ក្រមរដ្ឋប្បវេណី (គន្ថីទី៤)

(1) An Obligation shall be a legal relationship that joins a particular person with another specified person through the former person assuming a certain Obligation with respect to the latter specified person. (2) The person assuming the Obligation shall be referred to as the Obligor, and the person receiving benefit from the performance of such Obligation shall be referred to as the Obligee. (3) An Obligee shall retain the rights corresponding to the Obligation assumed by the Obligor.

(1) An Obligation may arise from a contract, unilateral legal act, management of affairs without mandate, unjust enrichment, tortious act, and/or legal provisions. (2) An Obligation arising from a contract or unilateral legal act shall be an Obligation created based on the intention of one or both parties. (3) An Obligation arising through the management of affairs without mandate, unjust enrichment, tortious act or legal provisions shall be an Obligation created by law. The provisions set forth in Chapter Three (Execution of Contract) through Chapter Seven (Easements) of this Book shall apply mutatis mutandis to an Obligation created by law.

(1) A declaration of intent shall be an expression of intention made by a party with the intent to achieve a legal effect. (2) A declaration of intent shall come into effect upon the serving of notice thereof to the other party.

A contract shall mean the matching of intentions held by two or more parties for the purpose of creating, amending or extinguishing an Obligation.

(1) A unilateral legal act shall be an act that creates, amends or extinguishes an Obligation through the unilateral expression of intent to dispose of property or through the exercise of a right granted through contract or legal provision. (2) The provisions set forth in Section Ⅱ(Defective Declaration of Intent and Validity of Contract) and Section IV(Agency) of Chapter Two of this Book shall apply mutatis mutandis to unilateral legal acts.

The subject of an Obligation may be the transfer of ownership of, or the right to possess, property or money, or to perform or not to perform a certain act.

Should the subject of an Obligation include the delivery of a specified Object, the Obligor shall preserve such Object with the care of a good manager until the delivery thereof.

(1) Should the Object to be delivered under the Obligation be described only with reference to its class and/or type, and different quality levels exist for such Object, the Obligor shall be obligated to deliver an Object of a quality decided between the parties. Should no such quality designation be reached for the Object, the Obligor shall be obligated to deliver an Object of medium quality. (2) With regard to Obligations for the delivery of Object, where the Obligor has specified the Object to be delivered and has completed all requisites for the delivery of such Object, the Obligor is only obligated to subsequently deliver that specified Object.

(1) Should the subject of an Obligation include the payment of monies, the Obligor may effect such payment in any desired currency according to his/her preference. However, the Obligee and the Obligor shall agree that the payment will be effected in a specific currency. (2) Should the specified currency of the Subject of the Obligation have ceased to be a legal tender at the time at which the Obligation comes due, the Obligor shall execute payment in another currency. (3) The provisions of paragraphs (1) and (2) shall apply mutatis mutandis to cases where the delivery of foreign currency is the subject of an Obligation.

(1) Even should the amount of an Obligation be specified in terms of a foreign currency, the Obligor may chose to payment in the Cambodian currency according to the foreign exchange rate at the location where the Obligation is performed once comes due. However, should the Obligee and the Obligor agree otherwise, such agreement shall prevail. (2) Should the Obligor be tardy in performing such Obligation, should the Obligor execute payment in the Cambodian currency, the Obligee may demand that the Obligor calculate the amount of payment based on the foreign exchange rate in effect at the time the Obligation became due or at the time the Obligor effects actual payment, according to the Obligee's preference. However, if the Obligee and the Obligor agree otherwise, such agreement shall prevail.

With respect to an interest-bearing Obligation, the interest rate shall be 5 % per annum unless otherwise agreed to by the parties.

Should the payment of interest be in arrears for one or more years and the Obligor has failed to pay such interest after having received a demand for payment from the Obligee, the Obligee may include the amount of such interest in the principal.

Should the subject of an Obligation be determined by choosing from among two or more methods of performance, the Obligor shall have the right to chose from among the methods. However, the Obligor may grant the right to choose to the Obligee or to a third party through specific agreement thereto.

(1) The right to choose shall be exercised through the serving of notice to the other party. Should the Obligor bear the right to choose, such right shall be deemed have been exercised through the delivery of the property chosen by the Obligor. Should a third party bear the right to choose, the right to choose shall be exercised through the serving of notice to either the Obligor or the Obligee. (2) The choice shall be retroactively effective to the time that the Obligation arose.

(1) Once an Obligation has become due, should either the Obligor or the Obligee holding the right to choose receives a demand from the other party instructing the right holder to make a choice within a reasonable fixed period of time and said right holder fails to make a choice within such period, the right to choose shall be deemed to have been transferred to the other party. (2) Should the right to choose be vested with a third party, should the third party receive notice from the Obligor or the Obligee instructing said third party to make a choice within a reasonable fixed period of time and said third party fails to make a choice within such period, the right to choose shall be deemed to have been transferred to the Obligor.

(1) Should one of the acts of performance subject to a choice by the Obligor become impossible due a cause not attributable to either party on or after the date of formation, the subject of the Obligation shall be comprised of the remaining acts of performance. In such case, paragraph (2) of Article 321 (Exercising of right to choose) shall apply mutatis mutandis. (2) Should a method of performance become impossible due to the fault of the party holding the right to choose, such right to choose shall be transferred to the other party. (3) Should any act of performance become impossible due to the fault of an Obligor who does not hold the right to choose, the party who holds the right to choose may select the method of performance that has been rendered impossible and demand compensation for subsequent damages from the Obligor. (4) Should any act of performance become impossible due to the fault of an Obligee not holding the right to choose, the Obligor who holds the right to choose may choose the method of performance that was rendered impossible, and thereafter be released from the Obligation.

(1) Should there be several Obligees of a single Obligation, unless otherwise agreed by such Obligees, each Obligee shall have a right to the Obligation in an equal proportion. (2) Should the performance of an Obligation be indivisible by its nature or by Declaration of Intent by the parties, should there be several Obligees of the Obligation, each Obligee may demand performance on behalf of all the Obligees and the Obligor may effect performance to any Obligee on behalf of all the Obligees. (3) With regards to an Obligation set forth in paragraph (2), the act by or circumstances occurred to an Obligees of an indivisible Obligation may not be effective to other Obligees. In cases where the Obligor has renewed the contract with, or been exempted from the performance for one of the Obligees of an indivisible Obligation, if the Obligor has performed part or the whole of an Obligation upon claims by other Obligees, the Obligor may seek compensation from the above- mentioned Obligee for the benefits which may be distributed to such Obligee if such Obligee had not lost its right to the Obligation. (4) Should there exist joint liability or multiple Obligors for an Obligation, the provisions of Article 921 (Definition of joint Obligation) through Article 937 (Indivisible Obligations, pseudo-joint Obligations, divisible Obligation) shall apply.

(1) The contracting party may impose conditions concerning the occurrence or extinguishment of the effectiveness of the contract. In cases of a unilateral legal act, conditions may be imposed only when the conditions are not unduly detrimental to any other party. (2) Conditions are defined as events that occur at a future time and whose occurrence are uncertain. (3) Should an Obligation or a right that has arisen out of a contract or a unilateral legal act be subject to a condition precedent, the Obligation or right shall come into effect upon the fulfillment of said condition. On the other hand, should an Obligation or right arise from a contract or a unilateral legal act be subject to a condition subsequent, such Obligation or contract shall terminate upon the fulfillment of said condition.

A right subject to a condition may be an object of an inheritance, disposition or security interest. Furthermore, an Obligation subject to a condition may be succeeded to in accordance with the provisions regarding inheritance.

(1) Neither party to an Obligation subject to a condition may, while such condition is pending, impair the benefits that other parties may stand to receive should the condition be met. (2) Should a third party impair the benefits referred to in paragraph (1), should such third party's act constitute a tortious act, such third party shall be liable for damages.

If a party for whom the fulfillment of a condition would be detrimental or intentionally obstructs the fulfillment of such condition, the other party may assume the condition to have been fulfilled.

(1) Should the effect of a contract be subject to a specified commencement time, the contract shall not come into effect until such commencement time has occurred. Should performance under a contract be subject to a specific commencement time, the Obligee shall not require the Obligor to perform the Obligation prior to said commencement time. (2) Should the effect of a contract be subject to a specific termination time, said contract shall terminate upon such time occurring. (3) With regards to a unilateral legal act, a commencement time stipulated in paragraph (1) or a termination time stipulated in paragraph (2) may be imposed, unless it is unduly detrimental to another party.

(1) Time is presumed to be set out in the beneficial interest of the Obligor. (2) Benefit from the time determination may be waived, provided that it is not unduly detrimental to any other party. However, should another party suffer damage due to such waiver, the waiving party shall be liable for such damages.

