Law of Contract and Torts

General rules of fulfilment of obligations

An obligation shall be terminated after being fulfilled, as well as in other cases provided by law. According to provisions of the Law of Contract and Torts, other cases of termination of obligations are offsetting (compensation), remission of debt, substitution (innovation), integration (merger), the impossibility of fulfilment, flow of time, notice and death.

The termination of the principal obligation shall also extinguish the pledge, mortgage, and other accessory rights.

Who can fulfill obligations and expenses of the fulfillment of obligations?

An obligation may be fulfilled not only by a debtor but also by a third person. A creditor shall be bound to accept fulfilment by every person having a legal interest in fulfilling the obligation, even should the debtor be opposed to such fulfilment.

Should, however, the debtor offers to fulfil his requirement himself immediately, the creditor shall not accept the fulfilment of obligations by the third person.

Fulfilment of Obligations by One without Business Capacity

A debtor without business capacity, may also duly fulfil an obligation should its existence be certain and after its fulfilment is due.

The fulfillment of obligations may be contested should such person pay off an expired debt or a debt coming out of a game or bet.

Expenses of the Fulfilment of Obligations

Fulfilment expenses shall be covered by the debtor if not caused by the creditor.

Fulfilment by Subrogation

In the case of fulfilment of another person’s obligation, each fulfiller may stipulate with the creditor, before the realization or in the course of it, that the claim which is fulfilled be transferred to him, together with all, or only some, of the accessory rights. A creditor’s rights may also be transferred to the fulfiller on the ground of a contract between the debtor and the fulfiller concluded before fulfilment. In such cases, the subrogation of the rights of the creditor to the fulfiller shall take place at the moment of fulfilment.

Statutory Subrogation

If an obligation is fulfilled by a person having some legal interest in the matter, the creditor’s claim shall be transferred to him by the law itself at the moment of fulfilment, together with all accessory rights.

Subrogation in Case of Partial Fulfilment

In case of partial fulfilment of the creditor’s claim, all accessory rights by which such claim is guaranteed shall be transferred to the fulfiller unless necessary for the fulfilment of the rest of the creditor’s claim.

However, the creditor and the fulfiller may stipulate that they shall use the guarantees commensurately to their respective claims. At the same time, they may also stipulate that the fulfiller shall have the right to priority in effecting collection.

Evidence and Means of Guarantee

A creditor shall be bound to hand over to the fulfiller the means by which the claim is proved or guaranteed. Exceptionally, the creditor may hand over an object received in pledge from the debtor or some other person, to the fulfiller only should the pledger agree; otherwise, the pledge shall stay with the creditor to hold and preserve to the account of the fulfiller.

How Much May Be Claimed against a Debtor

A person receiving a transferred claim shall not request from a debtor more than has been paid to the creditor.

Exemption from Liability of a Creditor for the Existence and Collectability of the Claim

A creditor who accepts fulfilment from a third person shall not be liable for the claim’s existence and collectability at the time of fulfilment. The above shall not exclude the application of the rules of acquiring without ground.

Persons to Accept Fulfilment

The fulfilment must be effected to the creditor or a person designated by law, court decision, contract between the creditor and the debtor, or the creditor himself.

The fulfilment of obligations shall also be valid if effected to a third person, should subsequently the creditor approve it, or should he acquire benefit out of it.

The fulfillment effected to a creditor without business capacity shall exempt the debtor only after being to the benefit of the creditor or after the subject of achievement has remained in his possession.

A creditor without business capacity may approve, after regaining business capacity, of the fulfillment of obligations accepted by him at the time of his being without business capacity.

Subject of Fulfilment

The fulfilment shall consist of performing that which forms the content of obligation, so that a debtor may not affect fulfilment by something else, nor a creditor request something else. There shall be no valid fulfilment should that which is delivered by the debtor as a matter owed, and accepted by the creditor as such, turn out not to be a matter genuinely provided for by the contract so that the creditor shall be entitled to restitute that what has been delivered to him, and to request the subject owed to him.

Substitution of Fulfilment

An obligation shall be terminated should the creditor, by agreement with the debtor, accept something else instead of what was owed to him. In such a case, the debtor shall be liable as a seller for substantive and legal defects in the object delivered instead of what was owed by him. However, a creditor, instead of claiming on the ground of the debtor’s liability for substantive and legal defects in the object, may request from the debtor – but not more than a guarantor – the fulfilment of the original claim and the corresponding damages.

