Summary of legal seminar on “Some Theoretical Aspects of Sources of Obligation: Perspectives from Thai and German Law”, held by the Department of Civil Law, Faculty of Law, Thammasat University, on Wednesday 23 September 2020, between 16.30-19.30 hours, at Room 410, SC3 Building, Thammasat University, Rangsit Campus
Speakers:
- Asst Prof Dr Korrasut Khopuangklang, Lecturer, Faculty of Law, Thammasat University
- Dr Lasse Schuldt, Lecturer, Faculty of Law, Thammasat University
Moderator: Kittipob Wangkham, Lecturer, Faculty of Law, Thammasat University
Summary by Asst Prof Dr Korrasut Khopuangklang, Assistant Dean for Education, Faculty of Law, Thammasat University.
There are ten issues which were discussed in this seminar, namely (1) category of sources of obligation (2) other obligations imposed by law than the traditional ones (3) nature of obligation in family law (4) whether marriage is a juristic act (5) whether marriage is a contract (6) whether a will (testament) creates an obligation (7) whether a promise creates an obligation (8) whether a promise of reward requires acceptance (9) whether stipulated penalty is a unilateral juristic act and (10) whether other unilateral juristic acts create an obligation.
Issue (1) : How does each system categorise sources of obligations? For example, is there a distinction between voluntary and involuntary obligation? In this sense, voluntary obligation refers to an obligation arising from the will of a person.
Asst Prof Dr Korrasut : Thai law is not familiar with the terms “voluntary/involuntary obligations”. Thai literature generally categorises sources of obligation into two groups, namely obligations arising from juristic acts e.g contract and promise (subject to debate) and obligations arising from legal causes e.g. wrongful acts (tort), management of affairs without mandate (negoriorum gestio), undue enrichment (unjust enrichment) and other obligations imposed by law. Nonetheless, these two categories are comparable with voluntary and involuntary obligations, given that obligations arising from juristic acts refer to obligations arising from our intention (ie. voluntary), whereas obligations arising from legal causes refer to obligation that does not arise from our intention (ie. involuntary).
Dr Lasse : There are two kinds of obligations, namely obligations arising from juristic acts (mainly contracts) and obligations arising by law such as torts, unjust enrichment, agency without specific authorisation (negotiorum gestio) and others obligations which will be later discussed.
Issue (2) : The second issue concerns involuntary obligations. Traditional or common involuntary obligations among legal systems are tort, unjust enrichment and negotiorum gestio. What are other involuntary obligations in German law and Thai law than the traditional ones?
Dr Lasse : Examples of other obligations arising by law (than the traditional ones( in German law include liability after avoidance (Sec. 122 BGB), culpa in contrahendo (Sec. 311(2) BGB), Liability of an innkeeper (Sec. 701 ff. BGB), Co-ownership (Sec. 741 ff. BGB), Presentation of things (Sec. 809 ff. BGB), Finding (Sec. 965 ff. BGB), Obligations in property law (Book 3), family law (Book 4) and succession law (Book 5).
Culpa in contrahendo is a pre-contractual liability imposed by law, stems from the doctrine of good faith, was first developed by the German courts and is now recognised in the German Civil Code. Culpa means wrongful behaviour. In contrahendo means while making the contract. It is a basis for claims which very long did not exist in the German Civil Code, but then was created by court decisions. For example, two parties may want to make a contract. They negotiate about the contents of the contract, and then one party may pay or make some investments because he thinks the contract will be made. One party relies on the fact that the contract will be made after the negotiation. But suddenly one party decides to change his mind, then the contract is not made. The problem is that there is no contract so there is no contractual claim. Therefore, the German courts have created this category of legal obligation, which is basically wrongful behaviour while making contract. It is a claim based on good faith.
Asst Prof Dr Korrasut : Examples of other obligations imposed by law are duties of children to maintain parents (Section 1563) and vice versa (Section 1564), obligations between husband and wife (Section 1461), obligation to pay tax, duties of a person who finds a lost property (Section 1323), obligations arising from finding a lost property (Section 1324). For example, in the case of Section 1324, a finder of lost property is entitled to claim a reward of ten per cent of the value of the property up to thirty thousand baht from the owner of the property, even if the latter did not make a promise of reward, as this is the obligation imposed by law.
