.
Exposing goods for sale with their selling price shall be deemed to be an offer. However, the sending of pricelists is not deemed to be an offer.
Article 155
An offer ceases to be binding if it is refused.
Article 156
An offer made inter presentes ceases to be binding if it is not accepted at once.
Article 157
An offer made inter absentes ceases to be binding if it is not accepted by the other party within the time during which notice of acceptance may be expected to arrive under ordinary circumstances.
Article 158
If a period of time for the acceptance of the offer has been fixed, the offer ceases to be binding if it is not accepted within such period.
Article 159
If an acceptance arrives late though it should usually arrive within a reasonable time by its transmitting manner, and this might be known to the offerer, the offerer should immediately notify the acceptor of such delay.
If the offerer delays the notice specified in the preceding paragraph, the acceptance shall be deemed to have arrived without delay.
Article 160
An acceptance which arrives late, except under the circumstances in the preceding article, shall be deemed to be a new offer.
An acceptance with amplifications, limitations or other alterations shall be deemed to be a refusal of the original offer and the making of a new offer.
Article 161
In cases where according to customs or owing to the nature of the affair, a notice of acceptance is not necessary, the contract shall be constituted when, within a reasonable time, there is a fact, which may be considered as an acceptance of the offer.
The provision of the preceding paragraph shall be mutatis mutandis applied when at the time of offer the offerer has waived notice of acceptance.
Article 162
If a notice of withdrawing an offer arrives after the arrival of the offer itself, though it should usually arrive before or simultaneously with the arrival of the offer within a reasonable time by its transmitting manner, and this might be known to the other party, the other party so notified should notify the offerer immediately of such delay.
If such other party delays the notice specified in the preceding paragraph, the notice of withdrawing the offer shall be deemed to have arrived without delay.
Article 163
The provisions of the preceding article shall apply mutatis mutandis to the withdrawal of acceptance.
Article 164
When a public notice promises to reward the person for his performance of a particular act, it is a rewarding public notice. The promisor is bound to deliver the reward to the person who has performed the act.
When the act specified in the preceding paragraph has been successively performed by several persons, it is the person who has performed first acquires the claim for reward; when the act has been performed jointly by several persons or performed simultaneously by several persons respectively, it is these persons who acquire the claim for reward jointly.
In the preceding paragraph, if the promisor has delivered the reward in good faith to the person who has first notified his performance, the obligation of the promisor to deliver the reward shall be extinguished.
The provisions of the preceding three paragraphs shall apply mutatis mutandis to the person who has performed such act specified in the public notice without knowing of this notice.
Article 164-1
If there is a specific right acquired because of the performance of an act in the preceding article, this right shall belong to the person who has performed the act, unless otherwise notified in the public notice.
Article 165
When a promise of reward made by a public notice is withdrawn before the act is performed, the promisor is bound to compensate the person performing the act in good faith for the injury arising therefrom, unless the promisor can prove that the person could have never performed the act. The compensation shall not exceed the amount of the promised reward.
When there is a period of time fixed for the performance in the public notice, the promisor is presumed to waive his withdrawing right.
Article 165-1
If a public notice promises to reward the person who has performed a particular act, notified within a certain period of time and has been evaluated as the best, it is a rewarding public notice for the best. The promisor is bound to deliver the reward in the completion of the evaluation.
Article 165-2
The evaluation in the preceding article shall be proceeded by the person appointed in the public notice. If there is no any appointment in the public notice, it shall be proceed with the manner decided by the promisor.
The evaluation according to the provision of the preceding paragraph shall be binding on the promisor and the promisee.
Article 165-3
If there are several persons evaluated as the best, unless otherwise notified in the public notice, these persons acquire the claim for reward jointly.
Article 165-4
The provision of Article 164-1 shall apply mutatis mutandis to the rewarding public notice for the best.
Article 166
If it is agreed between the parties that a contract shall be made in a certain definite form, the contract is presumed to be not constituted before the completion of such form.
Article 166-1
If a contract is made for the obligations of the transferring, creation, or altering of rights over the real property, it shall be made in the notarization made by the notary public.
A contract not notarized according to the provision of the preceding paragraph could still be valid if the parties have agreed on the transferring, creation, or altering of rights over the real property and have completed the recordation.
Sub-section 2 Conferring Of Authority Of Agency
Article 167
If authority of agency is conferred by a juridical act, it shall be made by an expression of intent to the agent or to the third party with whom the delegated act is transacted.
Article 168
If there are several agents, the delegated act shall be transacted by them jointly, unless otherwise provided by the act or the principal's expression of intent.
Article 169
A person, who by his own acts represents he has conferred the authority of agency to another person, or who knows that another person declares himself to be his agent and failed to express a contrary intent, shall be liable to the third party as a person who has conferred that authority, except the third party knew, or might know of the absence of authority.
Article 170
A juridical act made in the name of an agent by a person of no authority of agency shall not be effective to the principal except it is acknowledged by the principal.
In the case specified in the preceding paragraph, the other party to the juridical act may fix a reasonable period and request the principal to declare definitely whether he acknowledges it or not. If the principal does not give a definite answer within the specified period, the acknowledgement shall be deemed to have been refused.
Article 171
[The expression of intend in]A juridical act made by a person of no authority of agency may be withdrawn by the other party to the act before the acknowledgement of the principal, except where such other party knew of the absence of authority at the time of the act.
Sub-section 3 Management Of Affairs Without Mandate
Article 172
A person, who manages an affair of another person without a mandate or obligation, shall manage the affair in conformity with the principal's expressed or presumptive wishes and in the manner beneficial to the principal.
Article 173
The manager shall notify the principal without delay at the beginning of the management in so far as the notice is possible. If there is no urgency, he shall wait for the instructions of the principal.
The provisions of Articles 540 to Article 542 concerning Mandate shall apply mutatis mutandis to Management of Affairs without Mandate.
Article 174
If the undertaking of the management of the affair is against the principal's expressed or presumptive wishes, the manager is bound to compensate the principal for any injury arising from his management, even if no negligence is in his act.
The provision of the preceding paragraph shall not apply if the undertaking of the management of the affair is in order to fulfill an obligation of public interests for the principal or to fulfill a statutory duty of the principal to furnish maintenance to others, or the principal's wishes are against the public policy or morals.
Article 175
If the undertaking of the management of the affair is in order to avert an imminent danger which threatens the life, body or property of the principal, the manager is not responsible for any injury derived from his management, except in case of bad faith or gross negligence.
