Even something the value of which cannot be computed in money, may be the subject of a claim.
If the delivery of a specific thing is the subject of a claim, the obligor is bound to preserve such thing with the care of a good manager until it is delivered.
(1) Where the subject of a claim is designated in species only, and its quality cannot be determined by the nature of the juristic act or by the intention of the parties, the obligor is bound to perform with a thing of medium quality.
(2) If in the cases mentioned in the preceding paragraph the obligor has completed all acts that are necessary for the performance or has with the consent of the obligee designated a thing to be performed, such thing shall thenceforth constitute the subject matter of the claim.
Where the subject of a claim is to be delivered in one kind of currency, and the currency has ceased to be legal tender at the time the claim becomes due, the obligor is bound to effect payment in another currency of legal tender.
(1) Where the subject of a claim is to be delivered in foreign currency, the obligor may, at his option, effect payment in any kind of currency of the country.
(2) When the subject of a claim is to be delivered in one kind of foreign currency, and the currency has ceased to be legal tender at the time when the claim becomes due, payment shall be effected in some other currency of the country.
If the amount of a claim is designated in foreign currency, the debtor may effect payment in Korean currency at the current rate of exchange at the place of performance when the delivery is made.
The rate of interest of a claim bearing interest, unless otherwise provided by other Acts or agreed by the parties, shall be five percent per annum.
Where the subject of a claim is to be determined according to option from among two or more acts, unless otherwise provided by other Acts or agreed by the parties, the right of option shall vest in the obligor.
(1) Where the period for the exercise of a right of option is specified, and the party having a right of option fails to exercise it within the period, the other party, having determined a reasonable period, may give peremptory notice to make an option;in a case where the party having a right of option fails to do so within the reasonably fixed period, the right of option shall be vested in the other party.
(2) Where the period for the exercise of a right of option is not specified, after the claim has become due, the other party, having determined a reasonable period, gives peremptory notice to make an option, and the party having a right of option fails to do so within such period, then it becomes identical with the preceding paragraph.
(1) Where an option is made by the one party, it shall be made by the declaration of intention to the other party.
(2) The declaration of intention mentioned in the preceding paragraph cannot be revoked without the consent of the other party.
(1) Where an option is made by a third person, it shall be made by the declaration of intention both to the obligor and to the obligee.
(2) The declaration of intention mentioned in the preceding paragraph cannot be revoked without the consent of both the obligee and the obligor.
(1) In a case where a third person cannot make an option, the right of option shall be vested in the obligor.
(2) Where a third person does not make an option, the obligee or the obligor may notify him to make an option within a reasonably fixed period, and if the third person fails to do so within the period, the right of option shall vest in the obligor.
(1) If, among two or more acts of performance which are to be made under an option, some of which have either been impossible to perform in the beginning or subsequently become impossible to perform, the subject of the claim shall exist in respect of the remaining acts.
(2) The provisions of the preceding paragraph shall not apply, if any act of performance has become impossible by reason of the negligence of the party who does not have the right of option.
The option shall be effective retroactively from the time the obligation arose:Provided, That the right of a third person may not be prejudiced thereby.
(1) Where a definite time for the performance of a claim is fixed, the obligor shall be responsible for delay as from the commencement of such time. If an indefinite time for the performance of a claim is fixed, the obligor shall be responsible for any delay as from the time when the obligor has become aware of the arrival of the time for performance.
(2) If a time for the performance of a claim is not fixed, the obligor shall be responsible for the delay as from the time when demand for performance has been made upon him.
The obligor cannot claim the benefit of time under the following circumstances:
1. If the obligor has damaged, diminished or extinguished the security;and
2. If the obligor has failed to perform the obligation of furnishing the security.
(1) If an obligor does not perform his obligation voluntarily, the obligee may apply to a court for compulsory performance thereof:Provided, That this shall not apply to cases where the nature of an obligation does not so permit.
(2) If the obligation mentioned in the preceding paragraph has a juristic act for its subject, application may be made to a court for a decision which shall act as a substitute for a declaration of intention by the obligor;if it has an act which is not entirely personal to the obligor for its subject, application may be made to a court to compel performance by a third person at the expenses of the obligor.
(3) Where the obligation has nonfeasance for its subject, and the obligor has violated it, application may be made to a court to have that which has been violated by the obligor removed at the obligor’s expense, and that reasonable precautionary steps be taken against future repetition.
(4) The provisions of the preceding three paragraphs shall not affect a demand of compensation for damages.
If an obligor fails to effect performance in accordance with the tenor and purport of the obligation, the obligee may claim damages:Provided, That this shall not apply to cases where performance has become impossible and where this is not due to the obligor’s intention or negligence.