However, unlike German law, Thai law does not recognise the concept of pre-contractual liability. It was asked by Dr Lasse whether it is possible for the Thai courts to impose this kind of obligation based on good faith. Dr Korrasut responded that it may be difficult as the Thai courts generally do not make law. In addition, it is explained by some writers that the general principle of good faith (Section 5) itself does not create right. This is because Section 5 clearly states that good faith governs exercise of right or performance of obligation, suggesting that rights or obligation must come from other provisions/principles.
Issue (3) : How do Thai law and German law view obligation in family law- are they obligations imposed by law or obligations arising from a contract?
Asst Prof Dr Korrasut : It is obvious that obligations in family law such as duties of children to maintain parents and vice versa are obligations imposed by law. As for obligations between husband and wife to maintain each other, although marriage itself is a contract, this kind of obligation is also an obligation arising by law, rather than arising a marriage contract itself.
Dr Lasse : The obligations in family law are all legal obligations. Even though marriage itself is a contract but German law views it as a contract with a specific character, which creates status, and this status creates obligation. This status then gives rights to legal obligation. German law also treats life partnerships almost the same as marriage.
Overall, maintenance obligations in German law are obligations imposed by law. Examples include obligation between spouses (Sec. 1360 ff. BGB); obligation in registered life partnerships (Sec. 5 LPartG), obligation between divorced spouses (Sec. 1569 ff. BGB); obligation in registered life partnerships (Sec. 16 LPartG), obligation between lineal relatives (Sec. 1601 ff. BGB), practically most important: Parents for children; obligation of father for unmarried mother before and after birth of the child (Sec. 1615l BGB).
Issue (4) : Since both Thai law and German law recognise the concept of juristic act (and, in fact, Thai law derives this concept from German law, is marriage a juristic act in each system?
Dr Lasse : Civil marriage (Sec. 1297 ff. BGB) is a juristic act (Rechtsgeschäft), which is based on declaration of intent. It is also a contract sui generis, that is to say, a contract which its own character.
Asst Prof Dr Korrasut : In Thai law, juristic acts are defined as “voluntary lawful acts, the immediate purpose of which is to establish between persons relations, to create, modify, transfer, preserve or extinguish rights.” (Section 149). There are two theories regarding its legal status. Some writers explicitly explain mariage as a juristic act because it creates right (personal right) between husband and wife. For instance, Associate Professor Dr Kittisak Prokati gives an example of marriage under the section of juristic act. On the contrary, some writers e.g. Professor Dr Sanankorn Sotthibandbu, explain that, by citing Professor Chitti Tingsabadh, marriage is not a juristic act. As Professor Chitti Tingsabadh wrote: personal right or rights in family is not a juristic act or contract according to Books 1 and 2 of the Civil and Commercial Code. It is not an obligation that directly arises from juristic act, but rater obligations imposed by law. Nonetheless, Dr Korrasut observes that Professor Chitti Tingsabadh may in fact meant that marriage is merely a juristic act that creates legal status, but does not create contractual obligation.
Issue (5) : Is marriage a contract in Thai and German law?
Asst Prof Dr Korrasut : Some literature (e.g. Professor Dr Pairoj Kampusiri) does not refer to marriage as a contract, but rather a juristic act. As he writes: marriage is a juristic act that a man and a woman declare their intention to cohabitate. However, Thai writers tend to refer to use the terms prenuptial Contract (contract prior to marriage) and postnuptial Contract (contract after marriage) as a contract. It is therefore not clear whether these writers view marriage as a contract or not. Nonetheless, some writers, e.g. Professor Dr Kittisak Prokati, explicitly refer to marriage as a contract. As he writes: contract is not merely important to create legal relations in terms of obligations but also has a role in legal relations in people status whereas in family law, engagement and marriage.