Article 176
If the management of the affair is beneficial to the principal and is not against his expressed or presumptive wishes, and where the manager has, for the principal, made necessary or beneficial expenses, or assumed debt, or suffered injury, he is entitled to claim against the principal for the reimbursement of such expenses plus interest commencing from the date of outlay, or the payment of such debt, or compensation for the injury sustained.
In the cases provided by the second paragraph of Article 174, the manager may still have the claim in the preceding paragraph, even if the undertaking of the management of the affair is against the principal's wishes.
Article 177
If the management of the affair does not accord with the provisions of the preceding article, the principal may still be entitled to the interests derived from the management. But the obligation specified in the first paragraph of the preceding article of the principal towards the manager shall be only to the extent of the interests he acquired.
The provision of the preceding paragraph shall apply mutatis mutandis to the situation when the manager knew it was another person's affair but still managed for his own interests.
Article 178
If the management of the affair is acknowledged by the principal, unless otherwise expressed by the parties, from the beginning of the management, the provisions concerning Mandate shall be applied.
Sub-section 4 Unjust Enrichment
Article 179
A person who acquires interests without any legal ground and prejudice to the other shall be bound to return it. The same rule shall be applied if a legal ground existed originally but disappeared subsequently.
Article 180
In any of the following cases, the prestation shall not be claimed to return:
(1) If the prestation was for the performance of a moral obligation;
(2) If the prestation made by the debtor for the performance of an undue obligation;
(3) If the person who has made a prestation for the purpose of performing an obligation knew, at the time of performance, that he was not bound to perform;
(4) If the prestation was made for an unlawful cause. Except when the unlawful cause exists only with regard to the recipient.
Article 181
In addition to the interests received, a recipient unjustly enriched shall return whatever he acquired by virtue of such interests. If restitution is impossible by reason of the very nature of the interests or by reason of any other circumstance, he shall be bound to reimburse the value.
Article 182
The recipient, who did not know of the absence of the legal ground and the interests have no longer existed, is released from the obligation to return the interests or reimburse the value.
If the recipient knew of the absence of the legal ground at the time of the receipt, or if he was subsequently aware of it, he shall be bound to return the interests acquired at the time of the receipt or such interests still existing at the time when he was aware of the absence of the legal ground plus the interest and to make compensation for the injury, if any.
Article 183
When the recipient unjustly enriched transferred gratuitously whatever he has received to a third party, and therefore the recipient is released from his obligation to return the interests, such third party shall be bound to make restitution to the extent which the recipient is released from his obligation.
Sub-section 5 Torts
Article 184
A person who, intentionally or negligently, has wrongfully damaged the rights of another is bound to compensate him for any injury arising therefrom. The same rule shall be applied when the injury is done intentionally in a manner against the rules of morals.
A person, who violates a statutory provision enacted for the protection of others and therefore prejudice to others, is bound to compensate for the injury, except no negligence in his act can be proved.
Article 185
If several persons have wrongfully damaged the rights of another jointly, they are jointly liable for the injury arising therefrom. The same rule shall be applied even if which one has actually caused the injury cannot be sure.
Instigators and accomplices are deemed to be joint tortfeasors.
Article 186
An official, who has intentionally committed a breach of duty which he ought to exercise in favor of a third party and therefore prejudice to such third party, is liable for any injury arising therefrom. If the breach is the result of this official's negligence, he may be held liable to compensate only in so far as the injured person is unable to obtain compensation by other means.
In the case mentioned in the preceding paragraph, if the injured person who may obviate the injury by making use of a legal remedy has intentionally or negligently omitted to make use of it, the official shall not be liable to compensate for the injury.
Article 187
A person of no capacity or limited in capacity to make juridical acts, who has wrongfully damaged the rights of another, shall be jointly liable with his guardian for any injury arising therefrom if he is capable of discernment at the time of committing such an act. If he is incapable of discernment at the time of committing the act, his guardian alone shall be liable for such injury.
In the case of the preceding paragraph, the guardian is not liable if there is no negligence in his duty of supervision, or if the injury would have been occasioned notwithstanding the exercise of reasonable supervision.
If compensation cannot be obtained according to the provisions of the preceding two paragraphs, the court may, on the application of the injured person, take the financial conditions among the tortfeasors, the guardian and the injured person into consideration, and order the tortfeasors or his guardian to compensate for a part or the whole of the injury.
The provision of the preceding paragraph shall apply mutatis mutandis to cases where the injury has been caused to a third party by a person other than those specified in the first paragraph in a condition of unconsciousness or of mental disorder.
Article 188
The employer shall be jointly liable to make compensation for any injury which the employee has wrongfully caused to the rights of another in the performance of his duties. However, the employer is not liable for the injury if he has exercised reasonable care in the selection of the employee, and in the supervision of the performance of his duties, or if the injury would have been occasioned notwithstanding the exercise of such reasonable care.
If compensation cannot be obtained according to the provision of the preceding paragraph, the court may, on the application of the injured person, take the financial conditions of the employer and the injured person into consideration, and order the employer to compensate for a part or the whole of the injury.
The employer who has made compensation as specified in the preceding paragraph may claim for reimbursement against the employee committed the wrongful act.
Article 189
The proprietor is not liable for the injury wrongfully caused by an undertaker to the rights of another in the course of his work, unless the proprietor was negligent in regard to the work ordered or his instructions.
Article 190
If injury is caused by an animal, the possessor is bound to compensate the injured person for any injury arising therefrom, unless reasonable care in keeping according to the species and nature of the animal has been exercised, or unless the injury would have been occasioned notwithstanding the exercise of such reasonable care.
The possessor may claim for reimbursement against the third party, who has excited or provoked the animal, or against the possessor of another animal which has caused the excitement or provocation.
Article 191
The injury, which is caused by a building or other work on privately owned land, shall be compensated by the owner of such building or work, unless there is no defective construction or insufficient maintenance in such building or work, or the injury was not caused by the defectiveness or insufficiency, or the owner has exercised reasonable care to prevent such injury.
In the case of the preceding paragraph, if there is another person who shall be responsible for the injury, the owner making compensation may make a claim for reimbursement against such person.
Article 191-1
The manufacturer is liable for the injury to another arising from the common use or consumption of his merchandise, unless there is no defectiveness in the production, manufacture, process, or design of the merchandise, or the injury is not caused by the defectiveness, or the manufacturer has exercised reasonable care to prevent the injury.
The manufacturer mentioned in the preceding paragraph is the person who produces, manufactures, or processes the merchandise. Those, who attach the merchandise with the service mark, or other characters, signs to the extent enough to show it was produced, manufactured, or processed by them, shall be deemed to be the manufacturer.