Obligation to Deliver Objects Specified by Kind

Should objects be specified only according to their kind, the debtor shall be bound to deliver average quality objects. However, should the purpose of the objects be known to him, he shall be obliged to deliver objects of corresponding quality.

Making Allowance for Fulfilment

Should several obligations of the same kind exist between the same parties and what is fulfilled by the debtor fail to satisfy the entire claim, should there be no agreement between the creditor and the debtor, the allowance shall be made in an order determined by the debtor, at the moment of fulfilment at the latest.

Should there be no statement by the debtor on making allowance, the obligation shall be settled in the order of their becoming due (for fulfilment).

Should several obligations become due at the same time, the first to be settled shall be the ones supplied by the weakest guarantee. Should all of them be guaranteed in the same way,, the first to be settled shall be the ones representing the heaviest burden for the debtor.

Obligations being entirely equal in all the above respects shall be settled in the order of their occurrence. In contrast, in case of simultaneous presence, what was done to effect fulfilment shall be distributed over all obligations proportionally to their amounts.

Should a debtor, in addition to the principal owe interest and expenses, the allowance shall be made to pay first the costs, then the interest and, finally, the principal.

Time of Fulfilment

When a Time Limit Is not Determined?

When a time limit is not determined, if the purpose of the transaction, the nature of the obligation, and the remaining circumstances do not require a specific time limit for the fulfilment, the creditor may request immediate fulfilment of the obligation. In contrast, the debtor, on his part, may request from the creditor an immediate acceptance of fulfilment.

When Determining a Time Limit Is Left to One Party?

Should determining a fulfilment time limit be left to the creditor or the debtor, the other party, should the authorized person fail to determine the time limit even after a corresponding warning, may address the court to decide an adequate fulfilment time limit.

Monetary Obligation

Should payment be effected through a bank or other organisation keeping the creditor’s account, the debt shall be considered settled unless contracting parties determine otherwise, if the bank or organisation keeping the account has received remittance in favor of the creditor, or an order from the debtor’s bank or organisation, to transfer the amount designated to the creditor’s account.

Should payment by mail be stipulated, the parties shall be held to have agreed that payment of the amount due to the post-office shall mean the meeting of the debtor’s obligation to the creditor. In contrast, should this manner of payment not be stipulated, the debt shall be settled when the remittance has reached the creditor.

Should particular regulations or contracts provide payment by postal money order to a specific account, the parties shall be considered to have agreed that payment is effected when the debtor pays the amount due through money order to the designated account.

Place of Fulfilment

A debtor shall be bound to fulfil the obligation and the creditor to accept the fulfilment at a place determined by the legal transaction or by law.

Should the place of fulfilment not be determined, and should it be impossible to decide on it according to the purpose of a transaction, the nature of obligation or other circumstances, the fulfilment of obligation shall be effected at the debtor’s seat of business or his domicile at the time of origination of duty, and should there be no domicile, at his residence. However, in the case of a debtor being a corporate body with several branches in various places, the seat of business of a branch obliged to effect the acts necessary to fulfil the obligation shall be considered as the place of fulfilment if the creditor was aware of these circumstances when negotiating the contract, or should have been aware of them.

Place of Fulfilment of Monetary Obligation

A monetary obligation shall be fulfilled at creditor’s seat of business or his domicile, and should there be no such domicile, of his residence.

Should payment be effected by transfer order, a monetary obligation shall be discharged at the registered office of the organisation, keeping the creditor’s financial means.

If a creditor has changed the place of his business seat, or his domicile at the time of the creation of the obligation, so that higher costs relating to fulfilment resulted, such increase shall be to the charge of the creditor.

Receipt

Whoever fulfils an obligation entirely or partially shall be entitled to request that the creditor issues him a receipt at his own expense. A debtor paying his debt through a bank or a post office may request the creditor to issue a receipt only after having an especially justified reason.

Should a creditor refuse to issue a receipt, the debtor may deposit the subject of his obligation with the court.

Restoring a Bond

After entirely fulfilling his obligation, a debtor may, in addition to a receipt, seek that the creditor restores the relevant bond to him. A debtor fulfilling an obligation only partially shall be entitled to request such fulfilment be inscribed on the face of the bond.

Read more:
Contract of Assumption of Debt »
Cession of claims by contract »
Competence for conducting enforcement »

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