Dr Lasse : Marriage is a contract of its own kind. There are specific provisions about marriage e.g. capacity to contract (Sec. 1304 BGB), conclusion and form (Sec. 1310 ff. BGB), annulment (Sec. 1313 ff. BGB) and divorce (Sec. 1564 ff. BGB). It is a contract sui generis because the German Civil Code already has general provisions on these issues, but there is no general provision on declaration of intent that is applicable to marriage. This is also the case of divorce, which is different from normal contracts where parties may agree to end the contract. However, in German law, in order to get divorce, spouses must show the court evidence that their marriage has failed. This is influenced by Christian beliefs. In response to this, Dr Korrasut noted that this is different from Thai law because in Thai law spouses are able to divorce voluntarily. Dr Lasse also noted that Professor Dr Pairoj Kampusiri (that refers to marriage as a juristic act) is interesting because he might view it as a contract with specific character, that is why he does not use the term contract with marriage.
Issue (6) : Does a will (testament) create an obligation? If yes, since a will is a unilateral juristic act, is it an obligation imposed by law or arising from a juristic act?
Dr Lasse : Will in a testament is a unilateral juristic act. However, Inheritance passes by law (Sec. 1942 BGB) when testator dies. Claim to inheritance (and corresponding obligation) by law (Sec. 2018 ff. BGB). As a result,
Asst Prof Dr Korrasut : Most literatures on obligations do not refer to a will (testament) as a source of obligation. Nonetheless, it is debatable whether inheritance (in the case of wills) passes by law or juristic act. For instance, although a will itself is a unilateral juristic act, there have been court decisions that held that inheritance passes by law, rather than juristic act.
Issue (7) : Does a promise create an obligation in each system? In this sense, a promise refers to to a unilateral juristic act or a one-sided commitment.
Asst Prof Dr Korrasut : There are a number of provisions dealing with promise such as promise of reward, promise of sale, promise of a gift. There are three different theories regarding this issue. The first theory views promise as part of contract, and thus a promise does not create obligation per se. Supporters include Professor Seni Pramoj. The second theory makes a distinction between promise of reward and promise to enter into a contract (e.g. promise of sale and promise of a gift). In this theory, while promise of reward creates an obligation per se, promise to enter into a contract does not. This theory seems to be the majority view. Supporters include Professor Sanankorn Sothibundu. The third theory explains that promise creates obligation per se. Supporters include Professors Chitti Tingsabadth and Pridi Banomyong.
Dr Lasse : Most “promises” (Versprechen) in the BGB are normal contracts. Examples are “promise” of performance to a third party (Sec. 328 ff. BGB), “promise” to pay a penalty (Sec. 339 ff. BGB), “promise” of donation (Sec. 518 BGB), “promise” to fulfil an obligation (Sec. 780 BGB). As a result, they do not create obligations. The notion of private autonomy plays an important role in German law-Juristic acts (Rechtsgeschäfte) are based on declaration of intent. As a result, as a general principle, obligations can only be crated only with consent, or bilateral juristic acts. In general, unilateral juristic act cannot create obligation. There is the only one exception of Promise of reward (Sec. 657 ff. BGB), which no consent (of the promisee) is required.
Other example of legal concepts which consent of the beneficiary is required to constitute obligations/rights, which are
- Juristic acts by which third parties may receive benefits, but not against their will;
- Contract for the benefit of third parties (Sec. 328, 331 BGB);
- Contract with protective effect for third parties;
- Liquidation of third parties‘ damages (Drittschadens-liquidation);
- Contract of forgiveness (Sec. 397 BGB);
- Donation (Sec. 516 ff. BGB);
- Succession and disclaimer (Sec. 1942, 1953 BGB);
Issue (8) : Does a promise of reward require acceptance. Does it constitute a contract, i.e. whether its obligation is contractual or promissory in nature? When does an obligation of a promise of reward occur?
Dr Lasse : Promise of reward (Auslobung), according to Sec. 657 ff. BGB, is a unilateral creation of an obligation. It is clear that no acceptance is required, which is exceptional in German law. The provision appears elsewhere, not in the Book of Contract.
