Pledge in Thailand: What the Civil Code Requires

A pledge can also transfer to a new debt on a novation under Section 352, as covered in the novation in Thailand article.

A pledge follows the claim it secures when the claim moves under Section 305; see our guide to assignment of claims in Thailand.

What is a pledge in Thailand?

A pledge in Thailand is a security contract over movable property. Under Section 747 the pledgor hands the asset to the pledgee, and the pledgee holds it until the debt is paid. Delivery is the element that forms the pledge, so a written agreement without delivery does not create one.

Section 748 extends the security beyond the principal. The pledge also covers interest, damages for non-performance, enforcement costs, the cost of preserving the asset and damages for hidden defects in it. Section 749 allows the parties to agree that a third person keeps the asset.

Which assets can a pledge in Thailand cover?

A pledge covers movable property, including rights recorded in instruments and registered shares. Sections 750 to 753 add formal steps for these rights, because a right cannot be handed over in the way a machine can.

Section 754 deals with a pledged right that falls due before the secured debt. Section 755 bars the pledgor from extinguishing or impairing a pledged right without the pledgee’s consent.

What duties does the pledgee carry?

The pledgee must keep the asset safe with the care a reasonable person gives their own property. Section 759 states that duty. Section 760 makes the pledgee liable for loss if the pledgee uses the asset personally, gives it to a third person to use, or has a third person keep it, without the pledgor’s consent.

That liability reaches loss caused by events beyond anyone’s control. The pledgee escapes it only by proving the loss would have occurred anyway. Section 761 applies natural fruits of the asset first to overdue interest and then to the principal, unless the contract says otherwise. Section 762 makes the pledgor reimburse reasonable costs of maintaining the asset.

Section 763 sets a six-month limit. Claims for deterioration caused by the pledgee, for maintenance costs and for hidden-defect damages expire six months after the asset is returned or sold at auction.

How does enforcement of a pledge in Thailand work?

The pledgee enforces by public auction after a written notice to the debtor. Section 764 allows sale only by public auction. The Code follows a fixed order, set out below.

1. Written notice to the debtor. Section 764 requires a written demand for payment of the debt and its accessories within a reasonable time that the notice states. The section sets no number of days.
2. Public auction. If the debtor does not pay, the pledgee may sell the asset, but only at public auction. The pledgee must also notify the pledgor in writing of the time and place of the sale.
3. Sale without prior notice. Section 765 permits a sale without the prior notice when notice cannot be given and the debt has been overdue for one month.
4. Application of proceeds. Section 767 applies the net proceeds to the debt and costs and returns any surplus to the pledgor or the person entitled to it.
5. Shortfall. If the proceeds fall short, Section 767 leaves the debtor liable for the balance.

Section 766 treats a pledged bill differently. The pledgee collects the amount on the due date and needs no prior notice. Section 768 lets the pledgee choose which asset to sell when several secure one debt, and bars a sale beyond what the debt requires.

Which clauses make a pledge agreement void?

Section 756 voids any clause, agreed before the debt falls due, that lets the pledgee take ownership on default or deal with the asset outside the statutory rules. The pledge itself remains. Only the clause fails, and enforcement returns to Sections 764 to 768.

When does a pledge end?

Section 769 ends a pledge in two cases. The first is when the secured debt ends for a reason other than prescription. The second is when the pledgee allows the asset to return to the pledgor’s possession.

The second case ties back to Section 747. Because possession forms the pledge, handing the asset back can end it.

How does a pledge compare with a mortgage or business collateral?

A pledge turns on delivery, while the other two security types follow their own formation rules. The table sets the three side by side, and the linked guides give the section detail.

A guarantee can sit beside a pledge in one financing. Our guide to a guarantee contract in Thailand covers the personal-security side. The statutory text is on the Krisdika legal database of the Office of the Council of State.

Frequently asked questions

Conclusion

The pledge chapter of the Civil Code is short and strict. Possession forms the security, public auction enforces it, and Section 756 voids pre-default agreements that bypass it. Each of these points should shape how a lender drafts, holds and enforces movable collateral in Thailand. For related debt work, see our debt recovery lawyer in Thailand page.