The Obligor shall forfeit the benefit from time under the following circumstances: a. Should the Obligor have been declared to be bankrupt; b. Should the Obligor have destroyed or diminished the value of the security; c. Should the Obligor have failed to furnish the security that the Obligor was obligated to furnish; or d. Should an event that was agreed to between the parties have occurred.

A period may be designated in terms of hours, minutes or seconds, or in terms of days, weeks, months or years.

Should a period have been fixed in terms of hours, minutes or seconds, such period shall be computed from the first moment to the last moment.

(1) Should a period have been defined in terms of days, weeks, months or years, the first day of such period shall not be included in its computation. This provided that this shall not apply if the period begins at the stroke of midnight. (2) In the cases mentioned in paragraph (1), the period shall terminate at the end of the last day of the period. (3) Should the last day of the period fall on a national holiday, Sunday or any other holiday established by law or ordinance, said period shall terminate at the end of the subsequent business day.

(1) Should a period have been established in terms of weeks, months or years, it shall be computed in accordance with the calendar. (2) Should a period not commence at the beginning of a week, month or year, such period shall terminate on the day in the last week, month or year preceding the day corresponding to that on which it commenced. However, if the period has been fixed in terms of months or years, and there is no corresponding day in the last month or year, the last day of the month shall be the day of termination.

(1) A contract shall come into effect once an Offer and the Acceptance thereto conform to each other. (2) Notwithstanding the provisions of paragraph (1), a contract in which one of the parties bears an Obligation to transfer or to acquire ownership of an immovable shall come into effect only upon such contract having been executed in the form of a notarized document.

(1) An Offer is defined as an invitation to enter into a contract based on the Offeror's intention to be legally bound by the other party's Acceptance thereof. (2) An Offer shall take effect once it reaches the other party. However, an Offer shall not take effect if a notice of revocation of the Offer has reached the other party simultaneously with or prior to the Offer. (3) An Acceptance is the expression of an intention of a party to agree to an Offer received from another party. (4) An Acceptance shall take effect upon its reaching the party who made the Offer. However, an Acceptance shall not take effect if a notice of revocation of the Offer reaches simultaneous with or prior to the notice of Acceptance.

(1) An Offer may be made subject to an Acceptance period. An Acceptance Period shall, where it is unclear whether the Offeror has set another date, be computed from the day of the dispatch of the Offer. (2) An Offer that specifies an Acceptance Period cannot be revoked. (3) Should the Offeror not receive notice of Acceptance within the Acceptance Period described in paragraph (1), the Offer shall automatically lapse upon the expiration of the Acceptance period. The Offer shall also lapse should a notice of refusal from the other party reach the Offeror, even where such notice is received within the specified Acceptance period.

(1) An Offer that states no Acceptance Period and is made inter praesentes, and the Offeree is able to respond immediately, shall lapse unless it is accepted forthwith by the Offeree. (2) An Offer that states no Acceptance Period and is made inter absentes cannot be revoked by the Offeror during a reasonable period of time. (3) A revocation of an Offer shall not take effect unless notice thereof reaches the Offeree prior to the Offeree's dispatch of a notice of Acceptance.

A contract shall deemed to have been formed upon the notice of Acceptance being received by the Offeror.

(1) Should a notice of Acceptance to an Offer with a stated Acceptance Period reach the other party after the passing of the Acceptance Period and the Offeror was able to determine that the notice of Acceptance was dispatched at a time for which could be expected that the notice of Acceptance would reach the Offeror within the Acceptance Period under normal circumstances, the Offeror must dispatch a notice of delayed Acceptance to the Offeror without delay. If the Offeror fails to dispatch such notice, the delayed Acceptance shall be deemed to be effective. (2) The Offeror may regard the notice of Acceptance reaching the Offeror after the Acceptance Period as a new Offer.

(1) An Acceptance to which the acceptor has attached any type of condition or any other substantial modification shall not be a valid Acceptance, and such purported Acceptance shall be regarded as a new Offer. A contract shall be formed only once the original Offeror accepts such new Offer. (2) Should the condition or modification attached to the Acceptance not substantially change the original Offer, the Acceptance shall be deemed to be valid unless the Offeror immediately raises an objection. The contents of such contract shall incorporate the conditions or modifications contained in the intended Acceptance unless the Offeror immediately raises an objection thereto.

In the event that a notice of Acceptance is not required as a manifest intention of the Offeror or under applicable trade customs, the contract shall be formed once the act that is recognized as an Acceptance has been performed.

An Offer made to an unspecified party made through advertising or other method may be revoked only through the use of the same method employed to make such Offer.

Under the following circumstances, a person who declares their intention to accept an Offer may rescind the contract due to the Declaration of Intent being defective pursuant to the provisions set forth in this Section 2(Defective Declaration of Intent and Validity of contract) and Section 3(Invalidity and Rescission): a. Where the Declaration of Intent was made as the result of an error; b. Where the Declaration of Intent was made as the result of the other party’s fraud, duress or misrepresentation; or c. Where the Declaration of Intent was made as the result of the other party’s act with the aim to obtain excessive profits and exploits the situation.

(1) Should a party make a mistake on the substantial terms of the contract, if the other party could have been aware of such mistake, the counter-party may rescind the contract on the grounds of the defect in the Declaration of Intent. (2) Should a party make a mistake in the terms of the contract that such party deems important or important for the formation of the contract, if the counter-party could have been aware of the importance of such term and the mistake of the party, the party making the mistake may rescind the contract on the grounds of defect in the Declaration of Intent. (3) Should both parties make a mistake on the substantial terms of the contract that both parties deem important or important for the formation of the contract, each party may rescind the contract on the ground of the defect of the Declaration of Intent, although a party could not be aware of such mistake of the party. (4) The rescission of the contract on the grounds of mistake may be asserted against a third party. However the rescission may not be asserted against third party if the third party acts in good faith without negligence.

(1) A person who makes a Declaration of Intent because of the fraud of the other party, the person may rescind the contract on the grounds of a defect in the Declaration of Intent. (2) Should a party make a Declaration of Intent due to fraud by a third party, the party may rescind the contract on the grounds of a defect in the Declaration of Intent only if the other party knew or could have known of the fraudulent act. (3) A rescission of a contract due to fraud may be asserted against a third party. However, should the third party have acted in good faith and without negligence, the rescission of the contract cannot be asserted against such third party.

(1) Where a fact asserted by a party in the course of the formation of the contract is false and the counter-party made a Declaration of Intent based on said fact, if such party had known that such fact was false, the counter-party may rescind the contract on the ground of the defect of the declaration. (2) The provisions of paragraph (1) above do not preclude the party who made a Declaration of Intent from claiming compensation for damages from the party who made the misrepresentation if such party negligently committed such error. (3) Rescinding of a contract on the grounds of misrepresentation may be asserted against a third party. However, if the third party acted in good faith and without negligence, the rescission of the contract shall not be asserted against such party.

(1) Should, in the course of the formation of a contract, a contracting party used his/her superior economic or social position relative to the other party or used other circumstances so that the other party could not contest the contract, the counterparty may rescind the contract based on a defect in the Declaration of Intent. (2) The rescission of a contract set forth in the provisions of paragraph (2) may not be asserted against a third party who has acted in good faith and without negligence.

A person who makes a Declaration of Intent as a result of duress exerted by the counterparty or a third party may rescind the contract on the grounds of defect in the Declaration of Intent.

Should a party enter into a contract while taking advantage of the other party’s economic difficulties, ignorance or inexperience, and receive excessive benefits from said contract, the counter-party may rescind the contract on the grounds of defect in the Declaration of Intent.

Should a contract be formed by the Declaration of Intent made by a party who knows that it does not reflect the true intentions of the declarant, the contract shall not be void. However, if the other party is aware also that such Declaration of Intent does not reflect the true intention of the declarant, the declarant may reject the performance of the contract.

(1) A contract formed through a fictitious Declaration of Intent made in collusion with another party shall be void. (2) The nullification of the contract set forth under paragraph (1) shall not be asserted against a third party with interests in the contract based on the fictitious Declaration of Intent. This provision shall not apply should the third party be unaware of the said Declaration of Intent in malice or by gross negligence.

(1) Even should the declarations of intention of both parties be made without defect, the contract therefrom shall be void should any of the following circumstances apply: a. Where the contents of the contract violate a mandatory provision of law; or b. Where the contents of the contract contravene public order and good morals. (2) Should a portion of a contract violate a mandatory provision of law or public order and good morals, and should the remainder of the contract would not affect the reasonable expectations of the parties, only the portion of the contract in violation of such provision of law or public order and good morals shall be void.

(1) Even should it was impossible to perform the stipulations of a contract at the time of its formation, such contract shall not be void due to such impossibility. However, this provision shall not preclude either contracting party to the contract from rescinding the contract on the grounds of their being an error if the requirements for such grounds are met. (2) Should a party have been able to know that the provisions of a contract were impossible at its inception, and another party suffers any damages due to the formation of such contract, the initiating party shall be liable for the damages of the other party in accordance with Article 398 (Requirements for damages).