Where an Agent by law for the obligor effects performance in lieu of the latter or the obligor effects performance through the other person as an employee, the intention or negligence of the agent by law or the other person shall be deemed as that of the obligor.
The obligor shall be responsible for damages during delay of the performance even where he is not at negligence:Provided, That this shall not apply to cases where the damage is inevitable even if he performed at the time when the time of performance became due.
(1) The compensation for damages arising from the non-performance of an obligation shall be limited to ordinary damages.
(2) The obligor is responsible for reparation for damages that have arisen through special circumstances, only if he had foreseen or could have foreseen such circumstances.
Unless otherwise agreed by the parties, the damages shall be recovered in money.
Where the obligor has delayed the performance of an obligation, and the obligor fails to perform within a reasonably fixed time that the obligee has given notice, or performance after delay is no longer profitable for the obligee, the obligee may refuse to accept performance and claim damages in lieu of performance.
If there has been any negligence on the part of the obligee in regard to the non-performance of the obligation, the court shall take it into account in determining the liability for and assessing the amount of the damages.
(1) The amount of damages for non-performance of a monetary debt shall be determined by the legal rate of interest:Provided, That in a case where there exists an agreed rate of interest which does not exceed the limitation provided by Acts and subordinate statutes, that agreed rate of interest shall prevail.
(2) With regard to the damages mentioned in the preceding paragraph, the obligee is not bound to prove the actual damages nor can the obligor set up the absence of negligence as a defense.
(1) The parties may determine in advance the amount of damages payable in the event of the non-performance of an obligation.
(2) Where the amount of damages determined in advance is unduly excessive, the court may reduce the amount to a more reasonable and appropriate sum.
(3) The determination in advance of the amount of damages shall not affect the obligee’s demand for performance or rescission of the contract.
(4) The agreement of a penalty is presumed to be determined in advance of the amount of damages.
(5) Even in a case where the parties have agreed beforehand that something other than money shall be applied as compensation for damages, the provisions of the preceding paragraphs shall apply mutatis mutandis.
If an obligee has received by way of damages the full value of the thing or right which forms the subject of the claim, the obligor shall ipso jure be subrogated to the position of the obligee in respect of such thing or right.
If an obligee is unable to accept performance of an obligation or refuses to accept it, such obligee shall be responsible for the delay commencing from the time when the performance has been tendered.
If the obligor has no intention or gross negligence in respect of non-performance, such obligor shall, during the obligee’s delay of acceptance, be free of all responsibility arising as a result of non-performance.
During a period of delay on the part of the obligee, the obligor is not bound to pay the interest even though the obligation is accompanied by the interest.
If the expense for the custody of the subject-matter or for performance is increased owing to the delay on the part of the obligee, the amount of the increased expense shall be deducted from the account of the obligee.
(1) An obligee may, in order to preserve his claim, exercise the rights belonging to the obligor:Provided, That this shall not apply to such rights as are strictly personal to the obligor.
(2) Before a claim becomes due, the obligee cannot exercise the rights mentioned in the preceding paragraph without the court’s permission:Provided, That this shall not apply to an act of preservation.
(1) If the obligee, according to the provisions of the paragraph (1) of the preceding Article, has exercised the rights, except the act of preservation, he is bound to give notice to the obligor.
(2) After the obligor has received the notice under the preceding paragraph, even though he has disposed of his rights, this shall not be so set up against the obligee.
(1) If the obligor has performed any juristic act which has a property right for its subject, with the knowledge that it would prejudice the obligee, the obligee may apply to the court for its revocation and restitution of its original status:Provided, That this shall not apply in a case where a person who has derived a benefit from such act or a subsequent purchaser was, at the time of the act or of the purchase, unaware of the fact that it would prejudice the obligee.
(2) The action mentioned in the preceding paragraph shall be brought within one year from the time when the obligee became aware of the cause for revocation, or within five years from the time when the juristic act was done.
The revocation and restitution of its original status according to the provisions of the preceding Article shall take effect for the benefit of all obligees.
Where there are several obligees or obligors, they shall, in the absence of any other agreement, have rights or assume duties in equal proportions.
Where the subject of a claim is indivisible by its nature or by a declaration of intention by the parties, and there are several obligees, each obligee may demand performance on behalf of all the obligees, and the obligor may effect performance to any obligee on behalf of all the obligees.
(1) Among the obligees having indivisible claims, an act done by, or any fact concerning any one of the obligees, except the fact which has an effect upon all the obligees according to the preceding Article, shall have no effect upon the other obligees.
(2) Where a novation or a release has been effected between one of the obligees having indivisible claims and the obligor, other obligees who have received performance of the entire obligation must reimburse the obligor that which would have been allocated to such obligee if he had not lost his right.