If the production, manufacture, process, or design of the merchandise is inconsistent with the contents of its manual or advertisement, it is deemed to be defective.
The importer shall be as liable for the injury as the manufacturer.
Article 191-2
If an automobile, motorcycle or other motor vehicles which need not to be driven on tracks in use has caused the injury to another, the driver shall be liable for the injury arising therefrom, unless he has exercised reasonable care to prevent the injury.
Article 191-3
The person, who runs a particular business or does other work or activity, shall be liable for the injury to another if the nature of the work or activity, or the implement or manner used might damage to another. Except the injury was not caused by the work or activity, or by the implement or manner used, or he has exercised reasonable care to prevent the injury.
Article 192
A person who has wrongfully caused the death of another shall also be bound to make compensation for the injury to any person incurring the medical expenses, increasing the need in living, or incurring the funeral expenses.
If the deceased was statutorily bound to furnish maintenance to a third party, the tortfeasor shall also make compensation to such third party for any injury arising therefrom.
The provision of the second paragraph of Article 193 shall apply to the compensation of the preceding paragraph.
Article 193
If a person has wrongfully damaged to the body or health of another, and caused the injured person to lose or decrease his laboring capacity, or to increase the need in living, the tortfeasors shall be bound to make compensation to the injured person for any injury arising therefrom.
The court may, on the application of the parties, order the compensation of the preceding paragraph to be made in periodical payments of money, but the court shall compel the tortfeasor to furnish security.
Article 194
In case of death caused by a wrongful act, the father, mother, sons, daughters and spouse of the deceased may claim for a reasonable compensation in money even if such injury is not a purely pecuniary loss.
Article 195
If a person has wrongfully damaged to the body, health, reputation, liberty, credit, privacy or chastity of another, or to another's personality in a severe way, the injured person may claim a reasonable compensation in money even if such injury is not a purely pecuniary loss. If it was reputation that has been damaged, the injured person may also claim the taking of proper measures for the rehabilitation of his reputation.
The claim of the preceding paragraph shall not be transferred or inherited, except a claim for compensation in money has been promised by contract or has been commenced.
The provisions of the preceding two paragraphs shall be mutatis mutandis applied when a person has wrongfully damaged to another's status based on the relationship to their father, mother, sons, daughters, or spouse in a severe way.
Article 196
If a person has wrongfully damaged to a thing which belongs to another, the injured person may claim to make compensation for the diminution of the value of the thing.
Article 197
The claim for the injury arising from a wrongful act shall be extinguished by prescription, if not exercised within two years from the date when the injury and the person bound to make compensation became known to the injured person. The same rule shall be applied if ten years have elapsed from the date when the wrongful act was committed.
A person bound to make compensation shall, even after the completion of prescription under the preceding paragraph, return to the injured person in accordance with the provisions concerning Unjust Enrichment whatever he has acquired through a wrongful act and therefore prejudiced to the injured person.
Article 198
If a person acquires a claim against the injured person by a wrongful act, the latter may still refuse to perform even if the claim for avoidance has been extinguished by prescription.
Section 2 - Object Of Obligations
Article 199
By virtue of an obligation, the creditor is entitled to claim a prestation from the debtor.
A prestation may consist in something which cannot be valued in money.
A prestation may consist in forbearance.
Article 200
When the object of the prestation is determined only in kind, if its quality cannot be determined by the nature of the juridical act or the intent of the parties, the debtor must deliver a thing of medium quality.
In the case of the preceding paragraph, if the debtor has done whatever is necessary for the delivery of such a thing, or if, with the consent of the creditor, he has designated a thing to be delivered, such thing is designated as the object of the prestation.
Article 201
When the object of the obligation is a prestation of a particular kind of currency in vogue and when at the time of prestation this currency is no longer in vogue, the debtor shall make prestation in another currency in vogue.
Article 202
When the object of the prestation is expressed in a foreign currency in vogue, the debtor may make prestation in currency of the Republic of China at the market rate of the place and time of prestation, except it has been agreed upon by the parties that prestation shall be made in the foreign currency in vogue.
Article 203
In the case of a debt bearing interest, if no rate has been fixed by the contract or by the act, the rate shall be five percent (5%) per annum.
Article 204
If the agreed rate of interest is over twelve percent (12%) per annum, the debtor may at any time after one year has elapsed discharge the capital, but he shall notify the creditor one month before.
The right of discharge specified in the preceding paragraph shall not be excluded or limited by the contract.
Article 205
If the agreed rate of interest exceeds twenty percent (20%) per annum, the creditor shall not be entitled to claim any interest over twenty percent (20%).
Article 206
The creditor shall not cunningly obtain interests by discounting or by any other way, except the interest specified in the preceding article.
Article 207
Interest shall not be added to capital and again bear interest; unless otherwise agreed by the parties in writing that the creditor may add interest to the capital after interest has been in arrears for more than one year and has not been paid notwithstanding the demand of the creditor.
The provision of the preceding paragraph does not apply in case there is a different trade custom.
Article 208
When the prestation is to be selected from among several prestations, the right of choice belongs to the debtor, unless otherwise provided by the act or by the contract.
Article 209
Either the creditor or the debtor who has the right of choice shall exercise it by an expression of intent to the other party.
If a third party has the right of choice, he shall exercise it by an expression of intent to both the creditor and the debtor.
Article 210
If there is a fixed period for exercising the right of choice and it is not exercised within such period, the right of choice will be transferred to the other party.
If there is no fixed period for exercising the right of choice, the party who has no such right may, when the obligation becomes due, fix a reasonable time and notify the other party to exercise his right of choice within such time. If the other party does not exercise his right of choice within the fixed period, the right of choice will be transferred to the party who notified.
If the choice is to be made by a third party and such person is unable or unwilling to exercise it, the right of choice will be transferred to the debtor.
Article 211
If one of the several prestations is impossible from the beginning or becomes impossible subsequently, the obligation exists only in the prestations which remain possible, except the party who has no right of choice shall be responsible for the impossibility.
Article 212
The effect of the choice is retroactive back to the time when the obligation occurred.
Article 213
Unless otherwise provided by the act or by the contract, a person who is bound to make compensation for an injury shall restore the injured party to the status quo before the injury.
If the restoration of the status quo ante shall be paid in money, interest shall be added from the time of the injury.
Under the circumstances of the first paragraph, the creditor may claim the necessary expenses for restoration instead of the restoration.