An Act under Section 3(Nullity and Recession) shall refer to any contract or a unilateral legal act.

Any person may seek to nullify an Act should the provisions of said Act be inconsistent with the mandatory provisions of law, public order and good morals. Any person may seek to nullify an act should the act be inconsistent with the forms required by this law or other laws.

(1) A voidable act shall be effective until the person bearing the right of rescission exercises said right. (2) Should a person having a right of rescission rescind a voidable act, said act shall be deemed void retroactively. (3) Should a person bearing the right of rescission ratify a voidable act, such act shall be deemed valid definitively.

(1) Should an act be rescindable based on the grounds of a defective Declaration of Intent as set forth in Article 346(Mistake) through Article 351(Conduct resulting in excessive benefits) of this code. Such rescission may be effected by the person who made the defective Declaration of Intent or his/her legal representative. This right of rescission may also be executed his/her heir or the person who has succeeded him/her status under the contract. (2) A rescission of an act based on the incapacity or minority or other limitation on the capacity to act may be carried out by the relevant person through his/her legal representative or curator. The heir or general legatee of such person may also exercise their right of rescission.

Should another party to a voidable act be identified, the rescission or ratification shall be carried out with notification to said party. Such rescission or ratification shall come into effect upon the notification thereof reaching said party.

(1) Ratification of a voidable act shall be carried out by a person bearing a right of rescission. Should the rescission be of an act that was based on a defective Declaration of Intent, the ratification may be carried out once the person bearing said rescission right learns of the cause of the rescission, or should the rescission be based on an act of an General Ward, the ratification shall be carried out once the circumstances giving rise to the rescission are no longer present. (2) Sentence 2 of paragraph (1) shall not apply where ratification has been carried out by a legal representative of the General Ward or a curator.

A voidable act shall be deemed ratified should any of the following actions have occurred subsequent to the time for ratification pursuant to the provisions of Article 361 Person bearing right of ratification and conditions of ratification): a. Full or partial performance of an Obligation arising due to a voidable act or the giving of security for such Obligation; b. Exercising of a right obtained through a voidable act or a demand for performance by another party; or c. Total or partial transfer, or other such disposition, of a right obtained through a voidable act. This shall not apply should it be specifically stated upon such fact occurring that ratification has not been carried out.

(1) A right of rescission, as well as the right to demand the return of unjust enrichments that accompanies the exercising of the rescission, shall be extinguished if it is not exercised within three years of the date on which ratification has been performed. Provisions regarding the interruption of prescription shall not apply to this period. (2) Notwithstanding the provisions of paragraph (1), a right of rescission shall be extinguished ten years from the date of the occurrence of act subject to rescission. (3) Should multiple people have the right of rescission for the same act, the provisions of paragraphs (1) and (2) above shall apply to each person’s right of rescission.

Agency is defined as a relationship wherein a representative enters into a contract with another party by stating that he/she is acting on behalf of a principal within the scope of an agency authorization, and the effects of the contract are effective directly upon the principal.

An agency authorization shall be created through a contract between the principal and the agent or statutorily.

(1) The scope of an agency authorization is established through the contract that confers such agency upon the agent. Where an agency authorization is established statutorily, the scope of the agency authorization shall be made through the provisions of such relevant statutes. (2) Should there be no provisions regarding the scope of an agency authorization, the agent is entitled to conduct any acts to preserve or improve the Object or right that forms the subject of said agency. This shall not apply to acts of improvement that would alter the nature of such Object or right.

(1) An agent is not entitled to conduct acts bearing a conflict of interests between the interests of the principal and the interests of the agent, even where such acts are otherwise within the scope of the agency authorization. This shall not apply should the principal consent thereto. (2) Transactions between the agent and the principal are presumed to involve conflicting interests between the principal and the agent. (3) Should an agent represent both a principal and a third party, paragraphs (1) and (2) shall apply mutatis mutandis to all acts giving rise to a conflict of interests between the principal and the third party.

(1) Agency conferred by a principal via contract shall be extinguished by any of the following: a. Death, bankruptcy or dissolution of the principal; b. Death or bankruptcy of the agent, or a restriction upon the agent's capacity to act; or c. Termination of the trust, employment or other legal relationship that gave rise to the agency authorization. (2) An agency created statutorily shall be extinguished as specified by the relevant statutes.

(1) Should a person commit an act as an agent for another without having an agency authorization, the effects of said act shall not be attributable to the principal. This provision shall not apply should the act be ratified by the principal. (2) The counter-party to an act of agency without authorization may not effect such act, but this provision shall not prevent the counter-party from exercising his/her rights to have the agent be liable according to the provisions of Article 371(Liability of person acting without agency authorization).

(1) The effect of ratification shall not be asserted against a counter-party unless such ratification is exercised upon the counter-party. (2) An act conducted in the absence of an agency authorization and is then subsequently ratified shall be valid retroactive to the time it is conducted. Should rights accrue to a third party in the interim between the time that act was conducted and the time of ratification, such rights shall not be infringed upon. (3) The counter-party to an act conducted in the absence of an agency authorization may demand that the principal indicate within a reasonable period of time, designated by said counter-party, whether the principal ratifies such act. Should the principal not respond within the established period of time, ratification shall be deemed to have been rejected. (4) The counter-party to a contract executed without agency authorization may choose to rescind the contract up until it is ratified by the principal. The principal shall not ratify an act conducted without an agency authorization once rescinded by the counter-party.

Should a person executing a contract as an agent for another be unable to establish the existence of an agency authorization or obtain ratification from the principal, such person shall be liable for either performing the Obligations under such contract or paying damages, as chosen by the counter-party. Should the other party have known of the lack of agency authorization at the time the contract was formed, the person acting without agency authorization shall be exempted from such liability. Should the person acting without agency authorization have acted without negligence in regard to the absence of agency authorization, and the counter-party's ignorance as to the lack of agency authorization was due to negligence, such person shall not be liable under the provisions of this Article.

(1) Should an agent execute a contract outside the scope of the agency authorization, and the counter-party believed without negligence that the agent was authorized to enter into such contract, the principal shall be liable for the contract. (2) Should, after the extinction of an agency authorization, the former agent enter into a contract with another party as the agent of the former principal, the former principal shall be liable for said contract. This shall not apply where the counter party knew of the extinction of the agency authorization, or where the counter-party's ignorance of such extinction was due to their own negligence. (3) Should, despite the absence of an agency authorization, the principal give the impression that an agency authorization has been conferred on another person, or allows another person to give the impression that he/she has received an agency authorization, the principal is liable to the counter-party for performance of the contract. This provision shall not apply if the counter-party knew of the absence of an agency authorization, or where the counter-party's ignorance of the absence of an agency authorization was due to their own negligence.

(1) Should an agent engage in a transaction with the intent of acting on behalf of a principal without disclosing such intent, the other party can treat the contract as executed between such party and the agent. However, where the other party knew at the time the contract was executed] that the agent was acting on behalf of the principal, the other party can treat the contract as executed only between such party and the principal. (2) The other party can treat the contract as executed between such party and the principal where such party knows the existence of the principle, after engaged in a transaction with the agency without disclosing the intention of acting on behalf of a principle.

(1) Should the validity of the contract executed by the representative be effected due to mistakes, fraud or duress that was unknown due to negligence, the presence and absence of such shall be determined in relation to the Agent. (2)Should applying the provision of paragraph (1), where the principal has authorized the agent to execute a particular contract, the principal cannot assert the agent's ignorance of facts if they were known to the principal. This provision shall also apply in case where the principal was ignorant due to the principal's own negligence.

A principal shall not confer an agency authorization on a person who has a limited legal capacity. Should a principal do so, the contract executed between such agent and a counter-party may not be rescinded by the principal on account of the agent's limited legal capacity.

A person authorized as an agent pursuant to a contract with a principal may not appoint a sub-agent. This shall not apply where the principal consents or circumstances exist that make such sub-agency unavoidable.

(1) Should an agent appoint a sub-agent under the circumstances described in the second sentence of Article 376 (Sub-agency), such agent shall be responsible to the principal for the appointment and supervision of the sub-agent. (2) Should an agent appoint a sub-agent at the behest of the principal, the agent shall not be responsible for the conduct of the sub-agent unless the agent knew the sub-agent to be unfit or untrustworthy, and the agent failed to either notify the principal of such fact or dismiss the sub-agent. (3) Should an agent appoint a sub-agent under circumstances other than sentence 2 of Article 376 (Sub-agency), the acts of the sub-agent shall not be imputed upon the principal. Should another party be unaware of the sub-agent's lack of authority, and such ignorance is not the result of his/her own negligence, such party may demand that the agent be liable for performance under the contract or pay damages.