Where several persons assume an indivisible obligation, the provisions of Articles 413 through 415, 422, and 424 through 427 as well as those of the preceding Article shall apply mutatis mutandis.
Where an indivisible claim or obligation is converted into a divisible one with respect to the obligees or the obligors, each obligee may demand performance only in respect of his own share, and each obligor shall be liable for the performance only in respect of the share incumbent upon himself to perform.
If each of the several obligors has the responsibility to perform the entire obligation, and the performance by one of the obligors discharges the other’s obligation, the obligation shall be a joint and several obligation.
The obligee may demand performance, in whole or in part of the obligation, against one of the obligors jointly and severally liable or all of them simultaneously or in succession.
The ground for nullifying or avoiding a juristic act in regard to one of the obligors jointly and severally liable, shall not affect the others obligation.
A demand for performance made upon one of the obligors jointly and severally liable shall be effective as against the others.
If a novation has been effected between one of the obligors jointly and severally liable and the obligee, the claim shall be extinguished in favor of all the obligors.
(1) Where one of the obligors jointly and severally liable has a counter claim against the obligee, and the obligor makes a set-off, the claim shall be extinguished in favour of all the obligors.
(2) If the obligor who has a counter claim does not make a set-off, the other obligors can make a set-off only to the extent of his share of the obligation.
A release of an obligation given to one of the obligors jointly and severally liable, shall be effective in favour of the other obligors jointly and severally liable only to the extent of his share of the obligation.
If a merger has taken place as between one of obligors jointly and severally liable and the obligee, the other obligors jointly and severally liable shall also be relieved of their obligation only to the extent of the share incumbent upon such obligor.
If extinctive prescription has been completed for one of the obligors jointly and severally liable, the other obligors jointly and severally liable shall also be relieved of their obligation only to the extent of the share incumbent upon such obligor.
The obligee’s acceptance delay against one of the obligors jointly and severally liable, shall be effective upon the other obligors jointly and severally liable.
Except for matters mentioned in the preceding seven Articles, all other matters relating to one of the obligors jointly and severally liable shall not be effective on the other obligors.
The extent of the share incumbent upon the obligors jointly and severally liable to contribute, shall be presumed as equal.
(1) If one of the obligors jointly and severally liable has, by performance of the obligation or otherwise at his own expense, procured a discharge for common profit, he is entitled to reimbursement from the other obligors jointly and severally liable in proportion to their respective shares.
(2) The right of reimbursement mentioned in the preceding paragraph shall include legal interest as from the day of discharge, and the expenses or other losses which were unavoidable, or other compensation for damages.
(1) Where one of the obligors jointly and severally liable has, without notifying the other obligors jointly and severally liable, procured a common discharge by performance or otherwise at his own expense, and one of the other obligors had a defense available against the obligee, he may set it up against such obligor as has done an act for discharge only to the extent of the share incumbent upon himself, and if the ground for defense so set up is a set-off, the claim which is to be extinguished by a set-off, shall be transferred to such obligor as has done an act for discharge.
(2) Where one of the obligors jointly and severally liable fails to notify the other obligors jointly and severally liable that he has procured a common discharge by performance or otherwise at his own expense, and one of the other obligors jointly and severally liable has in good faith effected performance or otherwise procured a discharge for value, he shall insist upon the effectiveness of his own act for discharge.
(1) If one of the obligors jointly and severally liable has no sufficient means to make reimbursement, the part which he is unable to pay shall be borne by the person demanding reimbursement and the other solvent obligors in proportion to their respective shares:Provided, That if the party demanding reimbursement is at negligence, he cannot demand the other obligors jointly and severally liable to bear their proportionate shares.
(2) In the case of the preceding paragraph, if one of the other obligors who are to bear the part for reimbursement of the obligor, who is insolvent, has obtained a release by the obligee from his joint and several liability, the obligee shall bear the part incumbent upon the obligor.
(1) A surety is liable to perform the obligation upon which the principal obligor has defaulted.
(2) A suretyship may be made for a future obligation.
(1) A suretyship shall take effect when a declaration of intention is made with a sign and seal or written with a signature of the surety, provided that the suretyship shall not take effect if the will to make a suretyship is declared in electronic terms.
(2) Paragraph (1) shall also apply where surety obligation is changed in a prejudicial manner to the surety.
(3) Where a surety has performed surety obligation, no claim for the nullity of the surety shall be made due to defects in methods pursuant to paragraph (1) and (2) within the extent.
<This Article Newly Inserted by Act No. 13125, Feb. 3, 2015>
(1) A suretyship may be made for multiple indefinite surety obligations. In such cases the maximum amount of the surety obligation shall be specified in writing.
(2) In the case of paragraph (1), any suretyship that does not specify the maximum amount of the surety obligation in writing pursuant to Article 428 (2) 1 will not take effect.