Article 214
If the person who is bound for the restoration of the status quo ante does not perform his obligation within a reasonable period fixed by the creditor, the latter may claim compensation in money for the injury sustained.
Article 215
If it is impossible or obviously and greatly difficult for the restoration of the status quo ante, the injury sustained shall be compensated in money.
Article 216
Unless otherwise provided by the act or by the contract, the compensation shall be limited to the injury actually suffered and the interests which have been lost.
Interests which could have been normally expected are deemed to be the interests which have been lost, according to the ordinary course of things, the decided projects, equipment, or other particular circumstances.
Article 216-1
If there are injury suffered and interests acquired derived from the same reason, the interests acquired shall be deducted from the amount of the compensation claimed.
Article 217
If the injured person has negligently contributed in causing or aggravating the injury, the court may reduce or release the amount of the compensation.
If the reason of a grave injury was unknown to the debtor and the injured person has omitted to call the attention of the debtor beforehand, or to avert, or mitigate the injury, the injured person will be deemed to be negligently contributed in the injury.
The provisions of the preceding two paragraphs shall apply mutatis mutandis to the situation when the agent of the injured person or the person performing the obligation for the injured person has negligently contributed to the injury.
Article 218
When the injury was not caused intentionally or grossly negligently, and if the compensation would gravely affect the livelihood of the person responsible for it, the court may reduce the amount of the compensation.
Article 218-1
If a person who is bound to make compensation for the loss or damage of a thing or a right, he may claim from another, who is entitled to claim for the injury, for the transfer of the claims which the latter has against the third party by virtue of his ownership of the said thing, or by virtue of the said right.
The provisions of Article 264 shall apply mutatis mutandis to the situation of the preceding paragraph.
Section 3 - Effects Of Obligations
Sub-section 1 Performance
Article 219
(Repealed)
Article 220
The debtor shall be responsible for his acts, whether intentional or negligent.
The extent of responsibility for one's negligence varies with the particular nature of the affair; but such responsibility shall be lessened, if the affair is not intended to procure interests to the debtor.
Article 221
Where the debtor is a person of no or limited in capacity to make juridical acts, his responsibility shall be determined according to the provisions of Article 187.
Article 222
Responsibility for intentional or gross negligent acts shall not be released in advance.
Article 223
A person who is answerable for such care as he is accustomed to in the management of his own affairs, shall still be responsible for his gross negligent acts.
Article 224
A debtor shall be responsible for the intentional or negligent acts of his agent and of the person performing the obligation for him to the same extent as he is responsible for his own intentional or negligent acts. Unless otherwise agreed upon by the parties.
Article 225
The debtor will be released from his obligation to perform if the performance becomes impossible by reason of a circumstance to which he is not imputed.
If the debtor is entitled to claim compensation for the injury against a third party in consequence of the impossibility of the performance under the preceding paragraph, the creditor may claim against the debtor for the transfer of the claim for the injury, or for the delivery of the compensation he has received.
Article 226
If the performance becomes impossible by reason of a circumstance to which the debtor is imputed, the creditor may claim compensation for any injury arising therefrom.
In the case specified in the preceding paragraph, if one part of the performance becomes impossible and the remaining part, if performed, will be of no interests to the creditor, the creditor may refuse the performance of the remaining part and claim compensation for the injury arising from complete non-performance.
Article 227
If a debtor incompletely performs his obligation by reason of a circumstance to which the debtor is imputed, the creditor may execute his right according to the provisions of the default or the impossibility of the performance.
In addition to the injury arising from the incomplete performance in the preceding paragraph, the creditor may claim compensation for other injuries arising therefrom, if any.
Article 227-1
If the creditor's personality has been injured by reason of the debtor's non-performance, the debtor shall be bound to compensate for the injury in compliance mutatis mutandis with the provisions of Article 192 to Article 195 and Article 197.
Article 227-2
If there is change of circumstances which is not predictable then after the constitution of the contract, and if the performance of the original obligation arising therefrom will become obviously unfair, the party may apply to the court for increasing or reducing his payment, or altering the original obligation.
The provision in the preceding paragraph shall apply mutatis mutandis to the obligation not arising from the contract.
Article 228
(Repealed)
Sub-section 2 Defaults
Article 229
When there is a definite period fixed for the performance of an obligation, the debtor is responsible for the default from the moment when such period expires.
When there is no definite period fixed for the performance of the obligation, and when the creditor may demand the performance, but the debtor failed to perform the same after the creditor has notified him of the demand, the debtor is responsible for the default from the moment when he has been notified. The effect of instituting an action for performance and the service of the complaint, or the service of an order for payment according to the hortatory process, or any other similar act is equivalent to a notice.
If there is a period fixed for the performance in the notice of the preceding paragraph, the debtor is responsible for the default from the moment when such time expires.
Article 230
The debtor is not being responsible for the default if the prestation has not been made by reason of circumstances to which he is not imputed.
Article 231
When the debtor is in default, the creditor is entitled to claim compensation for any injury arising therefrom.
So long as the default continues, the debtor under the preceding paragraph shall also be responsible for any injury arising from circumstances of force majeure, unless he can prove that the injury would have been sustained, even if he had performed in due time.
Article 232
If the performance after the default is of no interests to the creditor, he may refuse the performance and claim compensation for the injury arising from the non-performance.
Article 233
When the object of an obligation which is in default is the payment of money, the creditor may claim interest for the default, which is to be calculated at the statutory rate. But if the agreed rate of interest is higher, this higher rate shall apply.
There is no need to pay interest for the interest of default.
In cases specified in the preceding two paragraphs, if the creditor can prove other injuries sustained, he may claim compensation for the same.
Article 234
If the creditor refuses or fails to accept the performance tendered to him, he is responsible for the default from the moment when the performance has been tendered.
Article 235
If the debtor does not actually tender the performance according to the tenor of the obligation, there will be no effect on this tendering. But if the creditor has previously declared that he will not accept the performance, or if an act of the creditor is necessary for the performance, the debtor may substitute the notice to the creditor announcing that he (the debtor) is ready to perform for the tendering.
Article 236
If there is no definite deadline for the performance, or if the debtor is entitled to perform before the deadline, the creditor is not responsible for the default when he is temporarily prevented from accepting the tendered performance, unless the performance was tendered by reason of the creditor's notice, or unless the debtor has notified the creditor a reasonable time beforehand.
Article 237
During the default of the creditor, the debtor is responsible only for his intentional or gross negligent acts.
Article 238
The debtor is not responsible for interest during the default of the creditor.
Article 239
If the debtor has to return the profits produced by an object or to make reimbursement for them, he is only responsible for the profits which he has actually acquired during the default of the creditor.