Asst Prof Dr Korrasut : There are two different theories on this point. The first theory explains that promise of reward requires acceptance, and thus constitutes a contract. In this view, there are two possibilities which the contractual obligation occurs. First, the obligation occurs when the person who completes the act asks for the reward (which is equivalent to when the acceptance reaches the offeror). Second, the obligation exists when the promisee (the person who completes the acts) does the act, which is equivalent to acceptance by conduct. One of the argument of this theory is because Section 362 (dealing with promise of reward) appears in Book II Obligation, Title II Contract, Chapter I Formation of Contract.
The second theory explains that a promise of reward does not require acceptance, which is similar to the German interpretation. This is because Section 362 states in the final part that the promisee is entitled to get the reward “even if such person did not act with a view to the reward.” In order to accept something, that person must know of it. Thus, in this view, a promise of reward does not require acceptance, and does not create contractual obligation.
These two theories result in different legal outcomes. For example, the prescription will not start until the obligation exists. Therefore, according to the first theory, the obligation may start from the moment when the promisee asks for the reward, whereas, according to the secondly, it starts from the moment when the condition stated in the advertisement is fulfilled.
Issue (9) : Is stipulated penalty a juristic act?
Asst Prof Dr Korrasut : As a general rule, a stipulated penalty is an accessory contract. However, there is an exception in the case of Section 383 para 2 stating that : “The same rule applies also, apart from the cases provided for by Sections 379 and 382, if a person promises a penalty for the case of his doing or forbearing to do some act.” Some explain that the legal status of stipulated penalty in this provision is a unilateral juristic act, given that the provision uses the term “person” rather than “debtor and creditor”, suggesting that there was no principal obligation between the parties before. Nonetheless, there is the competing view that stipulated penalty in Section 383 para 2 is a unilateral contract (bilateral juristic act).
Dr Lasse : As already noted, it is a normal contract, so stipulated penalty in German law is viewed as accessory contract.
Issue 10 : Are there any other unilateral juristic acts that create an obligations?
Dr Lasse : Other unilateral juristic acts cannot create claims for third persons. Nonetheless, the case of foundation is debatable whether it is the case of a unilateral juristic act creating obligation or not. A recognized foundation (Sec. 80 ff. BGB) receives a claim against the founder for the transfer of assets. Nonetheless, the foundation has been created by the founder him/herself. In addition, the claim arises with the recognition by the public authority. Therefore, it is difficult to say that it is the case of unilateral juristic act creating obligation.
Asst Prof Dr Korrasut : Some writers e.g. Professors Chitti Tingsabadth and Pridi Banomyong suggest that a unilateral juristic act, apart from promise of reward, may create obligation. Examples are promise of sale (Section 454), promise of a gift (Section 526) and stipulated penalty (Section 383 para 2), which are unilateral juristic acts and are binding before acceptance. In addition, there was a court decision, though the court did not analyse whether a promise of sale created obligation, that enforced a promise of sale which was made 12 years earlier. There is also the concept of promise to lease, which is not recognised in the Civil and Commercial Code, but is enforceable by virtue of the doctrine of private autonomy. Dr Korrasut observed that Thai lawyers seem to explain the relationship between private autonomy and the constitution of obligation different from German lawyers. As Dr Lasse explains, consent from the beneficiary is required in order to constitute an obligation in German law. However, in Thai law, a declaration of intent may unilaterally create a right to the beneficiary and if the latter does not want such a right, he or she may simply reject it, but the right has been already occurred. The case of release of obligation in Thai law is also different from that of German law because in Thai law it does not require consent of the debtor.
Moreover, Professor Pridi Banomyong, by citing Ernest Joseph Schuster, The principles of German Civil Law, argues that the foundation (Section 121) is the unilateral juristic act that creates obligation. It is a unilateral juristic act because it is made by the only intention of the founder. Once it is officially recognised (by registration), the foundation has a right to claim the property from the founder or his or her estate.