<This Article Newly Inserted by Act No. 13125, Feb. 3, 2015>
(1) The surety obligation shall include interest on the principal obligation, penalty, damages, and all other charge incidental to the principal obligation.
(2) A surety may stipulate in advance the amount of penalty or other liquidated damages in regard to his own surety obligation.
If the burden of a surety is greater than that of the principal obligor either as to its subject or its terms, it shall be reduced to the extent of the principal obligation.
(1) Where an obligor is bound to furnish surety, such surety must be a person who has full capacity and sufficient means to effect performance.
(2) If the surety ceases to have sufficient means to effect performance, the obligee may demand substitution of another for such surety.
(3) Where the obligee has designated the surety, the provisions of the preceding two paragraphs shall not be applicable.
The obligor may be released from liability to furnish a surety by furnishing other reasonable security in lieu thereof.
(1) A surety may avail himself of any defense against the obligee which the principal obligor has against the obligee.
(2) A waiver of a defense by the principal obligor shall not be effective as against a surety.
A surety may avail himself of any claim which the principal obligor has against the obligee as a set-off against the latter.
So far as the principal obligor has the right of revocation, rescission or termination against the obligee, the surety may refuse to perform the obligation against the obligee.
If an obligee has demanded performance of the obligation from the surety, upon proving that the principal obligor has sufficient means to effect performance and that the execution would be easy, the surety may enter a plea as a defense that the obligee must demand from the principal obligor and that he must first levy execution on the property of the principal obligor:Provided, That if the surety has assumed an obligation jointly and severally liable with the principal obligor, this shall not be apply.
Notwithstanding that a defense has been made by a surety in accordance with the provisions of the preceding Article, and the obligee has, owing to his laches, been unable to obtain partial or full performance from the obligor, the surety shall be relieved of his liability to the extent that the obligee would have received performance, if he had not been negligent.
Even where several sureties have assumed their liabilities for one obligation by separate acts, the provisions of Article 408 shall apply.
Even where several sureties have assumed their liabilities for one obligation by separate acts, the provisions of Article 408 shall apply.
(1) If a surety who has become such at the request of the principal obligor has, without negligence on his part, caused the principal obligation to be extinguished by performance or at his own expense, such surety shall have a right to be indemnified by the principal obligor.
(2) The provisions of Article 425 (2) shall apply mutatis mutandis to the cases mentioned in the preceding paragraph.
(1) A surety who has become such at the request of the principal obligor may exercise in advance his right of reimbursement against the principal obligor in one of the following subparagraphs:
1. When a surety has, without his negligence, had judgment entered against him ordering performance to the obligee;
2. If the principal obligor has been declared bankrupt, and the obligee does not participate in the bankrupt estate;
3. If five years have elapsed after the conclusion of the contract of suretyship, in a case where the time for the performance of the obligation is uncertain and even its maximum duration is unascertainable;and
4. If the time for the performance of the obligation has arrived.
(2) In the case of subparagraph 4 of the preceding paragraph, no time granted by the obligee to the principal obligor after the conclusion of the contract of suretyship can be set up against the surety.
Where a principal obligor indemnifies the surety in accordance with the provisions of the preceding Article, he may demand of the surety to discharge the obligation for him or request of the surety to furnish security, or he may relieve himself of his liability of indemnification by making a deposit of the amount of indemnification, furnishing security or procuring a discharge of the surety.
(1) In a case where a person who has become surety without the request of the principal obligor, has performed the obligation or has otherwise, at his own expense, procured the discharge of the principal obligor, the latter is liable to indemnify the surety to the extent that he was enriched as of the time of discharge.
(2) In a case where a person has become surety against the will of the principal obligor, has performed the obligation or has otherwise at his own expense procured the discharge of the principal obligor, the latter is liable to indemnify the surety only to the extent that the latter is still being enriched.
(3) If, in the preceding paragraph, the principal obligor claims that he had, prior to the demand for indemnification, a good cause for set-off against the obligee, the claim, which would have been extinguished by such set-off, shall be transferred to the surety.
(1) Where a surety has, without notifying the principal obligor, performed or otherwise procured a discharge of the principal obligation at his own expense, and the principal obligor had a defense available against the obligee, he may set it up against the surety, and in a case where the defense so set up is a set-off, the claim which would be extinguished by the set-off shall be transferred to the surety.
(2) Where a surety has not notified the principal obligor that he had performed the obligation or otherwise procured at his own expense a discharge, and the principal obligor has in good faith effected performance to the obligee or otherwise procured a discharge for value, the principal obligor may treat his act of discharge as effective.