(1) An act conducted by a sub-agent within the sub-agent's authority and accompanied by the sub-agent's express statement that the act is conducted on behalf of the principal shall be binding on the principal. (2) A sub-agent shall bear the same rights and Obligations as an agent with respect to the principal. (3) Section IV shall apply mutatis mutandis to the relationship between the principal and sub-agent, who shall be deemed to be an agent for purposes thereof.

(1) Parties to a contract can agree to confer a right or benefit arising under the contract upon a third party. In such case, the person performing an Obligation under the contract for the benefit of a third party shall be referred to as the Contract Donor, and the counter-party to such contract shall be referred to as the Contract Donee. The person to receive the right or benefit thereunder shall be referred to as the Third-party Beneficiary. (2) A Third-party Beneficiary shall be have the right to make a direct demand on the Contract Donor for performance.

At the time of the contracts formation, the Third-party Beneficiary need not exist should the requirements identifying the Third-party Beneficiary be clearly stated. Should a Third-party Beneficiary not exist at the time for the performance of the Obligation by the Contract Donor, the promise to perform the contract for the benefit of a third party shall become null, and the Contract Donor may be exempted from responsibility upon performance of the contract with respect to the Contract Donee.

(1) A Contract Donee may, at any time prior to an intended Third-party Beneficiary's declaration of its intention of accepting benefit to the Contract Donor or the Contract Donee, withdraw the promise to perform the contract for the benefit of the third party via notification to the Contract Donor and the Third-party Beneficiary. (2) Once the Third-party Beneficiary declares an intention to accept the right or benefit, the parties to the contract may not thereafter alter or extinguish the Third-party Beneficiary's right.

A Contract Donor under contract to confer a right or benefit on a Third-party Beneficiary may assert against the Beneficiary any defenses arising under the contract.

(1) Should grounds for invalidity or rescission of the contract exist between the Contract Donee and Contract Donor, either party may assert the invalidity of or seek to rescind the contract in accordance with the provisions of Section III or Chapter Two of this Book concerning invalidity and rescission, notwithstanding the existence of any special agreement in the contract conferring a right or benefit upon a third party. (2) A Contract Donor may terminate the contract on the grounds of the Contract Donee's breach thereof. Should the Contract Donor's breach be grounds for termination, and the Third-party Beneficiary has already declared an intention to accept the right or benefit, the Contract Donee can terminate the contract only with the consent of the Third-party Beneficiary.

(1) An Obligor shall perform its contractual Obligations in accordance with the purpose of the contract and the principle of good faith. (2) The Obligation of a party is extinguished by the performance that complies with the standard established in paragraph (1).

(1) An Obligee has the right to demand that the Obligor perform the Obligation whether in the form of a filed lawsuit or otherwise. (2) Notwithstanding the provision of paragraph (1), an Obligee shall not file a lawsuit demanding performance should the parties to the contract have agreed to not seek judicial enforcement of performance. (3) Even if a lawsuit seeking judicial enforcement of performance is barred under paragraph (2), should the Obligor carry out such performance voluntarily, the Obligee may receive and retain the benefits thereof.

Each party to a bilateral contract may refuse to perform its own Obligation until the other party tenders the performance of its Obligation. This shall not apply where the time for performance of the other party's Obligation has yet to occur.

A party to a bilateral contract who is required to perform an Obligation in advance of the other party may refuse to perform the Obligation if there is a significant risk that the other party will not substantially perform its Obligation in accordance with its intended purpose. This shall not apply should the other party provide security or otherwise take measures to eliminate such risks.

In addition to the provisions of this Chapter, the provisions of Section I of Chapter Seven of this Book regarding performance shall also apply to the performance of contract.

Non-performance is defined as an Obligor's failure to perform an Obligation arising under a contract. The types of non-performance are as follows: a. Cases in which performance cannot be carried out by the established time for performance due to a delay in performance; b. Cases in which performance is impossible; c. Cases in which full and complete performance in accordance with the intended purpose of the Obligation is not carried out; and d. Other cases in which performance is not carried out in accordance with the intended purpose.

Should an Obligor fail to perform an Obligation, the Obligee may demand compulsory performance, payment of damages, or termination of the contract in accordance with the provisions set forth in Sections II through IV of this Chapter IV.

An Obligor shall be liable for delayed performance if he/she fails to perform the Obligation as set forth below: a. Where performance is to occur at a specified time, when such time has arrived; b. Where performance is to occur at a time that is uncertain, when the Obligor knows that such time has arrived; or c. Where no time for performance is specified, when the Obligor receives a demand for performance.

(1) Should it be physically impossible to perform an Obligation, the performance shall be deemed impossible. Performance shall also be deemed impossible where performance is determined to be impossible from a social or economic standpoint. (2) Should it be established prior to the time of performance that performance will be impossible at the time of performance, such performance shall be deemed impossible at the time that such impossibility is established.

Incomplete performance refers to cases in which an Obligation has been performed but the act of performance remains incomplete, where only partial performance was carried out or where, for any other reason, complete performance in accordance with the intended purpose of the Obligation was not carried out.

In addition to the types of non-performance described in Article 391 (Delayed performance) through Article 393 (Incomplete performance), should there be a breach of any other Obligations arising under the contract, the contract shall be considered to be non-performed.

Should multiple remedies be available to the Obligee, the Obligee may select any or all of such remedies so long as they are not in mutually exclusive.

Should an Obligor not voluntarily perform an Obligation, the Obligee may seek an order of compulsory performance from the court, except where the nature of the Obligation does not permit for compulsory performance. The provisions set forth in the Code of Civil Procedure shall apply to the proceedings of compulsory performance.

Should an Obligor fails to perform an Obligation, the Obligee may demand damages either in lieu of performance or together with performance so long as there is no conflict between these two demands.

(1) Should an Obligation fail to be performed, the Obligee may demand damages from the Obligor for any resulting damage. Should the Obligor prove that the non-performance was not the fault of the Obligor, the Obligor shall not be liable for damages. (2) Should an Obligor use another individual as an assistant to assist in carrying out the performance of the Obligation, the Obligor may not avoid liability unless the Obligor proves that the Obligor was not negligent in the selection and supervision of said assistant and that the assistant was not at fault for the failure.

(1) Should the subject of the Obligation be the payment of money, the Obligor shall not be exempted from payment of interest for any delay even if the Obligor proves that the delay in payment was the result of force majeure. The interest for the delay shall be calculated based on the legal rate of interest. Should an agreed-upon interest rate exceed the legal interest rate, the agreed-upon interest rate shall prevail. (2) The Obligor shall be exempted from liability for damages beyond interest for the delay if the Obligor is able to prove that the Obligor was not at fault for the non-performance.

(1) The Obligee may demand as damages: (a) compensation for the benefit of performance that would have been received under the contract; as well as (b) expenditures that were used due to the non-performance to the extent that such expenditures do not duplicate amounts received as benefit from the performance damages; and (c) additional expenditures or burdens resulting from non-performance. (2) The court may, based on a petition the Obligee, order payment of damages for emotional distress. The amount of damages payable for emotional distress shall be determined by the court in consideration of the surrounding circumstances.

The Obligor shall provide compensation for the following types of damages: a. Normally occurring damages suffered by the Obligee due to non-performance; b. Regarding special damages suffered by the Obligee due to special circumstances, such damages shall be compensated for should the occurrence of such special damages have been possibly anticipated by the parties when the contract was executed. This shall not apply where the parties did not take the possible occurrence of special damages into consideration when the contract was executed; and c. Notwithstanding items (a) and (b), where the non-performance is the result of the Obligor’s malicious intent or actions in bad faith, the court may, upon the Obligee's demand for damages, order that the Obligor pay to the Obligee as damages the profits or benefits obtained by the Obligor from the conduct comprising the non-performance.

(1) Should the Obligee's negligence or fault have contributed to the occurrence of non-performance or damages, the court may reduce the amount of damages to be paid by the Obligor to the extent that the Obligee's conduct contributed thereto. (2) Should damages have been expanded due to the Obligee’s negligent failure to mitigate damages, the court may reduce the amount to be paid by the Obligor in proportion to the amount of the damages that could have been mitigated by the Obligee.

(1) The Obligor and Obligee may separately and in advance establish conditions for the payment of damages and the amount to be paid. (2) A special agreement exempting the Obligor from liability for intentional non-performance or the result of gross negligence shall be void. (3) Should the parties have agreed to the amount of damages, the court shall not increase or reduce the agreed-upon amount. However, if the amount fixed by the parties as liquidated damages is either grossly higher or grossly lower than the amount of damages calculated in accordance with the provisions of Article 401 (Scope of damages), the court may increase or decrease the liquidated damages amount fixed by the parties. (4) The liquidation of damages does not preclude a claim for performance or for termination of the contract. An amount fixed and agreed to by the parties as damages for delays shall not be binding on the parties should the Obligee seek the termination of the contract and compensation for damages as a substitute for performance in reference to the Object comprising the subject matter of the contract. (5) The penalty for breach of contract shall be presumed to constitute liquidated damages.

