Thailand Law Library

by Thailand Lawyer

Effect of Contract

A party to a reciprocal contract may refuse to perform his obligation until the other party performs or tenders performance of his obligation. But this does not apply, if the other party's obligation is not yet due.

If the object of a reciprocal contract is the creation or transfer of a real right in a specific thing, and such thing is lost or damaged by a cause which is not attributable to the debtor, the loss or damage fails upon the creditor.

To a non-specific thing the provisions of the foregoing paragraph apply from the time when the thing has become specific in accordance with the provisions of Section 195 paragraph 2.

The provision of the foregoing section do not apply, if the thing which forms the subject of a reciprocal contract depending upon a condition precedent is lost or destroyed while the condition is pending.

If the thing is damaged by a cause not attributable to the creditor, the latter, when the condition is fulfilled, may at his option either demand performance with reduction of his counter performance or rescind the contract, provided that in the case where the cause of the damage is attributable to the debtor, the creditor's right to compensate is not affected thereby.

Except in the cases mentioned in the two foregoing sections, if an obligation becomes impossible of performance by a cause not attributable to either party, the debtor has no right to receive the counter performance.

If performance becomes impossible by a cause attributable to the creditor, the debtor does not lose his right to the counter performance. He must however, deduct what he saves in consequence of release from the performance, or what he acquires or maliciously omits to acquire by a different application of his faculties. The same rule applies in the performance due from one party becomes impossible, in consequence of a circumstance for which he is not responsible, at the time when the other party is in default to acceptance.

An agreement made in advance exonerating a debtor from his own fraud or gross negligence is void.

If a party by a contract agrees to make a performance to a third person, the latter has a right to claim such performance directly from the debtor.

In the case of the foregoing paragraph the right of the third person comes into existence at the time when he declares to the debtor his intention to take the benefit of the contract.

After the right of the third person has come into existence in accordance with the provisions of the foregoing section, it cannot be charged or extinguished by the parties to the contract.

Defenses arising from the contract mentioned in Section 374 can be set up by the debtor against the third person who received the benefit of the contract.