Where the principal obligor has not notified the person who has become a surety at the request of the principal obligor that he has obtained a discharge by his own act, and the surety has in good faith effected performance to the obligee or otherwise has procured a discharge for value, the surety may treat his act of discharge as effective.
A person who has become surety for one of the obligors jointly and severally liable or of an indivisible obligation is entitled to be indemnified from the other obligors only in proportion to their respective shares.
(1) Where there are several sureties, one of whom has effected performance in excess of the share incumbent on him, the provisions of Article 444 shall apply mutatis mutandis.
(2) Where the principal obligation is indivisible or each surety has assumed the obligation for which they are jointly and severally liable to each other or with the principal obligor, and one of the sureties has effected performance in excess of the share incumbent on him, the provisions of Articles 425 through 427 shall apply mutatis mutandis.
(1) A claim may be assigned, except in cases where its nature does not so permit.
(2) Where the parties have declared a contrary intention, a claim shall not be assigned:Provided, That such declaration of intention, cannot be set up against a third person acting in good faith.
(1) The assignment of a nominative claim cannot be set up against the obligor or any other third person, unless the assigner has given notice thereof to obligor or the obligor has consented thereto.
(2) The notice or consent mentioned in the preceding paragraph cannot be set up against a third person other than the obligor, unless it is put in writing with a certified fixed date.
(1) If the obligor has given his consent as mentioned in the preceding Article without reservation, he cannot set up against the assignee any defense that he could have set up against the assignor:Provided, That if the obligor has paid anything to the assignor for the discharge of his obligation, he may recover it, and if he had incurred a new obligation to him, he may treat it as if it had not been incurred.
(2) Where the assignor has merely given notice of the assignment, the obligor may set up against the assignee any defense which has arisen against the assignor prior to the receipt of the notice.
(1) If an assignor has given notice of assignment of a claim to the obligor, even in a case where assignment has not been made or the assignment is null and void, an obligor acting in good faith may be set up a defense which can set up against the assignee, against the assignor.
(2) The notice mentioned in the preceding paragraph cannot be withdrawn without the consent of the assignee.
(1) A third person may assume an obligation by contract entered into with the obligee and thereby discharge the obligation for the obligor, except in a case where its nature does not so permit.
(2) A third person who has no interest in the obligation cannot assume an obligation against the will of the obligor.
(1) Where a third person has taken over a debt by contract entered with the obligor, it shall be effective as from the time when the obligee has given consent thereto.
(2) The other party to whom the obligee’s consent or refusal shall have effect upon, shall be the obligor or a third person.
(1) In the case of the preceding Article, the third person or the obligor may request the obligee to answer whether he will consent or not within a reasonably fixed period.
(2) If the obligee has not sent a definite answer within such reasonable period specifying whether to consent or not, it shall be deemed as a refusal.
The parties may withdraw or change the assumption of an obligation according to a contract between a third person and the obliger by the time of the obligee’s consent.
The consent of the assumption of the obligation by the obligee shall, if there exists no different declaration of intention, be effective retroactively as from the time of such assumption:Provided, That the retroactive effect may not harm the rights of a third person.
A person assuming an obligation may set up a defense against the obligee which the former obligor could have set up.
A suretyship for the obligation of the former obligor or the security furnished by a third person shall be extinguished by virtue of assumption of the obligation, unless the surety or the third person has given consent thereto.
Performance must be effected by way of actual tender in strict accordance with the tenor of the obligation:Provided, That in a case where the obligee previously refused its acceptance or where an act of the obligee is required for the performance of the obligation, it shall be sufficient to inform the obligee that all preparations have been made for performance, and give a peremptory notice to him of its acceptance.
A tender of performance shall relieve the obligor from responsibility for non-performance as from the time of such tender.
If the delivery of a specific thing is the subject of the obligation, the obligor must deliver the thing in the condition in which it exists at the time when the delivery thereof is due.
An obligor who has delivered a thing belonging to another by way of performance of an obligation cannot demand the recovery of such thing, unless he effects a valid performance anew.
Where the owner of a thing who has no capacity to dispose of it has delivered it by way of performance, and then such performance has been avoided, he cannot demand the recovery of such thing unless he effects a valid performance anew.
(1) If, in the cases mentioned in the preceding two Articles, the obligee has consumed or disposed of in good faith the thing which he had received by way of performance, the performance shall be effective.
(2) If, in the cases of the preceding paragraph, the obligee has been demanded by a third person to pay damages, he may exercise the right of reimbursement against the obligor.
Where an obligor has, with the consent of the obligee, done an act of performance different from, and in substitution for the one originally intended, such act shall be deemed a valid performance.
(1) If the place of performance has not been decided by the nature of the obligation or the declaration of intention of the parties, the delivery of a specific thing must be made at the place where the thing existed when the obligation arose.