Article 240
In case of the default of the creditor, the debtor may claim compensation for the necessary expenses incurred from the tendering as well as from the safekeeping of the object of the prestation.
Article 241
When the debtor is under an obligation to deliver a real property, he may, after the creditor is in default, abandon its possession.
In the case of abandonment under the preceding paragraph, the debtor shall be bound to notify the creditor in advance, unless such notice is impossible.
Sub-section 3 Preservation
Article 242
The creditor may, in order to preserve his prestation, exercise in his the name of himself any right of the debtor which the debtor neglects to exercise, except rights which are exclusively belonged to the debtor.
Article 243
So long as the debtor is not in default, the creditor shall not exercise the right specified in the preceding article, except those rights which are exclusively for the preservation of the rights of the said debtor.
Article 244
If a gratuitous act done by the debtor is likely to be prejudicial to the rights of the creditor, the creditor may apply to the court for the revocation of such act.
If a non-gratuitous act done by the debtor is likely to be prejudicial to the rights of the creditor and the debtor knew of it at the time of doing that act, the creditor may apply to the court for the revocation of such act, provided that the party profited by the act (the beneficiary) also knew of the circumstances on the receipt of the interests.
The provisions of the preceding two paragraphs do not apply to the act done by the debtor, if the object of which is not on the property or is only prejudicial to the prestation of delivering a specific thing.
When the creditor applies to the court for the revocation according to the provision of the first or the second paragraph, he may also apply for ordering the beneficiary or the person who acquires the object afterwards (the afterwards acquiring person) to restore to the status quo ante, except the afterwards acquiring person did not know of the ground for revocation at the time of acquiring.
Article 245
The claim for revocation in the provisions of the preceding article shall be extinguished by prescription if not exercised within one year from the moment when the creditor knew of the ground for revocation, or shall be extinguished after ten years from the date of doing the act.
Sub-section 4 Contracts
Article 245-1
Even though the contract is not constituted, one of the parties is responsible for the injury caused to the other party who without his own negligence believed in the constitution of the contract when he, in order to prepare or negotiate for the contract, has done either of the following:
(1) Hidden in bad faith or dishonestly explained the gravely relevant matter of the contract when the other party inquired.
(2) Intentionally or gross negligently spilt out the other party's secret known or held by himself which the other party has explicitly expressed to be kept in secret.
(3) Any other matter obviously against good faith.
The claim for the injury in the preceding paragraph shall be extinguished by prescription if not exercised within two years.
Article 246
If the prestation of a contract is impossible, it is void. However, if the impossibility can be removed and if the parties, at the time when the contract was constituted, intended to have it performed after the removal of the impossibility, the contract is still valid.
If the contract is subject to a suspenseful condition or to a time of commencement, and if the impossibility has been removed prior to the fulfillment of the condition or the arrival of the time, the contract is valid.
Article 247
When a contract is void on account of the impossibility of the performance, the party who at the time of constituting the contract knew or might know the impossibility is responsible for the injury caused to the other party who, without his own negligence, believed in the validity of the contract.
The provision of the preceding paragraph shall be mutatis mutandis applied if the prestation is partially impossible and the contract is valid in respect to the possible part, or if one of the several prestations subject to a choice is impossible.
The claims for the injury in the preceding two paragraphs shall be extinguished by prescription if not exercised within two years.
Article 247-1
If a contract has been constituted according to the provisions which were prepared by one of the parties for contracts of the same kind, the agreements which include the following agreements and are obviously unfair under that circumstance are void.
(1) To release or to reduce the responsibility of the party who prepared the entries of the contract.
(2) To increase the responsibility of the other party.
(3) To make the other party waive his right or to restrict the exercise of his right.
(4) Other matters gravely disadvantageous to the other party.
Article 248
When one of the parties to a contract receives earnest money from the other, the contract is presumed to be constituted.
Article 249
Unless otherwise agreed upon by the parties, the following rules apply to the earnest money:
(1) When the contract has been performed, the earnest money shall be returned or treated as one part of the payment.
(2) If the contract cannot be performed owing to a circumstance to which the party who gave the earnest money is imputed, such party shall not claim for the return of the earnest money.
(3) If the contract cannot be performed owing to a circumstance to which the party who received the earnest money is imputed, such party shall return double amounts of earnest money.
(4) If the contract cannot be performed owing to a circumstance to which neither of the parties is imputed, the earnest money shall be returned.
Article 250
The parties may agree on a penalty to be paid by the debtor in case the debtor does not perform the obligation.
Unless otherwise agreed upon by the parties, the penalty shall be deemed to be the total amount of damages due to the non-performance. If it is agreed that the penalty shall be paid when the debtor does not perform the obligation at the agreed time or in the agreed way, this penalty shall be deemed to be the total amount of damages due to this non-performance, besides the creditor may claim for the performance.
Article 251
If the obligation has been partially performed, the court may reduce the penalty proportionately as the interests received by the creditor due to the partial performance.
Article 252
If the agreed penalty is disproportionately high, the court may reduce it to a reasonable amount.
Article 253
The provisions of the preceding three articles shall apply mutatis mutandis to the agreed non-pecuniary payment for the breach of a contract.
Article 254
When a party to a contract is in default, the other party may fix a reasonable period and notify him to perform within that period. If the party in default does not perform within that period, the other party may rescind the contract.
Article 255
If according to the nature of the contract or the expression of intent of the parties, the purpose of the contract can not be accomplished if not performed within the fixed period, and if one of the parties does not perform the contract within that period, the other party may rescind the contract without giving the notice specified in the preceding article.
Article 256
In cases provided by Article 226, the creditor may rescind the contract.
Article 257
If there is no deadline for the exercise of the right of rescission, the other party may fix a reasonable one and notify the party having the right of rescission to make a definite reply within such deadline whether he will rescind the contract or not. If the notice of rescission is not received before such deadline, the right of rescission is extinguished.
Article 258
The right of rescission shall be exercised with the expression of intent to the other party.
If there are several persons on either side of the contract, the expression of intent specified in the preceding paragraph shall be made by all of them or to all of them.
The expression of intent to rescind a contract shall not be revoked.
Article 259
Unless otherwise provided by the act or by the contract, each party shall, in case of rescission, restore the other party to his status quo ante according to the following rules:
(1) Each party shall return the prestation received to the other party.
(2) If the prestation received consisted of money, interest calculated from the time of receipt shall be added.
(3) If the prestation received consisted of service or of the use of a thing, the value of such service or use at the time of receipt shall be reimbursed in money.
