Indivisible Obligations in Thailand: Civil Code Rules

What Are Indivisible Obligations in Thailand?

Indivisible obligations in Thailand are obligations in which the performance owed cannot be divided between the parties on one side. The Code uses the phrase nee an ja baeng kan chamra mi dai. It attaches its own consequences in Section 301 for several debtors and in Section 302 for several creditors.

The starting point for every obligation with more than one debtor or creditor is Section 290. Where the performance is divisible, and in case of doubt, each debtor is liable only for an equal share and each creditor is entitled only to an equal share. Sections 291 to 296 then set out the rules for joint debtors. These are explained in our article on joint and several liability in Thailand.

Sections 297 to 302 complete the chapter. They identify three situations in which the equal-share rule of Section 290 gives way:

1. several persons bind themselves together in one contract (Section 297);
2. several creditors are each entitled to demand the whole performance, which the Code calls joint creditors (Sections 298 to 300);
3. the performance itself cannot be divided (Sections 301 and 302).

When Are Co-Contractors Liable as Joint Debtors?

Under Section 297, if several persons jointly bind themselves in a contract to perform an obligation, they are liable as joint debtors in case of doubt. This applies even where the performance could be divided. The presumption therefore reverses the equal-share starting point of Section 290 for contractual co-obligors.

The words “in case of doubt” matter. The presumption applies only where the contract does not show a different intention. Parties who want each co-obligor to answer only for its own portion can say so in the contract, and Section 290 then governs that divisible debt.

What Rights Do Joint Creditors Have?

Joint creditors are several creditors each of whom may demand the whole performance, while the debtor need perform in full only once. Section 298 lets the debtor perform to any one of them at its choice. The debtor keeps this choice even after one of the creditors has already sued for performance.

Section 299 sets out which events affect all joint creditors. First, default by one joint creditor operates against the other creditors as well. Second, if the claim and the debt merge in the person of one joint creditor, the rights of the other creditors against the debtor are extinguished. Third, Sections 292, 293 and 295 apply to joint creditors mutatis mutandis. Section 299 states one consequence expressly: a transfer of its claim by one joint creditor does not affect the rights of the other creditors.

Between the joint creditors themselves, Section 300 provides that each is entitled to an equal share of what is received, unless otherwise agreed.

Indivisible Obligations in Thailand With Several Debtors

Section 301 provides that where several persons owe a performance that cannot be divided, they are liable as joint debtors. The creditor therefore has the position described in Section 291: it may demand performance from any one debtor, in whole or in part, and all debtors remain bound until the performance is complete.

Unlike Section 297, Section 301 does not depend on a contract or on doubt. It follows from the nature of the performance itself. Between joint debtors, Section 296 provides for equal shares unless otherwise agreed.

Indivisible Obligations in Thailand With Several Creditors

Section 302 covers an indivisible performance owed to several creditors who are not joint creditors. The debtor may perform only for the benefit of all of them together. Each creditor may demand performance only for the benefit of all, not for itself alone.

Section 302 gives each creditor a further remedy. Any one creditor may require the debtor to deposit the property owed for the benefit of all the creditors together. Where the property is not suitable for deposit, it is delivered to a custodian appointed by the court.

The second paragraph of Section 302 limits the effect of personal events. A fact that concerns only one of the creditors does not operate for or against the other creditors. This differs from joint creditors, where Section 299 makes default by one creditor operate against all.

The Code applies Section 302 elsewhere. Under Section 1359, a co-owner may exercise the rights arising from ownership against third parties over the whole property, but a claim to recover the property is subject to Section 302. Our guide to co-ownership in Thailand explains that rule.

Comparing the Rules in Sections 290 to 302

Joint Creditors or Creditors With Separate Shares?

The difference between joint creditors and creditors with separate shares decides who can sue and to whom the debtor may pay. Joint creditors each hold a claim to the whole performance under Section 298. Creditors with separate shares under Section 290 each hold a claim only to their own portion.

For transaction documents, the drafting point follows from the sections themselves. A contract that names several parties on one side should state whether each party owes or is owed a share, or the whole. Without that statement, Section 297 presumes joint liability among co-obligors, while Sections 290, 298 and 302 decide the position of several creditors.

Frequently Asked Questions

Planning for Indivisible Obligations in Thailand

Indivisible obligations in Thailand, joint creditors and contractual co-obligors each have their own rule in Sections 297 to 302. Each rule moves away from the equal shares of Section 290. Whether parties owe or are owed a share or the whole decides who may be sued, who may sue, and to whom payment discharges the debt. For that reason, contracts with several parties on one side should state the position expressly. Our contract lawyers in Thailand advise on these clauses in commercial agreements. The Code is available from the Office of the Council of State.