Compensation for damages for non-performance shall be made by the Obligor in money. This shall not apply if the parties agree otherwise.

Should an Obligee have received as damages compensation for the value of the Object or right comprising the subject matter of the Obligation, the Obligor shall be automatically subrogated to the position of the Obligee in regard to that Object or right.

The period of extinctive prescription applicable to the right to demand compensation for damages based on non-performance is five years from the time when the damages occurred.

Should one of the parties to a bilateral contract commit a material breach of the contract, the other party may terminate the contract immediately.

(1) A material breach of contract occurs where, as a result of one party's breach of a contract, the purpose of the contract for the other party cannot be achieved. This shall be deemed to occur in any of the following situations: a. Where after a failure to perform at the specified time, the other party demands that the non-performing party perform the Obligation by establishing a period of performance of reasonable length, and the Obligation is not performed within such period; b. Where a party fails to perform at the specified time, and the purpose of the contract cannot be achieved if performance is not made at the specified time; c. Where it is impossible to carry out the essential act of performance; and d. Where the magnitude of the breach is so substantial that trust between the parties is destroyed and further performance cannot be expected. (2) The non-performing party may not prevent termination of the contract based on the reasons set forth in paragraph (1) on the ground that the non-performance occurred without fault on his/her part.

(1) A party bearing the right to terminate a contract may terminate the contract by expressing an intention to terminate to the other party. Such an intention may be expressed by means other than a lawsuit. (2) An expression of an intention to terminate may not be revoked or withdrawn. (3) An declaration of an intention to terminate may be subject to a condition precedent.

(1) Should one of the parties comprise multiple persons, termination of the contract must be effected by all of such persons to the other party or by the other party to all of such persons. (2) In the case described in paragraph (1), where the right of termination is extinguished as to one person, it is extinguished as to all persons.

(1) Termination of a contract relieves both parties of their Obligations under the contract except for the duty to pay damages. (2) Upon termination, a party that has received all or part of a performance under the contract shall return those items received as performance to the other party and return the other party to the other party's original state. Should both parties be required to return the other party to the party's original state, these Obligations shall be carried out simultaneously. (3) A party required to return money as a result of termination shall return the money with interest computed from the date on which the money was received. A party required to return property or other benefit due to termination shall return any benefit received thereby. (4) The legitimate interests of third parties may not be prejudiced by a termination.

(1) Should, due to the intentional act of a person bearing a right of termination, an Object comprising the subject-matter of a contract be lost, destroyed or rendered incapable of being returned, or where such Object is changed into an Object of a different type due to processing or reworking, the right of termination shall be extinguished. (2) Should a right of termination be exercised by a person who is incapable of returning said Object under the circumstances described in paragraph (1), the value of the Object shall be paid in money; such value not exceeding the actual price thereof. (3) Should an Object have been destroyed or rendered incapable of being returned due to the negligence of or any other reason attributable to the other party, the person possessing a right of termination is not obligated to return the price of the Object pursuant to the provisions of Paragraph (2).

The period of extinctive prescription of the right of termination based on non-performance as well as the right to demand actions to return to the original state that existed prior to the execution of the contract is five years from the time when the non-performance occurred.

(1) The parties to a contract may agree under the contract that either one or both of the parties shall be given a right of termination. The provisions of Article 409 (Method of exercise of right of termination) through Article 412 (Right of termination when subject matter is destroyed) pertaining to termination granted by law shall apply mutatis mutandis to the method and effect of an agreed-upon right of termination unless the parties agree otherwise. (2) Even in the absence of a contractual provision regarding a right of termination, the parties to a contract may agree to terminate the contract. However, the legitimate interests of third parties may not be prejudiced thereby.

If performance of an Obligation has become impossible without the fault of the Obligor, the Obligation shall be extinguished and the Obligee may not demand performance thereof.

(1) Should the subject matter of a bilateral contract be to transfer title to specified object and said object is destroyed, lost or damaged without the faults of either party, the Obligor shall bear the risk thereof, and may not demand counter-performance. (2) The risk of destruction, loss or damage of the object comprising the subject matter of the contract shall be transferred to the Obligee upon any of the following events unless otherwise provided for in the contract: a. When the Obligor delivers the object or transfers the registration of the title thereto to the Obligee, or substantial control over the object is otherwise judged to be shifted to the Obligee; b. When the Obligor has made a proper tender of performance; or c. When the Obligee has unreasonably refused to accept the performance of the Obligor.

The provisions of Article 416 (Burden of risk in a contract to transfer title to specific property) shall apply mutatis mutandis to the establishment or transfer of real property rights other than ownership, claims or other rights.

Object of a specific class or type (1) Should the subject matter of a bilateral contract constitute the transfer of title to Object of a specific class or type and the Object to be delivered has not yet been specified, even if the Object which the Obligor was preparing for a tender of performance was destroyed or lost without the fault of the Obligor, the Obligation shall not be extinguished, and the Obligor remains obligated to perform under the contract. (2) The provisions of Article 416 (Burden of risk in a contract to transfer title to specific property) shall apply mutatis mutandis after the Object to be delivered has been specified.

Should property that is the subject of a bilateral contract with conditions precedent be destroyed, lost or damaged prior to the fulfillment of the conditions without fault of the Obligor, the risk of such destruction, loss or damage shall be borne by the Obligor. The provisions of Article 415 (Extinction of Obligation in case of impossibility of performance) shall apply mutatis mutandis once the conditions have been fulfilled.

Should one of the parties to a bilateral contract have an Obligation to perform or not perform a certain act and the performance of said Obligation becomes impossible due to no fault of either party, the Obligation shall be extinguished. In such case, the Obligor may not demand counter-performance.

Should performance of an Obligation in a bilateral contract become impossible at no fault of the Obligor but due to the fault of the Obligee, the Obligor shall not lose the right to demand counter-performance. However, should the Obligor receive benefit from being exempted from his/her Obligation, he/she must deliver such benefits to the Obligee.

(1) An Obligee may, where necessary to preserve his/her claim, exercise a right held by the Obligor in place of the Obligor. This shall not apply rights that are personal and exclusive to the Obligor, rights the exercise of which are entrusted at the complete discretion of the Obligor, or rights that cannot be subject to attachment. (2) An Obligee may, when necessary to receive satisfaction of a claim held by the Obligee, exercise via subrogation a right possessed by the Obligor having a close connection to such claim.

A third-party Obligor facing the exercising of an Obligee's right of subrogation may assert against such subrogating Obligee any defense possessed by the third-party Obligor against his/her own Obligee.

Should an Obligee notify the Obligor of the Obligee exercising the Obligor's rights via subrogation, the Obligor may not re-exercise such rights against a third-party Obligor. This shall not preclude the Obligor from accepting performance made by the third-party Obligor.

(1) The effect of an Obligee's exercise of a right via subrogation in relation to a right held by the Obligor shall inure directly to the Obligor. (2) Should the Obligor be unable to accept performance from a third party Obligor, an Obligee who exercises a right via subrogation can demand that the third-party Obligor tender performance directly to the Obligee.

Should performance be received by a subrogating Obligee from a third-party Obligor through the exercising of a right of subrogation, the Object delivered as such performance shall be preserved for the benefit of all Obligees until it is delivered to the Obligor. This shall not apply in cases described in paragraph (2) of Article 422 (Subrogation of Obligor’s Claim by Obligee).

(1) An Obligee may petition the court to order that an act conducted by an Obligor with the knowledge that the act would infringe on the Obligee's claim be rescinded, and persons who received benefit from such act or subsequent possessors return the Object delivered or make restitution for the value thereof. (2) The rescission referred to in paragraph (1) shall be denied if the person who received benefit from the Obligor's act or a subsequent acquirer was unaware of the infringement at the time of the Obligor's act or at the time of the subsequent acquisition. However, the Obligee may seek nullification in relation to a benefiting person or subsequent acquirer who paid no consideration for the benefit or the acquisition even if such person was unaware of the infringement of the Obligee. (3) The provisions of paragraphs (1) and (2) shall not apply to acts that were not intended for the acquisition of a property right.6

The provisions of Article 428 (Requirements for rescission of fraudulent act) shall also apply to an Obligee having a non-monetary claim. Such claim must be transformed into a monetary claim by the end of the oral argument proceedings on which the judgment of rescission is based.

Should no other appropriate method exist to achieve restitution from a person receiving benefit from the Obligor’s act or a subsequent acquirer, an Obligee who exercises a right of rescission may demand that the benefiting person or subsequent acquirer deposit the Object obtained.

A rescission conducted pursuant to the provisions of Article 428 (Requirements for rescission of fraudulent act) shall inure to the benefit of all Obligees.