(4) If a thing to be returned has produced profits, such profits shall be returned.
(5) If necessary or beneficial expenses of the thing to be returned have been paid, such expenses may be claimed for to the extent to which the other party is benefited at the time of return.
(6) If a thing to be returned has been damaged or destroyed or cannot be retuned owing to any other cause, its value shall be reimbursed.
Article 260
The exercise of the right of rescission does not prejudice to the claim for compensation.
Article 261
The provisions of Articles 264 to 267 shall mutatis mutandis apply to the mutual obligations of the parties resulting from the rescission of the contract.
Article 262
When the person entitled to the right of rescission is imputed to the damage or destruction of the thing received or any other circumstance which causes the return impossible, his right of rescission is extinguished. The same rule shall be applied when the kind of the thing received has been altered by process or remodeling.
Article 263
The provisions of Articles 258 and 260 shall be mutatis mutandis applied when the parties terminate the contract in accordance with the provisions of the act.
Article 264
A party to a mutual contract may refuse to perform his part until the counter-prestation has been performed by the other party, except he is bound to perform first.
When one party has partially performed his part, the other party shall not refuse his counter-prestation if circumstances are such that a refusal to perform would be against the manners of good faith.
Article 265
A person who is bound to perform his part first may, if after the constitution of the contract the property of the other party have obviously decreased whereby the counter-prestation might become difficult to be performed, refuse to perform his part, until the other party has performed his part or furnished security for such performance.
Article 266
If none of the parties is imputed to the impossibility of one party's performance, the other party shall be released from his obligation to perform the counter-prestation. If the impossibility is only partial, the counter-prestation shall be reduced proportionately.
In the case provided in the preceding paragraph, if the counter-prestation has been wholly or partially performed, it may be claimed for the reimbursement in accordance with the provisions concerning Unjust Enrichment.
Article 267
If one of the parties is imputed to the impossibility of the other party's performance, the later may claim for the counter-prestation, but the interests saved or ought to be saved arising from the release of the performance shall be deducted from the counter-prestation claimed.
Article 268
One of the parties to a contract who has undertaken that an obligation shall be performed by a third party shall be responsible for the injury if the third party does not perform the obligation.
Article 269
When it is provided in a contract that an obligation shall be performed to a third party, the offeror may demand the debtor to perform the obligation to the third party, and such third party also has the right to demand performance direct from the debtor.
So long as the third party has not expressed his intent to take advantage of the contract specified in the preceding paragraph, the parties may modify the contract or revoke it.
If the third party expresses to either of the parties his intent not to take advantage of the contract, he is deemed to never have any right under the contract.
Article 270
The debtor specified in the preceding article may take all the valid defenses arising out of the contract against the beneficial third party.
Section 4 - Plurality Of Creditors And Debtors
Article 271
When several persons undertake the same obligation, and if the prestation is divisible, each of them shall be responsible for or be entitled to the prestation equally, unless otherwise provided by the act or by the contract. The same rule shall be applied when a prestation is converted from an indivisible one to a divisible one.
Article 272
When there are several persons undertaking the same obligation and expressing that each of them is bound to the creditor for the whole of the prestation, this obligation is a joint-obligation.
If there is no such expression specified in the preceding paragraph, a joint-obligation is constituted only in the cases provided by the act.
Article 273
The creditor of a joint-obligation is entitled to demand one or several or all of the debtors simultaneously or successively to tender total or partial performance.
Before the complete performance of the obligation, all of the debtors are jointly bound to tender the performance.
Article 274
If any one of the joint-debtors has extinguished the obligation by performance, prestation in lieu of performance, lodgment, offset or merger, the other debtors are also released from the obligation.
Article 275
If there is a non-appealable judgment rendered in favor of one of the joint-debtors and if it is not based on such debtor's personal affairs, this judgment operates in favor of all the other debtors.
Article 276
When the creditor grants a release to one of the joint-debtors without the intent to extinguish the whole obligation, except the amount of the share which is incumbent on such debtor, the other debtors are still not released from the obligation.
When the extinctive prescription has been completed as regards one of the joint-debtors, the provisions of the preceding paragraph shall be mutatis mutandis applied.
Article 277
If there is one of the joint-debtors acquiring a claim against the creditor, to the extent of the amount of the share which is incumbent on such debtor, the other debtors may claim to offset.
Article 278
When there is default of the creditor towards one of the joint-debtors, the effect of the default also operates in favor of all the other debtors.
Article 279
Unless otherwise provided by the provisions of the preceding five articles or the contract, any consequence of the affairs on one of the joint-debtors, whether it is beneficial or not, does not operate on the other debtors.
Article 280
Unless otherwise provided by the act or the contract, all of the joint-debtors shall be burdened for the obligation equally. Except, the damages and the costs resulting from facts for which one of the joint-debtors shall be personally responsible shall be borne by such debtor.
Article 281
If one of the joint-debtors has caused the other joint-debtors to be released from the obligation by virtue of his performance, prestation in lieu of performance, lodgment, offset or merger, he is entitled to demand from the other debtors the reimbursement of their respective shares in the prestation, plus interest from the date of release.
In the case specified in the preceding paragraph, the debtor entitled to claim the reimbursement is subrogated to the rights of the creditor to the amount of the reimbursement which the said debtor is entitled to demand, but such debtor shall not exercise them to the detriment of the creditor.
Article 282
If one of the joint-debtors cannot reimburse his share in the prestation, the deficiency shall be borne pro rata by the other debtors, including the debtor entitled to claim the reimbursement, but if the impossibility to reimburse is due to the negligence of the debtor entitled to claim, he shall not claim the other debtors to bear their shares.
In the case of the preceding paragraph, if one of those other debtors has been released from his own share in the obligation, he shall still be, however, in accordance with the provisions of the preceding paragraph, responsible for his share in the deficiency.
Article 283
When several persons entitled by the act or by the juridical act to a claim of the same obligation that each of them may demand the whole of the prestation from the debtor, this claim is a joint-claim.
Article 284
The debtor to a joint-claim may at his option perform wholly in favor of any of the joint-creditors.
Article 285
If one of the joint-creditors has made the demand, it operates in favor of all the other creditors.
Article 286
If the obligation is extinguished on account of any one of the creditors having been satisfied by performance, prestation in lieu of performance, lodgment, offset or merger, the rights of the other creditors are also extinguished.
Article 287
If there is a non-appeallable judgment rendered in favor of one of the joint-creditors, it also operates in favor of all the other creditors.
