Talk:2468th Sec 0370

French Concept of the Effects of Reciprocal Contracts

In the Title "Effects of Reciprocal Contracts" (Secs.369 – 376), the Thai drafter follows mainly the traditional Japanese Arts. Arts.533 – 539.

Especially, Sec.370 adopted the traditional Japanese Art.534, which shows the special feature of the French concept on "Burden of risk of loss". Contrary to the German concept, the French concept lets the creditor bear the burden of risk of loss. The ground of this concept was Art.1138:

Art. 1138
The consent of the parties is all that is necessary to make the obligation of delivering the thing complete. Such consent makes the person to whom deliyery has to be made the owner, and the thing is at his risk from the moment it ought to have been delivered, although delivery may not have been actually given, unless the person bound to deliver is in default in delivering the same, in whioh ease the thing is at his risk.

The Japanese Art.176 adopted this French principle. Accordingly, the creditor had already obtained its ownership at the moment where the subject matter of a reciprocal contract is lost, damaged, or storen. This is the reason for the principle that the creditor must bear the burden of risk of loss.

However, Art.176 would have no effect to other kinds of contracts; namely cases where the subject matter of a contract is not delivery of any specific thing, but certain act or forbearance as well as something designated by species only. For such cases, the traditional Art.536(I) provided for another rule that the debtor shall be the party who must bear the burden of risk of loss.

Despite this alternative rule, its efficiency was quite doubtful in regard to cases with subject matters designated by species only; namely because occurance of "impossibility of performance" is almost excluded. Moreover, the Japanese drafters did not adopted the German concept of the debtor's "inablity of performance"; namely the traditional §§ 275, 279, and 300(II). As a result, the traditional Art.536(I) had almost no efficiency.

Unfortunately, the Thai drafter adopted this Japanese concept together with its system inconsistencies. The Thai Code, Book IV on Law of Things, does not posses any general clause like the French Art.1138 or the Japanese Art.176. Book III on Specific Contracts, however, includes the same rule especially for Sale contract in Sec.458:

Sec.458
The ownership of the property sold is transferred to the buyer from the moment when the contract of sale is entered into.

Probably, this was a reason for the Thai drafter's decision to adopt the French-Japanese concept. Codesuser (talk) 15:35, 16 October 2025 (UTC)

Integration of the German Provisions into the French-Japanese Concept

As mentioned above, the traditional Japanese Art.536(I) suffered a serious problem of inefficiency. The Thai drafter was aware of it:

Citation from “Thai Law and Recent Reforms in Germany and Japan in Law on Non-performance” (P.24 – 25) – Apparently, he was aware of this error, therefore, he tried to rescue the German concept at least in cases of reciprocal contracts with subject matters designated by species only. For this purpose, he inserted the old German § 324(II) into Sec. 372(II) Sentence 3. The Sec. 372 treats cases of reciprocal contracts where the debtor bears the risk of loss (Sec. 372(I)) and cases where the creditor is liable for the loss of subject matters due to his fault (Sec. 372(II) Sentence 1 and 2). In this arrangement, the Thai drafter adopted the traditional Japanese Art.536(I) as Sec.372(I) while he replaced the Japanese Art.536(II) with the traditional German § 324(I) as as Sec.372(II).36 At the end, he added the German § 324(II) to Sec. 372(II) as its 3rd Sentence. In cases of Sec.372(II), the debtor retains his right to demand counter-performance from the creditor. In its appearance, this rearrangement seemed to be quite successful.

Arrangement Secs.370 – 372

However, there is certain doubt about its conceptual consistency in the following two points:

• At first, it is only one part of the original German concept described above. Moreover, the traditional German § 324(II) was intended to apply to cases of specific subject matters. However, the Thai drafter conceived of its application to contracts subject matters of which are other than delivery of specific matters; namely certain act or forbearance on the one side, and subject matters designated by species only. In this manner, the original logical structure of the German concept was severely deformed.
• Secondly, the applicability of Sec. 372(II) Sentence 3 would be questionable. As described above, its text was adopted from the German § 324(II), but it pursues rather the same goal as the traditional German § 300(II); namely the passage of the risk of loss to the creditor during the time of his default in acceptance. On the other hand, however, there is an essential difference between the German § 300(II) and the Thai Sec. 372(II) Sentence 3; the German provision provided for the passage of the risk of loss to the creditor during his default in case of the debtor’s inability of performance while the Thai provision still maintains the wordings of the German § 324(II) and mentions only cases of impossibility of performance. This is a reason for the doubt about the conceptual consistency of the Thai provision; namely, it is quite difficult to imagine to what cases it could really apply because “impossibility of performance” is principally excluded in cases of subject matters designated by species only. It would be much more consequent if the Thai drafter modified the wordings of the German § 324(II) and clearly mentioned the debtor’s inability of performance as follows for instance:

Section 372.
[I] 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.

[II] 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 if the performance due from one party becomes impossible or the party becomes unable to perform his obligation, in consequence of a circumstance for which he is not responsible, at the time when the other party is in default to acceptance.