(1) The right of rescission established in Article 428 (Requirements for rescission of fraudulent act) shall expire if it is not exercised within one year of the time that the grounds for rescission were first discovered by the Obligee. The same shall apply if not exercised within three years of the occurrence of the act giving rise thereto. (2) The provisions of law pertaining to an interruption in the period of extinctive prescription shall not apply to the expiration period of a right of rescission as set forth in paragraph (1).

6 See the footnote to Article 195 for an explanation of ‘property right.’ Obligations shall be extinguished based on the following grounds: a. Performance, set-off, release, novation or merger as provided in Sections I (Performance) through V (Merger) of this Chapter; b. Impossibility of performance through no fault of the Obligor as provided in Chapter Five (Burden of risk) of this Book; c. Fulfillment of a condition subsequent as provided in Section III (Condition, Time and Period) of Chapter One, or through termination of the contract as provided in Section IV (Termination of Contract) of Chapter Four; d. Extinctive prescription as provided in Chapter Eight (Extinctive Prescription); or e. Exercise of a right of rescission pursuant to the provisions of Section III (Invalidity and Rescission) of Chapter Two.

(1) An Obligation may be performed by a third party as well as by the Obligor. (2) Should the purpose of the Obligation not be able to be achieved through the performance of a third party, the third party shall not perform the Obligation unless the Obligee consents. (3) The Obligor and the Obligee may agree to prohibit performance by a third party.

(1) Performance made by a person who neither owns the Object delivered for the purpose of performance nor has the authority to dispose of such Object shall not be considered to be valid performance. (2) Should the person making performance not own the Object delivered for the purpose of performance, he/she shall not recover such Object until valid performance has been made. However, the owner of such Object may recover the Object from the person receiving the invalid performance. (3) Should a person carrying out performance lack the capacity to dispose of the Object delivered for the purpose of performance, such person may rescind such act of performance. Paragraph (2) shall apply mutatis mutandis to the return of an Object delivered for the purpose of performance.

Obligee (1) For cases set forth in paragraphs (2) and (3) of Article 435 (Authority of disposition of performing person), should the Object delivered for the purpose of performance constitute a movable object and the Obligee has consumed or transferred in good faith the Object received as performance, such performance shall be deemed valid and the performing person may not demand the return of such Object. (2) For cases set forth in paragraph (1), the owner of the Object delivered for the purpose of performance may demand reimbursement for such Object from the receiver of said performance, unless such receiver acquired ownership of the Object in accordance with the provisions set forth in Article 193 (Bona fide acquisition of ownership of movables). An Obligee who has compensated the owner of the Object delivered for the purpose of performance may demand reimbursement for such compensation from the Obligor.

(1) Performance is invalid unless it is carried out on behalf of the Obligee or another person authorized to receive such performance. (2) Should the Obligor perform his/her Obligation for a person not having the power to receive performance, the Obligor must once more make performance for the Obligee upon the Obligee's request. The person who made performance may demand that the unauthorized receiver of the performance return the Object delivered for the purpose of the performance.

(1) Should a claim held by an Obligee be subject to attachment through a ruling of the court, the Obligee shall not have the power to accept performance made by the Obligor, and the Obligor shall not make performance to the Obligee. (2) Paragraph (2) of Article 437 (Power to accept performance) shall apply mutatis mutandis to cases in which an Obligor barred from making payment makes performance to his/her Obligee.

(1) Performance made to a person who appears to be the Obligee but who in fact is not the true Obligee shall be treated as valid if the performing party believed the receiver to be the true Obligee and such belief was not the result of gross negligence. (2) In cases set forth in paragraph (1), the true Obligee may not demand that the Obligor make performance again. The true Obligee may demand that the person receiving the performance return the Object delivered for the purpose of performance.

An Obligor shall perform in good faith the Obligations in accordance with the purpose of said Obligations.

An Obligee shall not be required to accept partial performance. However, should an Obligee accept performance knowing that it is partial, the performance shall be considered effective to the extent to which it is accepted.

(1) Should, with the consent of the Obligee, an Obligor perform a substitute act of performance that differs from the originally intended act of performance, it shall have the same effect as a valid performance. (2) An Obligee and Obligor may agree to a substitute act of performance being made in place of the originally intended act of performance. In such case the Obligor may choose to perform either the originally intended act of performance or the agreed substitute act of performance, except where the right to choose has been given to the Obligee.

(1) An Obligor shall perform Obligations at the time of performance as determined in each Item of Article 391 (Delayed performance). (2) Performance may be made prior to the time it is due as set forth in provisions of paragraph 2 Article 330 (Beneficiary of time determination).

An Obligor shall execute performance during regular business hours in accordance with prevailing customs and in good faith.

Should the place of performance not be agreed upon between the parties, performance of an Obligation to deliver specific Object shall be made at the place where the Object was located at the time the Obligation arose. For all other Obligations, the performance shall be made at the current residence of the Obligee.

In the absence of an agreement regarding the costs of performance, such costs shall be borne by the Obligor. However, should an increase in the costs of performance be due to a change in the residence of the Obligee or to some other act of the Obligee, such cost amount of the increase shall be borne by the Obligee.

The performing party may demand a bill of receipt from the person accepting performance.

Should documents evidencing the Obligation exist, the performing party may demand the return of such documents once the full Obligation has been performed.

(1) Should an Obligor owe to the same Obligee multiple Obligations of the same kind, if a tender of performance is not sufficient to discharge all of the Obligations, the performing party may at the time of performance designate the Obligation to which the performance shall be applied. (2) Should the performing party not make the designation described in paragraph (1), the party accepting the performance may make the assignment at the time performance is accepted. Provisions for statutory assignment shall apply should the performing party make an immediate objection to such assignment. (3) The assignment described in paragraphs (1) and (2) shall be made via notice to the counter-party.

Should neither the performing party nor the party receiving performance make an assignment of performance, the performance shall be assigned according to the following rules: a. Between the Obligations that are due and those that are yet to be due, the former shall have priority; b. Should all of the Obligations be due or not due, the Obligation as to which discharge would confer the greatest benefit for the Obligor shall have priority; c. Should the Obligor benefit equally from the discharge of any of the Obligations, the Obligation which first became due or will become due shall have priority; and d. Among multiple Obligations that are equal in regard to the benefit of discharge for the Obligor and that become due at the same time, performance shall be assigned based on to the amount of each Obligation.

Should an Obligor of one or more Obligations be obligated to pay interest and costs in addition to the principal, performance that is insufficient to discharge all of these shall be assigned in the order of costs, interest and principal. However, should the Obligor and the Obligee have agreed otherwise, such agreement shall prevail.

The provisions of Article 449 (Assignment via designation), Article 450 (Statutory assignment) and Article 451 (Order of assignment among costs, interests and principal) shall apply mutatis mutandis should the Obligor owe multiple Obligations to different Obligees and the Obligation, as to which the Obligor's performance was directed, cannot be determined.

(1) Tender of performance shall mean that the Obligor has completed the preparations necessary for performance and has asked the Obligee to accept such performance. (2) Even should the Obligor have made a tender of performance, if an Obligee does not take necessary actions to accept performance, the Obligor shall be relieved of any liability for non-performance. (3) Should the Obligor bearing a monetary Obligation with interest accruing thereon provide a tender of performance, if the Obligee does not accept such performance, the Obligor shall not be subsequently required to pay interest thereon.

A tender of performance must constitute an actual tender of performance in accordance with the intended purpose of the Obligation. Should the Obligee have refused in advance to accept the tender of performance, or an act on the part of the Obligee is necessary for performance, it shall be sufficient for the Obligor to give notice to the Obligee that preparations for performance have been completed and demand the Obligee's acceptance of performance.

Should an Obligee not accept a tender of performance, the following shall occur in addition to that described in Article 453 (Definition and basic effect of tender of performance): a. Where the Obligor bears the risk in a bilateral contract, the risk shall be transferred to the Obligee; b. The Obligee shall lose the right to put forth a defense of simultaneous performance for a bilateral contract; and c. The Obligor may become exempted from the Obligation by carrying out a deposit.7

(1) Should the Obligee have in advance refused to accept performance, or where tender of performance has been made to the Obligee, if performance is not accepted due to the fault of the Obligee, the Obligor may demand damages from the Obligee for any injury incurred due to such non-acceptance. (2) Should the Obligee's non-acceptance of a tender of performance constitute a material breach of the Obligee's contractual duties, the Obligor may terminate the contract.

7In this context, deposit refers to the placement of the object of performance into the possession of another on behalf of the Obligor. (1) An Obligor may be exempted from an Obligation by depositing the Object that is the subject of the Obligation with an authorized depository office in the following situations: a. Where the performing party has made a tender of performance, but the Obligee refuses to accept or is unable to accept such performance; or b. Where the identity of the Obligee cannot be determined for reasons not the fault of the Obligor. (2) The performing party may recover the Object deposited up until the time that the Obligee has accepted the deposit or a judgment declaring the deposit valid has become final and binding. In such case, the deposit shall be deemed to have not occurred. This shall not apply where a pledge or hypothec has been extinguished as a result of the deposit. (3) The details and procedures governing deposits shall be prescribed in the Law on Deposits.