(2) In the cases of the preceding paragraph, performance of the obligation other than the delivery of a specific thing must be effected at the present domicile of the obligee:Provided, That the performance of the obligation in regard to the business shall be effected at the present business place of the obligee.
In the absence of the declaration of special intention by the parties, the obligor may effect performance even prior to the time when performance becomes due:Provided, That he must compensate for the damage of the other party.
(1) The performance of an obligation may also be effected by a third person:Provided, That if its nature does not so permit, or the parties have declared a contrary intention, this shall not apply.
(2) A third person who has no interest in the obligation cannot effect performance against the will of the obligor.
A performance made to a quasi-possessor of the claim is effective only if it was done in good faith and without negligence.
A performance made to the bearer of a receipt shall be effective even where he is not authorized to accept performance:Provided, That this shall not apply to cases where the person effecting performance was aware or should have been aware of the fact that the bearer did not have such authority.
Except in the cases mentioned in the preceding two Articles, a performance made to a person who is not authorized to accept it is effective only to the extent that the obligee has been enriched thereby.
In the absence of a special agreement, the expenses of performance shall be borne by the obligor:Provided, That in a case where the expenses of performance is increased by changing the obligee’s domicile or by his any other act, the amount of such increase shall be borne by the obligee.
A person effecting performance may demand a receipt from the person accepting the performance.
If there exists a document evidencing the obligation, the person effecting performance in full may demand the return of such document. This shall also apply in a case wheres where the obligation has been extinguished in full by any cause other than performance.
(1) If an obligor owes to the same obligee several obligations whose subject is of the same kind, and the tender of performance is insufficient to discharge them all, the person effecting performance may, at the time of performance, designate the obligation to be discharged by appropriating performance for it.
(2) If the person effecting performance makes no such designation as mentioned in the preceding paragraph, the person accepting the performance may at the time of acceptance designate an obligation to be discharged by appropriation of performance:Provided, That this shall not apply if the person effecting performance immediately objects to such designation and appropriation.
(3) The appropriation of performance mentioned in the preceding two paragraphs shall be effected by a declaration of intention made to the other party.
If the parties have not designated the obligation to be discharged by appropriation, it shall be done in accordance with the provisions of the following subparagraphs:
1. If some of the obligations are due and others are not due, it shall be appropriated for the performance of the obligation which is due;
2. If all the obligations are due or all are not due, it shall be appropriated for the performance of the obligation the discharge of which is most advantageous to the obligor;
3. If the advantage to the obligor is equal, it shall be appropriated for the performance of the obligation which first became due or will become due;and
4. If the facts mentioned in the preceding two subparagraphs are equal, it shall be appropriated for the performance of each obligation in proportion to the amount of each obligation.
The provisions of the preceding two Articles shall apply mutatis mutandis to cases where two or more acts of performance are necessary for the discharge of one obligation, and those acts for performance which have been effected are insufficient to satisfy the entire obligation.
(1) If the obligor is to pay expenses and interest of one or more obligations, and the person effecting performance has effected insufficient performance to satisfy the entire obligation, such performance shall be appropriated in the order of the expenses, the interest and the principal.
(2) The provisions of Article 477 shall apply mutatis mutandis to the case mentioned in the preceding paragraph.
(1) A person who has performed an obligation on behalf of the obligor may be subrogated to the rights of the obligee with the consent of the latter, which should be obtained simultaneously with the performance.
(2) The Articles 450 through 452 shall apply mutatis mutandis to the case mentioned in the preceding paragraph.
A person who has a legitimate interest to effect performance shall be by operation of law subrogated to the rights of the obligee by effecting the performance.
(1) A person who has been subrogated to the rights of the obligee in accordance with the provisions of the preceding two Articles may exercise the claim and the right in respect to its security to the extent to which he may be reimbursed by virtue of his own right.
(2) The exercise of the right mentioned in the preceding paragraph shall be subject to the provisions of the following subparagraphs:
1. A surety cannot be subrogated to the rights of the obligee as against the third person who acquired of the right on an article which is the object of chonsegwon or mortgage unless the subrogation has been entered in advance into the registration of chonsegwon or the mortgage;
2. A third party purchaser cannot be subrogated to the rights of the obligee as against a surety;
3. One of the third party purchasers shall be subrogated to the rights of the obligee as against the other purchasers in proportion to the value of each immovable property;
4. The provisions of the preceding subparagraph shall apply mutatis mutandis to the case where there are several persons who have furnished their own property as security for the obligation of another;and
5. As between a person who has furnished his own property as security for the obligation of another and surety, they shall be subrogated to the rights of the obligee in proportion to their numbers:Provided, That there are several persons who have furnished their own property as security for the obligation of another, they shall be subrogated to the rights of the obligee in respect of the balance excluding the part incumbent upon the surety, and in proportion to the value of each property. If, in the case mentioned above the property is an immovable, the provisions of subparagraph 1 shall apply mutatis mutandis
(1) Where a person has performed a part of the obligation on behalf of the obligor by subrogation, he may exercise his right concurrently with the obligee in proportion to the value of the performance effected by him.