If there is a non-appeallable judgment rendered against one of the joint-creditors and if it is not based on such creditors' personal affairs, it also operates against all the other creditors.
Article 288
If one of the joint-creditors has granted a release to the debtor, except to the extent of the share to which the creditor granting the release is entitled, the rights of the other creditors are not extinguished.
When the extinctive prescription has been completed against one of the joint-creditors, the provisions of the preceding paragraph shall be mutatis mutandis applied.
Article 289
If there is one of the joint-creditors in default, the other creditors are also responsible for it.
Article 290
Unless otherwise provided by the preceding five articles or the contract, any consequence of the affairs on one of the joint-creditors, whether it is beneficial or not, does not operate on the other creditors.
Article 291
Unless otherwise provided by the act or the contract, all of the joint-creditors shall be benefited by the claim equally.
Article 292
When several persons undertake the same obligation, and the prestation is indivisible, the provisions concerning the joint-obligation shall be mutatis mutandis applied.
Article 293
If there are several persons entitled to a claim of the same obligation, and if the prestation is indivisible, each creditor may only demand the prestation to all of the creditors; and the debtor shall only tender the performance to all of the creditors.
Unless otherwise provided by the preceding paragraph, the affairs between one of the creditors and the debtor, whether it is beneficial or not, does not operate on the other creditors.
The provisions of Article 291 shall apply mutatis mutandis to the affairs between the creditors
Section 5 - Transfer Of Obligations
Article 294
A creditor may transfer a claim of an obligation to a third party, unless;
(1) The nature of the claim does not permit the transfer; or
(2) The parties have agreed that the claim shall not be transferred; or
(3) The claim is not subject to judicial attachment.
The agreement mentioned in the second section of the preceding paragraph shall not be a valid defense against any bona fide third party.
Article 295
When there is a claim being transferred, all the securities of the claim and other accessory rights are transferred together, except those rights which cannot be separated from the transferor.
Interests in arrears are presumed to be transferred, together with the capital.
Article 296
The transferor is bound to deliver to the transferee all documents which serve as evidence of the claim, and to give him all information necessary for the assertion of such claim.
Article 297
The transfer of a claim will not be effective as against the debtor until the debtor has been notified of it by the transferor or by the transferee, unless otherwise provided by the act.
The effect of tendering by the transferee to the debtor the deed of transfer executed by the transferor is equivalent to the effect of notice.
Article 298
When the transferor has notified the debtor that he has transferred the claim, the debtor may take all the defenses which he has against the transferee as the valid defenses against the transferor, even though the transfer is not executed or is invalid.
The notice under the preceding paragraph shall not be revoked without the consent of the transferee.
Article 299
At the time of the debtor being notified, all of the valid defenses he has against the transferor may be taken against the transferee.
At the time of the debtor being notified, if the debtor had the claim against the transferor, and if such claim matures before or at the same of the claim transferred does, he may claim for offset against the transferee.
Article 300
When a third party agrees with the creditor to assume the obligation of the debtor, the obligation is deemed to be transferred to the third party at the time of the constitution of the contract.
Article 301
When a third party agrees with the debtor to assume the obligation of the debtor, it is not effective as against the creditor until the creditor has acknowledged.
Article 302
The debtor or the person assuming the debt under the preceding article may fix a reasonable deadline and notify the creditor to reply definitely before such deadline whether he acknowledges the transfer or not. If the creditor does not give a definite reply before such period, he is deemed to have refused to acknowledge the said transfer.
If the creditor refuses to acknowledge the transfer, the debtor or the person assuming the debt may revoke the contract concerning the assumption of the debt.
Article 303
The person assuming the debt may take the debtor's valid defenses against the creditor on account of their legal relationship as his valid defenses against the creditor, unless he shall not offset a claim belonging to the debtor.
The person assuming the debt shall not take his valid defenses against the debtor on account of the legal relationship arising from the assumption of the debt against the creditor.
Article 304
The assumption of a debt does not affect the existence of the accessory rights of the claim, unless the accessory rights shall not be separated from the debtor.
The securities given by a third party for the performance of the obligation are extinguished on account of the assumption of the debt, unless such third party has acknowledged the assumption.
Article 305
In case of generally assuming all the assets and liabilities from the property or enterprise of a person, the assumption of the debts becomes effective from the moment the transfer has been published or has been notified to the creditor.
In the case specified in the preceding paragraph, the original debtor remains jointly liable with the person assuming the debt for a period of two years from the date of notice or publication of the transfer for the obligations due, or from the date of maturity for the obligations which are not yet due.
Article 306
When one enterprise is amalgamated with other enterprises and they are assumed each other's assets and liabilities, it is deemed as the general assumption in the preceding article. The new enterprise after the amalgamation shall be responsible for the obligation of each enterprise before the amalgamation.
Section 6 - Extinction Of Obligations
Sub-section 1 General Provision
Article 307
When the obligations are extinguished, the securities furnished for its performance, and other accessory rights are extinguished simultaneously.
Article 308
Once an obligation has been wholly extinguished, the debtor may require the creditor to return or cancel the deed in which the obligation is embodied. If the obligation has been only partially extinguished, or if the deed entitles the creditor to exercise other rights, the debtor may demand that particulars of the extinction to be endorsed into the deed.
If the creditor alleges that he cannot return or endorse the deed, the debtor may require from the creditor a publicly certified acknowledgment showing that the obligation has been extinguished.
Sub-section 2 Performance
Article 309
When performance has been made to the creditor or to his qualified representative in conformity with the tenor of the obligation, and has been accepted, the obligation is extinguished.
The bearer of a receipt signed by the creditor is deemed to be the qualified representative of the creditor, except the debtor knew or was negligent of not knowing that the bearer was not qualified to receive the performance.
Article 310
If the performance is tendered to a third party and has been accepted by him, the following rules shall apply:
(1) Performance effects if the creditor has acknowledged it or if the third party subsequently has acquired the claim of the obligation;
(2) Performance effects, if the performance had been accepted by the quasi possessor of the claim, and the creditor did not know that he is not a creditor;
(3) In cases other than those specified in the preceding two sections, the performance effects only to the extent which the creditor has been benefited thereby.
Article 311
An obligation may be performed by a third party unless otherwise agreed by the parties or accorded with the nature of the obligation.
If the debtor objects to the obligation being performed by a third party, the creditor may refuse such performance; but if the third party has the interest of conflicts on the performance of the obligation, the creditor shall not refuse.
Article 312
If a third party who has interest on the performance of the obligation has performed the obligation, the third party is subrogated to the rights of the creditor to the amount of the performance, but such third party shall not exercise them to the detriment of the creditor.