Should the Object comprising the subject matter of the Obligation be unsuitable for deposit, or be in danger of perishing or being damaged, the Obligor may, with the permission of the court, sell the Object via public auction and deposit the proceeds with an authorized depository office, and the same shall apply should the cost of preserving the Object be prohibitive.

(1) A person who has been discharged through his/her own performance or other expenditure and thereby obtained the right to demand indemnification from the Obligor may exercise via subrogation the claims held by the Obligee and all other rights associated therewith. (2) The provisions of Article 503 (Requirement for Assertion of Assignment of Nominative Claim against Third Parties) shall apply mutatis mutandis to situations described in paragraph (1). (3) The notification described in Articles 913 (Requirements for indemnification) and Article 933 (Notification as requirement for indemnification) may substitute for the notification set forth in paragraph (2). However, should a date-certified instrument be demanded in reference to provisions to which paragraph (2) hereof applies mutatis mutandis, the notification described in this paragraph shall also be provided through an instrument bearing a fixed date.

(1) A person who has been subrogated to an Obligee through Article 459 (Subrogation through performance) may exercise, within the scope of indemnification that can be demanded based on his/her own right, any and all rights that were possessed by the Obligee by virtue of the automatic effect of the claim or that derive from a security interest. This shall not apply to the rights that directly accompany the contractual position of the Obligee under the contract. (2) The following conditions shall apply to any subrogee: a. Unless the existence of a subrogation is entered in the registration accessory of a statutory lien, pledge for an immovable or hypothec that is created over any of the Obligor's objects, a guarantor or third party security provider shall not assert his/her subrogation upon an Obligee against a third-party acquirer who acquires an immovable that is the object of such a statutory lien, pledge or hypothec; b. A third-party acquirer who acquires an Object that is the subject of a security right from an Obligor shall not be subrogated to an Obligee concerning a guarantor; c. A third-party acquirer who acquires an Object that is the subject of a security right of an Obligor shall be subrogated to an Obligee concerning other third-party acquirers who acquire the objects of other security interests from such Obligor in proportion to their respective values of the acquired Objects; d. The provisions of item (c) shall apply mutatis mutandis to the relationship between third party security providers as described in Article 766 (Definition of security provider and Third Party acquirer); or e. If between guarantors and third party security providers, subrogation to the position of an Obligee shall be made in accordance with the number of persons within each group. However, should there be multiple third-party security providers, subrogation to the position of Obligee shall be made in accordance with the respective prices of the Objects provided as security by each third-party security provider in relation to the portion of the Obligation remaining after subtracting the portion for which a group of guarantors is responsible.

(1) Should subrogated performance of a portion of an Obligation have been made, the subrogee shall exercise the rights of the Obligee together with the Obligee to the extent of the partial performance. However, should the subrogee seek to execute these rights, the Obligee's consent must be obtained, and, at the request of the Obligee, such rights or ranking shall be transferred to the Obligee at no cost to the extent of the remaining Obligation. (2) In the cases set forth in paragraph (1), only the Obligee may terminate the contract on the grounds of non-performance. However, in such case the subrogee shall be compensated to the extent of the subrogee's performance and interest thereon.

(1) An Obligee who has received full performance via subrogated performance shall deliver to the subrogee a certificate of claim and any object of security possessed by the Obligee. (2) Should subrogated performance have been made with respect to a portion of the claim, the Obligee shall indicate on the claim instrument that subrogation had been carried out and shall ensure that the subrogee supervises the preservation of the security object possessed by the Obligee.

Should a person exist who could subrogate an Obligee pursuant to the provisions of Article 459 (Subrogation through performance), and the security right has been lost or diminished due to an intentional or negligent act of the Obligee, the person qualified to invoke such subrogation may be exempted from his/her own responsibility or seek damages to the extent that such person is no longer able to receive indemnification due to such loss or diminution.

(1) Should two persons bear mutual Obligations having similar subjects, if both Obligations are due for performance, one party may extinguish mutual Obligations to the extent that their respective amounts are equal by making a Declaration of Intent of set-off. (2) The parties may enter into a set-off agreement to extinguish the mutual Obligations even if both Obligations are not of a similar subject matter. However, the right of a third party shall not be infringed upon thereby.

(1) A set-off shall be effected by a party's declaration to set-off to the other party. (2) A Declaration of Intent to set-off may be subject to a condition precedent, but it shall not be subject to a condition subsequent or to a fixed time.

Should the requirements for set-off be satisfied, if a party declares a set-off, the set-off shall retroactively extinguish the two Obligations as of the time that the Obligations became suitable for a set-off.

(1) Should either or both of the Obligations be unsuitable for set-off in light of the nature of the Obligation(s), a set-off shall not be executed. (2) Should there be an agreement between the parties to not declare a set-off, both parties shall be prohibited from declaring a set-off. However, such an agreement may not be asserted against a bona fide third party.

(1) A party may not execute a set-off should the corresponding Obligation owed by the counter-party be subject to any form of defense exercisable by counter-party. (2) An Obligation for which the period of prescription or the period for exercise has elapsed may be set off by the Obligee should the requirements for set-off have been met prior to the elapsing of such respective period.

An Obligor who bears an Obligation arising through tort shall not seek extinction of such Obligation via set-off.

Should attachment of an Obligation be prohibited, the Obligor may not seek the extinction of such Obligation through set-off.

(1) Should an Obligation be subject to an order of attachment initiated by a third party, the Obligor may set off such Obligation only against a counter-Obligation borne by the counter-party and obtained prior to such attachment once the counter-Obligation has become due. This shall not apply in cases where such counter-Obligations will come due later than the Obligation borne and to be set off by the Obligor. (2) The second sentence of paragraph (1) shall not apply should there be an agreement between the parties allowing a set-off of Obligations irrespective of the time for performance thereof.

Should one or both of the parties to a set-off be liable for more than one Obligation suitable for set-off, the party declaring the set-off may designate the Obligations which are to be extinguished by the set-off. If a set-off is declared without the designation described in the first sentence of this Article, the provisions regarding assignment of performance shall apply mutatis mutandis.

An Obligation is extinguished once an Obligee expresses to the Obligor the intention to release the Obligor from the Obligation.

An Obligee may declare a partial release from an Obligation.

Should an Obligation be subject to attachment by a third party or the capacity of the Obligee to dispose of the Obligation be restricted for any other reason, the Obligee may not release the Obligor from such Obligation.

(1) Novation shall refer to a contract that extinguishes the original Obligation and creates a new Obligation between the same Obligee and Obligor in its stead. (2) The original Obligation shall be extinguished at the moment that the novation contract described in paragraph (1) comes into effect.

Should an Obligation created by a novation contract not come into effect due to the Obligee of the original Obligations not being expected or if the new Obligation is impossible to perform from the beginning, the original Obligation is not extinguished.8

(1) Should it be agreed to between the parties to the novation a contract, a pledge, hypothec or other security right established in regard to the original Obligation may be transferred to the new Obligation to the extent to which it falls within the scope of the original Obligation. However, a security right provided by a third party shall not be transferred without the third party's consent. (2) With regard to a quasi-loan for consumption, the agreement mentioned in the first sentence of paragraph (1) shall be presumed to exist.

(1) Should an Obligation and a claim corresponding to such Obligation belong to a sole and same person, such Obligation and claim shall be extinguished via merger. (2) Should the claim mentioned in paragraph (1) be the object of a right possessed by a third party, such claim shall not be extinguished 8Note: This article appears to have been inaccurate in both the original Khmer and respective Japanese version. via merger.

Extinctive prescription regarding a claim shall refer to the extinction of a claim based on an Obligee's failure to exercise the claim within a certain period.

Extinctive prescription regarding a claim shall commence at the time that the claim is capable of being exercised.

The extinctive prescription period for claims shall be five years, except as otherwise provided in this Code or other law or regulation.

The extinctive prescription period for a claim pertaining to the price of products sold or service provided by a manufacturer or merchant to a non-merchant shall be two years.

(1) The extinctive prescription period for a claim that is definitively established through a final and binding judgment, a judicial settlement or other determination having the effect of a final and binding judgment shall be five years from the time at which it was definitively established, even should it be a prescription period of less than five years. (2) The provisions of paragraph (1) shall not apply should the time for performance have not occurred by the time of the claim being definitively established.

The effect of extinctive prescription against a claim shall be retroactive from the date of commencement for the period thereof.