Also, it should be noted that Secs. 370 – 372 cause another difficulty regarding “rescission of contract” in Sec. 389 modeled after the traditional Japanese Art. 543. (end of citation) Codesuser (talk) 14:39, 17 October 2025 (UTC)

Another Inconsitency Issue in the Japanese Concept

Citation from “Thai Law and Recent Reforms in Germany and Japan in Law on Non-performance” (P.47) – As mentioned in the main text (III. B. 9. a)), this part of the Japanese Civil Code (1896/98) suffered a serious conceptional inconsistency. Its cause was mainly the position of Art.536(II), according to which the debtor does not lose his entitlement to counter-performance even in case the performance due from him becomes impossible if the creditor is responsible for the cause of impossibility. The problem is that this rule stood under the provision regarding exclusively the obligations subject matters of which are other than delivery of specific things. However, this rule may apply generally to all kinds of obligations. This is the conceptual inconsistency.

Generally speaking, there are three basic rules regarding the effects of reciprocal contracts. In the traditional German BGB, they were §§ 323, 324, and 325:

• § 323: The debtor bears the risk of loss due to impossibility of his performance for which neither the debtor nor the creditor is responsible;
• § 324: The debtor retains his entitlement to counter-performance from the creditor if the latter is responsible for the impossibility of performance;
• § 325: The creditor may rescind the contract or demand compensation if the debtor is responsible for the impossibility of performance.

The Japanese drafters in the Codes Investigatory Commission moved the 3^rd rule to Art. 543 in Book III, Chapter II, Part III regarding “Rescission of a Contract”. There remained the 1st and 2nd rules in Part II “Effects of a Contract”. They distinguished two kinds of cases to which the 1st rule shall apply; namely (A) contracts which have delivery of specific things as subject matters (Art. 534) and (B) contracts which have other kinds of performance as their subject matters, especially subject matters designated by species only (Art. 536). Unfortunately, they allocated the 2nd rule to Art. 536(II) despite its general applicability.

Theoretically, the 2^nd rule should stay at the top position of the part and the 1^st rule should follow under distinction between two groups mentioned above:

Conceptual inconsistency of Jp. Arts.534 – 536

Presumably, the Thai drafter did not notice of this conceptual inconsistency and followed the real order of the traditional Japanese Arts. 534 – 536 in the part of the Thai Secs. 370 – 372. It would be much more consequent if Sec.372(II) Sentence 1 and 2 could be moved to the top position before Sec. 370. (end of citation) Codesuser (talk) 08:00, 17 October 2025 (UTC)

How to Solve the Inconsistency Issue in the Thai Arrangement

Citation from "Thai Law and Recent Reforms in Germany and Japan in Law on Non-performance" (P. 48 –50) – Thai provisions Secs.370 – 372 followed the Japanese concept just reviewed above (VII. A.). In this sense, these Thai provisions suffer the same conceptional inconsistency as the Japanese Arts.534 – 536. According to the consideration in III. B. 9., their conceptual inconsistency would be improved by the following theoretical reconstruction of the concept on "Effects of a Reciprocal Contract":

• Principle I: Impossibility due to the debtor’s fault: Rescission of contract and demand for compensation.
• Principle II: Impossibility due to the creditor’s fault: Debtor’s demand for counter-performance.
• Principle III: Impossibility without fault of the parties: Burden of Risk of Loss.

In the Thai arrangement, "Principle I" is treated in Secs.386 – 394, and "Principles II and III" are just treated in Secs.370 – 372, the order of which could be improved according to the consideration about the Japanese provisions above in the following way:

Principle II and III of Effects of Reciprocal Contracts

Accordingly, the whole concept on the “Effects of a Reciprocal Contract” in the Thai arrangement could be described in the following manner:

Principle I: Impossibility due to the debtor’s fault: Rescission of contract and demand for compensation.

• Sec. 387. [Rescission of contract: Debtor’s default]
  If one part does not perform the obligation, the other party may fix a reasonable period and notify him to perform within that period. If he does not perform within that period, the other party may rescind the contract.
  [...]
• Sec. 389. [Rescission of contract: Impossibility due to Debtor’s fault]
  If performance becomes wholly or party impossible by a cause attributable to the debtor, the creditor may rescind the contract.
• Sec.391. [Effects of rescission]
  • [I] If one party has exercised his right of rescission, each party is bound to restore the other to his former condition; but the rights of third persons cannot be impaired.
  • [II] To money which is to be repaid in the case of the foregoing paragraph interest is to be paid from the time when it was received.
  • [III] For services rendered and for allowing the use of a thing the restitution shall be made by paying the value, or, if in the contract a counter-payment in money is stipulated for, this shall be paid.
  • [IV] The exercise of the right of rescission does not affect a claim for damages.

[...]

Principle II: Impossibility due to the creditor’s fault: Debtor’s demand for counter-performance.

• Sec. 372(II) Sentence 1, 2. [Right to counter-payment: Impossibility due to Creditor’s fault]
  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.

Principle III: Impossibility without fault of parties: Burden of Risk of Loss.

• Sec. 370. [Burden of Risk of Loss (A): Impossibility without parties’ fault; Specific things as subject matters]
  • [I] 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.
  • [II] 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.
• Sec. 371. [Exception to Rule (A): Contract under condition precedent]
  • [I] 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.
  • [II] 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 compensation is not affected thereby.
• Sec. 372(I). [Burden of Risk of Loss (B): Impossibility without parties’ fault; Act or forbearance, things designated by species only as subject matters]
  • 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.
• Sec. 372(II) Sentence 3. [Exception to Rule (B); Creditor’s Default in Acceptance]
  • The same rule applies if If the performance due from one party becomes impossible or he becomes unable to perform his obligation, in consequence of a circumstance for which he is not responsible, at the time when the other party s in default to acceptance.

Codesuser (talk) 08:17, 17 October 2025 (UTC)