(2) In the case mentioned in the preceding paragraph the rescission or termination of contract by reason of non-performance must be done by the obligee only, and he must reimburse the person subrogated for the value of the performance effected together with the interest thereon.
(1) An obligee who has obtained full satisfaction of the obligation by performance by subrogation must deliver to the subrogee all the documents relating to the obligation and the Article held in possession as security.
(2) Where performance by subrogation has taken place in respect to a part of the obligation, the obligee must enter the fact of subrogation in the documents relating to the obligation, and must allow the subrogee to supervise the preservation of the Article held in his possession as security.
Where there is a person entitled to the rights of subrogation in accordance with the provisions of Article 481, and the security is lost or diminished by the obligee’s intention or negligence, such person shall be relieved of his liability in so far as it has become impossible for him to be reimbursed by reason of loss or diminution.
The provisions of the preceding six Articles shall apply mutatis mutandis to the case where a third person has made the obligor’s obligation extinguished by the deposit or at his own expenses.
If the obligee refuses to accept performance or is unable to accept it, the person effecting performance may relieve himself of his obligation by depositing the subject matter of performance for the obligee. The same shall apply where the obligee cannot be ascertained without any negligence on the part of the person effecting performance.
(1) The deposit must be made with the Deposit Office in the place for the performance of the obligation.
(2) If there are no special provisions of Acts in respect of the Deposit Office, the court must, on the application of the person effecting performance, designate a Deposit Office and appoint a custodian of the deposited article.
(3) The depositor must, without delay, give notice of the deposit to the obligee.
(1) Until the obligee has given his consent to the deposit or has notified the Deposit Office of the receipt of the deposited article or a judgment declaring the deposit effective has become final and conclusive, the depositor may recover the deposited article and, in such case, the deposit is deemed not to have been made.
(2) The provisions of the preceding paragraph shall not apply where a pledge or a mortgage has been extinguished by making a deposit.
If the subject matter of performance is unfit for deposit, or there is any danger of its perishing or being damaged, or excessive expense is required for deposit, the person effecting performance may, with the permission of the court, sell the subject matter by official auction or for value at the market price and deposit the proceeds.
Where the obligor is to effect performance concurrently with the counter performance of the obligee, the obligee cannot take delivery of the deposited article unless he effects his performance.
(1) If two persons are bound to each other by obligations whose subject
is of the same kind and both of which have become due, each obligor may make a set-off to the extent of the amount corresponding to that of his obligation:Provided, That this shall not apply where the nature of the obligations does not so permit.
(2) The provisions of the preceding paragraph shall not apply to cases where the parties have declared an intention to the contrary:Provided, That such declaration of intention cannot be so set up against a third person acting in good faith.
(1) A set-off be effected by means of a declaration of intention to the other party. No condition may be attached, nor a time be fixed, to such declaration of intention.
(2) The declaration of intention for a set-off shall be deemed to extinguish the obligation to the extent of the same amount when each obligation is eligible for a set-off.
A set-off may be effected even where each obligation is to be performed at different places:Provided, That the party who effects the set-off must compensate the other party for any damages which have arisen therefrom.
A claim with completed extinctive prescription may be used for a set-off if it had been able to be used therefor prior to the completion of prescription.
Where the obligation has arisen from an intentional unlawful act, the obligor cannot avail himself of a set-off against the obligee.
If the claim is one of which an attachment cannot be effected, the obligor may not set up against the obligee any defense of set-off.
A third obligor under garnishment order may not set up against his obligee who requested such order any defense of set-off subsequently acquired by him.
The provisions of Articles 476 through 479 shall apply mutatis mutandis to a set-off.
If the parties have entered into a contract by which the essential elements
A novation by change of an obligor may be effected by a contract between the obligee and the new obligor:Provided, That it shall not be effected against the intention of the original obligor.
A novation by change of an obligee cannot be set up against a third person, unless it is done by a document with a certified fixed date.
The provisions of Article 451 (1) shall apply mutatis mutandis to a novation by change of an obligee.
If the new obligation arisen from a novation does not come into existence or has been avoided by reason of illegality of its cause or of any circumstance of which the parties were not aware, the original obligation shall not be extinguished.
The parties to a novation may transfer the security for the original obligation to that of the new obligation, within the limit of its objective:Provided, That if the security has been furnished by a third person, his consent must be obtained.