Article 313
The provisions of Articles 297 and 299 shall apply mutatis mutandis to the subrogation specified in the preceding article.
Article 314
Unless otherwise provided by the act or by the contract or by the custom, or unless otherwise decided by the nature of the obligation or other situations, the place of performance shall be decided as follows:
(1) If the object of the obligation is to deliver a specific thing, performance shall be tendered at the place where such thing was at the time when the contract was constituted.
(2) The other obligations shall be performed at the place of the creditor's domicile.
Article 315
Unless otherwise provided by the act or by the contract, or unless otherwise decided by the nature of the obligation or other situations, the creditor may demand the performance at any time and the debtor may also perform at any time.
Article 316
If there is a deadline for performance, the creditor may not demand the performance before the deadline; but if there is no contrary expression, the debtor may perform before the deadline.
Article 317
Unless otherwise provided by the act or by the contract, the costs of performance shall be borne by the debtor. But if the creditor has increased the costs of performance by changing his domicile or by any other acts, the additional costs shall be borne by the creditor.
Article 318
A debtor is not entitled to perform in part. However, the court may, taking the condition of the debtor into consideration, allow him to perform by installment or to delay his performance in such reasonable time as may not greatly prejudice to the interests of the creditor.
When the court allows the debtor to perform by installment, the creditor may claim for the whole prestation if the debtor has delayed any installment.
In case the prestation is indivisible, the court may, subject to the provision of the first paragraph, allow the debtor to delay his performance.
Article 319
If the creditor has accepted other prestation in lieu of the prestation originally agreed, the obligation is extinguished.
Article 320
When the debtor, for the purpose of satisfying his creditor, has assumed a new obligation towards him, the original obligation will not be extinguished, if the new obligation is not performed, unless otherwise agreed by a contrary expression of the parties.
Article 321
If a debtor is bound to the same creditor to perform several obligations of the same kind, and if the prestation performed is insufficient for discharging all the obligations, it is the person tendering the performance to specify the obligation to be discharged at the time of the prestation.
Article 322
If the person tendering the performance has not made the specification provided in the preceding article, the obligation to be discharged shall be specified as follows:
(1) If a obligation has been due, it shall be discharged first;
(2) If all of the obligations are due or if none is due, the obligation which affords the creditor the least security shall be discharged first; if all the obligations are equally secured, the obligation which will be the most favorable to the debtor if performed shall be discharged first; if all the obligations will be equally favorable the debtor if performed, a obligation which matures first shall be discharged first;
(3) If all the obligations are equally favorable to the debtor and all mature at the same time if performed, the obligations shall be discharged proportionately.
Article 323
The prestation tendered by the person tendering the performance shall be taken to discharge the expenses first, then the interest and finally the capital. The same rule shall be applied when an obligation is performed according to the provisions of the preceding two articles.
Article 324
The person tendering the performance may demand from the person accepting the performance the delivery of a written receipt.
Article 325
In case of payment of interest or other periodical performance, if the creditor gives a receipt for one term without any reservation for the other terms, it is presumed that he has received performance for the previous terms.
If the creditor gives a receipt for the capital, it is presumed that he has received the interest.
If the deed to the obligation has been returned, it is presumed that the obligation has been extinguished.
Sub-section 3 Lodgments
Article 326
When the creditor is in default, or when it is impossible to know exactly who the creditor is so that performance becomes difficult, the person tendering the performance may lodge the prestation for the creditor.
Article 327
Lodgment shall be made in the lodgment office of the courthouse at the place of performance.
Article 328
After the lodgment, the danger of the damage or destruction of the object of the prestation is borne by the creditor, and the debtor is not bound to pay the interest or to compensate for failure to acquire the profits.
Article 329
The creditor is entitled to take delivery of the thing lodged at any time. If, however, the debtor is bound to perform only after a counter-prestation has been performed by the creditor, the debtor may prevent the delivery of the thing lodged, until the counter-prestation has been performed or proper security has been furnished.
Article 330
The right of the creditor to the thing lodged shall be exercised within ten years from the day of lodgment; and if it is not exercised within such period, the ownership of the thing lodged is assigned to the Treasury.
Article 331
If the object of the prestation is not suitable for lodgment, or if it might be damaged or destroyed, or if its lodgment would cost disproportionate expenses, the person tendering the performance may apply to the court of the place of performance to have it sold by auction and to lodge the proceeds of the sale.
Article 332
When the object of the prestation mentioned in the preceding article has a current market value, the court may allow the person tendering the performance to sell it at such market value and to lodge the proceeds of the sale.
Article 333
The costs of lodging the proceeds of the auction or the sale are borne by the creditor.
Sub-section 4 Offset
Article 334
If two persons are bound by obligations for each other, and the objects of which are of the same kind and which are both due, each party may take his own obligation to offset the other party's, except the nature of the obligations or the agreement of the parties does not permit of it.
The agreement provided in the preceding paragraph shall not be a valid defense against any bona fide third party.
Article 335
The offset shall be made with the expression of intent by one party to the other. As the mutual relationship of the obligations between themselves, it is extinguished to the extent of the corresponding amounts of the obligations deducted in the offset since the moment when the offset could be claimed.
The expression specified in the preceding paragraph, if made subject to a condition or to a time of commencement or ending, is void.
Article 336
An offset may be made even though the obligations are to be performed in different places; but the party who has claimed the offset shall compensate the other party for any injury resulting therefrom.
Article 337
Even if the claim of an obligation has been extinguished by prescription, it may also be offset, provided that the offset may be made prior to its extinction.
Article 338
If the obligation is not subject to a judicial attachment, the debtor shall not claim for offset.
Article 339
If the obligation is resulted from an intentional wrongful act, the debtor shall not claim for offset.
Article 340
When an obligation has been attached by an order of the court, the third debtor of such obligation shall not take a claim which he has acquired from the creditor after the attachment to offset the obligation attached.
Article 341
When it is provided by a contract that an obligation shall be performed to a third party, the debtor of such obligation shall not take the obligation of the other party to the contract to offset his obligation.
Article 342
The provisions of Articles 321 to 323 shall apply mutatis mutandis to the offset.
Sub-section 5 Releases
Article 343
If the creditor has expressed his intent to release the debtor from his obligation, the relationship of the obligation is extinguished.
Sub-section 6 Merger
Article 344
When the right and liability of an obligation are vested in the same person, the obligation is extinguished, except when it was the object of another person's right or when it is otherwise provided by the act.