(1) A court shall not render a judgment based on extinctive prescription regarding a claim unless extinctive prescription has been invoked by a party. (2) Extinctive prescription in relation to a claim may only be invoked by an Obligor, a joint Obligor, a guarantor, a third party security provider or a third party acquirer as specified in Article 766 (Definition of security provider and Third Party acquirer), or other person possessing a legally recognized interest in the invocation of such extinctive prescription. (3) Should extinctive prescription regarding a claim be invoked by an Obligor, any third parties shall also receive the benefit of the extinctive prescription. Should the extinctive prescription regarding the claim be invoked by a person having a right to do so other than the Obligor, the invocation shall only be effective between such person and the Obligee.

The benefits arising from extinctive prescription shall not be renounced in advance. The benefits of extinctive prescription, the period for which has already been completed, may be renounced.

A renunciation of the benefit of extinctive prescription of a claim shall be effective only in regards to the relationship between the Obligee and the renouncing party having the right to invoke extinctive prescription.

Extinctive prescription regarding a claim shall interrupted due to the occurrence of any of the following events: a. Filing of a lawsuit, participation in a bankruptcy proceeding, or the equivalent exercise of a claim; b. An act of execution or issuance of preservative relief; or c. Partial repayment, payment of interest, provision of security or acknowledgement of the existence of the claim through any other method.

Should extinctive prescription regarding a claim be interrupted against an Obligor, other persons shall not contest the effects of such interruption. Should extinctive prescription regarding a claim be interrupted against a person who is not the Obligor and has a right to invoke extinctive prescription, the interruption is effective only in regards to the Obligee and such person entitled to invoke extinctive prescription.

A judicial action does not interrupt extinctive prescription in cases where the action is dismissed without prejudice or discontinued.

Should an act of execution or preservative relief be rescinded upon the motion of a rights-holder or for failure to comply with conditions imposed by law, any interruption of extinctive prescription effected by such act shall be deemed to have not occurred.

An act of execution or preservative relief conducted as against a person other than the Obligor shall interrupt any extinctive prescription in relation to the Obligor only should the Obligor be notified of such act.

(1) Any interrupted extinctive prescription period shall begin anew from the time that the grounds for interruption have terminated. (2) An extinctive prescription period that was interrupted due to the filing of a lawsuit shall begin anew from the time that the judgment resolving said lawsuit becomes final and binding.

(1) Should a rights-holder demand satisfaction of such right within six months of the completion of an extinctive prescription period, the extinctive prescription period shall not be completed as against such person until six months has lapsed from the time of the notice of said demand. However, a subsequent demand for satisfaction by the rights-holder shall not delay the completion of the extinctive prescription. (2) Even should a lawsuit not have the effect of interrupting the extinctive prescription period due to the dismissal without prejudice or discontinuation of said lawsuit, a demand shall be deemed to have been provided continuously from the time the complaint was served upon the defendant until the time the lawsuit was dismissed or discontinued. In such case, the extinctive prescription period shall not be completed pertaining to the person who brought the lawsuit until six months has elapsed from the date of dismissal or discontinuation. (3) Should the rights-holder assert his/her right as a defendant in litigation, such assertion shall be deemed a continuous demand while the lawsuit is pending from the time at which it was made. In such case, the extinctive prescription period shall not be completed as against such person until six months have elapsed from the date on which the judgment in the case had become final and binding.

Should there be no legal representative for a minor or General Ward within the six months prior to the completion of an extinctive prescription period, the extinctive prescription period for claims shall not be perfected against such person until six months elapses from the time at which such person either attains the age of majority or a legal representative is retained on that person's behalf.

Should one spouse possess a right with respect to the other, extinctive prescription regarding such right shall be not completed until six months has elapsed following the dissolution of marriage.

Should a rights-holder be unable to interrupt extinctive prescription within six months prior to the completion of the extinctive prescription period due to a natural disaster or other force majeure, extinctive prescription shall not be completed until six months has elapsed from the time that such force majeure ceases.

A person who provides performance in order to satisfy a right subject to completed extinctive prescription shall not thereafter seek repayment even if the performance is provided without knowledge of the fact that such right was subject to a completed extinctive prescription.

Except as otherwise provided in this Code or in other law or regulation, the period for extinctive prescription regarding property rights, other than claims and ownership, shall be 10 years. The provisions pertaining to extinctive prescription regarding claims shall apply mutatis mutandis to extinctive prescription for property rights other than claims and ownership.

(1) A claim may be assigned unless the nature of the claim does not permit such assignment. In such a case, the assignee shall become a new Obligee. (2) Assignment of a claim may be prohibited by a declaration of intent by the party(s), even where the nature of the claim permits the assignment. (3) The Declaration of Intent referred to in paragraph (2) shall be asserted against a third party having no knowledge thereof. This shall not apply should the third party's lack of knowledge be the result of the third party's gross negligence.

The assignment of a claim shall take effect only through agreement between the Obligee seeking to assign the claim and the assignee. However, in order to assert the assignment of a claim against the Obligor or a third party, the conditions established in Article 503 (Requirement for Assertion of Assignment of Nominative Claim against Third Parties) must be met.

(1) The assignment of a nominative claim may not be asserted against the applicable Obligor or any other third party unless the assignor has given notice thereof to the Obligor or the Obligor given consent thereto to the assignor or the assignee. (2) The notice or consent described in paragraph (1) shall not be asserted against a third party unless the notice or consent has been made using an instrument bearing a fixed date.

(1) Should one claim have been assigned multiple times, the priority among such assignments shall be determined based on the chronological order of the times at which the competing notices using the instruments bearing a fixed date reach the Obligor, or the times at which the Obligor has given consent using instruments bearing a fixed date. In such case, the Obligor must perform the Obligations borne to the Obligee having the priority position. (2) For situations set forth in paragraph (1), should the chronological order among the notifications or consents not be clearly determined, they shall be deemed to have arrived or been given at the same time. In such case, each assignee may demand full performance from the Obligor in relation to the assigned Obligation. Should the Obligor perform the Obligations to one of the Obligees, the Obligation shall be deemed extinguished. (3) In case set forth in paragraph (2), the Obligor shall be relieved of the Obligation by depositing the Object comprising the subject of the Obligation.

(1) Should the Obligor have been provided with the consent described in Article 503 (Requirement for Assertion of Assignment of Nominative Claim against Third Parties) without raising any objection, even if there are grounds which could have been raised as a defense against the assignor, s/he may not raise such grounds as a defense against the assignee. However, if the Obligor has paid any money or delivered any Object or assumed a new Obligation to or for the benefit of the assignor in order to obtain extinction of his/her Obligation, the Obligor may recover the money paid or other Object delivered, or may deem that the new Obligation had not been assumed, as the case may be. (2) Should the assignor have merely provided notice of the assignment, the Obligor may raise any grounds as a defense against the assignee, which accrues with respect to the assignor before s/he receives such notice as a defense against the assignee.

The conditions governing the assignment of a claim payable to order or other claim regarding which securities representing such claim have been issued shall be established separately through special law.

(1) An Obligation that can be performed by a third party, other than the Obligor, can be assumed by such third party. (2) The assumption of an Obligation by a third party may be prohibited through a declaration of intent by a party(s).

The assuming of an Obligation shall take effect based on the agreement of Obligor and the person assuming the Obligation or between the Obligee and such person.

(1) An Obligee's rights against the Obligor shall not be extinguished through the assumption of the Obligation. In such case, the Obligor and the party assuming the Obligation are jointly and severally liable with respect to the Obligee. (2) A party who assumes an Obligation may exempt the Obligor therefrom with the consent of the Obligee.

Should an Obligation be assumed, the assuming party may assert against the Obligee any defense possessed by the Obligor up to the time that the assumption was formed.

Should a person assume responsibility for the performance of an Obligation based on an agreement between the Obligor and the assuming party without assuming the Obligation itself, the Obligee may not demand performance from the assuming party.

(1) A party that has executed a contract with another party may assign to a third party his/her position under such contract. This shall not apply where assignment is impossible due to the nature of the contract. Moreover, the assignment of a party's contractual position may be prohibited based on the agreement of the parties. In such case, the provisions of paragraph (3) of Article 501 (Assignability of claims and special agreements prohibiting assignment) pertaining to the assignment of Obligations shall apply mutatis mutandis. (2) Should the assignment of a contractual position be substantially disadvantageous to the other party of the contract, the party seeking to assign the contractual position shall obtain the approval of the assignment from the other party to the contract.

The assignment of a contractual position shall take effect only upon the agreement of the assignee and the party to the contract seeking to assign the contractual position. However, in order to assert the assignment against the counter-party to the contract or a third party, the requisites for assertion set forth in Article 503 (Requirement for Assertion of Assignment of Nominative Claim against Third Parties) pertaining to assignment of claims must be met.

Should a contractual position have been assigned, all rights and Obligations possessed by the assignor shall be transferred to the assignee unless a specific declaration of intent is made to the contrary. In such case, the provisions of Article 505 (Effect of notification and consent) pertaining to the assignment of claims and of Article 510 (Defenses following assumption of Obligation) pertaining to the assumption of Obligations shall apply mutatis mutandis.