law of obligation

Law of Obligation

Student ID : 5710135 (Jump) 5710425 (Ant) 5710426 (Jeans) 5711038 (TangMo) 5713455 (Nut) 5713456 (Zeen) 5716802 (Ton)

Obligation

• The state of being forced to do something because it is your duty, or because of a law.

Law of Obligation

• Definition of Obligation– Section 194, "By virtue of an obligation the

creditor is entitled to claim performance from the debtor. The performance may consist of forbearance."

Characteristic

• 1. There must be 2 parties (Creditor/Debtor)

– Creditor is the party who has right to claim performance from the debtor.

– Debtor is a person who has duty to perform the obligation in accordance with the claim of the creditor.

Characteristic

• 2. There must be a juristic relation to establish rights and duties

– It may be a reciprocal juristic relation such as a Sales contract.

– The juristic relation may be a non-reciprocal one such as deposit of property without remuneration.

Characteristic

• 3. There must be subjects of obligation– Indicates how the debtor should perform

an obligation.

3 types–Delivery of a property–Doing some act–Forbear from doing some act

Law of ObligationSources of Obligation• Contract

– Between 2 or more parties and obligations enforceable by law.

• Legal Causes– The circumstances which create legal

consequences.

Legal Causes

• Tort– Created by the law, not by consent.

– It creates an obligation, which comes from the willful / negligent act of the debtor in which he must compensate to the creditor by paying damages.

Legal Causes

• Management of Affairs without Mandate

– An obligation when someone who take charge of the principal’s affair has managed it in accordance with the interest and the presumptive wishes of the principal. Thus, he is entitled to claim for the expense paid for the principal.

Legal Causes

• Undue Enrichment (Unjust Enrichment)

– A person who has got any property from the other without any legal ground should return the property to the person who gives it to him.

– The one who receives the property is deemed to be the debtor because the enrichment is not lawful

Sources of Obligation

• Legal Provision– The law particularly provides certain duties to

people for the peace and development of the country or public policies, this source of obligation stated in various laws.

Sources of Obligation

• Legal Provision– The Civil and Commercial Code– Law of Taxation– The Labor Protection Act

Law of Obligation

• Consequences of Obligation– Where there is an obligation, the creditor may

demand performance from his debtor and in the case the debtor ignores his duty, the creditor is entitled to enforce the performance. The enforcement, however, must be in accordance with legal provisions and legal procedures, namely, will be enforced upon the court’s decision. Creditor has to file a lawsuit against the debtor.

Consequences of Obligation

• Maturity of an obligation

– The due date for the debtor to perform the obligation.

Maturity of an obligation

• 1. Without specified time for performance– The creditor may demand forthwith, and the

debtor may perform his part forthwith, namely this obligation is mature once the contract is made.


• 2. With specified time for performance (in case of doubt)– The creditor cannot demand the performance

before the maturity but the debtor can perform earlier if he wishes.


• 3. Mature as per calendar– Mature or falls die exactly on the date of the

calendar.

• 4. Mature on fixed period assuming from the circumstances

– The due date for the obligation could still be assumed from the circumstances.


• Default– When a debtor performs his obligation later than

the maturity and thereby causes the damage to the creditor.

– Thus the debtor must compensate his creditor for the damage therefrom.

Default

• 1. Without the specification of time for performance and unable to infer from the circumstance of the maturity– Already mature but the debtor has not yet

performed, the debtor is not yet in default.– He will default only after the creditor gives him a

warning.

Default

• 2. With the specified maturity date as per calendar– Due on the date and period fixed and if the debtor

does not perform his obligation on that date and that period,

– He is automatically in default.

Default

• 3. Form Tort– The debtor is in default from the time the party

committed a tort.


• The debtor’s excuse of default– For a debtor who wants to claim that is not yet in

default, he must be able to prove that he is not responsible for the circumstances for which he is not responsible.


• Consequences of default

− When the debtor does not perform the obligation in accordance with true intent, the creditor may claim compensation for any damage.

− If the performance becomes useless to the creditor, he may refuse to accept it and claim compensation for non-performance.

− A debtor is responsible for all negligence during the default, unless the injury would have arisen even if he had performance in due time.

Consequences of default

− A money debt bears interest during the default at seven and half percent per annum. If the creditor can demand higher interest, this shall continue to be paid.

− If the debtor is bound to make compensation for the value of an object which cannot be delivered during the default, the creditor may demand interest on the amount to be paid as compensation.


• When the creditor is in default

− Without legal ground, he does not accept the performance tendered to him.

− If the debtor is bound to perform his part only upon counter performance by the creditor, the creditor is in default if he does not offer the required performance, though prepared to accept the performance tendered.


• The effects of the creditor’s being in default− When the creditor is in default, the debtor is not

liable for any damage arising from the non-performance, from the time the debtor has tendered to make performance


• Performance becomes impossible− The performance of an obligation becomes

impossible after the obligation was created but before debtor is in default


Performance becomes impossible

• 1) An obligation becomes impossible in the circumstance for which debtor is responsible− When the performance becomes impossible,

debtor does not have to perform his part to the creditor. However, he is liable for the damages to the creditor for such non-performance.

• 2) An obligation becomes impossible in the consequence for which the debtor is not responsible− By the third person’s action or without debtor’s

responsibility− By force majeure

Performance becomes impossible

• Extinction of an obligation

Law of Obligation

Extinction of an obligation

• By performance− Fulfillment or accomplish of a promise, contract or

other obligation.• By release

− Release is a unilateral, non-reciprocal declaration of intention by the creditor to release the obligation

− A writing or an oral statement

• By set-off− Two persons are bound to each other by

obligation whose subject is of the same kind, debtor may be discharged from his obligation by setting-off.

• By novation− A substitution of a new contract, debt, or

obligation for an existing one between the same or different parties


• By merger− If right and liabilities in an obligation become

vested in the same person, the obligation is extinguished.


law of obligation

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