If the obligee declares to the obligor an intention to release the obligor from the obligation, such obligation shall be extinguished:Provided, That a release cannot be set up against a third person who has a reasonable interest.
If a claim and the corresponding obligation become vested in one and the same person, the claim shall be extinguished:Provided, That this shall not apply if such claim itself is a subject of a third person’s right.
A debt payable to order may be assigned by means of endorsement on and delivery of the instrument.
(1) A debt payable to order may be assigned even to its obligor by means of endorsement.
(2) An obligor who has been assigned the debt payable to order by means of endorsement may assign it by means of re-endorsement.
(1) An endorsement must be written on the instrument or on a slip affixed thereto and the endorser must sign or write his name and affix his seal on it.
(2) The endorsement may be made by means of leaving the endorsed unspecified, and it may be made by means of simply a signature of the endorser or the name and seal of an endorser.
If an endorsement has been made in an informal way according to paragraph (2) of the preceding Article, the holder may dispose of it in the form of each of following subparagraphs.
1. His own name or the name of some other person may be written as an endorsee;
2. An endorsement may again be made on the instrument in an informal way or by means of indicating some other person as an endorsee;and
3. The instrument may be assigned by means of delivering it to a third person without indicating the endorsee, and without endorsing it.
An endorsement payable to bearer is equivalent to an informal endorsement.
(1) The possessor of an instrument is deemed to be the lawful holder if he establishes his title to the instrument through an uninterrupted series of endorsements. The same shall apply even if the last endorsement is in an informal way.
(2) If an informal endorsement is followed by another endorsement, the endorser of this last endorsement is deemed to have acquired the instrument by the informal endorsement.
(3) Cancelled endorsements are deemed not to be written in connection with the uninterrupted series of endorsements.
No person can require the lawful holder of an instrument to give it up:Provided, That this shall not apply if, the holder acquired it, he was aware that the assignor did not have title, or was not aware of it owing to gross negligence.
The debtor of a debt payable to order cannot set up against the holder defenses arising from his personal relations with the previous holders:Provided, That this shall not apply if the holder has knowingly acquired the debt payable to order to the detriment of the debtor.
If the place of performance is not determined by the instrument, the present place of business of the obligor shall be the place of performance. If he has not the place of business, his present domicile shall be the place of performance.
Even in a case where the time for performance is determined by the instrument, the obligor shall be in default only when the holder has presented the instrument and demanded performance after the time for performance has commenced.
The debtor is bound to verify the regularity of the series of endorsements, and he has the right, but is not under any duty, to verify the genuineness of the signature or name and seal of the endorser, or the identity of the holder:Provided, That if, when the debtor effected payment, he was aware that the holder is not the person having the right or fails to know it owing to gross negligence, the payment shall be null and void.
The debtor is bound to effect performance only in exchange for the instrument.
(1) The debtor, when he effects performance, may require the instrument to be receipted by the holder.
(2) In the case of partial payment, if the debtor requires, the obligee is bound to make mention of this payment on the instrument.
The instrument which has been destroyed, or has become separated from the possession of the holder may be voidable by the procedure of public summons.
When there exists a cause for application for a public summons, it may cause the obligor to deposit the subject matter of the obligation, and it may cause the obligor to effect performance, if the holder furnishes adequate security.
A debt payable to bearer may be assigned by means of delivery of the instrument.
The provisions of Articles 514 through 522 shall be applied mutatis mutandis to a debt payable to bearer.
The instrument in which the obligee is named with an additional statement that the payment is to be made to the holder, is equivalent to a debt payable to bearer.
The provisions of Articles 516, 517 and 520 shall be applied mutatis mutandis to the instrument issued by the obligor in order to escape from the responsibility by means of effecting performance to the holder of the instrument.
(1) Where an obligee has or is aware of any credit information concerning the principal obligor's obligations which may affect the decision on whether to conclude a suretyship agreement or any terms and conditions thereof, he/she shall notify the surety of such credit information. The same shall also apply where a suretyship agreement is renewed.
(2) Every obligee shall give written notice to the surety upon the occurrence of any of the following events after concluding a suretyship agreement:
1. Where the principal obligor fails to pay the principal, interest, penalty, compensation, or other charges incidental to the principal obligation for at least three months;
2. Where the obligee becomes aware that the principal obligor’s fulfillment will not be possible before the time for performance;
3. Where the obligee becomes aware of a significant change to the credit information concerning the principal obligor’s obligations.
(3) If requested by the surety, the obligee shall notify him/her of the details of the principal obligation and whether such obligation is performed.
(4) Where an obligee inflicts a loss on the surety for a violation of any of his/her duties prescribed in paragraphs (1) through (3), the court may grant a reduction of, or exemption from, the surety obligations, depending on the details, degree, etc., of the relevant violation.